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Exhibit 4.1




OPTICAL COMMUNICATION PRODUCTS, INC.




2000 STOCK INCENTIVE PLAN




ARTICLE ONE




GENERAL PROVISIONS




     I. PURPOSE OF THE PLAN



     This 2000 Stock Incentive Plan is intended to promote the interests of Optical Communication
Products, Inc., a Delaware corporation, by providing eligible persons in the Corporation’s service
with the opportunity to acquire a proprietary interest, or otherwise increase their proprietary
interest, in the Corporation as an incentive for them to remain in such service.



     Capitalized terms shall have the meanings assigned to such terms in the attached Appendix.



     II. STRUCTURE OF THE PLAN



          A. The Plan shall be divided into four separate equity incentives programs:




               - the Discretionary Option Grant Program under which eligible persons may, at the
discretion of the Plan Administrator, be granted options to purchase shares of Common Stock,



               - the Salary Investment Option Grant Program under which eligible employees may elect to
have a portion of their base salary invested each year in special option grants,



               - the Stock Issuance Program under which eligible persons may, at the discretion of the
Plan Administrator, be issued shares of Common Stock directly, either through the immediate
purchase of such shares or as a bonus for services rendered the Corporation (or any Parent or
Subsidiary), and



               - the Director Fee Option Grant Program under which non-employee Board members may elect
to have all or any portion of their annual retainer fee otherwise payable in cash applied to a
special stock option grant.



          B. The provisions of Articles One and Six shall apply to all equity programs under the Plan
and shall govern the interests of all persons under the Plan.




 









 








     III. ADMINISTRATION OF THE PLAN



          A. The Primary Committee shall have sole and exclusive authority to administer the
Discretionary Option Grant and Stock Issuance Programs with respect to Section 16 Insiders.
Administration of the Discretionary Option Grant and Stock Issuance Programs with respect to all
other persons eligible to participate in those programs may, at the Board’s discretion, be vested
in the Primary Committee or a Secondary Committee, or the Board may retain the power to administer
those programs with respect to all such persons. However, any discretionary option grants or stock
issuances for members of the Primary Committee must be authorized by a disinterested majority of
the Board.




          B. Members of the Primary Committee or any Secondary Committee shall serve for such period of
time as the Board may determine and may be removed by the Board at any time. The Board may also at
any time terminate the functions of any Secondary Committee and reassume all powers and authority
previously delegated to such committee.




          C. Each Plan Administrator shall, within the scope of its administrative functions under the
Plan, have full power and authority (subject to the provisions of the Plan) to establish such rules
and regulations as it may deem appropriate for proper administration of the Discretionary Option
Grant and Stock Issuance Programs and to make such determinations under, and issue such
interpretations of, the provisions of those programs and any outstanding options or stock issuances
thereunder as it may deem necessary or advisable. Decisions of the Plan Administrator within the
scope of its administrative functions under the Plan shall be final and binding on all parties who
have an interest in the Discretionary Option Grant and Stock Issuance Programs under its
jurisdiction or any stock option or stock issuance thereunder.




          D. The Primary Committee shall have the sole and exclusive authority to determine which
Section 16 Insiders and other highly compensated Employees shall be eligible for participation in
the Salary Investment Option Grant Program for one or more calendar years. However, all option
grants under the Salary Investment Option Grant Program shall be made in accordance with the
express terms of that program, and the Primary Committee shall not exercise any discretionary
functions with respect to the option grants made under that program.




          E. Service on the Primary Committee or the Secondary Committee shall constitute service as a
Board member, and members of each such committee shall accordingly be entitled to full
indemnification and reimbursement as Board members for their service on such committee. No member
of the Primary Committee or the Secondary Committee shall be liable for any act or omission made in
good faith with respect to the Plan or any option grants or stock issuances under the Plan.




          F. Administration of the Director Fee Option Grant Programs shall be self-executing in
accordance with the terms of that program, and no Plan Administrator shall exercise any
discretionary functions with respect to any option grants or stock issuances made under that
program.









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     IV. ELIGIBILITY



          A. The persons eligible to participate in the Discretionary Option Grant and Stock Issuance
Programs are as follows:





                    (i) Employees,




                    (ii) non-employee members of the Board or the board of directors of any Parent or Subsidiary,
and




                    (iii) consultants and other independent advisors who provide services to the Corporation (or
any Parent or Subsidiary).



          B. Only Employees who are Section 16 Insiders or other highly compensated individuals shall be
eligible to participate in the Salary Investment Option Grant Program.




          C. Each Plan Administrator shall, within the scope of its administrative jurisdiction under
the Plan, have full authority to determine, (i) with respect to the option grants under the
Discretionary Option Grant Program, which eligible persons are to receive such grants, the time or
times when those grants are to be made, the number of shares to be covered by each such grant, the
status of the granted option as either an Incentive Option or a Non-Statutory Option, the time or
times when each option is to become exercisable, the vesting schedule (if any) applicable to the
option shares and the maximum term for which the option is to remain outstanding and (ii) with
respect to stock issuances under the Stock Issuance Program, which eligible persons are to receive
such issuances, the time or times when the issuances are to be made, the number of shares to be
issued to each Participant, the vesting schedule (if any) applicable to the issued shares and the
consideration for such shares.




          D. The Plan Administrator shall have the absolute discretion either to grant options in
accordance with the Discretionary Option Grant Program or to effect stock issuances in accordance
with the Stock Issuance Program.




          E. All non-employee Board members shall be eligible to participate in the Director Fee Option
Grant Program.




     V. STOCK SUBJECT TO THE PLAN



          A. The stock issuable under the Plan shall be shares of authorized but unissued or reacquired
Common Stock, including shares repurchased by the Corporation on the open market. The number of
shares of Common Stock initially reserved for issuance over the term of the Plan shall not exceed
11,591,680 shares. Such reserve shall consist of (i) the number of shares estimated to remain
available for issuance, as of the Plan Effective Date, under the Predecessor Plans as last approved
by the Corporation’s stockholders, including the shares subject to outstanding options under the
Predecessor Plans (approximately 6,591,680 shares), (ii) plus an additional increase of
approximately 5,000,000 shares to be approved by the Corporation’s stockholders prior to the
Underwriting Date.




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          B. No one person participating in the Plan may receive stock options, separately exercisable
stock appreciation rights and direct stock issuances for more than 500,000 shares of Common Stock
in the aggregate per calendar year.




          C. Shares of Common Stock subject to outstanding options (including options transferred to
this Plan from the Predecessor Plans) shall be available for subsequent issuance under the Plan to
the extent (i) those options expire or terminate for any reason prior to exercise in full or (ii)
the options are cancelled in accordance with the cancellation-regrant provisions of Article Two.
Unvested shares issued under the Plan and subsequently cancelled or repurchased by the Corporation,
at the original issue price paid per share, pursuant to the Corporation’s repurchase rights under
the Plan shall be added back to the number of shares of Common Stock reserved for issuance under
the Plan and shall accordingly be available for reissuance through one or more subsequent option
grants or direct stock issuances under the Plan. However, should the exercise price of an option
under the Plan be paid with shares of Common Stock or should shares of Common Stock otherwise
issuable under the Plan be withheld by the Corporation in satisfaction of the withholding taxes
incurred in connection with the exercise of an option or the vesting of a stock issuance under the
Plan, then the number of shares of Common Stock available for issuance under the Plan shall be
reduced by the gross number of shares for which the option is exercised or which vest under the
stock issuance, and not by the net number of shares of Common Stock issued to the holder of such
option or stock issuance. Shares of Common Stock underlying one or more stock appreciation rights
exercised under Section IV of Article Two, Section III of Article Three, or Section III of Article
Five of the Plan shall not be available for subsequent issuance under the Plan.




          D. If any change is made to the Common Stock by reason of any stock split, stock dividend,
recapitalization, combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Corporation’s receipt of consideration, appropriate
adjustments shall be made by the Plan Administrator to (i) the maximum number and/or class of
securities issuable under the Plan, (ii) the maximum number and/or class of securities for which
any one person may be granted stock options, separately exercisable stock appreciation rights and
direct stock issuances under the Plan per calendar year, (iii) the number and/or class of
securities and the exercise price per share in effect under each outstanding option under the Plan
and (iv) the number and/or class of securities and exercise price per share in effect under each
outstanding option transferred to this Plan from the Predecessor Plans. Such adjustments to the
outstanding options are to be effected in a manner which shall preclude the enlargement or dilution
of rights and benefits under such options. The adjustments determined by the Plan Administrator
shall be final, binding and conclusive.




ARTICLE TWO




DISCRETIONARY OPTION GRANT PROGRAM




     I. OPTION TERMS



     Each option shall be evidenced by one or more documents in the form approved by the Plan
Administrator; provided, however, that each such document shall comply with the terms specified



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below. Each document evidencing an Incentive Option shall, in addition, be subject to the
provisions of the Plan applicable to such options.



          A. Exercise Price.




               1. The exercise price per share shall be fixed by the Plan Administrator but shall not be less
than one hundred percent (100%) of the Fair Market Value per share of Common Stock on the option
grant date.



               2. The exercise price shall become immediately due upon exercise of the option and shall,
subject to the provisions of Section I of Article Six and the documents evidencing the option, be
payable in one or more of the forms specified below:



                    (i) cash or check made payable to the Corporation,



                    (ii) shares of Common Stock held for the requisite period necessary to avoid a charge to the
Corporation’s earnings for financial reporting purposes and valued at Fair Market Value on the
Exercise Date, or



                    (iii) to the extent the option is exercised for vested shares, through a special sale and
remittance procedure pursuant to which the Optionee shall concurrently provide irrevocable
instructions to (a) a Corporation-designated brokerage firm to effect the immediate sale of the
purchased shares and remit to the Corporation, out of the sale proceeds available on the settlement
date, sufficient funds to cover the aggregate exercise price payable for the purchased shares plus
all applicable Federal, state and local income and employment taxes required to be withheld by the
Corporation by reason of such exercise and (b) the Corporation to deliver the certificates for the
purchased shares directly to such brokerage firm in order to complete the sale. Except to the
extent such sale and remittance procedure is utilized, payment of the exercise price for the
purchased shares must be made on the Exercise Date.



          B. Exercise and Term of Options. Each option shall be exercisable at such time or times,
during such period and for such number of shares as shall be determined by the Plan Administrator
and set forth in the documents evidencing the option. However, no option shall have a term in
excess of ten (10) years measured from the option grant date.




          C. Effect of Termination of Service.




               1. The following provisions shall govern the exercise of any options held by the Optionee at
the time of cessation of Service or death:



                    (i) Any option outstanding at the time of the Optionee’s cessation of Service for any reason
shall remain exercisable for such period of time thereafter as shall be determined by the Plan
Administrator and set forth in the documents evidencing the option, but no such option shall be
exercisable after the expiration of the option term.



                    (ii) Any option held by the Optionee at the time of death and exercisable in whole or in part
at that time may be subsequently exercised by the personal



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representative of the Optionee’s estate
or by the person or persons to whom the option is transferred pursuant to the Optionee’s will or
the laws of inheritance or by the Optionee’s designated beneficiary or beneficiaries of that
option.



                    (iii) Should the Optionee’s Service be terminated for Misconduct or should the Optionee
otherwise engage in Misconduct while holding one or more outstanding options under this Article
Two, then all those options shall terminate immediately and cease to be outstanding.



                    (iv) During the applicable post-Service exercise period, the option may not be exercised in
the aggregate for more than the number of vested shares for which the option is exercisable on the
date of the Optionee’s cessation of Service. Upon the expiration of the applicable exercise period
or (if earlier) upon the expiration of the option term, the option shall terminate and cease to be
outstanding for any vested shares for which the option has not been exercised. However, the option
shall, immediately upon the Optionee’s cessation of Service, terminate and cease to be outstanding
to the extent the option is not otherwise at that time exercisable for vested shares.



               2. The Plan Administrator shall have complete discretion, exercisable either at the time an
option is granted or at any time while the option remains outstanding, to:



                    (i) extend the period of time for which the option is to remain exercisable following the
Optionee’s cessation of Service from the limited exercise period otherwise in effect for that
option to such greater period of time as the Plan Administrator shall deem appropriate, but in no
event beyond the expiration of the option term, and/or



                    (ii) permit the option to be exercised, during the applicable post-Service exercise period,
not only with respect to the number of vested shares of Common Stock for which such option is
exercisable at the time of the Optionee’s cessation of Service but also with respect to one or more
additional installments in which the Optionee would have vested had the Optionee continued in
Service.



          D. Stockholder Rights. The holder of an option shall have no stockholder rights with respect
to the shares subject to the option until such person shall have exercised the option, paid the
exercise price and become a holder of record of the purchased shares.




          E. Repurchase Rights. The Plan Administrator shall have the discretion to grant options which
are exercisable for unvested shares of Common Stock. Should the Optionee cease Service while
holding such unvested shares, the Corporation shall have the right to repurchase, at the exercise
price paid per share, any or all of those unvested shares. The terms upon which such repurchase
right shall be exercisable (including the period and procedure for exercise and the appropriate
vesting schedule for the purchased shares) shall be established by the Plan Administrator and set
forth in the document evidencing such repurchase right.




          F. Limited Transferability of Options. During the lifetime of the Optionee, Incentive Options
shall be exercisable only by the Optionee and shall not be assignable or



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transferable other than by
will or the laws of inheritance following the Optionee’s death. Non-Statutory Options shall be
subject to the same restriction, except that a Non-Statutory Option may be assigned in whole or in
part during the Optionee’s lifetime to one or more members of the Optionee’s family or to a trust
established exclusively for one or more such family members or to Optionee’s former spouse, to the
extent such assignment is in connection with the Optionee’s estate plan or pursuant to a domestic
relations order. The assigned portion may only be exercised by the person or persons who acquire a
proprietary interest in the option pursuant to the assignment. The terms applicable to the
assigned portion shall be the same as those in effect for the option immediately prior to such
assignment and shall be set forth in such documents issued to the assignee as the Plan
Administrator may deem appropriate. Notwithstanding the foregoing, the Optionee may also designate
one or more persons as the beneficiary or beneficiaries of his or her outstanding options under
this Article Two, and those options shall, in accordance with such designation, automatically be
transferred to such beneficiary or beneficiaries upon the Optionee’s death while holding those
options. Such beneficiary or beneficiaries shall take the transferred options subject to all the
terms and conditions of the applicable agreement evidencing each such transferred option, including
(without limitation) the limited time period during which the option may be exercised following the
Optionee’s death.




     II. INCENTIVE OPTIONS



     The terms specified below shall be applicable to all Incentive Options. Except as modified by
the provisions of this Section II, all the provisions of Articles One, Two and Six shall be
applicable to Incentive Options. Options which are specifically designated as Non-Statutory
Options when issued under the Plan shall not be subject to the terms of this Section II.



          A. Eligibility. Incentive Options may only be granted to Employees.




          B. Dollar Limitation. The aggregate Fair Market Value of the shares of Common Stock
(determined as of the respective date or dates of grant) for which one or more options granted to
any Employee under the Plan (or any other option plan of the Corporation or any Parent or
Subsidiary) may for the first time become exercisable as Incentive Options during any one calendar
year shall not exceed the sum of One Hundred Thousand Dollars ($100,000). To the extent the
Employee holds two (2) or more such options which become exercisable for the first time in the same
calendar year, the foregoing limitation on the exercisability of such options as Incentive Options
shall be applied on the basis of the order in which such options are granted.




          C. 10% Stockholder. If any Employee to whom an Incentive Option is granted is a 10%
Stockholder, then the exercise price per share shall not be less than one hundred ten percent
(110%) of the Fair Market Value per share of Common Stock on the option grant date, and the option
term shall not exceed five (5) years measured from the option grant date.




     III. CORPORATE TRANSACTION/CHANGE IN CONTROL



          A. In the event of any Corporate Transaction, each outstanding option under the Discretionary
Option Grant Program shall automatically accelerate so that each such option shall, immediately
prior to the effective date of the Corporate Transaction, become exercisable for all the



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shares of
Common Stock at the time subject to such option and may be exercised for any or all of those shares
as fully vested shares of Common Stock. However, an outstanding option shall not become
exercisable on such an accelerated basis if and to the extent: (i) such option is, in connection
with the Corporate Transaction, to be assumed by the successor corporation (or parent thereof) or
(ii) such option is to be replaced with a cash incentive program of the successor corporation which
preserves the spread existing at the time of the Corporate Transaction on any shares for which the
option is not otherwise at that time exercisable and provides for subsequent payout in accordance
with the same exercise/vesting schedule applicable to those option shares or (iii) the acceleration
of such option is subject to other limitations imposed by the Plan Administrator at the time of the
option grant.




          B. All outstanding repurchase rights under the Discretionary Option Grant Program shall
automatically terminate, and the shares of Common Stock subject to those terminated rights shall
immediately vest in full, in the event of any Corporate Transaction, except to the extent: (i)
those repurchase rights are to be assigned to the successor corporation (or parent thereof) in
connection with such Corporate Transaction or (ii) such accelerated vesting is precluded by other
limitations imposed by the Plan Administrator at the time the repurchase right is issued.




          C. Immediately following the consummation of the Corporate Transaction, all outstanding
options under the Discretionary Option Grant Program shall terminate and cease to be outstanding,
except to the extent assumed by the successor corporation (or parent thereof).




          D. Each option which is assumed in connection with a Corporate Transaction shall be
appropriately adjusted, immediately after such Corporate Transaction, to apply to the number and
class of securities which would have been issuable to the Optionee in consummation of such
Corporate Transaction had the option been exercised immediately prior to such Corporate
Transaction. Appropriate adjustments to reflect such Corporate Transaction shall also be made to
(i) the exercise price payable per share under each outstanding option, provided the aggregate
exercise price payable for such securities shall remain the same, (ii) the maximum number and/or
class of securities available for issuance over the remaining term of the Plan and (iii) the
maximum number and/or class of securities for which any one person may be granted stock options,
separately exercisable stock appreciation rights and direct stock issuances under the Plan per
calendar year. To the extent the actual holders of the Corporation’s outstanding Common Stock
receive cash consideration for their Common Stock in consummation of the Corporate Transaction, the
successor corporation may, in connection with the assumption of the outstanding options under the
Discretionary Option Grant Program, substitute one or more shares of its own common stock with a
fair market value equivalent to the cash consideration paid per share of Common Stock in such
Corporate Transaction.




          E. The Plan Administrator shall have the discretionary authority to structure one or more
outstanding options under the Discretionary Option Grant Program so that those options shall,
immediately prior to the effective date of such Corporate Transaction, become exercisable for all
the shares of Common Stock at the time subject to those options and may be exercised for any or
all of those shares as fully vested shares of Common Stock, whether or not those options are
to be assumed in the Corporate Transaction. In addition, the Plan Administrator shall have the
discretionary authority to structure one or more of the Corporation’s repurchase rights under the



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Discretionary Option Grant Program so that those rights shall not be assignable in connection with
such Corporate Transaction and shall accordingly terminate upon the consummation of such Corporate
Transaction, and the shares subject to those terminated rights shall thereupon vest in full.




          F. The Plan Administrator shall have full power and authority to structure one or more
outstanding options under the Discretionary Option Grant Program so that those options shall become
exercisable for all the shares of Common Stock at the time subject to those options in the event
the Optionee’s Service is subsequently terminated by reason of an Involuntary Termination within a
designated period (not to exceed eighteen (18) months) following the effective date of any
Corporate Transaction in which those options are assumed and do not otherwise accelerate. In
addition, the Plan Administrator may structure one or more of the Corporation’s repurchase rights
so that those rights shall immediately terminate with respect to any shares held by the Optionee at
the time of his or her Involuntary Termination, and the shares subject to those terminated
repurchase rights shall accordingly vest in full at that time.




          G. The Plan Administrator shall have the discretionary authority to structure one or more
outstanding options under the Discretionary Option Grant Program so that those options shall,
immediately prior to the effective date of a Change in Control, become exercisable for all the
shares of Common Stock at the time subject to those options and may be exercised for any or all of
those shares as fully vested shares of Common Stock. In addition, the Plan Administrator shall
have the discretionary authority to structure one or more of the Corporation’s repurchase rights
under the Discretionary Option Grant Program so that those rights shall terminate automatically
upon the consummation of such Change in Control, and the shares subject to those terminated rights
shall thereupon vest in full. Alternatively, the Plan Administrator may condition the automatic
acceleration of one or more outstanding options under the Discretionary Option Grant Program and
the termination of one or more of the Corporation’s outstanding repurchase rights under such
program upon the subsequent termination of the Optionee’s Service by reason of an Involuntary
Termination within a designated period (not to exceed eighteen (18) months) following the effective
date of such Change in Control.




          H. The portion of any Incentive Option accelerated in connection with a Corporate Transaction
or Change in Control shall remain exercisable as an Incentive Option only to the extent the
applicable One Hundred Thousand Dollar ($100,000) limitation is not exceeded. To the extent such
dollar limitation is exceeded, the accelerated portion of such option shall be exercisable as a
Nonstatutory Option under the Federal tax laws.




          I. The outstanding options shall in no way affect the right of the Corporation to adjust,
reclassify, reorganize or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.




     IV. CANCELLATION AND REGRANT OF OPTIONS



     The Plan Administrator shall have the authority to effect, at any time and from time to time,
with the consent of the affected option holders, the cancellation of any or all outstanding options
under the Discretionary Option Grant Program (including outstanding options incorporated from the
Predecessor Plan) and to grant in substitution new options covering the same or a different number



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of shares of Common Stock but with an exercise price per share based on the Fair Market Value per
share of Common Stock on the new grant date.



     V. STOCK APPRECIATION RIGHTS



          A. The Plan Administrator shall have full power and authority to grant to selected Optionees
tandem stock appreciation rights and/or limited stock appreciation rights.




          B. The following terms shall govern the grant and exercise of tandem stock appreciation
rights:




                    (i) One or more Optionees may be granted the right, exercisable upon such terms as the Plan
Administrator may establish, to elect between the exercise of the underlying option for shares of
Common Stock and the surrender of that option in exchange for a distribution from the Corporation
in an amount equal to the excess of (a) the Fair Market Value (on the option surrender date) of the
number of shares in which the Optionee is at the time vested under the surrendered option (or
surrendered portion thereof) over (b) the aggregate exercise price payable for such shares.



                    (ii) No such option surrender shall be effective unless it is approved by the Plan
Administrator, either at the time of the actual option surrender or at any earlier time. If the
surrender is so approved, then the distribution to which the Optionee shall be entitled may be made
in shares of Common Stock valued at Fair Market Value on the option surrender date, in cash, or
partly in shares and partly in cash, as the Plan Administrator shall in its sole discretion deem
appropriate.



                    (iii) If the surrender of an option is not approved by the Plan Administrator, then the
Optionee shall retain whatever rights the Optionee had under the surrendered option (or surrendered
portion thereof) on the option surrender date and may exercise such rights at any time prior to the
later of (a) five (5) business days after the receipt of the rejection notice or (b) the last day
on which the option is otherwise exercisable in accordance with the terms of the documents
evidencing such option, but in no event may such rights be exercised more than ten (10) years after
the option grant date.



          C. The following terms shall govern the grant and exercise of limited stock appreciation
rights:




                    (i) One or more Section 16 Insiders may be granted limited stock appreciation rights with
respect to their outstanding options.



                    (ii) Upon the occurrence of a Hostile Take-Over, each individual holding one or more options
with such a limited stock appreciation right shall have the unconditional right (exercisable for a
thirty (30)-day period following such Hostile Take-Over) to surrender each
such option to the Corporation. In return for the surrendered option, the Optionee shall
receive a cash distribution from the Corporation in an amount equal to the excess of (A) the
Take-Over Price of the shares of Common Stock at the time subject to such option (whether or not
the option is otherwise at that time vested and exercisable for those shares) over (B) the
aggregate exercise price



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payable for those shares. Such cash distribution shall be paid within
five (5) days following the option surrender date.



                    (iii) At the time such limited stock appreciation right is granted, the Plan Administrator
shall pre-approve any subsequent exercise of that right in accordance with the terms of this
Paragraph C. Accordingly, no further approval of the Plan Administrator or the Board shall be
required at the time of the actual option surrender and cash distribution.



ARTICLE THREE




SALARY INVESTMENT OPTION GRANT PROGRAM




     I. OPTION GRANTS



     The Primary Committee shall have the sole and exclusive authority to determine the calendar
year or years (if any) for which the Salary Investment Option Grant Program is to be in effect and
to select the Section 16 Insiders and other highly compensated Employees eligible to participate in
the Salary Investment Option Grant Program for such calendar year or years. Each selected
individual who elects to participate in the Salary Investment Option Grant Program must, prior to
the start of each calendar year of participation, file with the Plan Administrator (or its
designate) an irrevocable authorization directing the Corporation to reduce his or her base salary
for that calendar year by an amount not less than Ten Thousand Dollars ($10,000.00) nor more than
Fifty Thousand Dollars ($50,000.00). Each individual who files such a timely authorization shall
automatically be granted an option under the Salary Investment Option Grant Program on the first
trading day in January of the calendar year for which the salary reduction is to be in effect.



     II. OPTION TERMS



     Each option shall be a Non-Statutory Option evidenced by one or more documents in the form
approved by the Plan Administrator; provided, however, that each such document shall comply with
the terms specified below.



          A. Exercise Price.




               1. The exercise price per share shall be thirty-three and one-third percent (33-1/3%) of the
Fair Market Value per share of Common Stock on the option grant date.



               2. The exercise price shall become immediately due upon exercise of the option and shall be
payable in one or more of the alternative forms authorized under the Discretionary Option Grant
Program. Except to the extent the sale and remittance procedure specified thereunder is utilized,
payment of the exercise price for the purchased shares must be made on the Exercise Date.



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          B. Number of Option Shares. The number of shares of Common Stock subject to the option shall
be determined pursuant to the following formula (rounded down to the nearest whole number):




               X = A / (B x 66-2/3%), where



               X is the number of option shares,



               A is the dollar amount by which the Optionee’s base salary is to be reduced for the calendar
year pursuant to his or her election under the Salary Investment Option Grant Program, and



               B is the Fair Market Value per share of Common Stock on the option grant date.



          C. Exercise and Term of Options. The option shall become exercisable in a series of twelve
(12) successive equal monthly installments upon the Optionee’s completion of each calendar month of
Service in the calendar year for which the salary reduction is in effect. Each option shall have a
maximum term of ten (10) years measured from the option grant date.




          D. Effect of Termination of Service. Should the Optionee cease Service for any reason while
holding one or more options under this Article Three, then each such option shall remain
exercisable, for any or all of the shares for which the option is exercisable at the time of such
cessation of Service, until the earlier of (i) the expiration of the ten (10)-year option term or
(ii) the expiration of the three (3)-year period measured from the date of such cessation of
Service. Should the Optionee die while holding one or more options under this Article Three, then
each such option may be exercised, for any or all of the shares for which the option is exercisable
at the time of the Optionee’s cessation of Service (less any shares subsequently purchased by
Optionee prior to death), by the personal representative of the Optionee’s estate or by the person
or persons to whom the option is transferred pursuant to the Optionee’s will or the laws of
inheritance or by the designated beneficiary or beneficiaries of the option. Such right of
exercise shall lapse, and the option shall terminate, upon the earlier of (i) the expiration of the
ten (10) year option term or (ii) the three (3)-year period measured from the date of the
Optionee’s cessation of Service. However, the option shall, immediately upon the Optionee’s
cessation of Service for any reason, terminate and cease to remain outstanding with respect to any
and all shares of Common Stock for which the option is not otherwise at that time exercisable.




     III. CORPORATE TRANSACTION/ CHANGE IN CONTROL/ HOSTILE TAKE-OVER



          A. In the event of any Corporate Transaction while the Optionee remains in Service, each
outstanding option held by such Optionee under this Salary Investment Option Grant Program shall
automatically accelerate so that each such option shall, immediately prior to the effective date of
the Corporate Transaction, become exercisable for all the shares of Common Stock at the time
subject to such option and may be exercised for any or all of those shares as fully vested shares
of Common Stock. Each such outstanding option shall terminate immediately following the
Corporate Transaction, except to the extent assumed by the successor corporation (or parent
thereof) in such Corporate Transaction. Any option so assumed shall remain exercisable for the
fully vested shares until the earlier of (i) the expiration of the ten (10)-year option term or
(ii) the expiration of the three (3)-year period measured from the date of the Optionee’s cessation
of Service.




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          B. In the event of a Change in Control while the Optionee remains in Service, each outstanding
option held by such Optionee under this Salary Investment Option Grant Program shall automatically
accelerate so that each such option shall, immediately prior to the effective date of the Change in
Control, become exercisable for all the shares of Common Stock at the time subject to such option
and may be exercised for any or all of those shares as fully vested shares of Common Stock. The
option shall remain so exercisable until the earliest to occur of (i) the expiration of the ten
(10)-year option term, (ii) the expiration of the three (3)-year period measured from the date of
the Optionee’s cessation of Service, (iii) the termination of the option in connection with a
Corporate Transaction or (iv) the surrender of the option in connection with a Hostile Take-Over.




          C. Upon the occurrence of a Hostile Take-Over while the Optionee remains in Service, such
Optionee shall have a thirty (30)-day period in which to surrender to the Corporation each
outstanding option held by him or her under the Salary Investment Option Grant Program. The
Optionee shall in return be entitled to a cash distribution from the Corporation in an amount equal
to the excess of (i) the Take-Over Price of the shares of Common Stock at the time subject to the
surrendered option (whether or not the option is otherwise at the time exercisable for those
shares) over (ii) the aggregate exercise price payable for such shares. Such cash distribution
shall be paid within five (5) days following the surrender of the option to the Corporation. The
Primary Committee shall, at the time the option with such limited stock appreciation right is
granted under the Salary Investment Option Grant Program, pre-approve any subsequent exercise of
that right in accordance with the terms of this Paragraph C. Accordingly, no further approval of
the Primary Committee or the Board shall be required at the time of the actual option surrender and
cash distribution.




          D. Each option which is assumed in connection with a Corporate Transaction shall be
appropriately adjusted, immediately after such Corporate Transaction, to apply to the number and
class of securities which would have been issuable to the Optionee in consummation of such
Corporate Transaction had the option been exercised immediately prior to such Corporate
Transaction. Appropriate adjustments shall also be made to the exercise price payable per share
under each outstanding option, provided the aggregate exercise price payable for such securities
shall remain the same. To the extent the actual holders of the Corporation’s outstanding Common
Stock receive cash consideration for their Common Stock in consummation of the Corporate
Transaction, the successor corporation may, in connection with the assumption of the outstanding
options under the Salary Investment Option Grant Program, substitute one or more shares of its own
common stock with a fair market value equivalent to the cash consideration paid per share of Common
Stock in such Corporate Transaction.




          E. The grant of options under the Salary Investment Option Grant Program shall in no way
affect the right of the Corporation to adjust, reclassify, reorganize or otherwise change its
capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all
or any part of its business or assets.




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     IV. REMAINING TERMS



     The remaining terms of each option granted under the Salary Investment Option Grant Program
shall be the same as the terms in effect for option grants made under the Discretionary Option
Grant Program.



ARTICLE FOUR




STOCK ISSUANCE PROGRAM




     I. STOCK ISSUANCE TERMS



     Shares of Common Stock may be issued under the Stock Issuance Program through direct and
immediate issuances without any intervening option grants. Each such stock issuance shall be
evidenced by a Stock Issuance Agreement which complies with the terms specified below. Shares of
Common Stock may also be issued under the Stock Issuance Program pursuant to share right awards
which entitle the recipients to receive those shares upon the attainment of designated performance
goals.



          A. Purchase Price.




               1. The purchase price per share shall be fixed by the Plan Administrator, but shall not be
less than one hundred percent (100%) of the Fair Market Value per share of Common Stock on the
issuance date.



               2. Subject to the provisions of Section I of Article Six, shares of Common Stock may be issued
under the Stock Issuance Program for any of the following items of consideration which the Plan
Administrator may deem appropriate in each individual instance:



                    (i) cash or check made payable to the Corporation, or



                    (ii) past services rendered to the Corporation (or any Parent or Subsidiary).



          B. Vesting Provisions.




               1. Shares of Common Stock issued under the Stock Issuance Program may, in the discretion of
the Plan Administrator, be fully and immediately vested upon issuance or may vest in one or more
installments over the Participant’s period of Service or upon attainment of specified performance
objectives. The elements of the vesting schedule applicable to any unvested shares of Common Stock
issued under the Stock Issuance Program shall be determined by the Plan Administrator and
incorporated into the Stock Issuance Agreement. Shares of Common Stock may also be issued under
the Stock Issuance Program pursuant to share right awards which entitle the recipients to receive
those shares upon the attainment of designated performance goals.



               2. Any new, substituted or additional securities or other property (including money paid other
than as a regular cash dividend) which the Participant may have the



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right to receive with respect
to the Participant’s unvested shares of Common Stock by reason of any stock dividend, stock split,
recapitalization, combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Corporation’s receipt of consideration shall be
issued subject to (i) the same vesting requirements applicable to the Participant’s unvested shares
of Common Stock and (ii) such escrow arrangements as the Plan Administrator shall deem appropriate.



               3. The Participant shall have full stockholder rights with respect to any shares of Common
Stock issued to the Participant under the Stock Issuance Program, whether or not the Participant’s
interest in those shares is vested. Accordingly, the Participant shall have the right to vote such
shares and to receive any regular cash dividends paid on such shares.



               4. Should the Participant cease to remain in Service while holding one or more unvested shares
of Common Stock issued under the Stock Issuance Program or should the performance objectives not be
attained with respect to one or more such unvested shares of Common Stock, then those shares shall
be immediately surrendered to the Corporation for cancellation, and the Participant shall have no
further stockholder rights with respect to those shares. To the extent the surrendered shares were
previously issued to the Participant for consideration paid in cash or cash equivalent (including
the Participant’s purchase-money indebtedness), the Corporation shall repay to the Participant the
cash consideration paid for the surrendered shares and shall cancel the unpaid principal balance of
any outstanding purchase-money note of the Participant attributable to the surrendered shares.



               5. The Plan Administrator may in its discretion waive the surrender and cancellation of one or
more unvested shares of Common Stock which would otherwise occur upon the cessation of the
Participant’s Service or the non-attainment of the performance objectives applicable to those
shares. Such waiver shall result in the immediate vesting of the Participant’s interest in the
shares of Common Stock as to which the waiver applies. Such waiver may be effected at any time,
whether before or after the Participant’s cessation of Service or the attainment or non-attainment
of the applicable performance objectives.



               6. Outstanding share right awards under the Stock Issuance Program shall automatically
terminate, and no shares of Common Stock shall actually be issued in satisfaction of those awards,
if the performance goals established for such awards are not attained. The Plan Administrator,
however, shall have the discretionary authority to issue shares of Common Stock under one or more
outstanding share right awards as to which the designated performance goals have not been attained.



     II. CORPORATE TRANSACTION/CHANGE IN CONTROL



          A. All of the Corporation’s outstanding repurchase rights under the Stock Issuance Program
shall terminate automatically, and all the shares of Common Stock subject to those terminated
rights shall immediately vest in full, in the event of any Corporate Transaction, except to the
extent (i) those repurchase rights are to be assigned to the successor corporation (or parent
thereof) in connection with such Corporate Transaction or (ii) such accelerated vesting is
precluded by other limitations imposed in the Stock Issuance Agreement.




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          B. The Plan Administrator shall have the discretionary authority to structure one or more of
the Corporation’s repurchase rights under the Stock Issuance Program so that those rights shall
automatically terminate in whole or in part, and the shares of Common Stock subject to those
terminated rights shall immediately vest, in the event the Participant’s Service should
subsequently terminate by reason of an Involuntary Termination within a designated period (not to
exceed eighteen (18) months) following the effective date of any Corporate Transaction in which
those repurchase rights are assigned to the successor corporation (or parent thereof).




          C. The Plan Administrator shall also have the discretionary authority to structure one or more
of the Corporation’s repurchase rights under the Stock Issuance Program so that those rights shall
automatically terminate in whole or in part, and the shares of Common Stock subject to those
terminated rights shall immediately vest, either upon the occurrence of a Change in Control or upon
the subsequent termination of the Participant’s Service by reason of an Involuntary Termination
within a designated period (not to exceed eighteen (18) months) following the effective date of
that Change in Control.




     III. SHARE ESCROW/LEGENDS



     Unvested shares may, in the Plan Administrator’s discretion, be held in escrow by the
Corporation until the Participant’s interest in such shares vests or may be issued directly to the
Participant with restrictive legends on the certificates evidencing those unvested shares.



ARTICLE FIVE




DIRECTOR FEE OPTION GRANT PROGRAM




     I. OPTION GRANTS



     The Primary Committee shall have the sole and exclusive authority to determine the calendar
year or years for which the Director Fee Option Grant Program is to be in effect. For each such
calendar year the program is in effect, each non-employee Board member may irrevocably elect to
apply all or any portion of the annual retainer fee otherwise payable in cash for his or her
service on the Board for that year to the acquisition of a special option grant under this Director
Fee Option Grant Program. Such election must be filed with the Corporation’s Chief Financial
Officer prior to the first day of the calendar year for which the annual retainer fee which is the
subject of that election is otherwise payable. Each non-employee Board member who files such a
timely election shall automatically be granted an option under this Director Fee Option Grant
Program on the first trading day in January in the calendar year for which the retainer fee
election is in effect.



     II. OPTION TERMS



     Each option shall be a Non-Statutory Option governed by the terms and conditions specified
below.



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          A. Exercise Price.



               1. The exercise price per share shall be thirty-three and one-third percent (33-1/3%) of the
Fair Market Value per share of Common Stock on the option grant date.



               2. The exercise price shall become immediately due upon exercise of the option and shall be
payable in one or more of the alternative forms authorized under the Discretionary Option Grant
Program. Except to the extent the sale and remittance procedure specified thereunder is utilized,
payment of the exercise price for the purchased shares must be made on the Exercise Date.



          B. Number of Option Shares. The number of shares of Common Stock subject to the option shall
be determined pursuant to the following formula (rounded down to the nearest whole number):




               X = A / (B x 66-2/3%), where



               X is the number of option shares,



               A is the portion of the annual retainer fee subject to the non-employee Board member’s
election under this Director Fee Option Grant Program, and



               B is the Fair Market Value per share of Common Stock on the option grant date.



          C. Exercise and Term of Options. The option shall become exercisable in a series of twelve
(12) equal monthly installments upon the Optionee’s completion of each calendar month of Board
service during the calendar year for which the retainer fee election is in effect. Each option
shall have a maximum term of ten (10) years measured from the option grant date.




          D. Limited Transferability of Options. Each option under this Article Five may be assigned in
whole or in part during the Optionee’s lifetime to one or more members of the Optionee’s family or
to a trust established exclusively for one or more such family members or to Optionee’s former
spouse, to the extent such assignment is in connection with Optionee’s estate plan or pursuant to a
domestic relations order. The assigned portion may only be exercised by the person or persons who
acquire a proprietary interest in the option pursuant to the assignment. The terms applicable to
the assigned portion shall be the same as those in effect for the option immediately prior to such
assignment and shall be set forth in such documents issued to the assignee as the Plan
Administrator may deem appropriate. The Optionee may also designate one or more persons as the
beneficiary or beneficiaries of his or her outstanding options under this Article Five, and those
options shall, in accordance with such designation, automatically be transferred to such
beneficiary or beneficiaries upon the Optionee’s death while holding those options. Such
beneficiary or beneficiaries shall take the transferred options subject to all the terms and
conditions of the applicable agreement evidencing each such transferred option, including (without
limitation) the limited time period during which the option may be exercised following the
Optionee’s death.




          E. Termination of Board Service. Should the Optionee cease Board service for any reason
(other than death or Permanent Disability) while holding one or more options under this Director
Fee Option Grant Program, then each such option shall remain exercisable, for any or all of



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the
shares for which the option is exercisable at the time of such cessation of Board service, until
the earlier of (i) the expiration of the ten (10)-year option term or (ii) the expiration of the
three (3)-year period measured from the date of such cessation of Board service. However, each
option held by the Optionee under this Director Fee Option Grant Program at the time of his or her
cessation of Board service shall immediately terminate and cease to remain outstanding with respect
to any and all shares of Common Stock for which the option is not otherwise at that time
exercisable.




          F. Death or Permanent Disability. Should the Optionee’s service as a Board member cease by
reason of death or Permanent Disability, then each option held by such Optionee under this Director
Fee Option Grant Program shall immediately become exercisable for all the shares of Common Stock at
the time subject to that option, and the option may be exercised for any or all of those shares as
fully vested shares until the earlier of (i) the expiration of the ten (10)-year option term or
(ii) the expiration of the three (3)-year period measured from the date of such cessation of Board
service. To the extent such option is held by the Optionee at the time of his or death, that
option may be exercised by the personal representative of the Optionee’s estate or by the person or
persons to whom the option is transferred pursuant to the Optionee’s will or the laws of
inheritance or by the designated beneficiary or beneficiaries of such option. Should the Optionee
die after cessation of Board service but while holding one or more options under this Director Fee
Option Grant Program, then each such option may be exercised, for any or all of the shares for
which the option is exercisable at the time of the Optionee’s cessation of Board service (less any
shares subsequently purchased by Optionee prior to death), by the personal representative of the
Optionee’s estate or by the person or persons to whom the option is transferred pursuant to the
Optionee’s will or the laws of inheritance or by the designated beneficiary or beneficiaries of
such option. Such right of exercise shall lapse, and the option shall terminate, upon the earlier
of (i) the expiration of the ten (10)-year option term or (ii) the three (3)-year period measured
from the date of the Optionee’s cessation of Board service.




     III. CORPORATE TRANSACTION/CHANGE IN CONTROL/HOSTILE TAKE-OVER



          A. In the event of any Corporate Transaction while the Optionee remains a Board member, each
outstanding option held by such Optionee under this Director Fee Option Grant Program shall
automatically accelerate so that each such option shall, immediately prior to the effective date of
the Corporate Transaction, become exercisable for all the shares of Common Stock at the time
subject to such option and may be exercised for any or all of those shares as fully vested shares
of Common Stock. Each such outstanding option shall terminate immediately following the Corporate
Transaction, except to the extent assumed by the successor corporation (or parent thereof) in such
Corporate Transaction. Any option so assumed and shall remain exercisable for the fully vested
shares until the earliest to occur of (i) the expiration of the ten (10)-year option term, (ii) the
expiration of the three (3)-year period measured from the date of the Optionee’s cessation of Board
service or (iii) the surrender of the option in connection with a Hostile Take-Over.




          B. In the event of a Change in Control while the Optionee remains a Board member, each
outstanding option held by such Optionee under this Director Fee Option Grant
Program shall automatically accelerate so that each such option shall, immediately prior to
the effective date of the Change in Control, become exercisable for all the shares of Common Stock
at the time subject to such option and may be exercised for any or all of those shares as fully
vested



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shares of Common Stock. The option shall remain so exercisable until the earliest to occur
of (i) the expiration of the ten (10)-year option term, (ii) the expiration of the three (3)-year
period measured from the date of the Optionee’s cessation of Board service, (iii) the termination
of the option in connection with a Corporate Transaction or (iv) the surrender of the option in
connection with a Hostile Take-Over.




          C. Upon the occurrence of a Hostile Take-Over while the Optionee remains a Board member, such
Optionee shall have a thirty (30)-day period in which to surrender to the Corporation each
outstanding option held by him or her under the Director Fee Option Grant Program. The Optionee
shall in return be entitled to a cash distribution from the Corporation in an amount equal to the
excess of (i) the Take-Over Price of the shares of Common Stock at the time subject to each
surrendered option (whether or not the option is otherwise at the time exercisable for those
shares) over (ii) the aggregate exercise price payable for such shares. Such cash distribution
shall be paid within five (5) days following the surrender of the option to the Corporation. No
approval or consent of the Board or any Plan Administrator shall be required at the time of the
actual option surrender and cash distribution.




          D. Each option which is assumed in connection with a Corporate Transaction shall be
appropriately adjusted, immediately after such Corporate Transaction, to apply to the number and
class of securities which would have been issuable to the Optionee in consummation of such
Corporate Transaction had the option been exercised immediately prior to such Corporate
Transaction. Appropriate adjustments shall also be made to the exercise price payable per share
under each outstanding option, provided the aggregate exercise price payable for such securities
shall remain the same. To the extent the actual holders of the Corporation’s outstanding Common
Stock receive cash consideration for their Common Stock in consummation of the Corporate
Transaction, the successor corporation may, in connection with the assumption of the outstanding
options under the Director Fee Option Grant Program, substitute one or more shares of its own
common stock with a fair market value equivalent to the cash consideration paid per share of Common
Stock in such Corporate Transaction.




          E. The grant of options under the Director Fee Option Grant Program shall in no way affect the
right of the Corporation to adjust, reclassify, reorganize or otherwise change its capital or
business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any
part of its business or assets.




     IV. REMAINING TERMS



     The remaining terms of each option granted under this Director Fee Option Grant Program shall
be the same as the terms in effect for option grants made under the Discretionary Option Grant
Program.




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ARTICLE SIX




MISCELLANEOUS




     I. FINANCING



     The Plan Administrator may permit any Optionee or Participant to pay the option exercise price
under the Discretionary Option Grant Program or the purchase price of shares issued under the Stock
Issuance Program by delivering a full-recourse, interest-bearing promissory note payable in one or
more installments. The terms of any such promissory note (including the interest rate and the
terms of repayment) shall be established by the Plan Administrator in its sole discretion. In no
event may the maximum credit available to the Optionee or Participant exceed the sum of (i) the
aggregate option exercise price or purchase price payable for the purchased shares (less the par
value of such shares) plus (ii) any Federal, state and local income and employment tax liability
incurred by the Optionee or the Participant in connection with the option exercise or share
purchase.



     II. TAX WITHHOLDING



          A. The Corporation’s obligation to deliver shares of Common Stock upon the exercise of options
or the issuance or vesting of such shares under the Plan shall be subject to the satisfaction of
all applicable Federal, state and local income and employment tax withholding requirements.




          B. The Plan Administrator may, in its discretion, provide any or all holders of Non-Statutory
Options or unvested shares of Common Stock under the Plan (other than the options granted under the
Director Fee Option Grant Program) with the right to use shares of Common Stock in satisfaction of
all or part of the Withholding Taxes to which such holders may become subject in connection with
the exercise of their options or the vesting of their shares. Such right may be provided to any
such holder in either or both of the following formats:




               Stock Withholding: The election to have the Corporation withhold, from the shares of Common
Stock otherwise issuable upon the exercise of such Non-Statutory Option or the vesting of such
shares, a portion of those shares with an aggregate Fair Market Value equal to the percentage of
the Withholding Taxes (not to exceed one hundred percent (100%)) designated by the holder.



               Stock Delivery: The election to deliver to the Corporation, at the time the Non-Statutory
Option is exercised or the shares vest, one or more shares of Common Stock previously acquired by
such holder (other than in connection with the option exercise or share vesting triggering the
Withholding Taxes) with an aggregate Fair Market Value equal to the percentage of the Withholding
Taxes (not to exceed one hundred percent (100%)) designated by the holder.



     III. EFFECTIVE DATE AND TERM OF THE PLAN



          A. The Plan shall become effective immediately on the Plan Effective Date. However, the
Salary Investment Option Grant Program and the Director Fee Option Grant Program




-20-









 







shall not be
implemented until such time as the Primary Committee may deem appropriate. Options may be granted
under the Discretionary Option Grant at any time on or after the Plan Effective Date. However, no
options granted under the Plan may be exercised, and no shares shall be issued under the Plan,
until the Plan is approved by the Corporation’s stockholders. If such stockholder approval is not
obtained within twelve (12) months after the Plan Effective Date, then all options previously
granted under this Plan shall terminate and cease to be outstanding, and no further options shall
be granted and no shares shall be issued under the Plan.




          B. The Plan shall serve as the successor to the Predecessor Plans, and no further option
grants or direct stock issuances shall be made under the Predecessor Plans after the Plan Effective
Date. All options outstanding under the Predecessor Plans on the Plan Effective Date shall be
transferred to the Plan at that time and shall be treated as outstanding options under the Plan.
However, each outstanding option so transferred shall continue to be governed solely by the terms
of the documents evidencing such option, and no provision of the Plan shall be deemed to affect or
otherwise modify the rights or obligations of the holders of such transferred options with respect
to their acquisition of shares of Common Stock.




          C. One or more provisions of the Plan, including (without limitation) the option/vesting
acceleration provisions of Article Two relating to Corporate Transactions and Changes in Control,
may, in the Plan Administrator’s discretion, be extended to one or more options incorporated from
the Predecessor Plans which do not otherwise contain such provisions.




          D. The Plan shall terminate upon the earliest to occur of (i) August 28, 2010, (ii) the date
on which all shares available for issuance under the Plan shall have been issued as fully vested
shares or (iii) the termination of all outstanding options in connection with a Corporate
Transaction. Should the Plan terminate on August 28, 2010, then all option grants and unvested
stock issuances outstanding at that time shall continue to have force and effect in accordance with
the provisions of the documents evidencing such grants or issuances.




     IV. AMENDMENT OF THE PLAN



          A. The Board shall have complete and exclusive power and authority to amend or modify the Plan
in any or all respects. However, no such amendment or modification shall adversely affect the
rights and obligations with respect to stock options or unvested stock issuances at the time
outstanding under the Plan unless the Optionee or the Participant consents to such amendment or
modification. In addition, certain amendments may require stockholder approval pursuant to
applicable laws or regulations.




          B. Options to purchase shares of Common Stock may be granted under the Discretionary Option
Grant and Salary Investment Option Grant Programs and shares of Common Stock may be issued under
the Stock Issuance Program that are in each instance in excess of the number of shares then
available for issuance under the Plan, provided any excess shares actually
issued under those programs shall be held in escrow until there is obtained stockholder
approval of an amendment sufficiently increasing the number of shares of Common Stock available for
issuance under the Plan. If such stockholder approval is not obtained within twelve (12) months
after the date the first such excess issuances are made, then (i) any unexercised options granted
on the basis of




-21-









 







such excess shares shall terminate and cease to be outstanding and (ii) the
Corporation shall promptly refund to the Optionees and the Participants the exercise or purchase
price paid for any excess shares issued under the Plan and held in escrow, together with interest
(at the applicable Short Term Federal Rate) for the period the shares were held in escrow, and such
shares shall thereupon be automatically cancelled and cease to be outstanding.




     V. USE OF PROCEEDS



     Any cash proceeds received by the Corporation from the sale of shares of Common Stock under
the Plan shall be used for general corporate purposes.



     VI. REGULATORY APPROVALS



          A. The implementation of the Plan, the granting of any stock option under the Plan and the
issuance of any shares of Common Stock (i) upon the exercise of any granted option or (ii) under
the Stock Issuance Program shall be subject to the Corporation’s procurement of all approvals and
permits required by regulatory authorities having jurisdiction over the Plan, the stock options
granted under it and the shares of Common Stock issued pursuant to it.




          B. No shares of Common Stock or other assets shall be issued or delivered under the Plan
unless and until there shall have been compliance with all applicable requirements of Federal and
state securities laws, including the filing and effectiveness of the Form S-8 registration
statement for the shares of Common Stock issuable under the Plan, and all applicable listing
requirements of any stock exchange (or the Nasdaq National Market, if applicable) on which Common
Stock is then listed for trading.




     VII. NO EMPLOYMENT/SERVICE RIGHTS



     Nothing in the Plan shall confer upon the Optionee or the Participant any right to continue in
Service for any period of specific duration or interfere with or otherwise restrict in any way the
rights of the Corporation (or any Parent or Subsidiary employing or retaining such person) or of
the Optionee or the Participant, which rights are hereby expressly reserved by each, to terminate
such person’s Service at any time for any reason, with or without cause.



-22-









 





APPENDIX




     The following definitions shall be in effect under the Plan:



     A. Board shall mean the Corporation’s Board of Directors.



     B. Change in Control shall mean a change in ownership or control of the Corporation effected
through either of the following transactions:



          (i) the acquisition, directly or indirectly by any person or related group of persons (other
than the Corporation or a person that directly or indirectly controls, is controlled by, or is
under common control with, the Corporation), of beneficial ownership (within the meaning of
Rule 13d-3 of the 1934 Act) of securities possessing more than fifty percent (50%) of the total
combined voting power of the Corporation’s outstanding securities pursuant to a tender or exchange
offer made directly to the Corporation’s stockholders, or




          (ii) a change in the composition of the Board over a period of thirty-six (36) consecutive
months or less such that a majority of the Board members ceases, by reason of one or more contested
elections for Board membership, to be comprised of individuals who either (A) have been Board
members continuously since the beginning of such period or (B) have been elected or nominated for
election as Board members during such period by at least a majority of the Board members described
in clause (A) who were still in office at the time the Board approved such election or nomination.




     C. Code shall mean the Internal Revenue Code of 1986, as amended.



     D. Common Stock shall mean the Corporation’s Class A common stock.



     E. Corporate Transaction shall mean either of the following stockholder-approved transactions
to which the Corporation is a party:



          (i) a merger or consolidation in which securities possessing more than fifty percent (50%) of
the total combined voting power of the Corporation’s outstanding securities are transferred to a
person or persons different from the persons holding those securities immediately prior to such
transaction, or




          (ii) the sale, transfer or other disposition of all or substantially all of the Corporation’s
assets in complete liquidation or dissolution of the Corporation.




     F. Corporation shall mean Optical Communication Products, Inc., a Delaware corporation, and
any corporate successor to all or substantially all of the assets or voting stock of Optical
Communication Products, Inc. which shall by appropriate action adopt the Plan.



     G. Director Fee Option Grant Program shall mean the special stock option grant in effect for
non-employee Board members under Article Five of the Plan.



A-1









 





     H. Discretionary Option Grant Program shall mean the discretionary option grant program in
effect under Article Two of the Plan.



     I. Employee shall mean an individual who is in the employ of the Corporation (or any Parent or
Subsidiary), subject to the control and direction of the employer entity as to both the work to be
performed and the manner and method of performance.



     J. Exercise Date shall mean the date on which the Corporation shall have received written
notice of the option exercise.



     K. Fair Market Value per share of Common Stock on any relevant date shall be determined in
accordance with the following provisions:



          (i) If the Common Stock is at the time traded on the Nasdaq National Market, then the Fair
Market Value shall be the closing selling price per share of Common Stock on the date in question,
as such price is reported by the National Association of Securities Dealers on the Nasdaq National
Market and published in The Wall Street Journal. If there is no closing selling price for the
Common Stock on the date in question, then the Fair Market Value shall be the closing selling price
on the last preceding date for which such quotation exists.




          (ii) If the Common Stock is at the time listed on any Stock Exchange, then the Fair Market
Value shall be the closing selling price per share of Common Stock on the date in question on the
Stock Exchange determined by the Plan Administrator to be the primary market for the Common Stock,
as such price is officially quoted in the composite tape of transactions on such exchange and
published in The Wall Street Journal. If there is no closing selling price for the Common Stock on
the date in question, then the Fair Market Value shall be the closing selling price on the last
preceding date for which such quotation exists.




          (iii) For purposes of any option grants made on the Underwriting Date, the Fair Market Value
shall be deemed to be equal to the price per share at which the Common Stock is to be sold in the
initial public offering pursuant to the Underwriting Agreement.




     L. Hostile Take-Over shall mean the acquisition, directly or indirectly, by any person or
related group of persons (other than the Corporation or a person that directly or indirectly
controls, is controlled by, or is under common control with, the Corporation) of beneficial
ownership (within the meaning of Rule 13d-3 of the 1934 Act) of securities possessing more than
fifty percent (50%) of the total combined voting power of the Corporation’s outstanding securities
pursuant to a tender or exchange offer made directly to the Corporation’s stockholders which the
Board does not recommend such stockholders to accept.



     M. Incentive Option shall mean an option which satisfies the requirements of Code Section 422.



     N. Involuntary Termination shall mean the termination of the Service of any individual which
occurs by reason of:



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          (i) such individual’s involuntary dismissal or discharge by the Corporation for reasons other
than Misconduct, or




          (ii) such individual’s voluntary resignation following (A) a change in his or her position
with the Corporation which materially reduces his or her duties and responsibilities or the level
of management to which he or she reports, (B) a reduction in his or her level of compensation
(including base salary, fringe benefits and target bonus under any corporate-performance based
bonus or incentive programs) by more than fifteen percent (15%) or (C) a relocation of such
individual’s place of employment by more than fifty (50) miles, provided and only if such change,
reduction or relocation is effected by the Corporation without the individual’s consent.




     O. Misconduct shall mean the commission of any act of fraud, embezzlement or dishonesty by the
Optionee or Participant, any unauthorized use or disclosure by such person of confidential
information or trade secrets of the Corporation (or any Parent or Subsidiary), or any other
intentional misconduct by such person adversely affecting the business or affairs of the
Corporation (or any Parent or Subsidiary) in a material manner. The foregoing definition shall not
in any way preclude or restrict the right of the Corporation (or any Parent or Subsidiary) to
discharge or dismiss any Optionee, Participant or other person in the Service of the Corporation
(or any Parent or Subsidiary) for any other acts or omissions, but such other acts or omissions
shall not be deemed, for purposes of the Plan, to constitute grounds for termination for
Misconduct.



     P. 1934 Act shall mean the Securities Exchange Act of 1934, as amended.



     Q. Non-Statutory Option shall mean an option not intended to satisfy the requirements of Code
Section 422.



     R. Optionee shall mean any person to whom an option is granted under the Discretionary Option
Grant, Salary Investment Option Grant, or Director Fee Option Grant Program.



     S. Parent shall mean any corporation (other than the Corporation) in an unbroken chain of
corporations ending with the Corporation, provided each corporation in the unbroken chain (other
than the Corporation) 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.



     T. Participant shall mean any person who is issued shares of Common Stock under the Stock
Issuance Program.



     U. Permanent Disability or Permanently Disabled shall mean the inability of the Optionee or
the Participant to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment expected to result in death or to be of continuous
duration of twelve (12) months or more. However, solely for purposes of the Director Fee Option
Grant Program, Permanent Disability or Permanently Disabled shall mean the inability of the
non-employee Board member to perform his or her usual duties as a Board member by reason of any
medically determinable physical or mental impairment expected to result in death or to be of
continuous duration of twelve (12) months or more.



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     V. Plan shall mean the Corporation’s 2000 Stock Incentive Plan, as set forth in this document.



     W. Plan Administrator shall mean the particular entity, whether the Primary Committee, the
Board or the Secondary Committee, which is authorized to administer the Discretionary Option Grant
and Stock Issuance Programs with respect to one or more classes of eligible persons, to the extent
such entity is carrying out its administrative functions under those programs with respect to the
persons under its jurisdiction.



     X. Plan Effective Date shall mean the date the Plan shall become effective and shall be
coincident with the Underwriting Date.



     Y. Predecessor Plans shall mean (i) the Corporation’s 1992 Stock Option Plan and (ii) the
Corporation’s 2000 Stock Option/Stock Issuance Plan, as those plans are in effect immediately prior
to the Plan Effective Date hereunder.



     Z. Primary Committee shall mean the committee of two (2) or more non-employee Board members
appointed by the Board to administer the Discretionary Option Grant and Stock Issuance Programs
with respect to Section 16 Insiders and to administer the Salary Investment Option Grant Program
solely with respect to the selection of the eligible individuals who may participate in such
program.



     AA. Salary Investment Option Grant Program shall mean the salary investment option grant
program in effect under Article Three of the Plan.



     BB. Secondary Committee shall mean a committee of one or more Board members appointed by the
Board to administer the Discretionary Option Grant and Stock Issuance Programs with respect to
eligible persons other than Section 16 Insiders.



     CC. Section 16 Insider shall mean an officer or director of the Corporation subject to the
short-swing profit liabilities of Section 16 of the 1934 Act.



     DD. Service shall mean the performance of services for the Corporation (or any Parent or
Subsidiary) by a person in the capacity of an Employee, a non-employee member of the board of
directors or a consultant or independent advisor, except to the extent otherwise specifically
provided in the documents evidencing the option grant or stock issuance.



     EE. Stock Exchange shall mean either the American Stock Exchange or the New York Stock
Exchange.



     FF. Stock Issuance Agreement shall mean the agreement entered into by the Corporation and the
Participant at the time of issuance of shares of Common Stock under the Stock Issuance Program.



     GG. Stock Issuance Program shall mean the stock issuance program in effect under Article Four
of the Plan.



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     HH. Subsidiary shall mean any corporation (other than the Corporation) in an unbroken chain of
corporations beginning with the Corporation, 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.



     II. Take-Over Price shall mean the greater of (i) the Fair Market Value per share of Common
Stock on the date the option is surrendered to the Corporation in connection with a Hostile
Take-Over or (ii) the highest reported price per share of Common Stock paid by the tender offeror
in effecting such Hostile Take-Over. However, if the surrendered option is an Incentive Option,
the Take-Over Price shall not exceed the clause (i) price per share.



     JJ. 10% Stockholder shall mean the owner of stock (as determined under Code Section 424(d))
possessing more than ten percent (10%) of the total combined voting power of all classes of stock
of the Corporation (or any Parent or Subsidiary).



     KK. Underwriting Agreement shall mean the agreement between the Corporation and the
underwriter or underwriters managing the initial public offering of the Common Stock.



     LL. Underwriting Date shall mean the date on which the Underwriting Agreement is executed and
priced in connection with an initial public offering of the Common Stock.



     MM. Withholding Taxes shall mean the Federal, state and local income and employment
withholding taxes to which the holder of Non-Statutory Options or unvested shares of Common Stock
may become subject in connection with the exercise of those options or the vesting of those shares.



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