**Exhibit 10.3**

 

**Tapestry Pharmaceuticals, Inc.**

**2004 Equity Incentive Plan**

 

**Adopted: April 19, 2004**

**Approved By Stockholders: July 6, 2004**

**As Amended: June 10, 2005**

**Termination Date: April 19, 2014**

 

**1.****             Purposes.**

 

**(a)****           EligibleStock Award Recipients.** The persons eligible to receive Stock Awards areEmployees and Consultants.

 

**(b)****           AvailableStock Awards.** The purpose of the Plan is to provide a means by whicheligible recipients of Stock Awards may be given an opportunity to benefit fromincreases in value of the Common Stock through the granting of the followingStock Awards: (i) Incentive Stock Options, (ii) Nonstatutory StockOptions, (iii) Stock Purchase Awards, (iii) Stock Bonus Awards, (iv) StockAppreciation Rights, (v) Stock Unit Awards and (vi) Other StockAwards.

 

**(c)****           GeneralPurpose.** The Company, by means of the Plan, seeks to retain the services ofthe group of persons eligible to receive Stock Awards, to secure and retain theservices of new members of this group and to provide incentives for such personsto exert maximum efforts for the success of the Company and its Affiliates.

 

**2.****             Definitions.**

 

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

 

**(b)*****           “Board”*** meansthe Board of Directors of the Company.

 

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

 

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

 

**(i)**            anyExchange Act Person becomes the Owner, directly or indirectly, of securities ofthe Company representing more than fifty percent (50%) of the combined votingpower of the Company’s then outstanding securities other than by virtue of amerger, consolidation or similar transaction;

 

**(ii)**           thereis consummated a merger, consolidation or similar transaction involving(directly or indirectly) the Company if, immediately after the consummation ofsuch merger, consolidation or similar transaction, the stockholders of theCompany immediately prior thereto do not Own, directly or indirectly, either (A) outstandingvoting securities representing more than fifty percent (50%) of the combinedoutstanding voting power of the surviving Entity in such merger, consolidationor similar transaction or (B) more than fifty percent (50%) of thecombined outstanding voting power of the parent of the surviving Entity in suchmerger, consolidation or similar transaction;

 

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

 

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**(iv)**          thereis consummated a sale, lease, license or other disposition of all orsubstantially all of the consolidated assets of the Company and itsSubsidiaries, other than a sale, lease, license or other disposition of all orsubstantially all of the consolidated assets of the Company and itsSubsidiaries to an Entity, more than fifty percent (50%) of the combined votingpower of the voting securities of which are Owned by stockholders of theCompany in substantially the same proportion as their Ownership of the Companyimmediately prior to such sale, lease, license or other disposition; or

 

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

 

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

 

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

 

**(e)*****           “Code”*** meansthe Internal Revenue Code of 1986, as amended.

 

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

 

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

 

**(h)*****           “Company”*** meansTapestry Pharmaceuticals, Inc., a Delaware corporation.

 

**(i)*****            “Consultant”***means any person other than a Director or Employee (i) who acts as aconsultant or advisor to the Company or an Affiliate and who is compensated forsuch services or (ii) who serves as a member of the Board of Directors ofan Affiliate and who is compensated for such services.

 

**(j)*****            “Continuous Service”***means that the Participant’s service with the Company or an Affiliate, whetheras an Employee, Director or Consultant, is not interrupted or terminated. Achange in the capacity in which the Participant renders service to the Companyor an Affiliate as an Employee, Consultant or Director or a change in theentity for which the Participant renders such service, provided that there isno interruption or termination of the Participant’s service with the Company oran Affiliate, shall not terminate a Participant’s Continuous Service. Forexample, a change in status from an employee of the Company to a consultant toan Affiliate or to a Director shall not constitute an interruption ofContinuous Service. The Board or the chief executive officer of the Company, inthat party’s sole discretion, may determine whether Continuous Service shall beconsidered interrupted in the case of any leave of absence approved by thatparty, including sick leave, military leave or any other personal leave.Notwithstanding the foregoing, a leave of absence shall be treated asContinuous Service for purposes of vesting in a Stock Award only to such extentas may be provided in the Company’s leave of absence policy or in the writtenterms of the Participant’s leave of absence.

 

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

 

**(i)**            asale or other disposition of all or substantially all, as determined by theBoard in its discretion, of the consolidated assets of the Company and itsSubsidiaries;

 

**(ii)**           asale or other disposition of at least ninety percent (90%) of the outstandingsecurities of the Company;

 

**(iii)**         amerger, consolidation or similar transaction following which the Company is notthe surviving corporation; or

 

**(iv)**          amerger, consolidation or similar transaction following which the Company is thesurviving corporation but the shares of Common Stock outstanding immediatelypreceding the merger, consolidation or similar transaction are converted orexchanged by virtue of the merger, consolidation or similar transaction intoother property, whether in the form of securities, cash or otherwise.

 

**(l)*****            “Covered Employee”***means a covered employee as defined in Section 162(m) of the Code.

 

**(m)*****          “Director”*** meansa member of the Board.

 

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

 

**(o)*****           “Employee”***means any person employed by the Company or an Affiliate. However, service as aDirector, or payment of a fee for such service, shall not cause a Director tobe considered an Employee for purposes of the Plan.

 

**(p)*****           “Entity”*** meansa corporation, partnership or other entity.

 

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

 

**(r)*****           “Exchange Act Person”***means any natural person, Entity or “group” (within the meaning of Section 13(d) or14(d) of the Exchange Act), except that “Exchange Act Person” shall notinclude (A) the Company or any Subsidiary of the Company, (B) anyemployee benefit plan of the Company or any Subsidiary of the Company or anytrustee or other fiduciary holding securities under an employee benefit plan ofthe Company or any Subsidiary of the Company, (C) an underwritertemporarily holding securities pursuant to an offering of such securities, or (D) anEntity Owned, directly or indirectly, by the stockholders of the Company insubstantially the same proportions as their Ownership of stock of the Company.

 

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

 

**(i)**            Ifthe Common Stock is listed on any established stock exchange or traded on theNasdaq National Market or the Nasdaq SmallCap Market, the Fair Market Value ofa share of Common Stock, unless otherwise determined by the Board, shall be theclosing sales price for such stock (or the closing bid, if no sales werereported) as quoted on such exchange or market (or the exchange or market withthe greatest volume of trading in the Common Stock) on the day of determination(or if such day of determination does not fall on a market trading day, thenthe last market trading day prior to the day of determination), as reported in *The Wall Street Journal* or such othersource as the Board deems reliable.

 

**(ii)**           Inthe absence of such markets for the Common Stock, the Fair Market Value shallbe determined by the Board in good faith.

 

**(t)*****            “Incentive StockOption”*** means an Option intended to qualify as an incentive stockoption within the meaning of Section 422 of the Code and the regulationspromulgated thereunder.

 

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**(u)*****           “Non-Employee Director”***means a Director who either (i) is not currently an employee or officer ofthe Company or an Affiliate, does not receive compensation, either directly orindirectly, from the Company or an Affiliate, for services rendered as aconsultant or in any capacity other than as a Director (except for an amount asto which disclosure would not be required under Item 404(a) of Regulation S-Kpromulgated pursuant to the Securities Act (“Regulation S-K”)), does notpossess an interest in any other transaction for which disclosure would berequired under Item 404(a) of Regulation S-K, and is not engaged in abusiness relationship for which disclosure would be required pursuant to Item404(b) of Regulation S-K; or (ii) is otherwise considered a “non-employeedirector” for purposes of Rule 16b-3.

 

**(v)*****            “Nonstatutory StockOption”*** means an Option not intended to qualify as an Incentive StockOption.

 

**(w)*****           “Officer”*** meansa person who is an officer of the Company within the meaning of Section 16of the Exchange Act and the rules and regulations promulgated thereunder.

 

**(x)*****           “Option”*** meansan Incentive Stock Option or a Nonstatutory Stock Option granted pursuant tothe Plan.

 

**(y)*****           “Option Agreement”***means a written agreement between the Company and an Optionholder evidencingthe terms and conditions of an individual Option grant. Each Option Agreementshall be subject to the terms and conditions of the Plan.

 

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

 

**(aa)****         *“Other Stock Award”*** means an awardbased in whole or in part by reference to the Common Stock which is grantedpursuant to the terms and conditions of Section 7(e).

 

**(bb)****         *“Other Stock Award Agreement”*** means awritten agreement between the Company and a holder of an Other Stock Awardevidencing the terms and conditions of an Other Stock Award grant. Each OtherStock Award Agreement shall be subject to the terms and conditions of the Plan.

 

**(cc)****         *“Outside Director”*** means a Directorwho either (i) is not a current employee of the Company or an “affiliatedcorporation” (within the meaning of Treasury Regulations promulgated under Section 162(m)of the Code), is not a former employee of the Company or an “affiliatedcorporation” who receives compensation for prior services (other than benefitsunder a tax-qualified retirement plan) during the taxable year, has not been anofficer of the Company or an “affiliated corporation”, and does not receiveremuneration from the Company or an “affiliated corporation,” either directlyor indirectly, in any capacity other than as a Director or (ii) isotherwise considered an “outside director” for purposes of Section 162(m)of the Code.

 

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

 

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

 

**(ff)****           *“Plan”*** means this TapestryPharmaceuticals, Inc. 2004 Equity Incentive Plan, as amended from time totime.

 

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

 

**(hh)****         *“Securities Act”*** means the SecuritiesAct of 1933, as amended.

 

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**(ii)****           *“Stock Appreciation Right”*** means aright to receive the appreciation on Common Stock that is granted pursuant tothe terms and conditions of Section 7(c).

 

**(jj)****           *“Stock Appreciation Right Agreement”***means a written agreement between the Company and a holder of a StockAppreciation Right evidencing the terms and conditions of a Stock AppreciationRight grant. Each Stock Appreciation Right Agreement shall be subject to theterms and conditions of the Plan.

 

**(kk)****        *“Stock Award”*** means any right grantedunder the Plan, including an Option, a Stock Purchase Award, a Stock BonusAward, a Stock Appreciation Right, a Stock Unit Award or any Other Stock Award.

 

**(ll)****           *“Stock Award Agreement”*** means awritten agreement between the Company and a Participant evidencing the termsand conditions of an individual Stock Award grant. Each Stock Award Agreementshall be subject to the terms and conditions of the Plan.

 

**(mm)****       *“Stock Bonus Award”*** means an award ofshares of Common Stock which is granted pursuant to the terms and conditions ofSection 7(b).

 

**(nn)****         *“Stock Bonus Award Agreement”*** means awritten agreement between the Company and a holder of a Stock Bonus Awardevidencing the terms and conditions of a Stock Bonus Award grant. Each StockBonus Award Agreement shall be subject to the terms and conditions of the Plan.

 

**(oo)****         *“Stock Purchase Award”*** means an awardof shares of Common Stock which is granted pursuant to the terms and conditionsof Section 7(a).

 

**(pp)****         *“Stock Purchase Award Agreement”*** meansa written agreement between the Company and a holder of a Stock Purchase Awardevidencing the terms and conditions of a Stock Purchase Award grant. Each StockPurchase Award Agreement shall be subject to the terms and conditions of thePlan.

 

**(qq)****         *“Stock Unit Award”*** means a right toreceive shares of Common Stock which is granted pursuant to the terms andconditions of Section 7(c).

 

**(rr)****         *“Stock Unit Award Agreement”*** means awritten agreement between the Company and a holder of a Stock Unit Awardevidencing the terms and conditions of a Stock Unit Award grant. Each StockUnit Award Agreement shall be subject to the terms and conditions of the Plan.

 

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

 

**(tt)****           *“Ten Percent Stockholder”*** means aperson who Owns (or is deemed to Own pursuant to Section 424(d) ofthe Code) stock possessing more than ten percent (10%) of the total combinedvoting power of all classes of stock of the Company or of any of itsAffiliates.

 

**3.****             Administration.**

 

**(a)****           Administrationby Board.** The Board shall administer the Plan unless and until the Boarddelegates administration of the Plan to a Committee, as provided in Section 3(c).

 

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

 

**(i)**            Todetermine from time to time which of the persons eligible under the Plan shallbe granted Stock Awards; when and how each Stock Award shall be granted; whattype or combination of types of Stock Award shall be granted; the provisions ofeach Stock Award granted (which need not be identical), including the time ortimes when a person shall be permitted to receive Common Stock pursuant to aStock Award; and the number of shares of Common Stock with respect to which aStock Award shall be granted to each such person.

 

**(ii)**           Toconstrue and interpret the Plan and Stock Awards granted under it, and toestablish, amend and revoke rules and regulations for its administration.The Board, in the exercise of this power, may correct any defect, omission orinconsistency in the Plan or in any Stock Award Agreement, in a manner and tothe extent it shall deem necessary or expedient to make the Plan fullyeffective.

 

**(iii)**         Toamend the Plan or a Stock Award as provided in Section 12.

 

**(iv)**          Toterminate or suspend the Plan as provided in Section 13.

 

**(v)**            Generally,to exercise such powers and to perform such acts as the Board deems necessaryor expedient to promote the best interests of the Company and that are not inconflict with the provisions of the Plan.

 

**(c)****           Delegationto Committee.**

 

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

 

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

 

**(d)****           Delegationto an Officer.** The Board may delegate to one or more Officers of theCompany the authority to do one or both of the following (i) designateEmployees of the Company or any of its Subsidiaries who are not Officers to berecipients of Stock Awards and (ii) determine the number of shares ofCommon Stock to be subject to such Stock Awards granted to such Employees ofthe Company; *provided, however,*that the Board resolutions regarding such delegation shall specify the totalnumber of shares of Common Stock that may be subject to the Stock Awardsgranted by such Officer 

 

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and that such Officer may not grant a Stock Award to himself orherself. Notwithstanding the foregoing, the Board may not delegate authority toan Officer to determine the Fair Market Value of the Common Stock.

 

**(e)****           Effectof Board’s Decision.** All determinations, interpretations and constructionsmade by the Board in good faith shall not be subject to review by any personand shall be final, binding and conclusive on all persons.

 

**4.****             SharesSubject to the Plan.**

 

**(a)****           ShareReserve.** Subject to the provisions of Section 11(a) relating toCapitalization Adjustments, the Common Stock that may be issued pursuant toStock Awards shall not exceed in the aggregate four million (4,000,000)shares of Common Stock; *provided, however,*that subject to the provisions of Section 11(a) relating toCapitalization Adjustments, the aggregate maximum number of shares of CommonStock that may be issued as Stock Purchase Awards, Stock Bonus Awards, StockUnit Awards or Other Stock Awards shall be five hundred thousand (500,000)shares of Common Stock.

 

**(b)****           Reversionof Shares to the Share Reserve.** If any Stock Award shall for any reasonexpire or otherwise terminate, in whole or in part, without having beenexercised in full, or if any shares of Common Stock issued to a Participantpursuant to a Stock Award are forfeited back to or repurchased by the Company,including, but not limited to, any repurchase or forfeiture caused by thefailure to meet a contingency or condition required for the vesting of suchshares, then the shares of Common Stock not acquired under such Stock Awardshall revert to and again become available for issuance under the Plan; *provided, however,* that subject to theprovisions of Section 11(a) relating to Capitalization Adjustments,the aggregate maximum number of shares of Common Stock that may be issued asIncentive Stock Options shall be four million (4,000,000) shares of CommonStock. If any shares subject to a Stock Award are not delivered to aParticipant because such shares are withheld for the payment of taxes or theStock Award is exercised through a reduction of shares subject to the StockAward (*i.e.,* “net exercised”),then the number of shares that are not delivered shall revert to and againbecome available for issuance under the Plan. If the exercise price of anyStock Award is satisfied by tendering shares of Common Stock held by theParticipant (either by actual deliver or attestation), then the number of suchtendered shares shall revert to and again become available for issuance underthe Plan.

 

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

 

**5.****             Eligibility.**

 

**(a)****           Eligibilityfor Specific Stock Awards**. Incentive Stock Options may be granted only toEmployees. Stock Awards other than Incentive Stock Options may be granted toEmployees and Consultants.

 

**(b)****           TenPercent Stockholders.** A Ten Percent Stockholder shall not be granted anIncentive Stock Option unless the exercise price of such Option is at least onehundred ten percent (110%) of the Fair Market Value of the Common Stock on thedate of grant and the Option is not exercisable after the expiration of five (5) yearsfrom the date of grant.

 

**(c)****           Section 162(m)Limitation on Annual Grants.** Subject to the provisions of Section 11(a) relatingto Capitalization Adjustments, no Employee shall be eligible to be grantedOptions or Stock Appreciation Rights covering more than one million(1,000,000) shares of Common Stock during any calendar year.

 

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

 

**6.****             OptionProvisions.**

 

Each Option shall be in such form and shall contain such terms andconditions as the Board shall deem appropriate. All Options shall be separatelydesignated Incentive Stock Options or Nonstatutory Stock Options at the time ofgrant, and, if certificates are issued, a separate certificate or certificatesshall be issued for shares of Common Stock purchased on exercise of each typeof Option. The provisions of separate Options need not be identical, but eachOption shall include (through incorporation of provisions hereof by referencein the Option or otherwise) the substance of each of the following provisions:

 

**(a)****           Term.**The Board shall determine the term of any Option granted under the Plan; *provided that*, subject to the provisionsof Section 5(b) regarding Ten Percent Stockholders, no IncentiveStock Option shall be exercisable after the expiration of ten (10) yearsfrom the date on which it was granted.

 

**(b)****           ExercisePrice of an Incentive Stock Option.** Subject to the provisions of Section 5(b) regardingTen Percent Stockholders, the exercise price of each Incentive Stock Optionshall be not less than one hundred percent (100%) of the Fair Market Value ofthe Common Stock subject to the Option on the date the Option is granted.Notwithstanding the foregoing, an Incentive Stock Option may be granted with anexercise price lower than that set forth in the preceding sentence if suchOption is granted pursuant to an assumption or substitution for another optionin a manner satisfying the provisions of Section 424(a) of the Code.

 

**(c)****           ExercisePrice of a Nonstatutory Stock Option.** The exercise price of eachNonstatutory Stock Option shall be not less than one-hundred percent (100%) ofthe Fair Market Value of the Common Stock subject to the Option on the date theOption is granted. Notwithstanding the foregoing, a Nonstatutory Stock Optionmay be granted with an exercise price lower than that set forth in thepreceding sentence if such Option is granted pursuant to an assumption orsubstitution for another option in a manner satisfying the provisions of Section 424(a) ofthe Code.

 

**(d)****           Consideration.**The purchase price of Common Stock acquired pursuant to an Option shall bepaid, to the extent permitted by applicable statutes and regulations, either (i) incash or check at the time the Option is exercised or (ii) at thediscretion of the Board at the time of the grant of the Option (or subsequentlyin the case of a Nonstatutory Stock Option) (1) by delivery to the Companyof other Common Stock at the time the Option is exercised, (2) accordingto a deferred payment or other similar arrangement with the Optionholder or (3) bya “net exercise” of the Option (as further described below) (4) pursuantto a program developed under Regulation T as promulgated by the FederalReserve Board that, prior to the issuance of Common Stock, results in eitherthe receipt of cash (or check) by the Company or the receipt of irrevocableinstructions to pay the aggregate exercise price to the Company from the salesproceeds or (5) in any other form of legal consideration that may beacceptable to the Board. Unless otherwise specifically provided in the Option,the purchase price of Common Stock acquired pursuant to an Option that is paidby delivery to the Company of other Common Stock acquired, directly orindirectly from the Company, shall be paid only by shares of the Common Stockof the Company that have been held for more than six (6) months (or suchlonger or shorter period of time required to avoid a charge to earnings forfinancial accounting purposes). At any time that the Company is incorporated inDelaware, payment of the Common Stock’s “par value,” as defined in the DelawareGeneral Corporation Law, shall not be made by deferred payment.

 

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In the case of any deferred payment arrangement, interest shall becompounded at least annually and shall be charged at the minimum rate ofinterest necessary to avoid (1) the treatment as interest, under anyapplicable provisions of the Code, of any amounts other than amounts stated tobe interest under the deferred payment arrangement and (2) the treatmentof the Option as a variable award for financial accounting purposes.

 

In the case of a “net exercise” of an Option, the Company will notrequire a payment of the exercise price of the Option from the Participant butwill reduce the number of shares of Common Stock issued upon the exercise bythe largest number of whole shares that has a Fair Market Value that does notexceed the aggregate exercise price. With respect to any remaining balance ofthe aggregate exercise price, the Company shall accept a cash payment from theParticipant. Shares of Common Stock will no longer be outstanding under anOption (and therefore not thereafter be exercisable) following the exercise ofsuch Option to the extent of (i) shares used to pay the exercise price ofan Option under a “net exercise” (ii) shares actually delivered to theParticipant as a result of such exercise, and (iii) shares withheld forpurposes of tax withholding.

 

**(e)****           Transferabilityof an Incentive Stock Option.** An Incentive Stock Option shall not betransferable except by will or by the laws of descent and distribution andshall be exercisable during the lifetime of the Optionholder only by theOptionholder. Notwithstanding the foregoing, the Optionholder may, bydelivering written notice to the Company, in a form provided by or otherwisesatisfactory to the Company, designate a third party who, in the event of thedeath of the Optionholder, shall thereafter be entitled to exercise the Option.

 

**(f)****            Transferabilityof a Nonstatutory Stock Option.** A Nonstatutory Stock Option shall betransferable to the extent provided in the Option Agreement. If theNonstatutory Stock Option does not provide for transferability, then theNonstatutory Stock Option shall not be transferable except by will or by thelaws of descent and distribution and shall be exercisable during the lifetimeof the Optionholder only by the Optionholder. Notwithstanding the foregoing,the Optionholder may, by delivering written notice to the Company, in a formprovided by or otherwise satisfactory to the Company, designate a third partywho, in the event of the death of the Optionholder, shall thereafter beentitled to exercise the Option.

 

**(g)****           VestingGenerally.** The total number of shares of Common Stock subject to an Optionmay, but need not, vest and therefore become exercisable in periodicinstallments that may, but need not, be equal. The Option may be subject tosuch other terms and conditions on the time or times when it may be exercised(which may be based on performance or other criteria) as the Board may deemappropriate. The vesting provisions of individual Options may vary. Theprovisions of this Section 6(g) are subject to any Option provisionsgoverning the minimum number of shares of Common Stock as to which an Optionmay be exercised.

 

**(h)****           Terminationof Continuous Service.** In the event that an Optionholder’s ContinuousService terminates (other than upon the Optionholder’s death or Disability),the Optionholder may exercise his or her Option (to the extent that theOptionholder was entitled to exercise such Option as of the date oftermination) but only within such period of time ending on the earlier of (i) theexpiration of the term of the Option as set forth in the Option Agreement or (ii) thedate one hundred eighty (180) days (ninety (90) days in the case ofIncentive Stock Options) following the termination of the Optionholder’sContinuous Service (or such longer or shorter period specified in the OptionAgreement). If, after termination of Continuous Service, the Optionholder doesnot exercise his or her Option within the time specified herein or in theOption Agreement (as applicable), the Option shall terminate.

 

**(i)****            Extensionof Termination Date.** An Optionholder’s Option Agreement may (but need not)provide that if the exercise of the Option following the termination of theOptionholder’s Continuous Service (other than upon the Optionholder’s death orDisability) would be prohibited at any time solely 

 

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because the issuance of shares of Common Stock would violate theregistration requirements under the Securities Act, then the Option shallterminate on the earlier of (i) the expiration of the term of the Optionset forth in Section 6(a) or (ii) the expiration of a period ofthree (3) months after the termination of the Optionholder’s ContinuousService during which the exercise of the Option would not be in violation ofsuch registration requirements.

 

**(j)****            Disabilityof Optionholder.** In the event that an Optionholder’s Continuous Serviceterminates as a result of the Optionholder’s Disability, the Optionholder may exercisehis or her Option (to the extent that the Optionholder was entitled to exercisesuch Option as of the date of termination of Continuous Service), but onlywithin such period of time ending on the earlier of (i) the expiration ofthe term of the Option as set forth in the Option Agreement or (ii) thedate twelve (12) months following such termination (or such longer orshorter period specified in the Option Agreement). If, after termination ofContinuous Service, the Optionholder does not exercise his or her Option withinthe time specified herein or in the Option Agreement (as applicable), theOption shall terminate.

 

**(k)****           Deathof Optionholder.** In the event that (i) an Optionholder’s ContinuousService terminates as a result of the Optionholder’s death or (ii) theOptionholder dies within the period (if any) specified in the Option Agreementafter the termination of the Optionholder’s Continuous Service, then the Optionmay be exercised (to the extent the Optionholder was entitled to exercise suchOption as of the date of death) by the Optionholder’s estate, by a person whoacquired the right to exercise the Option by bequest or inheritance or by aperson designated to exercise the option upon the Optionholder’s death pursuantto Section 6(e) or 6(f), but only within the period ending on theearlier of (i) the expiration of the term of such Option as set forth inthe Option Agreement or (ii) the date eighteen (18) months followingthe date of death (or such longer or shorter period specified in the OptionAgreement). If, after the Optionholder’s death, the Option is not exercisedwithin the time specified herein or in the Option Agreement (as applicable),the Option shall terminate.

 

**(l)****            EarlyExercise.** The Option may, but need not, include a provision whereby theOptionholder may elect at any time before the Optionholder’s Continuous Serviceterminates to exercise the Option as to any part or all of the shares of CommonStock subject to the Option prior to the full vesting of the Option. Anyunvested shares of Common Stock so purchased may be subject to a repurchaseoption in favor of the Company or to any other restriction the Board determinesto be appropriate. The Company shall not be required to exercise its repurchaseoption until at least six (6) months (or such longer or shorter period oftime required to avoid a charge to earnings for financial accounting purposes)have elapsed following exercise of the Option unless the Board otherwisespecifically provides in the Option.

 

**7.****             Provisionsof Stock Awards other than Options.**

 

**(a)****           StockPurchase Awards.** Each Stock Purchase Award Agreement shall be in such formand shall contain such terms and conditions as the Board shall deemappropriate. At the Board’s election, shares of Common Stock may be (i) heldin book entry form subject to the Company’s instructions until any restrictionsrelating to the Stock Purchase Award lapse; or (ii) evidenced by acertificate, which certificate shall be held in such form and manner asdetermined by the Board. The terms and conditions of Stock Purchase AwardAgreements may change from time to time, and the terms and conditions ofseparate Stock Purchase Award Agreements need not be identical, *provided, however,* that each StockPurchase Award Agreement shall include (through incorporation of the provisionshereof by reference in the agreement or otherwise) the substance of each of thefollowing provisions:

 

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

 

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**(ii)****           Consideration.**At the time of the grant of a Stock Purchase Award, the Board will determinethe consideration permissible for the payment of the purchase price of theStock Purchase Award. The purchase price of Common Stock acquired pursuant tothe Stock Purchase Award shall be paid either: (i) in cash at the time ofpurchase or (ii) in any other form of legal consideration that may beacceptable to the Board and permissible under the Delaware General CorporationLaw.

 

**(iii)****         Vesting.** Shares of Common Stock acquiredunder a Stock Purchase Award may be subject to a share repurchase right oroption in favor of the Company in accordance with a vesting schedule to bedetermined by the Board.

 

**(iv)****          Terminationof Participant’s Continuous Service.** In the event that a Participant’sContinuous Service terminates, the Company shall have the right, but not theobligation, to repurchase or otherwise reacquire, any or all of the shares ofCommon Stock held by the Participant that have not vested as of the date oftermination under the terms of the Stock Purchase Award Agreement. At the Board’selection, the repurchase right may be at the least of: (i) the Fair MarketValue on the relevant date or (ii) the Participant’s original cost. TheCompany shall not be required to exercise its repurchase option until at leastsix (6) months (or such longer or shorter period of time required to avoida charge to earnings for financial accounting purposes) have elapsed followingthe purchase of the restricted stock unless otherwise determined by the Boardor provided in the Stock Purchase Award Agreement.

 

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

 

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

 

**(i)****            Consideration.**A Stock Bonus Award may be awarded in consideration for past services actuallyrendered to the Company or an Affiliate.

 

**(ii)****           Vesting.**Shares of Common Stock awarded under the Stock Bonus Award Agreement may besubject to forfeiture to the Company in accordance with a vesting schedule tobe determined by the Board.

 

**(iii)****         Termination of Participant’s ContinuousService.** In the event a Participant’s Continuous Service terminates, theCompany may receive via a forfeiture condition, any or all of the shares ofCommon Stock held by the Participant which have not vested as of the date oftermination of Continuous Service under the terms of the Stock Bonus AwardAgreement.

 

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

 

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**(c)****           StockUnit Awards.** Each Stock Unit Award Agreement shall be in such form andshall contain such terms and conditions as the Board shall deem appropriate.The terms and conditions of Stock Unit Award Agreements may change from time totime, and the terms and conditions of separate Stock Unit Award Agreements neednot be identical, *provided, however,*that each Stock Unit Award Agreement shall include (through incorporation ofthe provisions hereof by reference in the agreement or otherwise) the substanceof each of the following provisions:

 

**(i)****            Consideration.**At the time of grant of a Stock Unit Award, the Board will determine theconsideration, if any, to be paid by the Participant upon delivery of eachshare of Common Stock subject to the Stock Unit Award. To the extent requiredby applicable law, the consideration to be paid by the Participant for eachshare of Common Stock subject to a Stock Unit Award will not be less than thepar value of a share of Common Stock. The consideration may be paid in any formpermitted under applicable law.

 

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

 

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

 

**(iv)****          AdditionalRestrictions.** At the time of the grant of a Stock Unit Award, the Board, asit deems appropriate, may impose such restrictions or conditions that delay thedelivery of the shares of Common Stock (or their cash equivalent) subject to aStock Unit Award after the vesting of such Stock Unit Award.

 

**(v)****            DividendEquivalents.** Dividend equivalents may be credited in respect of shares ofCommon Stock covered by a Stock Unit Award, as determined by the Board andcontained in the Stock Unit Award Agreement. At the sole discretion of theBoard, such dividend equivalents may be converted into additional shares ofCommon Stock covered by the Stock Unit Award in such manner as determined bythe Board. Any additional shares covered by the Stock Unit Award credited byreason of such dividend equivalents will be subject to all the terms andconditions of the underlying Stock Unit Award Agreement to which they relate.

 

**(vi)****          Terminationof Participant’s Continuous Service.** Except as otherwise provided in theapplicable Stock Unit Award Agreement, such portion of the Stock Unit Awardthat has not vested will be forfeited upon the Participant’s termination ofContinuous Service.

 

**(d)****           StockAppreciation Rights.** Each Stock Appreciation Right Agreement shall be insuch form and shall contain such terms and conditions as the Board shall deemappropriate. The terms and conditions of Stock Appreciation Right Agreementsmay change from time to time, and the terms and conditions of separate StockAppreciation Right Agreements need not be identical, *provided, however*, that each Stock Appreciation RightAgreement shall include (through incorporation of the provisions hereof byreference in the agreement or otherwise) the substance of each of the followingprovisions:

 

**(i)****            StrikePrice and Calculation of Appreciation.** Each Stock Appreciation Right willbe denominated in share of Common Stock equivalents. The appreciationdistribution payable on the exercise of a Stock Appreciation Right will be notgreater than an amount equal to the excess of (A) the aggregate FairMarket Value (on the date of the exercise of the Stock Appreciation Right) of anumber of shares of Common Stock equal to the number of share of Common Stockequivalents in which the Participant is vested under such Stock AppreciationRight, and with respect to which the Participant is exercising the StockAppreciation Right on such date, over (B) an amount (the strike price)that will be determined by the Board at the time of grant of the StockAppreciation Right.

 

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**(ii)****           Vesting.**At the time of the grant of a Stock Appreciation Right, the Board may imposesuch restrictions or conditions to the vesting of such Stock Appreciation Rightas it, in its sole discretion, deems appropriate.

 

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

 

**(iv)****          Payment**.The appreciation distribution in respect to a Stock Appreciation Right may bepaid in Common Stock, in cash or check, in any combination of the foregoing orin any other form of consideration as determined by the Board and contained inthe Stock Appreciation Right Agreement evidencing such Stock AppreciationRight.

 

**(v)****            Terminationof Continuous Service.** In the event that a Participant’s Continuous Serviceterminates, the Participant may exercise his or her Stock Appreciation Right(to the extent that the Participant was entitled to exercise such StockAppreciation Right as of the date of termination) but only within such periodof time ending on the earlier of (i) the date three (3) monthsfollowing the termination of the Participant’s Continuous Service (or suchlonger or shorter period specified in the Stock Appreciation Right Agreement)or (ii) the expiration of the term of the Stock Appreciation Right as setforth in the Stock Appreciation Right Agreement. If, after termination, theParticipant does not exercise his or her Stock Appreciation Right within thetime specified herein or in the Stock Appreciation Right Agreement (asapplicable), the Stock Appreciation Right shall terminate.

 

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

 

**8.****             Covenantsof the Company.**

 

**(a)****           Availabilityof Shares.** During the terms of the Stock Awards, the Company shall keepavailable at all times the number of shares of Common Stock required to satisfysuch Stock Awards.

 

**(b)****           SecuritiesLaw Compliance.** The Company shall seek to obtain from each regulatorycommission or agency having jurisdiction over the Plan such authority as may berequired to grant Stock Awards and to issue and sell shares of Common Stockupon exercise of the Stock Awards; *provided,however,* that this undertaking shall not require the Company toregister under the Securities Act the Plan, any Stock Award or any Common Stockissued or issuable pursuant to any such Stock Award. If, after reasonableefforts, the Company is unable to obtain from any such regulatory commission oragency the authority which counsel for the Company deems necessary for thelawful issuance and sale of Common Stock under the Plan, the Company shall berelieved from any liability for failure to issue and sell Common Stock uponexercise of such Stock Awards unless and until such authority is obtained.

 

**9.****             Useof Proceeds from Stock.**

 

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

 

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**10.****          Miscellaneous.**

 

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

 

**(b)****           StockholderRights.** No Participant shall be deemed to be the holder of, or to have anyof the rights of a holder with respect to, any shares of Common Stock subjectto such Stock Award unless and until such Participant has satisfied allrequirements for exercise of the Stock Award pursuant to its terms.

 

**(c)****           NoEmployment or other Service Rights.** Nothing in the Plan, any Stock AwardAgreement or any other instrument executed thereunder or any Stock Awardgranted pursuant thereto shall confer upon any Participant any right tocontinue to serve the Company or an Affiliate in the capacity in effect at thetime the Stock Award was granted or shall affect the right of the Company or anAffiliate to terminate (i) the employment of an Employee with or withoutnotice and with or without cause, (ii) the service of a Consultantpursuant to the terms of such Consultant’s agreement with the Company or anAffiliate or (iii) the service of a Director pursuant to the Bylaws of theCompany or an Affiliate, and any applicable provisions of the corporate law ofthe state in which the Company or the Affiliate is incorporated, as the casemay be.

 

**(d)****           IncentiveStock Option $100,000 Limitation.** To the extent that the aggregate FairMarket Value (determined at the time of grant) of Common Stock with respect towhich Incentive Stock Options are exercisable for the first time by anyOptionholder during any calendar year (under all plans of the Company and itsAffiliates) exceeds one hundred thousand dollars ($100,000), the Options or portionsthereof that exceed such limit (according to the order in which they weregranted) shall be treated as Nonstatutory Stock Options, notwithstanding anycontrary provision of the applicable Option Agreement.

 

**(e)****           InvestmentAssurances.** The Company may require a Participant, as a condition ofexercising or acquiring Common Stock under any Stock Award, (i) to givewritten assurances satisfactory to the Company as to the Participant’sknowledge and experience in financial and business matters and/or to employ apurchaser representative reasonably satisfactory to the Company who isknowledgeable and experienced in financial and business matters and that he orshe is capable of evaluating, alone or together with the purchaserrepresentative, the merits and risks of exercising the Stock Award; and (ii) togive written assurances satisfactory to the Company stating that theParticipant is acquiring Common Stock subject to the Stock Award for theParticipant’s own account and not with any present intention of selling orotherwise distributing the Common Stock. The foregoing requirements, and anyassurances given pursuant to such requirements, shall be inoperative if (1) theissuance of the shares of Common Stock upon the exercise or acquisition ofCommon Stock under the Stock Award has been registered under a then currentlyeffective registration statement under the Securities Act or (2) as to anyparticular requirement, a determination is made by counsel for the Company thatsuch requirement need not be met in the circumstances under the then applicablesecurities laws. The Company may, upon advice of counsel to the Company, placelegends on stock certificates issued under the Plan as such counsel deemsnecessary or appropriate in order to comply with applicable securities laws,including, but not limited to, legends restricting the transfer of the CommonStock.

 

**(f)****            WithholdingObligations.** To the extent provided by the terms of a Stock AwardAgreement, the Company may, in its sole discretion, satisfy any federal, stateor local tax withholding obligation relating to a Stock Award by any of thefollowing means (in addition to the Company’s right to withhold from anycompensation paid to the Participant by the Company) or by a combination ofsuch means: (i) causing the Participant to tender a cash payment; (ii) withholdingshares of Common Stock 

 

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from the shares of Common Stock issued or otherwise issuable to theParticipant in connection with the Stock Award; or (iii) via such othermethod as may be set forth in the Stock Award Agreement.

 

**11.****          Adjustmentsupon Changes in Stock.**

 

**(a)****           CapitalizationAdjustments**. If any change is made in, or other event occurs with respectto, the Common Stock subject to the Plan or subject to any Stock Award withoutthe receipt of consideration by the Company (through merger, consolidation,reorganization, recapitalization, reincorporation, stock dividend, dividend inproperty other than cash, stock split, liquidating dividend, combination ofshares, exchange of shares, change in corporate structure or other transactionnot involving the receipt of consideration by the Company (each a “CapitalizationAdjustment”), the Plan will be appropriately adjusted in the class(es) andmaximum number of securities subject to the Plan pursuant to Sections 4(a) and4(b) and the maximum number of securities subject to award to any personpursuant to Section 5(c), and the outstanding Stock Awards will beappropriately adjusted in the class(es) and number of securities and price pershare of Common Stock subject to such outstanding Stock Awards. The Board shallmake such adjustments, and its determination shall be final, binding andconclusive. (Notwithstanding the foregoing, the conversion of any convertiblesecurities of the Company shall not be treated as a transaction “withoutreceipt of consideration” by the Company.)

 

**(b)****           Dissolutionor Liquidation**. In the event of a dissolution or liquidation of theCompany, then all outstanding Stock Awards shall terminate immediately prior tothe completion of such dissolution or liquidation.

 

**(c)****           CorporateTransaction**. In the event of a Corporate Transaction, any survivingcorporation or acquiring corporation may (but need not) assume or continue anyor all Stock Awards outstanding under the Plan or may (but need not) substitutesimilar stock awards for Stock Awards outstanding under the Plan (includingawards to acquire the same consideration paid to the stockholders of theCompany, as the case may be, pursuant to the Corporate Transaction), and anyreacquisition or repurchase rights held by the Company in respect of CommonStock issued pursuant to Stock Awards may be assigned by the Company to thesuccessor of the Company (or the successor’s parent company), if any, inconnection with such Corporate Transaction. In the event that any survivingcorporation or acquiring corporation does not assume or continue all suchoutstanding Stock Awards or substitute similar stock awards for all suchoutstanding Stock Awards, then with respect to Stock Awards that have been notassumed, continued or substituted and that are held by Participants whoseContinuous Service has not terminated prior to the effective time of theCorporate Transaction, the vesting of such Stock Awards (and, if applicable,the time at which such Stock Awards may be exercised) shall (contingent uponthe effectiveness of the Corporate Transaction) be accelerated in full to adate prior to the effective time of such Corporate Transaction as the Boardshall determine (or, if the Board shall not determine such a date, to the datethat is five (5) days prior to the effective time of the CorporateTransaction), and such Stock Awards shall terminate if not exercised (ifapplicable) at or prior to such effective time, and any reacquisition orrepurchase rights held by the Company with respect to such Stock Awards shall(contingent upon the effectiveness of the Corporate Transaction) lapse. Withrespect to any other Stock Awards outstanding under the Plan that have not beenassumed, continued or substituted, the vesting of such Stock Awards (and, ifapplicable, the time at which such Stock Award may be exercised) shall not beaccelerated, unless otherwise provided in a written agreement between theCompany or any Affiliate and the holder of such Stock Award, and such StockAwards shall terminate if not exercised (if applicable) prior to the effectivetime of the Corporate Transaction.

 

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

 

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**12.****          Amendmentof the Plan and Stock Awards.**

 

**(a)****           Amendmentof Plan.** Subject to the limitations, if any of applicable law, the Board atany time, and from time to time, may amend the Plan. However, except asprovided in Section 11(a) relating to Capitalization Adjustments, noamendment shall be effective unless approved by the stockholders of the Companyto the extent stockholder approval is necessary to satisfy applicable law orany securities exchange listing requirements.

 

**(b)****           StockholderApproval.** The Board, in its sole discretion, may submit any other amendmentto the Plan for stockholder approval, including, but not limited to, amendmentsto the Plan intended to satisfy the requirements of Section 162(m) of theCode and the regulations thereunder regarding the exclusion of performance-basedcompensation from the limit on corporate deductibility of compensation paid toCovered Employees.

 

**(c)****           ContemplatedAmendments.** It is expressly contemplated that the Board may amend the Planin any respect the Board deems necessary or advisable to provide eligibleEmployees with the maximum benefits provided or to be provided under theprovisions of the Code and the regulations promulgated thereunder relating toIncentive Stock Options and /or to bring the Plan and/or Incentive StockOptions granted under it into compliance therewith.

 

**(d)****           NoImpairment of Rights.** Rights under any Stock Award granted before amendmentof the Plan shall not be impaired by any amendment of the Plan unless (i) theCompany requests the consent of the Participant and (ii) the Participantconsents in writing.

 

**(e)****           Amendmentof Stock Awards.** The Board at any time, and from time to time, may amendthe terms of any one or more Stock Awards, including, but not limited to,amendments to provide terms more favorable than previously provided in theagreement evidencing the Stock Award, subject to any specified limits in thePlan that are not subject to Board discretion; *provided,however,* that the rights under any Stock Award shall not be impairedby any such amendment unless (i) the Company requests the consent of theParticipant and (ii) the Participant consents in writing; and *provided further, however,* that nopreviously granted Stock Award may be repriced, replaced or regranted throughcancellation, or by lowering the exercise price of a previously granted StockAward without the prior approval of the Company’s stockholders.

 

**13.****          Terminationor Suspension of the Plan.**

 

**(a)****           PlanTerm.** The Board may suspend or terminate the Plan at any time. Unlesssooner terminated, the Plan shall terminate on the day before the tenth (10th)anniversary of the date the Plan is adopted by the Board or approved by thestockholders of the Company, whichever is earlier. No Stock Awards may begranted under the Plan while the Plan is suspended or after it is terminated.

 

**(b)****           NoImpairment of Rights.** Suspension or termination of the Plan shall notimpair rights and obligations under any Stock Award granted while the Plan isin effect except with the written consent of the Participant.

 

**14.****          EffectiveDate of Plan.**

 

The Plan became effective as of July 6, 2004. Any amendment to thePlan shall become effective upon the later of (i) the date such amendmentis adopted by the Board, or (ii) if stockholder approval of such amendmentis required by Section 12(a) hereof, the date such amendment isapproved by the stockholders of the Company.

 

**15.****          Choiceof Law.**

 

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

 

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