Document:

ex101012208.htm

    

      Exhibit
        10.1

       

      

       

      
 

       

      MERIDIAN
        BIOSCIENCE, INC.

       

      2004
        EQUITY COMPENSATION PLAN

       

      As
        Amended and Restated

       

      Through

       

      January
        22, 2008

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      TABLE
        OF CONTENTS

       

      
        
          	
                  Article
                    1

                	
                  OBJECTIVES

                	
                  1

                
	
                  Article
                    2

                	
                  DEFINITIONS

                	
                  1

                
	
                  Article
                    3

                	
                  ADMINISTRATION

                	
                  4

                
	
                  Article
                    4

                	
                  COMMON
                    SHARES SUBJECT TO PLAN

                	
                  5

                
	
                  Article
                    5

                	
                  DURATION
                    OF PLAN

                	
                  7

                
	
                  Article
                    6

                	
                  STOCK
                    OPTIONS

                	
                  7

                
	
                  Article
                    7

                	
                  STOCK
                    APPRECIATION RIGHTS

                	
                  10

                
	
                  Article
                    8

                	
                  RESTRICTED
                    AND UNRESTRICTED STOCK AWARDS

                	
                  10

                
	
                  Article
                    9

                	
                  PERFORMANCE
                    AWARDS

                	
                  11

                
	
                  Article
                    10

                	
                  OTHER
                    STOCK UNIT AWARDS

                	
                  13

                
	
                  Article
                    11

                	
                  TRANSFERABILITY
                    OF AWARDS

                	
                  13

                
	
                  Article
                    12

                	
                  TERMINATION
                    OF AWARDS

                	
                  14

                
	
                  Article
                    13

                	
                  DEFERRALS

                	
                  16

                
	
                  Article
                    14

                	
                  TERMINATION
                    OR AMENDMENT OF PLAN

                	
                  16

                
	
                  Article
                    15

                	
                  GENERAL
                    PROVISIONS

                	
                  16

                

        

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

MERIDIAN
        BIOSCIENCE, INC.

      2004
        EQUITY COMPENSATION PLAN

       

      ARTICLE
        1

      OBJECTIVES

       

      Meridian
        Bioscience, Inc. established this 2004 Equity Compensation Plan effective
        December 7, 2004 (the “Effective Date”). The Plan was Amended and Restated as of
        November 9, 2005 to reflect, among other things, changes in the number of
        Shares
        occasioned by the three-for-two split of the Common Shares which occurred
        September 2, 2005 and for other reasons on January 19, 2006 and January 22,
        2008.  The purposes of this Plan are to enable the Company and its
        Subsidiaries to compete successfully in retaining and attracting key employees,
        directors and advisors of outstanding ability, to stimulate the efforts of
        such
        persons toward the Company’s objectives and to encourage the identification of
        their interests with those of the Company’s shareholders.

       

      ARTICLE
        2

      DEFINITIONS

       

      For
        purposes of this Plan, the following terms shall have the following
        meanings:

       

      2.1.      “Advisor”
        means anyone who provides bona fide advisory or consultation services to
        the
        Company other than the offer or sale of securities in a capital-raising
        transaction.

       

      2.2.      “Award”
        means any one or more of the following: (a) Stock Options, (b) Stock
        Appreciation Rights, in tandem with Stock Options or free-standing; (c)
        Restricted Stock; (d) Performance Awards; and (e) other awards based in whole
        or
        in part by reference to or otherwise based on the Company’s Common Shares, or
        other securities of the Company or any Subsidiary.

       

      2.3.      “Award
        Agreement” means a written agreement setting forth the terms of an
        Award.

       

      2.4.      “Award
        Date” or “Grant Date” means the date designated by the Committee as the date
        upon which an Award is granted.

       

      2.5.      “Award
        Period” or “Term” means the period beginning on an Award Date and ending on the
        expiration date of such Award.

       

      2.6.      “Board”
        means the Board of Directors of the Company.

       

      2.7.      “Code”
        means the Internal Revenue Code of 1986, as amended, or any successor
        legislation.

       

      2.8.      “Committee”
        means the committee appointed by the Board and consisting of one or more
        Directors who qualify as Non-Employee Directors as defined by Rule
        16b-3(b)(3)(i). To the extent that it is desired that compensation resulting
        from an Awardbe
        excluded from the deduction limitation of Section 162(m) of the Code, all
        members of the Committee granting an Award also shall be “outside directors”
within the meaning of Section 162(m).

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      2.9.      “Covered
        Employee” means an employee covered by Section 162(m) of the Code, which as of
        the effective date of this Plan includes any individual who, on the last
        day of
        the taxable year is the Chief Executive Officer (or person acting in that
        capacity) or one of the four highest compensated Officers (other than the
        Chief
        Executive Officer) as determined under rules of the Securities and Exchange
        Commission.

       

      2.10.    “Director”
        means a member of the Board.

       

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

       

      2.12.    “Eligible
        Employee” means anyone, other than one who receives retirement benefits,
        consulting fees, honorariums, and the like from the Company, who performs
        services for the Company or a Subsidiary, including an Officer or Director
        of
        the Company or a Subsidiary, compensated on a regular basis by the Company
        or a
        Subsidiary.

       

      2.13.    “Fair
        Market Value” means the last closing price for a Common Share on the NYSE,
        NASDAQ or any stock exchange or national trading or quotation system on which
        such sales of Common Shares are reported. If the Common Shares are not so
        traded
        or reported, Fair Market Value shall be set under procedures established
        by the
        Committee.

       

      2.14.    “Incentive
        Option” means any Stock Option intended to be and designated as an “Incentive
        Stock Option” within the meaning of Section 422 of the Code or any successor
        provision.

       

      2.15.    “Non-Employee
        Director” means each Director of the Company or its subsidiaries, now serving as
        a Director or elected hereafter, who is not also an employee of the Company
        or
        any of its subsidiaries.

       

      2.16.    “Non-Qualified
        Option” means any Stock Option that is not an Incentive Option.

       

      2.17.    “Non-Tandem
        SAR” means a Stock Appreciation Right granted without reference to a Stock
        Option.

       

      2.18.    “Officer”
        means the president, principal financial officer, principal accounting officer,
        any vice president in charge of a principal business unit, division or function
        (such as sales, administration or finance) or any other officer who performs
        a
        significant policy-making function.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      2.19.    “Option
        Price” or “Exercise Price” means the price per Common Share at which a Common
        Share may be purchased upon the exercise of a Stock Option or an
        Award.

       

      2.20.    “Other
        Stock Unit Awards” shall have the meaning set forth in Section 10.1
        hereof.

       

      2.21.    “Participant”
        means a person to whom an Award has been made pursuant to this
        Plan.

       

      2.22.    “Performance
        Award” means an Award of a fixed number of Common Shares or cash conditioned
        upon meeting performance criteria granted to a Participant pursuant to Article
        9.

       

      2.23.    “Performance
        Period” means that period established by the Committee at the time any
        Performance Award is granted or at any time thereafter during which any
        performance goals established by the Committee with respect to such an Award
        are
        to be measured.

       

      2.24.    “Plan”
        means this 2004 Equity Compensation Plan, as amended from time to
        time.

       

      2.25.    “Reference
        Option” shall have the meaning set forth in Section 0 hereof.

       

      2.26.    “Restricted
        Period” means the period of not less than three years following the date of
        grant of any Restricted Stock Award, unless otherwise provided by the Committee
        in the related Award Agreement.

       

      2.27.    “Restricted
        Stock” means Common Shares issued pursuant to a Restricted Stock Award which are
        subject to the restrictions set forth in the related Award
        Agreement.

       

      2.28.    “Restricted
        Stock Award” means an Award of a fixed number of Common Shares to a Participant
        which is subject to forfeiture provisions and other conditions set forth
        in the
        Award Agreement.

       

      2.29.    “Retirement”
        means termination of employment or service from the Company, other than a
        termination for the reasons specified in Sections 12.1.3 or 12.1.4 and
        other than by death or Disability by an employee or a Director who is at
        least
        65 years of age, or 55 years of age with at least ten years of employment
        with,
        or service on the Board of, the Company or a Subsidiary.

       

      2.30.    “Rule
        16b-3” mean Securities and Exchange Commission Regulation Section 240.16b-3 or
        any corresponding successor regulation.

       

      2.31.    “Stock
        Appreciation Right” or “SAR” means the right to receive, for each unit of the
        SAR, cash and/or Common Shares equal in value to the excess of the
        FairMarket Value of one Common Share on the date of exercise
        of the SAR over the reference price per Common Share established on the Grant
        Date of the SAR

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      .

       

      2.32.    “Stock
        Option” means the right to purchase Common Shares granted pursuant to 0.

       

      2.33.    “Subsidiary”
        means any corporation, partnership, joint venture, or other entity of which
        the
        Company owns or controls, directly or indirectly, 25% or more of the outstanding
        voting stock, or comparable equity participation and voting power, or which
        the
        Company otherwise controls, by contract or any other means. However, when
        the
        term “Subsidiary” is used in the context of an Award of an Incentive Option, the
        applicable percentage shall be 50%. “Control” means the power to direct or cause
        the direction of the management and policies of a corporation or other
        entity.

       

      2.34.    “Tandem
        SAR” means a Stock Appreciation Right granted with reference to a Stock
        Option.

       

      2.35.    “Transfer”
        means alienation, attachment, sale, assignment, pledge, encumbrance, charge
        or
        other disposition; and the terms “Transferred” or “Transferable” have
        corresponding meanings.

       

      ARTICLE
        3

      ADMINISTRATION

       

      3.1.      Committee.  This
        Plan shall be administered and interpreted by the Committee.

       

      3.2.      Awards.  
        The Committee is authorized to grant (i) Stock Options; (ii) Stock Appreciation
        Rights, in tandem with Stock Options or free-standing; (iii) Restricted Stock;
        (iv) Common Shares conditioned upon meeting performance criteria; and (v)
        other
        awards based in whole or in part by reference to or otherwise based on the
        Company’s Common Shares, or other securities of the Company or any Subsidiaries
        (collectively, the “Awards”). In particular, the Committee shall have the
        authority:

       

      3.2.1      to
        select the persons to whom Awards may be granted;

       

      3.2.2      to
        determine the types and combinations of Awards to be granted;

       

      3.2.3      to
        determine the number of Common Shares or monetary units which may be subject
        to
        each Award;

       

      3.2.4      to
        determine the terms and conditions, not inconsistent with the terms of this
        Plan, of any Award, including, but not limited to, the term, price,
        exercisability, method of exercise, any restriction or limitation on Transfer,
        any vesting schedule or acceleration, the application of performance goals
        as
        set forth in Section 9.1.2, or any forfeiture provisions or waiver, regarding
        any Award, and the related Common Shares, based on such factors as the Committee
        shall determine; and

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      3.2.5      to
        modify or waive any restrictions or limitations contained in, and grant
        extensions to the terms of or accelerate the vesting of, any outstanding
        Award,
        as long as such modifications, waivers, extensions or accelerations are not
        inconsistent with the terms of this Plan for those Awards intended to be
        Incentive Options or meet the conditions of Section 162(m) of the Code, but
        no
        such changes shall impair the rights of any Participant without his or her
        consent.

       

      3.3.           
        Guidelines.  The
        Committee is authorized to adopt, alter and repeal administrative rules,
        guidelines and practices governing this Plan and perform all acts, including
        the
        delegation of its administrative responsibilities, as it deems advisable;
        to
        construe and interpret the terms and provisions of this Plan and any Award
        issued under this Plan; and to otherwise supervise the administration of
        this
        Plan. The Committee may correct any defect, supply any omission or reconcile
        any
        inconsistency in this Plan or in any related Award Agreement in the manner
        and
        to the extent it deems necessary to carry this Plan into effect.

       

      3.4.           
        Delegation of
        Authority.   The Committee may delegate its authority to
        Officers of the Company and its administrative duties to Officers or employees
        of the Company except with respect to persons who are senior Officers of
        the
        Company as defined by the Committee and except where performance goals for
        particular compensation grants are intended to be excluded from the deduction
        limitation imposed by Section 162(m) of the Code.

       

      3.5.           
        Decisions
        Final.   Any action, decision, interpretation or determination
        by or at the direction of the Committee concerning the application or
        administration of this Plan shall be final and binding upon all persons and
        need
        not be uniform with respect to its determination of recipients, amount, timing,
        form, terms or provisions.

       

      ARTICLE
        4

      COMMON
        SHARES SUBJECT TO
        PLAN

       

      4.1.           
        Common
        Shares.   Subject to adjustment as provided in Section 4.2, the
        number of Common Shares which may be issued under this Plan shall not exceed
        3,000,000 Common Shares. If any Award granted under this Plan shall expire,
        terminate or be canceled for any reason without having been exercised in
        full,
        the number of Common Shares not acquired that are subject to such Award shall
        again be available for future grants. The Committee may make such other
        determinations regarding the counting of Common Shares issued pursuant to
        this
        Plan as it deems necessary or advisable, provided that such determinations
        shall
        be permitted by law. Common Shares underlying a canceled Stock Option shall
        be
        counted against the maximum number of Common Shares for which Stock Options
        may
        be granted to an Eligible Employee or Advisor. The repricing of Stock Options
        shall be strictly prohibited under this Plan.

       

      4.2.           
        Adjustment
        Provisions.

       

      4.2.1      If
        the Company shall at any time after November 9, 2005 change the number of
        issued
        Common Shares, without new consideration to the Company, bystock
        dividend, split, combination, recapitalization, reorganization, exchange
        of
        Common Shares, liquidation or other change in
        corporate structure affecting the Common Shares, or make a distribution of
        cash
        or property which has a substantial impact on the value of issued Common
        Shares,
        the total number of Common Shares reserved for issuance under the Plan shall
        be
        appropriately adjusted and the number of Common Shares covered by each
        outstanding Award and the reference price or Fair Market Value for each
        outstanding Award shall be adjusted so that the aggregate consideration payable
        to the Company and the value of each such Award shall not be
        changed.

      

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

       

      4.2.2     The
        Committee may authorize the issuance, continuation or assumption of Awards
        or
        provide for other equitable adjustments after changes in the Common Shares
        resulting from any merger, consolidation, sale of assets, acquisition of
        property or stock, recapitalization, reorganization or similar occurrence
        in
        which the Company is the continuing or surviving entity, upon such terms
        and
        conditions as it may deem equitable and appropriate.

       

      4.3.           
        Merger, Dissolution
        or
        Liquidation.   Upon the dissolution or liquidation of the
        Company or any merger, consolidation, exchange or other transaction in which
        the
        Company is not the surviving entity or in which 75% or more of the outstanding
        Common Shares of the Company are converted into cash, other securities or
        other
        property, each outstanding Award shall terminate as of a date fixed by the
        Committee provided that not less than twenty days written notice of the date
        of
        expiration shall be given to each holder of an Award and each outstanding
        Award
        shall be fully vested and each such holder shall have the right during such
        period following notice to exercise the Award as to all or any part of the
        Common Shares for which it is exercisable.

       

      4.4.           
        Change of
        Control.   If a Participant’s employment or service is
        involuntarily terminated without cause (as determined by the Committee in
        its
        sole discretion) during the twenty-four month period following a Change in
        Control of the Company, all outstanding Awards shall become immediately
        exercisable in full. For purposes of this Agreement, a “Change in Control” of
        the Company shall be deemed to have occurred if (a) any “person,” as such term
        is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934,
        other than a trustee or other fiduciary holding securities under an employee
        benefit plan of the Company or William J. Motto and his heirs, lineal
        descendants, legatees and legal representatives of any of the foregoing and
        the
        trustee of any bona fide trust of which one or more of the foregoing are
        the
        sole beneficiaries or the grantors thereof, becomes the “beneficial owner,” as
        such term is defined in Rule 13d-3 under that Act, directly or indirectly,
        of
        securities of the Company representing 25% or more of the combined voting
        power
        of the Company’s then outstanding securities; or (b) during any period of one
        year (not including any period prior to the execution of this Agreement),
        individuals who at the beginning of such period constitute the Board and
        any new
        Director whose election by the Board or nomination for election by the Company’s
        shareholders was approved by a vote of at least two-thirds of the Directors
        then
        still in office who were either Directors at the beginning of the period
        or
        whose election or nomination for election was previously so approved, cease
        for
        any reason to constitute a majority thereof.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Notwithstanding
        any other provision of this Plan, in the event of a Change in Control, the
        Committee may, in its sole discretion, provide that each Stock Option or
        SAR
        shall, upon the occurrence of a Change in Control, be cancelled in exchange
        for
        a cash payment to be made within sixty days of the Change in Control in an
        amount equal to the amount by which the price per Common Share in connection
        with the Change in Control exceeds the purchase price per Common Share under
        the
        Award Agreement for any Stock Option or SAR multiplied by the number of Common
        Shares granted under the Award Agreement for any Stock Option or
        SAR.

       

      ARTICLE
        5

      DURATION
        OF
        PLAN

       

      This
        Plan
        shall terminate on the tenth anniversary of the Effective Date, unless
        terminated sooner by the Board pursuant to 0. The
        provisions of the Plan shall remain operative with respect to all outstanding
        Awards until their expiration.

       

      ARTICLE
        6

      STOCK
        OPTIONS

       

      6.1.           
        Grants.  Stock
        Options may be granted alone or in addition to other Awards granted under
        this
        Plan. Each Stock Option granted shall be designated as either a Non-Qualified
        Option or an Incentive Option and in each case such Stock Option may or may
        not
        include Stock Appreciation Rights. One or more Stock Options and/or Stock
        Appreciation Rights may be granted to any Eligible Employee or Advisor, except
        that no person shall receive during any 12-month period Non-Qualified Stock
        Options and Stock Appreciation Rights covering more than 112,500 Common Shares
        and only Non-Qualified Options may be granted to Advisors.

       

      6.2.           
        Incentive
        Options.  Any Stock Option designated by the Committee as an
        Incentive Option will be subject to the general provisions applicable to
        all
        Stock Options granted under the Plan plus the following specific
        provisions:

       

      6.2.1    
          If an Incentive Option is granted to a person who owns, directly or
        indirectly, stock representing more than 10% of (i) the total combined voting
        power of all classes of stock of the Company and its Subsidiaries, or (ii)
        a
        corporation that owns 50% or more of the total combined voting power of all
        classes of stock of the Company, then

       

      6.2.1.1   the
        Option Price must equal at least 110% of the Fair Market Value on the Grant
        Date; and

       

      6.2.1.2   the
        Term of the Incentive Option shall not be greater than five years from the
        Grant
        Date.

       

      6.2.2      
        The aggregate Fair Market Value of Common Shares, determined at the Grant
        Date,
        with respect to Incentive Options that may be exercised for the first time
        by
        any individual during any calendar year under this Plan or any other plan
        maintained by the Company and its Subsidiaries shall not exceed $100,000.
        To the
        extent that the aggregate Fair Market Value of Common Shares with respect
        to
        which IncentiveOptions
        are exercisable for the first time by any individual during any calendar
        year,
        under all plans of the Company and its Subsidiaries, exceeds $100,000, such
        Incentive Options shall be treated as Non-Qualified Options.

       

      
        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

       

      6.2.3        Qualification
        under the
        Code.   Notwithstanding anything in this Plan to the contrary,
        no term of this Plan relating to Incentive Options shall be interpreted,
        amended
        or altered, nor shall any discretion or authority granted under this Plan
        be
        exercised, so as to disqualify this Plan under Section 422 of the Code, or,
        without the consent of the Participants affected, to disqualify any Incentive
        Option under Section 422 of the Code.

       

      6.2.4        Limitation
        on Incentive
        Options.   The aggregate number of Common Shares under this
        Plan that may be issued with respect to Incentive Options shall not exceed
        the
        total number of Shares authorized for the Plan.

       

      6.3.        Terms
        of Stock
        Options.   Except as otherwise required by Subsection 6.2,
        Stock Options granted under this Plan shall be subject to the following terms
        and conditions and shall be in such form and contain such additional terms
        and
        conditions, not inconsistent with the terms of this Plan pertaining to Incentive
        Options and options intended to meet the conditions of Section 162(m) of
        the
        Code, as the Committee shall deem desirable:

       

      6.3.1        Option
        Price.   The Option Price shall be determined by the Committee
        at the time of grant, except that no Incentive Option may be granted for
        an
        Option Price less than 100% of Fair Market Value on the Grant Date.

       

      6.3.2        Option
        Term.   The Option Term shall be fixed by the Committee, but no
        Incentive Option shall be exercisable more than ten years after its Award
        Date.

       

      6.3.3        Exercisability.  
        A Stock Option shall be exercisable at such time or times and subject to
        such
        terms and conditions as shall be specified in the Award Agreement, provided,
        however, that a Stock Option may not be exercised as to less than Twenty-Five
        Common Shares at any one time or the total number available for exercise
        at that
        time.

       

      6.3.4        Method
        of
        Exercise.   A Stock Option may be exercised in whole or in part
        at any time during its Term by giving written notice of exercise to the Company
        specifying the number of Common Shares to be purchased. Such notice shall
        be
        accompanied by payment in full of the Option Price in cash or through the
        tender
        of previously-owned Shares which for such purposes shall be valued at their
        Fair
        Market Value unless some other form of consideration is approved by the
        Committee. Once delivered, an exercise shall be irrevocable.

       

      6.3.5        
        Transferability
        of
        Stock Options.   Stock Options shall be Transferable as
        provided in Article 11.

       

      6.3.6        
        Termination.  
        Stock Options shall terminate in accordance with Article 12.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      6.3.7         Buyout
        and Settlement
        Provisions.   The Committee may at any time offer to buy out a
        Stock Option previously granted, based on such terms and conditions as the
        Committee shall establish; however, such terms shall not effectively reprice
        the
        options (offer to buy out option shall not exceed the difference between
        the
        Fair Market Value of the Common Share and the Exercise Price on the date
        of the
        offer) and in no event shall the Committee without approval of the Company's
        shareholders within twelve (12) months of the date of such Committee action,
        buy
        out a Stock Option previously granted with an Exercise Price on the date
        of such
        buy out greater than the Fair Market Value of the Common Shares underlying
        such
        Stock Option.

       

      6.4.           
        Award of Non-Qualified
        Options to Non-Employee Directors.

       

      6.4.1         Grants.
        Each
        Non-Employee Director shall be granted a Non-Qualified Option for 7,500 Common
        Shares, or such other number as may be determined by the Board of Directors
        from
        time to time, upon appointment or election as a Director and immediately
        after
        each subsequent Annual Shareholders’ Meeting if such person is serving as a
        Director at such time either by virtue of being re-elected or by virtue of
        serving a term in excess of one year. All grants shall be made on the date
        of
        the event giving rise to the Non-Qualified Option. Such grants shall continue
        until the number of Common Shares provided for in this Plan in Article 4
        are
        exhausted. The number of Common Shares specified herein shall be subject
        to
        change in accordance with the adjustment provisions provided by Section
        4.2.

       

      6.4.2        Terms
        and Conditions of
        Options Granted to Non-Employee Directors.

       

      6.4.2.1     The
        Term of all Options shall be ten years from the Award Date.

       

      6.4.2.2     The
        Option Price of all Options shall be the Fair Market Value of a Common Share
        on
        the Award Date.

       

      6.4.2.3     All
        Options shall become vested to the extent of 25% at the completion of each
        ninety day period following the date of grant.

       

      6.4.2.4     
        All Options shall be exercisable in the manner provided in Subsections 6.3.3
        and
        6.3.4.

       

      6.4.2.5     All
        Options shall be Transferable as provided in Article 11 and shall
        terminate only upon the expiration of their term or in accordance with Section
        6.4.3.

       

      6.4.3        Automatic
        Termination of
        Non-Qualified Option.   Notwithstanding anything contained
        herein to the contrary, if at any time a holder of an Option granted to a
        Non-Employee Director under this Plan becomes an employee, Officer or Director
        of or a consultant to an entity which the Committee determines is a competitor
        of the Company, such Option shall automatically terminate as of the date
        such
        conflicting relationship was established.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      6.4.4        The
        provisions of this Section 6.4 replace the 1999 Directors’ Stock Option
        Plan.

       

      ARTICLE
        7

      STOCK
        APPRECIATION
        RIGHTS

       

      7.1.          Grants. 
The
        Committee may, in its discretion, grant SARs to any Eligible Employee, Advisor
        and/or Non-Employee Director. A SAR may be granted either with or without
        reference to all or any part of a Stock Option. A “Tandem SAR” is a SAR granted
        with reference to a Stock Option (the “Reference Option”). A “Non-Tandem SAR” is
        a SAR granted without reference to a Stock Option. If the Reference Option
        is a
        Non-Qualified Option, a Tandem SAR may be granted at or after the date of
        the
        Reference Option; if the Reference Option is an Incentive Option, the Grant
        Date
        of a Tandem SAR must be the same as the Grant Date of the Reference Option.
        Any
        SAR shall have such terms and conditions, not inconsistent with this Plan,
        as
        are established by the Committee in connection with the Award.

       

      7.2.          Term. 
A
        Tandem
        SAR shall terminate and no longer be exercisable upon the termination of
        its
        Reference Option. A Non-Tandem SAR may have a term no longer than ten years
        from
        its Grant Date.

       

      7.3.          Exercise.  A
        Tandem SAR may only be exercisable at the times and, in whole or in part,
        to the
        extent that its Reference Option is exercisable. The exercise of a Tandem
        SAR
        shall automatically result in the surrender of the applicable portion of
        its
        Reference Option. A Non-Tandem SAR shall be exercisable in whole or in part
        as
        provided in its Award Agreement. Written notice of any exercise must be given
        in
        the form prescribed by the Committee.

       

      7.4.          Payment.  For
        purposes of payment of a SAR, the reference price per Common Share shall
        be the
        Option Price of the Reference Option in the case of a Tandem SAR and shall
        be
        the Fair Market Value of a Common Share on the Grant Date in the case of
        a
        Non-Tandem SAR. The Committee shall determine the form of payment.

       

      7.5.          Transferability
        and
        Termination.  SARs shall be Transferable as provided in Article
        11 and shall terminate in accordance with Article 12.

       

      ARTICLE
        8

      RESTRICTED
        AND UNRESTRICTED
        STOCK AWARDS

       

      8.1.          Grants
        of Restricted Stock
        Awards.   The Committee may, in its discretion, grant one or
        more Restricted Stock Awards to any Eligible Employee, Advisor and/or
        Non-Employee Director. Each Restricted Stock Award shall specify the number
        of
        Common Shares to be issued to the Participant, the date of such issuance,
        the
        price, if any (as required by applicable law), to be paid for such Common
        Shares
        by the Participant and the restrictions imposed on such Common Shares. The
        Committee may grant Restricted Stock Awards subject to the attainment of
        specified performance goals as set forth in Section 9.1.2, continued employment
        or such other limitations or restrictions as the Committee may
        determine.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      8.2.         
        Terms and Conditions
        of Restricted Stock Awards.   Restricted Stock Awards shall be
        subject to the following provisions:

       

      8.2.1       Issuance
        of Common
        Shares.   Common Shares of Restricted Stock may be issued
        immediately upon grant or upon vesting as determined by the
        Committee. 

       

      8.2.2      
        Stock Powers and Custody. 
If Common Shares of Restricted
        Stock are issued immediately upon grant, the
        Committee may require the Participant to deliver a stock power, endorsed
        in
        blank, relating to the Restricted Stock covered by such an Award. If any
        stock
        certificates are issued in respect of Common Shares of Restricted Stock awarded
        under this Plan, such certificates shall be registered in the name of the
        Participant and shall bear an appropriate legend referring to the terms,
        conditions and restrictions applicable to such Award. The Committee may also
        require that the certificates evidencing Restricted Stock be held in custody
        by
        the Company until the restrictions on them shall have lapsed.

       

      8.2.3        Shareholder
        Rights.  Unless otherwise determined by the Committee at the
        time of grant, Participants receiving Restricted Stock Awards shall not be
        entitled to dividend or voting rights for the Restricted Stock until they
        are
        fully vested.

       

      8.2.4      
        Termination of
        Employment.   Upon termination of employment during the
        Restricted Period, all Restricted Stock shall be forfeited, subject to such
        exceptions, if any, as are authorized by the Committee, as to termination
        of
        employment, Retirement, Disability, death or special circumstances.

       

      8.3.           
        Unrestricted Stock
        Awards.  The Committee may make awards of unrestricted Common
        Shares to key Eligible Employees, Advisors and/or Non-Employee Directors
        in
        recognition of outstanding achievements or contributions by such employees
        and/or advisors. Unrestricted Common Shares issued on a bonus basis may be
        issued for no cash consideration. Each certificate for unrestricted Common
        Shares shall be registered in the name of the Participant and delivered to
        the
        Participant.

       

      ARTICLE
        9

      PERFORMANCE
        AWARDS

       

      9.1.         
        Performance
        Awards.

       

      9.1.1     Grant.  
        The Committee may, in its discretion, grant Performance Awards to Eligible
        Employees and Advisors. A Performance Award shall consist of the right to
        receive either Common Shares or cash of an equivalent value, or a combination
        of
        both, at the end of a specified Performance Period or a fixed dollar amount
        payable in cash or Common Shares, or a combination of both, at the end of
        a
        specified Performance Period. The Committee shall determine the Eligible
        Employees and Advisors to whom and the time or times at which Performance
        Awards
        shall be granted, the number of Common Shares or the amount of cash to be
        awarded to any person, the duration of the period during which, and the
        conditions under which, a Participant’s Performance Award will vest, and the
        other terms and conditions of the Performance Award in addition to those
        set
        forth in Subsection 9.2

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      9.1.2     Criteria
        for
        Award.   The Committee may condition the grant or vesting of a
        Performance Award upon the attainment of specified performance goals, including
        but not limited to, appreciation in the Fair Market Value, book value or
        other
        measure of value of the Common Shares; the performance of the Company or
        groups
        within the Company based on increases in sales, earnings (which may include
        an
        add back for taxes, interest, and/or depreciation and amortization), operating
        earnings, profit margins, earnings per Common Share, cash flow, favorable
        comparison to established budgets, return on stockholders’ equity, return on
        assets, attainment of strategic and operational initiatives, market share,
        comparisons with various stock market indices, reduction in costs or a
        combination of such factors; personal performance measures or such other
        similar
        factors or criteria as the Committee shall determine

       

      9.2.        Terms
        and Conditions of
        Performance Awards.   Performance Awards shall be subject to
        the following terms and conditions:

       

      9.2.1     Dividends.  
        Unless otherwise determined by the Committee at the time of the grant of
        the
        Award, amounts equal to dividends declared during the Performance Period
        with
        respect to any Common Shares covered by a Performance Award will not be paid
        to
        the Participant.

       

      9.2.2     Payment.  
        Subject to the provisions of the Award Agreement and this Plan, at the
        expiration of the Performance Period, share certificates, cash or a combination
        of both, as the Committee may determine, shall be delivered to the Participant,
        or his or her legal representative or guardian, in a number or an amount
        equal
        to the vested portion of the Performance Award. Performance Awards may be
        paid
        in a lump sum or in installments following the close of the Performance Period
        or, in accordance with procedures established by the Committee, on a deferred
        basis.

       

      9.2.3     Transferability.  
        Performance Awards shall be Transferable as provided in Article 11.

       

      9.2.4     Termination
        of Employment or
        Advisory Relationship.   Subject to the applicable provisions
        of the Award Agreement and this Plan, upon termination of a Participant’s
        employment or advisory relationship with the Company or a Subsidiary for
        any
        reason during the Performance Period for a given Award, the Performance Award
        in
        question will vest or be forfeited in accordance with the terms and conditions
        established by the Committee.

       

      9.2.5     Tax
        Considerations.   The Committee may designate whether any
        Performance Award, either alone or in addition to other Awards granted under
        this Plan, being granted to any Eligible Employee or Advisor is intended
        to be
“performance-based compensation” as that term is used in Section 162(m) of the
        Code. Any such Awards designated to be “performance-based compensation” shall be
        conditioned on the achievement of one or more performance measures discussed
        herein or otherwise determined by the Committee, to the extent required by
        section 162(m) of the Code.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      ARTICLE
        10

      OTHER
        STOCK UNIT
        AWARDS

       

      10.1.      The
        Committee is authorized to grant to employees of the Company and its affiliates,
        either alone or in addition to other Awards granted under this Plan, Awards
        of
        Common Shares or other securities of the Company or any Subsidiary of the
        Company and other Awards that are valued in whole or in part by reference
        to, or
        are otherwise based on, Common Shares or other securities of the Company
        or any
        subsidiary of the Company (“Other Stock Unit Awards”). Other Stock Unit Awards
        may be paid in cash, Common Shares, other property or in a combination thereof,
        as the Committee shall determine.

       

      10.2.      The
        Committee shall determine the employees to whom Other Stock Unit Awards are
        to
        be made, the times at which such Awards are to be made, the number of Common
        Shares to be granted pursuant to such Awards and all other conditions of
        such
        Awards. The provisions of Other Stock Unit Awards need not be the same with
        respect to each recipient. The recipient shall not be permitted to sell,
        assign,
        transfer, pledge, or otherwise encumber the Common Shares or other securities
        which constitute Other Stock Unit Awards prior to the later of: (i) the date
        on
        which the Common Shares or other securities are issued, or (ii) the date
        on
        which any applicable restrictions, performance or deferral period lapses.
        Common
        Shares (including securities convertible into Common Shares) and other
        securities granted pursuant to Other Stock Unit Awards may be issued for
        no cash
        consideration or for such minimum consideration as may be required by applicable
        law. Common Shares (including securities convertible into Common Shares)
        and
        other securities purchased pursuant to purchase rights granted pursuant to
        Other
        Stock Unit Awards may be purchased for such consideration as the Committee
        shall
        determine, which price shall not be less than the Fair Market Value of such
        Common Shares or other securities on the Grant Date, unless the Committee
        otherwise elects. Unless the Committee determines otherwise to address specific
        considerations, Other Stock Unit Awards granted under this Plan shall have
        a
        vesting period of not less than one year.

       

      ARTICLE
        11

      TRANSFERABILITY
        OF
        AWARDS

       

      Awards
        and benefits payable under this Plan shall not be Transferable by the
        Participant during his or her lifetime and may not be assigned, exchanged,
        pledged, transferred or otherwise encumbered or disposed of except by will
        or
        the laws of descent and distribution or, in the case of an Incentive Option,
        except by a domestic relations order pursuant to Section 414(p)(1)(B) of
        the
        Code. Awards shall be exercisable during a Participant’s lifetime only as set
        forth in the preceding sentence by the Participant or, if permissible under
        applicable law, by the Participant’s guardian or legal
        representative.

       

      Notwithstanding
        the above, the Committee may, with respect to particular Awards, other than
        Incentive Options, establish or modify the terms of the Awards to allow the
        Awards to be Transferred, at the request of the Participant, to trusts
        established by the Participant or as to which the Participant is a grantor
        or to
        family members of theParticipant
        or otherwise for personal and tax planning purposes of the Participant. If
        the
        Committee allows such Transfer, such Awards shall not be exercisable for
        a
        period of not less than six months following the action of the Committee.
        To the
        extent the Committee action allowing such Transfer occurs within the last
        six
        months of the term of any Award granted under this Plan, other than an Incentive
        Option, the term of such Award shall automatically be extended for a period
        necessary to accommodate the exercise limitation discussed in the preceding
        sentence or by such other period as determined by the Committee. In no event
        can
        a SAR be Transferred if it was issued as a Tandem SAR with an Incentive Option
        as a Reference Option unless the SAR is Transferred with the Incentive Option
        and the Transfer satisfies the other terms of this Plan.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      ARTICLE
        12

      TERMINATION
        OF
        AWARDS

       

      12.1.     Termination
        of
        Awards.   All Awards issued under this Plan, except for those
        issued to Non-Employee Directors as provided in Section 6.4, shall terminate
        as
        follows:

       

      12.1.1    At
        Expiration of
        Term.   During any period of continuous employment or business
        relationship with the Company or a Subsidiary, an Award will be terminated
        only
        if it is fully exercised or if it has expired by its terms or by the terms
        of
        this Plan. For these purposes, any leave of absence approved by the Company
        shall not be deemed to be a termination of employment, nor shall such approved
        leave of absence toll the Term of any Award whereby the Term of an Award
        would
        be extended to account for the time of the approved leave of
        absence.

       

      12.1.2    Death,
        Disability or
        Retirement.   If a Participant’s employment by the Company or a
        Subsidiary terminates by reason of death, Disability or Retirement, or in
        the
        case of an advisory relationship if such business relationship terminates
        by
        reason of death or Disability, any Award held by such Participant, unless
        otherwise determined by the Committee at grant, shall be fully vested and
        may
        thereafter be exercised by the Participant or by the Participant’s beneficiary
        or legal representative, for a period of one year following termination of
        employment, death or Disability, and ninety days in the case of Retirement,
        or
        such longer period as the Committee may specify at or after grant in all
        cases
        other than Incentive Options, or until the expiration of the stated Term
        of such
        Award, whichever period is shorter.

       

      12.1.3    Termination
        for
        Cause.   Awards shall terminate immediately if employment is
        terminated for Cause or by voluntary action of the Participant without the
        consent of the Company. “Cause” is defined as including, but not limited to,
        theft of or intentional damage to the Company’s property, intentional harm to
        the Company’s reputation, material breach of the Participant’s duty of fidelity
        to the Company, excessive use of alcohol, the use of illegal drugs, the
        commission of a criminal act, willful violation of the Company’s policies, or
        trading in Common Shares for personal gain based on knowledge of the Company’s
        activities or results when such information is not available to the general
        public.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      12.1.4    Employment
        and
        Noncompetition Agreements.   If an individual holding an Award
        violates any term of any written employment, confidentiality or noncompetition
        agreement between the Company and that person, all existing Awards held by
        such
        person will terminate immediately. In addition, if at any time of such violation
        such person has exercised an Award for Common Shares but has not received
        certificates for the Common Shares to be issued, the Company may void the
        Award
        and its exercise. Any such actions by the Company shall be in addition to,
        and
        not in lieu of, any other rights or remedies available to the Company in
        such
        circumstances.

       

      12.1.5    Other.  Except
        as provided above in this Section 12.1, unless otherwise determined by the
        Committee at or after grant, if a Participant’s employment by, or business
        relationship with, the Company or a Subsidiary terminates for any reason
        other
        than death, as provided above, the Award will terminate on the earlier to
        occur
        of the stated expiration date or ninety days after termination of the employment
        or business relationship. If a Participant dies during the ninety day period
        following the termination of the employment or business relationship, any
        unexercised Award held by the Participant, or transferred by the Participant
        in
        accordance with Article 11, shall be exercisable, to the full extent that
        such
        Award was exercisable at the time of death, by the heirs, beneficiaries or
        legal
        representative of the estate of the Participant, for a period of one year
        after
        the date of termination of employment of the Participant or until the expiration
        of the stated term of the Award, whichever occurs first.

       

      12.2.      
        Acceleration of
        Vesting and Extension of Exercise Period Upon Termination.

       

      12.2.1    Notwithstanding
        anything contained in this Article 12, upon the termination of employment
        of a
        Participant who is not an Officer or Director of the Company, for reasons
        other
        than those provided in Sections 12.1.3 and 12.1.4, the Committee may, in
        its sole discretion, accelerate the vesting of all or part of any Awards
        held by
        such terminated Participant, or Transferred by the Participant in accordance
        with Article 11, so that such Awards are fully or partially exercisable as
        of
        the date of termination, and may also extend the permitted exercise period
        of
        such Awards for up to five years from the date of termination, but in no
        event
        longer than the original expiration date of such Award. Under the Code,
        extensions of the Term of Incentive Options will cause the Option to become
        non-qualified unless the exercise price is reset to be at least equal to
        the
        Fair Market Value on the date of extension and the other requirements of
        an
        Incentive Option are satisfied at that time.

       

      12.2.2    Except
        as provided in Section 12.2.1 or Section 4.2, in no event will the
        continuation of the exercisability of an Award beyond the date of termination
        of
        employment allow the Participant, or his or her beneficiaries or heirs, to
        accrue additional rights under the Plan, or to purchase more Common Shares
        through the exercise of an Award than could have been purchased on the date
        that
        employment was terminated.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

       

      ARTICLE
        13

      DEFERRALS

       

      The
        Committee may permit recipients of Awards to defer the distribution of all
        or
        part of any Award in accordance with such terms and conditions as the Committee
        shall establish.

       

      ARTICLE
        14

      TERMINATION
        OR AMENDMENT OF
        PLAN

       

      Notwithstanding
        any other provisions hereof to the contrary, the Board may assume
        responsibilities otherwise assigned to the Committee and may at any time,
        amend,
        in whole or in part, any provisions of this Plan, or suspend or terminate
        it
        entirely; provided, however, that, unless otherwise required by law, the
        rights
        of a Participant with respect to any Awards granted prior to such amendment,
        suspension or termination may not be impaired without the consent of such
        Participant. No amendment shall, without shareholder approval, increase the
        number of Common Shares available under the Plan, increase the number of
        Common
        Shares for which Incentive Options may be granted, cause the Plan or any
        Award
        granted to Covered Employees under the Plan to fail to meet the conditions
        for
        exclusion of application of the $1,000,000 deduction limitation imposed by
        the
        Section 162(m) of the Code where the Award was granted with the intention
        of
        avoiding such limitations, or without the consent of the
        Participant.

       

      ARTICLE
        15

      GENERAL
        PROVISIONS

       

      15.1.     No
        Right to Continued
        Employment or Business Relationship.  Neither the establishment
        of the Plan nor the granting of any Award hereunder shall confer upon any
        Participant any right to continue in the employ of, or in any business
        relationship with, the Company or any Subsidiary, or interfere in any way
        with
        the right of the Company or any Subsidiary to terminate such employment or
        business relationship at any time.

       

      15.2.     No
        Right to
        Award.  No Eligible Employee, Advisor or Non-Employee Director
        shall have the right to be selected to receive an Award under this Plan or,
        having been so selected, to be selected to receive a future Award or Stock
        Option. Neither the Award nor any benefits arising out of this Plan shall
        constitute part of a Participant’s employment or service contract with the
        Company or any Affiliate and, accordingly, this Plan and the benefits hereunder
        may be terminated at any time in the sole and exclusive discretion of the
        Company without giving rise to liability on the part of the Company or any
        Affiliate for severance payments.

       

      15.3.     No
        Claim/Uniformity.  Except as provided in Section 6.4, no
        Eligible Employee, Advisor or Non-Employee Director shall have any claim
        to
        receive any Award under this Plan, and there is no obligation for uniformity
        of
        treatment of Participants under this Plan.

       

      15.4.     Acceptance
        of Award
        Agreement.  The prospective recipient of any Award under this
        Plan shall not, with respect to such Award, be deemed to have become a
        Participant, or to have any rights with respect to such Award, until and
        unless
        such recipient shall have accepted any Award Agreement or other instrument
        evidencing the Award.

       

      15.5.     Certificates
        for Common
        Shares.  All certificates for Common Shares delivered under
        this Plan pursuant to any Award shall be subject to such stock-transfer orders
        and other restrictions as the Committee may deem advisable under the rules,
        regulations and other requirements of the Securities and Exchange Commission,
        any stock exchange upon which the Common Shares are then listed, and any
        applicable federal or state securities law, and the Committee may cause a
        legend
        or legends to be put on any certificates to make appropriate reference to
        such
        restrictions.

       

      15.6.     No
        Offer to Sell
        Securities.  No Award granted hereunder shall be construed as
        an offer to sell securities of the Company, and no such offer shall be
        outstanding, unless and until the Committee in its sole discretion has
        determined that any such offer, if made, would comply with all applicable
        requirements of the federal securities laws and any other laws to which such
        offer, if made, would be subject.

       

      15.7.     Other
        Plans.  The value of, or income arising from, any Awards issued
        under this Plan shall not be treated as compensation for purposes of any
        pension, profit sharing, life insurance, Disability or other Retirement or
        welfare benefit plan now maintained or hereafter adopted by the Company or
        any
        Subsidiary, unless such plan specifically provides to the contrary. Nothing
        contained in this Plan shall prevent the Company from adopting other or
        additional compensation arrangements, subject to stockholder approval if
        such
        approval is required.

       

      15.8.     Withholding
        of
        Taxes.  The Company may deduct from any payment to be made
        pursuant to this Plan, or otherwise require, prior to the issuance or delivery
        of any Common Shares or the payment of any cash to a Participant, or at any
        time
        thereafter as requested by the Company (including without limitation at such
        time that a Participant makes an election under section 83(b) of the Code),
        payment by the Participant of any Federal, state, local or foreign taxes
        required by law to be withheld. The Company may withhold from payroll and/or
        any
        other amounts payable to the Participants all sums required to satisfy such
        tax
        obligations. In addition, the Committee may permit any such withholding
        obligations to be satisfied by reducing the number of Common Shares otherwise
        deliverable or by accepting the delivery of previously owned Common Shares.
        Any
        fraction of a Common Share required to satisfy such tax obligations shall
        be
        disregarded and the amount due shall be paid instead in cash by the
        Participant.

       

      15.9.     Reimbursement
        of
        Taxes.  The Committee may provide in its discretion that the
        Company may reimburse a Participant for federal, state, local and foreign
        tax
        obligations incurred as a result of the grant or exercise of an Award issued
        under this Plan.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

       

      15.10.   Grants
        to Covered
        Employees.   Notwithstanding anything to the contrary in this
        Plan, Awards granted under the Plan to Covered Employees may be granted in
        a
        manner such that the Company’s income tax deduction for the compensation
        attributable to the Awards is not limited to the deduction restriction imposed
        by Section 162(m) of the Code (“Performance-Based Awards”).

       

      15.11.   Governing
        Law.   This Plan and actions taken in connection with it shall
        be governed by the laws of Ohio without regard to the principles of conflict
        of
        laws.

       

      15.12.   Liability.  
        No employee of the Company nor member of the Committee or the Board shall
        be
        liable for any action or determination taken or made in good faith with respect
        to this Plan or any Award granted hereunder and, to the fullest extent permitted
        by law, all employees and members shall be indemnified by the Company for
        any
        liability and expenses which may occur through any claim or cause of action
        arising under or in connection with this Plan or any Awards granted under
        this
        Plan.

       

      15.13.   Severability.
          If any provision of this Plan is or becomes invalid, illegal or
        unenforceable in any jurisdiction, or would disqualify this Plan or any Award
        under any law deemed applicable by the Committee, such provision shall be
        construed or deemed amended to conform to applicable laws or if it cannot
        be
        construed or deemed amended without, in the determination of the Committee,
        materially altering the intent of this Plan, it shall be stricken and the
        remainder of this Plan shall remain in full force and effect.

       

      15.14.   Shareholder
        Approval.   This Plan was approved by shareholders at the
        Company’s 2005 Annual Shareholders’ Meeting and amended in certain respects by
        the Board of Directors and restated January 22, 2008.exv10w13

 

Exhibit 10.13

BROADCOM CORPORATION

1998 STOCK INCENTIVE PLAN

(as Amended and Restated August 9, 2007)

ARTICLE ONE

GENERAL PROVISIONS

     I. PURPOSE OF THE PLAN

     This amended and restated 1998 Stock Incentive Plan is intended to promote the interests of
Broadcom Corporation, a California 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 not otherwise defined herein shall have the meanings assigned to such terms
in the attached Appendix.

     All share numbers in this restatement have been adjusted to reflect all splits and dividends
of the Corporation’s Common Stock subsequent to April 16, 1998, including the three-for-two stock
split that was effected on February 21, 2006 through the payment of a dividend of one additional
share of Class A common stock for every two shares of Class A common stock outstanding, and one
additional share of Class B common stock for every two shares of Class B common stock outstanding,
as of the record date of February 6, 2006.

     II. STRUCTURE OF THE PLAN

     A. The Plan as hereby amended and restated is divided into three equity incentive programs:

	 	•	 	the Discretionary Grant Program, under which eligible persons may, at the discretion of
the Plan Administrator, be granted options to purchase shares of Common Stock or stock
appreciation rights tied to the value of such Common Stock,
	 
	 	•	 	the Stock Issuance Program, under which eligible persons may be issued shares of Common
Stock pursuant to restricted stock or restricted stock unit awards or other stock-based
awards, made by and at the discretion of the Plan Administrator, that vest upon the
completion of a designated service period and/or the attainment of pre-established
performance milestones, or under which shares of Common Stock may be issued through direct
purchase or as a bonus for services rendered the Corporation (or any Parent or Subsidiary),
and
	 
	 	•	 	the Director Automatic Grant Program, under which Eligible Directors shall automatically
receive option grants and restricted stock units at designated intervals over their period
of Board service.

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

1

 

     III. ADMINISTRATION OF THE PLAN

     A. The Primary Committee shall have sole and exclusive authority to administer the
Discretionary Grant and Stock Issuance Programs with respect to Section 16 Insiders. Administration
of the Discretionary 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 Awards to members of the Primary Committee
must be authorized and approved by a disinterested majority of the Board.

     B. Members of the Primary Committee or any Secondary Committee shall serve for such period 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 Grant and
Stock Issuance Programs and to make such determinations under, and issue such interpretations of,
the provisions of those programs and any outstanding Awards 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
Grant and Stock Issuance Programs under its jurisdiction or any Award thereunder.

     D. 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 Award under the Plan.

     E. Administration of the Director Automatic Grant Program 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 Award under that program.

     IV. ELIGIBILITY

     A. The persons eligible to participate in the Discretionary 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. Each Plan Administrator shall, within the scope of its administrative jurisdiction under
the Plan, have full authority to determine (i) with respect to Awards made under the Discretionary
Grant Program, which eligible persons are to receive such Awards, the time or times when those
Awards are to be made, the number of shares to be covered by each such Award, the status of any
awarded option as either an Incentive Option or a Non-Statutory Option, the exercise price per
share in effect for each Award (subject

2

 

to the limitations set forth in Article Two), the time or times when each Award is to vest and
become exercisable and the maximum term for which the Award is to remain outstanding, and (ii) with
respect to Awards under the Stock Issuance Program, which eligible persons are to receive such
Awards, the time or times when the Awards are to be made, the number of shares subject to each such
Award, the vesting schedule (if any) applicable to the shares subject to such Award, and the cash
consideration (if any) payable for such shares.

     C. The Plan Administrator shall have the absolute discretion to grant options or stock
appreciation rights in accordance with the Discretionary Grant Program and to effect stock
issuances or other stock-based awards in accordance with the Stock Issuance Program.

     D. Eligible Directors for purposes of the Director Automatic Grant Program shall be limited
to members of the Board who are not, at the time of such determination, employees of the
Corporation (or any Parent or Subsidiary). However, a Board member who has previously been in the
employ of the Corporation (or any Parent or Subsidiary) shall not be eligible to receive an Award
under the Director Automatic Grant Program at the time he or she first becomes a non-employee Board
member, but shall be eligible to receive periodic Awards under the Director Automatic Grant Program
while he or she continues to serve as an Eligible Director.

     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. Subject to the
automatic share increase provisions of Section V.B. of this Article One and any additional shares
authorized by the vote of the Board and approved by the shareholders, as of March 9, 2007 the
number of shares of Common Stock reserved for issuance over the term of the Plan shall not exceed
418,854,627 shares.1 To the extent any unvested shares of Common Stock outstanding under
the Predecessor Plans as of the Original Effective Date are subsequently repurchased by the
Corporation, at the option exercise price paid per share, in connection with the holder’s
termination of Service prior to vesting in those shares, the repurchased shares shall be added to
the reserve of Common Stock available for issuance under the Plan, but in no event shall such
addition exceed 27,000,000 shares.

     B. The number of shares of Common Stock available for issuance under the Plan shall
automatically increase on the first trading day of January each calendar year during the term of
the Plan by an amount equal to four and one-half percent (4.5%) of the total number of shares of
Class A and Class B Common Stock outstanding on the last trading day in December of the immediately
preceding calendar year, but in no event shall any such annual increase exceed 45,000,000 shares.

     C. No one person participating in the Plan may be granted Awards for more than 9,000,000
shares of Common Stock in the aggregate per calendar year.

     D. Shares of Common Stock subject to outstanding Awards under the Plan (including options
incorporated into this Plan from the Predecessor Plans) shall be available for subsequent issuance
under the Plan to the extent (i) those Awards expire or terminate for any reason prior to the
issuance of the shares of Common Stock subject to those Awards or (ii) the Awards 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 exercise or
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 subsequent reissuance under the Plan. All shares that become available
for reissuance under the Plan, including the shares of Class B Common Stock subject to the
outstanding options incorporated into this Plan from the

 

			
	1.	 	The Common Stock issuable under the Plan shall be Class A Common Stock, except to the extent such
stock is to be issued upon the exercise of outstanding options incorporated from the Predecessor
Plans. For those options, the issuable stock shall be Class B Common Stock.

3

 

Predecessor Plans that expire or terminate unexercised and any unvested shares of Class B
Common Stock repurchased by the Corporation pursuant to its repurchase rights, shall be issuable
solely as Class A Common Stock. In addition, should the exercise price of an option under the Plan
be paid with shares of Common Stock, the authorized reserve of Common Stock under the Plan shall be
reduced only by the net number of shares issued under the exercised stock option. 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 issuance, exercise or vesting of an Award
under the Plan, the number of shares of Common Stock available for issuance under the Plan shall be
reduced only by the net number of shares issued with respect to that Award.

     E. If any change is made to the Common Stock by reason of any stock split, stock dividend,
recapitalization, combination of shares, exchange of shares, spin-off transaction or other change
affecting the outstanding Common Stock as a class without the Corporation’s receipt of
consideration or should the value of outstanding shares of Common Stock be substantially reduced as
a result of a spin-off transaction or an extraordinary dividend or distribution, 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 Awards under the Plan per calendar year, (iii) the number and/or
class of securities for which stock option grants and restricted stock unit awards are subsequently
to be made under the Director Automatic Grant Program to new and continuing Eligible Directors,
(iv) the number and/or class of securities and the exercise or base price per share (or any other
cash consideration payable per share) in effect under each outstanding Award under the
Discretionary Grant Program and the Director Automatic Grant Program, (v) the number and/or class
of securities and exercise price per share in effect under each outstanding option incorporated
into this Plan from the Predecessor Plans, (vi) the number and/or class of securities subject to
each outstanding Award under the Stock Issuance Program and the cash consideration (if any) payable
per share thereunder, (vii) the maximum number and/or class of securities by which the share
reserve may increase automatically each calendar year pursuant to the provisions of Section V.B of
this Article One and (viii) the maximum number and/or class of securities that may be added to the
Plan through the repurchase of unvested shares issued under the Predecessor Plans. Similar
adjustments shall be made to the number of shares of Class B Common Stock issuable under the Plan
and the number of shares subject to outstanding stock options for Class B shares and exercise price
per share in effect under those options in the event of any similar changes to the outstanding
shares of Class B Common Stock. To the extent such adjustments are to be made to outstanding
Awards, those adjustments shall be effected in a manner that shall preclude the enlargement or
dilution of rights and benefits under those Awards. The adjustments determined by the Plan
Administrator shall be final, binding and conclusive.

4

 

ARTICLE TWO

DISCRETIONARY 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
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 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 valued at Fair Market Value on the Exercise Date and held for
the period (if any) necessary to avoid any additional charges to the Corporation’s earnings for
financial reporting purposes, 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 brokerage firm (designated by the Corporation)2 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 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 or as otherwise
specifically

 

			
	2.	 	With respect to Section 16 Insiders, the brokerage firm need only be reasonably satisfactory
to the Corporation for purposes of administering such procedure.

5

 

authorized by the Plan Administrator in its sole discretion pursuant to an express written
agreement with Optionee, 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 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, 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 that option is at the time
exercisable. No additional shares shall vest under the option following the Optionee’s
cessation of Service, except to the extent (if any) specifically authorized by the Plan
Administrator in its sole discretion pursuant to an express written agreement with Optionee.
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 shares for
which the option has not been exercised.

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

     E. Repurchase Rights. The Plan Administrator shall have the discretion to grant
options that 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. Transferability of Options. The transferability of options granted under the Plan
shall be governed by the following provisions:

     (i) Incentive Options. During the lifetime of the Optionee, Incentive Options shall
be exercisable only by the Optionee and shall not be assignable or transferable other than by
will or the laws of inheritance following the Optionee’s death.

6

 

     (ii) Non-Statutory Options. Non-Statutory Options shall be subject to the same
limitation on transfer as Incentive Options, except that the Plan Administrator may structure one
or more Non-Statutory Options so that the option may be assigned in whole or in part during the
Optionee’s lifetime to one or more Family Members of the Optionee or to a trust established
exclusively for the Optionee and/or one or more such Family Members, 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.

     (iii) Beneficiary Designations. Notwithstanding the foregoing, the Optionee may
designate one or more persons as the beneficiary or beneficiaries of his or her outstanding
options under this Article Two (whether Incentive Options or Non-Statutory Options), 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, together with any additions, deletions or changes thereto imposed
from time to time pursuant to the provisions of the Code governing Incentive Options, 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 Five shall be applicable to Incentive Options. Options that
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. Exercise Price. The exercise price per share shall not be less than one hundred
percent (100%) of the Fair Market Value per share of Common Stock on the option grant date.

     C. 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 that become exercisable for the first time in the same
calendar year, then for purposes of the foregoing limitation on the exercisability of those options
as Incentive Options, such options shall be deemed to become first exercisable in that calendar
year on the basis of the chronological order in which they were granted, except to the extent
otherwise provided under applicable law or regulation.

     D. 10% Shareholder. If any Employee to whom an Incentive Option is granted is a 10%
Shareholder, 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.

7

 

     III. STOCK APPRECIATION RIGHTS

     A. Authority. The Plan Administrator shall have full power and authority,
exercisable in its sole discretion, to grant stock appreciation rights in accordance with this
Section III to selected Optionees or other individuals eligible to receive option grants under the
Discretionary Grant Program.

     B. Types. Two types of stock appreciation rights shall be authorized for issuance
under this Section III: (i) tandem stock appreciation rights (“Tandem Rights”), and (ii) standalone
stock appreciation rights (“Standalone Rights”).

     C. Tandem Rights. The following terms and conditions shall govern the grant and
exercise of Tandem Rights.

     1. One or more Optionees may be granted a Tandem Right, exercisable upon such terms and
conditions as the Plan Administrator may establish, to elect between the exercise of the
underlying stock option for shares of Common Stock or the surrender of that option in exchange
for a distribution from the Corporation in an amount equal to the excess of (i) 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 (ii) the aggregate
exercise price payable for such vested shares.

     2. 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 accordingly become
entitled under this Section III 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.

     3. 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 (i) five (5) business days after the receipt of the rejection notice
or (ii) the last day on which the option is otherwise exercisable in accordance with the terms of
the instrument evidencing such option, but in no event may such rights be exercised more than ten
(10) years after the date of the option grant.

     D. Standalone Rights. The following terms and conditions shall govern the grant and
exercise of Standalone Rights under this Article Two:

     1. One or more individuals eligible to participate in the Discretionary Grant Program may be
granted a Standalone Right not tied to any underlying option under this Discretionary Grant
Program. The Standalone Right shall relate to a specified number of shares of Common Stock and
shall be exercisable upon such terms and conditions as the Plan Administrator may establish. In
no event, however, may the Standalone Right have a maximum term in excess of ten (10) years
measured from the grant date. Upon exercise of the Standalone Right, the holder shall be entitled
to receive a distribution from the Corporation in an amount equal to the excess of (i) the
aggregate Fair Market Value (on the exercise date) of the shares of Common Stock underlying the
exercised right over (ii) the aggregate base price in effect for those shares.

     2. The number of shares of Common Stock underlying each Standalone Right and the base price
in effect for those shares shall be determined by the Plan Administrator in its sole discretion
at the time

8

 

the Standalone Right is granted. In no event, however, may the base price per share be less
than the Fair Market Value per underlying share of Common Stock on the grant date.

     3. Standalone Rights shall be subject to the same transferability restrictions applicable to
Non-Statutory Options and may not be transferred during the holder’s lifetime, except to one or
more Family Members of the holder or to a trust established exclusively for the holder and/or
such Family Members, to the extent such assignment is in connection with the holder’s estate plan
or pursuant to a domestic relations order covering the Standalone Right as marital property. In
addition, one or more beneficiaries may be designated for an outstanding Standalone Right in
accordance with substantially the same terms and provisions as set forth in Section I.F of this
Article Two.

     4. The distribution with respect to an exercised Standalone Right may be made in shares of
Common Stock valued at Fair Market Value on the exercise date, in cash, or partly in shares and
partly in cash, as the Plan Administrator shall in its sole discretion deem appropriate.

     5. The holder of a Standalone Right shall have no shareholder rights with respect to the
shares subject to the Standalone Right unless and until such person shall have exercised the
Standalone Right and become a holder of record of shares of Common Stock issued upon the exercise
of such Standalone Right.

     E. Post-Service Exercise. The provisions governing the exercise of Tandem and
Standalone Appreciation Rights following the cessation of the recipient’s Service or the
recipient’s death shall be substantially the same as those set forth in Section I.C of this Article
Two for the options granted under the Discretionary Grant Program.

     F. Net Counting. Upon the exercise of any Tandem or Standalone Right under this
Section III, the share reserve under Section V of Article One shall only be reduced by the net
number of shares actually issued by the Corporation upon such exercise, and not by the gross number
of shares as to which such Tandem or Standalone Right is exercised.

     IV. CHANGE IN CONTROL/HOSTILE TAKE-OVER

     A. No Award outstanding under the Discretionary Grant Program at the time of a Change in
Control shall vest and become exercisable on an accelerated basis if and to the extent that: (i)
such Award is, in connection with the Change in Control, assumed by the successor corporation (or
parent thereof) or otherwise continued in full force and effect pursuant to the terms of the Change
in Control transaction, (ii) such Award is replaced with a cash retention program of the successor
corporation that preserves the spread existing at the time of the Change in Control on the shares
of Common Stock as to which the Award is not otherwise at that time vested and exercisable and
provides for subsequent payout of that spread in accordance with the same exercise/vesting schedule
applicable to those shares, or (iii) the acceleration of such Award is subject to other limitations
imposed by the Plan Administrator. However, if none of the foregoing conditions are satisfied, each
Award outstanding under the Discretionary Grant Program at the time of the Change in Control but
not otherwise vested and exercisable as to all the shares at the time subject to that Award shall
automatically accelerate so that each such Award shall, immediately prior to the effective date of
the Change in Control, vest and become exercisable as to all the shares of Common Stock at the time
subject to that Award and may be exercised as to any or all of those shares as fully vested shares
of Common Stock.

     B. All outstanding repurchase rights under the Discretionary Grant Program shall also
terminate automatically, and the shares of Common Stock subject to those terminated rights shall
immediately vest in full, in the event of any Change in Control, except to the extent: (i) those
repurchase rights are assigned

9

 

to the successor corporation (or parent thereof) or otherwise continue in full force and
effect pursuant to the terms of the Change in Control transaction or (ii) such accelerated vesting
is precluded by other limitations imposed by the Plan Administrator.

     C. Immediately following the consummation of the Change in Control, all outstanding Awards
under the Discretionary Grant Program shall terminate and cease to be outstanding, except to the
extent assumed by the successor corporation (or parent thereof) or otherwise expressly continued in
full force and effect pursuant to the terms of the Change in Control transaction.

     D. Each option that is assumed in connection with a Change in Control or otherwise continued
in effect shall be appropriately adjusted, immediately after such Change in Control, to apply to
the number and class of securities that would have been issuable to the Optionee in consummation of
such Change in Control had the option been exercised immediately prior to such Change in Control.
In the event outstanding Standalone Rights are to be assumed in connection with a Change in Control
transaction or otherwise continued in effect, the shares of Common Stock underlying each such
Standalone Right shall be adjusted immediately after such Change in Control to apply to the number
and class of securities into which those shares of Common Stock would have been converted in
consummation of such Change in Control had those shares actually been outstanding at that time.
Appropriate adjustments to reflect such Change in Control 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 base price per share in effect under
each outstanding Standalone Right, provided the aggregate base price shall remain the same, (iii)
the maximum number and/or class of securities available for issuance over the remaining term of the
Plan, (iv) the maximum number and/or class of securities for which any one person may be granted
Awards under the Plan per calendar year, (v) the maximum number and/or class of securities by which
the share reserve is to increase automatically each calendar year pursuant to the automatic share
increase provisions of the Plan, (vi) the number and/or class of securities for which stock option
grants and restricted stock unit awards are subsequently to be made under the Director Automatic
Grant Program to new and continuing Eligible Directors and (vii) the maximum number and class of
securities that may be added to the Plan through the repurchase of unvested shares issued under the
Predecessor Plans. To the extent the actual holders of the Corporation’s outstanding Common Stock
receive cash consideration for their Common Stock in consummation of the Change in Control, the
successor corporation may, in connection with the assumption or continuation of the outstanding
Awards under the Discretionary Grant Program, substitute, for the securities underlying those
assumed Awards, 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 Change in Control transaction.

     E. The Plan Administrator shall have the discretionary authority to structure one or more
outstanding Awards under the Discretionary Grant Program so that those Awards shall, immediately
prior to the effective date of a Change in Control or a Hostile Take-Over, vest and become
exercisable as to all the shares at the time subject to those Awards and may be exercised as to any
or all of those shares as fully vested shares of Common Stock, whether or not those Awards are to
be assumed or otherwise continued in full force and effect pursuant to the express terms of such
transaction. In addition, the Plan Administrator shall have the discretionary authority to
structure one or more of the Corporation’s repurchase rights under the Discretionary Grant Program
so that those rights shall immediately terminate at the time of such Change in Control or
consummation of such Hostile Take-Over and shall not be assignable to successor corporation (or
parent thereof), and the shares subject to those terminated rights shall accordingly vest in full
at the time of such Change in Control or consummation of such Hostile Take-Over.

     F. The Plan Administrator shall have full power and authority to structure one or more
outstanding Awards under the Discretionary Grant Program so that those Awards shall immediately
vest and become

10

 

exercisable as to all of the shares at the time subject to those Awards 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 Change
in Control or a Hostile Take-Over in which those Awards do not otherwise vest on an accelerated
basis. Any Awards so accelerated shall remain exercisable as to fully vested shares until the
expiration or sooner termination of their term. In addition, the Plan Administrator may structure
one or more of the Corporation’s repurchase rights under the Discretionary Grant Program 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 portion of any Incentive Option accelerated in connection with a 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 Non-Statutory Option
under the Federal tax laws.

     H. Awards outstanding under the Discretionary 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.

11

 

ARTICLE THREE

STOCK ISSUANCE PROGRAM

     I. STOCK ISSUANCE TERMS

     A. Issuances. 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 that complies with the terms specified
below. Shares of Common Stock may also be issued under the Stock Issuance Program pursuant to share
right awards or restricted stock units, awarded by and at the discretion of the Plan Administrator,
that entitle the recipients to receive the shares underlying those awards or units upon the
attainment of designated performance goals and/or the satisfaction of specified Service
requirements or upon the expiration of a designated time period following the vesting of those
awards or units.

     B. Issue Price.

     1. The price per share at which shares of Common Stock may be issued under the Stock Issuance
Program 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. Shares of Common Stock may be issued under the Stock Issuance Program for any of the
following items of consideration that the Plan Administrator may deem appropriate in each
individual instance:

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

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

     (iii) any other valid form of consideration permissible under the California Corporations
Code at the time such shares are issued.

     C. 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 and/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 or restricted stock units that entitle
the recipients to receive the shares underlying those awards and/or units upon the attainment of
designated performance goals or the satisfaction of specified Service requirements or upon the
expiration of a designated time period following the vesting of those awards or units, including
(without limitation) a deferred distribution date following the termination of the Participant’s
Service.

     2. The Plan Administrator shall also have the discretionary authority, consistent with Code
Section 162(m), to structure one or more Awards under the Stock Issuance Program so that the shares
of Common Stock subject to those Awards shall vest (or vest and become issuable) upon the
achievement of certain pre-established corporate performance goals based on one or more of the
following criteria: (i) return on total shareholder equity; (ii) net income per share of Common
Stock; (iii) net income or operating income; (iv) earnings before interest, taxes, depreciation,
amortization and stock-based

12

 

compensation costs, or operating income before depreciation and amortization; (v) sales or revenue targets;
(vi) return on assets, capital or investment; (vii) cash flow; (viii) market share; (ix) cost
reduction goals; (x) budget comparisons; (xi) implementation or completion of projects or processes
strategic or critical to the Corporation’s business operations; (xii) measures of customer
satisfaction; (xiii) any combination of, or a specified increase in, any of the foregoing; and
(xiv) the formation of joint ventures, research and development collaborations, marketing or
customer service collaborations, or the completion of other corporate transactions intended to
enhance the Corporation’s revenue or profitability or expand its customer base; provided, however,
that for purposes of items (ii), (iii) and (vii) above, the Plan Administrator may, at the time the
Awards are made, specify certain adjustments to such items as reported in accordance with generally
accepted accounting principles in the U.S. (“GAAP”), which will exclude from the calculation of
those performance goals one or more of the following: certain charges related to acquisitions,
stock-based compensation, employer payroll tax expense on certain stock option exercises,
settlement costs, restructuring costs, gains or losses on strategic investments, non-operating
gains or losses, certain other non-cash charges, valuation allowance on deferred tax assets, and
the related income tax effects, purchases of property and equipment, and any extraordinary non-
recurring items as described in Accounting Principles Board Opinion No. 30, provided that such
adjustments are in conformity with those reported by the Corporation on a non-GAAP basis. In
addition, such performance goals may be based upon the attainment of specified levels of the
Corporation’s performance under one or more of the measures described above relative to the
performance of other entities and may also be based on the performance of any of the Corporation’s
business groups or divisions thereof or any Parent or Subsidiary. Performance goals may include a
minimum threshold level of performance below which no award will be earned, levels of performance
at which specified portions of an award will be earned, and a maximum level of performance at which
an award will be fully earned. The Plan Administrator may provide that, if the actual level of
attainment for any performance objective is between two specified levels, the amount of the award
attributable to that performance objective shall be interpolated on a straight-line basis.

     3. Any new, substituted or additional securities or other property (including money paid other
than as a regular cash dividend) that the Participant may have the 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, spin-off transaction or other change
affecting the outstanding Common Stock as a class without the Corporation’s receipt of
consideration or a substantial reduction in the value of outstanding shares of Common Stock as a
result of a spin-off transaction or an extraordinary dividend or distribution, 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.

     4. The Participant shall have full shareholder 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. The Participant shall not
have any shareholder rights with respect to the shares of Common Stock subject to a restricted
stock unit or share right award until that award vests and the shares of Common Stock are actually
issued thereunder. However, dividend-equivalent units may be paid or credited, either in cash or in
actual or phantom shares of Common Stock, on outstanding restricted stock unit or share right
awards, subject to such terms and conditions as the Plan Administrator may deem appropriate.

     5. 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

13

 

shareholder rights with respect to those shares. To the extent the surrendered shares were
previously issued to the Participant for consideration paid in cash, cash equivalent or otherwise,
the Corporation shall repay to the Participant the same amount and form of consideration as the
Participant paid for the surrendered shares.

     6. The Plan Administrator may in its discretion waive the surrender and cancellation of one or
more unvested shares of Common Stock that would otherwise occur upon the cessation of the
Participant’s Service or the non-attainment of the performance objectives applicable to those
shares. Any 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. However, no vesting requirements tied to the attainment
of performance objectives may be waived with respect to shares that were intended at the time of
issuance to qualify as performance-based compensation under Code Section 162(m), except in the
event of the Participant’s Involuntary Termination or as otherwise provided in Section II.E of this
Article Three.

     7. Outstanding share right awards or restricted stock units under the Stock Issuance Program
shall automatically terminate, and no shares of Common Stock shall actually be issued in
satisfaction of those awards or units, if the performance goals or Service requirements established
for such awards or units are not attained or satisfied. The Plan Administrator, however, shall have
the discretionary authority to issue vested shares of Common Stock under one or more outstanding
share right awards or restricted stock units as to which the designated performance goals or
Service requirements have not been attained or satisfied. However, no vesting requirements tied to
the attainment of performance goals may be waived with respect to awards or units which were at the
time of grant intended to qualify as performance-based compensation under Code Section 162(m),
except in the event of the Participant’s Involuntary Termination or as otherwise provided in
Section II.E of this Article Three.

     II. CHANGE IN CONTROL/HOSTILE TAKE-OVER

     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 Change in Control, except to the extent
(i) those repurchase rights are to be assigned to the successor corporation (or parent thereof) or
otherwise continued in full force and effect pursuant to the express terms of the Change in Control
transaction or (ii) such accelerated vesting is precluded by other limitations imposed in the Stock
Issuance Agreement.

     B. Each outstanding Award under the Stock Issuance Program that is assumed in connection with
a Change in Control or otherwise continued in effect shall be adjusted immediately after the
consummation of that Change in Control to apply to the number and class of securities into which
the shares of Common Stock subject to the Award immediately prior to the Change in Control would
have been converted in consummation of such Change in Control had those shares actually been
outstanding at that time, and appropriate adjustments shall also be made to the cash consideration
(if any) payable per share thereunder, provided the aggregate amount of such consideration shall
remain the same. If any such Award is not so assumed or otherwise continued in effect or replaced
with a cash retention program that preserves the Fair Market Value of the shares underlying the
Award at the time of the Change in Control and provides for the subsequent payout of that value in
accordance with the vesting schedule in effect for the Award at the time of such Change in Control,
such Award shall vest, and the shares of Common Stock subject to that Award shall be issued as
fully-vested shares, immediately prior to the consummation of the Change in Control.

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     C. The Plan Administrator shall have the discretionary authority to structure one or more
unvested Awards under the Stock Issuance Program so that the shares of Common Stock subject to
those Awards shall automatically vest (or vest and become issuable) in whole or in part immediately
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 transaction.

     D. The Plan Administrator shall also have the discretionary authority to structure one or
more unvested Awards under the Stock Issuance Program so that the shares of Common Stock subject to
those Awards shall automatically vest (or vest and become issuable) in whole or in part immediately
upon the occurrence of a Hostile Take-Over 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 Hostile Take-Over.

     E. The Plan Administrator’s authority under Paragraphs C and D of this Section II shall also
extend to any Award intended to qualify as performance-based compensation under Code Section
162(m), even though the automatic vesting of those Awards pursuant to Paragraph C or D of this
Section II may result in their loss of performance-based status under Code Section 162(m).

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ARTICLE FOUR

DIRECTOR AUTOMATIC GRANT PROGRAM

     I. TERMS

     A. Grant Dates. Grants under this amended and restated Article Four shall be made on
the dates specified below:

     1. On the date of each annual meeting of shareholders, beginning with the 2006 Annual Meeting
of Shareholders, each individual who is to continue to serve as an Eligible Director, whether or
not that individual is standing for re-election to the Board at that particular annual meeting of
shareholders, shall automatically be granted a Non-Statutory Option to purchase 10,000 shares of
Common Stock and restricted stock units covering 5,000 shares of Common Stock. There shall be no
limit on the number of such annual option grants and restricted stock unit awards any one Eligible
Director may receive over his or her period of Board service, and Eligible Directors who have
previously been in the employ of the Corporation (or any Parent or Subsidiary) shall be eligible to
receive one or more such annual option grants and restricted stock unit awards over their period of
Board service.

     2. Each individual who is first elected or appointed as an Eligible Director at any time on or
after February 24, 2006, other than at an annual meeting of shareholders, shall, on the date he or
she commences Service as an Eligible Director, automatically be granted the following Awards,
provided such individual has not previously been in the employ of the Corporation (or any Parent or
Subsidiary):

     (i) a Non-Statutory Option to purchase that number of shares of Common Stock determined by
multiplying the normal 10,000-share automatic annual option grant by a fraction the numerator of
which is the number of months (including any partial month, expressed as a fraction) that will
elapse between the date he or she commenced Service as an Eligible Director and the first May 5th
next succeeding such Service commencement date and the denominator of which is 12 months; and

     (ii) a restricted stock unit award covering the number of shares of Common Stock determined
by multiplying the normal 5,000-share automatic annual restricted stock unit award by a fraction
the numerator of which is the number of months (including any partial month, expressed as a
fraction) that will elapse between the date he or she commenced Service as an Eligible Director
and the first May 5th next succeeding such Service commencement date and the denominator of which
is 12 months.

     B. Exercise Price.

     1. The exercise price per share for each option granted under this Article Four shall be equal
to one hundred percent (100%) of the Fair Market Value per share of Common Stock on the option
grant date.

     2. The exercise price shall be payable in one or more of the alternative forms authorized
under the Discretionary 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.

     C. Option Term. Each option granted under this Article Four shall have a term of ten
(10) years measured from the option grant date.

     D. Exercise and Vesting of Options. Each option granted under this Article Four
shall be immediately exercisable for any or all of the option shares. However, any unvested shares
purchased under the option shall be subject to repurchase by the Corporation, at the exercise price
paid per share,

16

 

upon the Optionee’s cessation of Board service prior to vesting in those shares.
The shares subject to each grant shall vest, and the Corporation’s repurchase right shall lapse, in a series of one or
more successive equal quarterly installments over the period measured from the date of the option
grant. The quarterly vesting dates shall be the 5th day of February, May, August and November each
year, with the first such quarterly vesting date to be at least thirty (30) days after the date of
the option grant and the final vesting date to be the earlier of (i) the last quarterly vesting
date determined for such option in accordance with the foregoing specified dates or (ii) the day
immediately preceding the date of the first annual meeting of shareholders following the grant date
of such option. The Optionee shall not vest in any additional shares subject to such option
following his or her cessation of service as a Board member; provided, however, that should such
cessation of Board service occur by reason of the Optionee’s death or Permanent Disability, all the
shares purchased or purchasable under that option shall immediately vest.

     E. Vesting of Restricted Stock Units and Issuance of Shares. Each restricted stock
unit award shall vest in a series of one or more successive equal quarterly installments over the
period measured from the date of such award. The quarterly vesting dates shall be the 5th day of
February, May, August and November each year, with the first such quarterly vesting date to be at
least thirty (30) days after the date of the award and the final vesting date to be the earlier of
(i) the last quarterly vesting date determined for such award in accordance with the foregoing
specified dates or (ii) the day immediately preceding the date of the first annual meeting of
shareholders following the date of such award. The Board member shall not vest in any additional
restricted stock units following his or her cessation of service as a Board member; provided,
however, that each restricted stock unit award held by an Eligible Director under the Director
Automatic Grant Program will immediately vest in full upon his or her cessation of Board service by
reason of death or Permanent Disability. As the restricted stock units under the Director Automatic
Grant Program vest in one or more installments, the shares of Common Stock underlying those vested
units shall be promptly issued.

     F. Limited Transferability of Options. Each option granted under the Director
Automatic Grant Program may be assigned in whole or in part during the Optionee’s lifetime to one
or more Family Members of the Optionee or to a trust established exclusively for Optionee and/or
for one or more such Family Members, 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. The Optionee may also designate one or
more persons as the beneficiary or beneficiaries of his or her outstanding options under this
Article Four, 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.

     G. Termination of Board Service. The following provisions shall govern the exercise
of any outstanding options under the Director Automatic Grant Program held by the Optionee at the
time the Optionee ceases to serve as a Board member:

     (i) The Optionee (or, in the event of Optionee’s death, the personal representative of the
Optionee’s estate or the person or persons to whom the option is transferred pursuant to the
Optionee’s will or the laws of inheritance or the designated beneficiary or beneficiaries of such
option) shall have a twelve (12)-month period following the date of such cessation of Board
service in which to exercise each such option.

17

 

     (ii) During the twelve (12)-month exercise period, the option may not be exercised for more
than the number of vested shares of Common Stock for which the option is exercisable at the time
of the Optionee’s cessation of Board service.

     (iii) Should the Optionee cease to serve as a Board member by reason of death or Permanent
Disability, all shares at the time subject to the option shall immediately vest so that such
option may, during the twelve (12)-month exercise period following such cessation of Board
service, be exercised for all or any portion of those shares as fully-vested shares of Common
Stock.

     (iv) In no event shall the option remain exercisable after the expiration of its term. Upon
the expiration of the twelve (12)-month 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 Board service for any reason other than death or Permanent Disability,
terminate and cease to be outstanding to the extent the option is not otherwise at that time
exercisable for vested shares.

     II. CHANGE IN CONTROL/HOSTILE TAKE-OVER

     A. In the event of any Change in Control while the Eligible Director remains a Board member,
the following provisions shall apply:

     (i) The shares of Common Stock at the time subject to each outstanding option held by such
Eligible Director under the Director Automatic Grant Program but not otherwise vested shall
automatically vest in full so that each such option shall, immediately prior to the effective
date of the Change in Control, become exercisable for all the option shares as fully-vested
shares of Common Stock and may be exercised for any or all of those vested shares. Immediately
following the consummation of the Change in Control, each automatic option grant shall terminate
and cease to be outstanding, except to the extent assumed by the successor corporation (or parent
thereof) or otherwise continued in full force and effect pursuant to the express terms of the
Change in Control transaction.

     (ii) The shares of Common Stock that are at the time of such Change in Control subject to
any outstanding restricted stock units awarded to such Director under the Director Automatic
Grant Program shall, immediately prior to the effective date of the Change in Control, vest in
full and be issued to such individual as soon as administratively practicable thereafter, but in
no event later than fifteen (15) business days.

     B. In the event of a Hostile Take-Over while the Eligible Director remains a Board member,
the following provisions shall apply:

     (i) The shares of Common Stock at the time subject to each option outstanding option held by
such Eligible Director under the Director Automatic Grant Program but not otherwise vested shall
automatically vest in full so that each such option shall, immediately prior to the effective
date of the Hostile Take-Over, become exercisable for all the option shares as fully-vested
shares of Common Stock and may be exercised for any or all of those vested shares. Each such
option shall remain exercisable for such fully-vested option shares until the expiration or
sooner termination of the option term or the surrender of the option in connection with that
Hostile Take-Over.

     (ii) The shares of Common Stock that are at the time of such Hostile Take-Over subject to
any outstanding restricted stock units awarded to such Eligible Director under the Director
Automatic Grant Program shall, immediately prior to the effective date of the Hostile Take-Over,
vest in full and be

18

 

issued to such individual as soon as administratively practicable thereafter, but in no
event later than fifteen (15) business days.

     C. All outstanding repurchase rights under the Director Automatic 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 Change in Control or Hostile Take-Over.

     D. Each option that is assumed in connection with a Change in Control or otherwise continued
in full force and effect shall be appropriately adjusted, immediately after such Change in Control,
to apply to the number and class of securities that would have been issuable to the Optionee in
consummation of such Change in Control had the option been exercised immediately prior to such
Change in Control. 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 Change in
Control transaction, the successor corporation may, in connection with the assumption of the
outstanding options under the Director Automatic 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 Change in Control transaction.

     F. The existence of outstanding Awards under the Director Automatic 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.

     III. REMAINING TERMS

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

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ARTICLE FIVE

MISCELLANEOUS

     I. TAX WITHHOLDING

     A. The Corporation’s obligation to deliver shares of Common Stock upon the issuance, exercise
or vesting of Awards 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 Optionees or
Participants to whom Awards are made under the Plan (other than the Awards made under the Director
Automatic Grant Program) with the right to utilize either or both of the following methods to
satisfy all or part of the Withholding Taxes to which those holders may become subject in
connection with the issuance, exercise or vesting of those Awards.

     Stock Withholding: The election to have the Corporation withhold, from the shares
of Common Stock otherwise issuable upon the issuance, exercise or vesting of those Awards 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 Optionee or
Participant and make a cash payment equal to such Fair Market Value directly to the appropriate
taxing authorities on such individual’s behalf. The shares of Common Stock so withheld shall not
reduce the number of shares of Common Stock authorized for issuance under the Plan.

     Stock Delivery: The election to deliver to the Corporation, at the time the Award
is issued, exercised or vests, one or more shares of Common Stock previously acquired by such the
Optionee or Participant (other than in connection with the issuance, exercise or 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 such holder. The
shares of Common Stock so delivered shall not be added to the shares of Common Stock authorized
for issuance under the Plan.

     II. SHARE ESCROW/LEGENDS

     Unvested shares issued under the Plan 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.

     III. EFFECTIVE DATE AND TERM OF THE PLAN

     A. The Plan became effective immediately on the Original Effective Date. Awards may be
granted under the Discretionary Grant Program, the Stock Issuance Program and the Director
Automatic Grant Program at any time on or after the Original Effective Date.

     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 April 16, 1998.
All options outstanding under the Predecessor Plans on April 16, 1998 were incorporated into the
Plan at that time and are treated as outstanding options under the Plan. However, each outstanding
option so incorporated 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 incorporated options with respect to their
acquisition of shares of Common Stock.

20

 

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

     D. The Plan was amended and restated by the Board on March 9, 2007 (the “2007 Restatement”),
subject to shareholder approval at the 2007 Annual Meeting of Shareholders, to extend the term of
the plan through March 9, 2017 and effect various technical revisions to facilitate plan
administration. The revisions to the Plan shall not become effective unless the shareholders
approve the 2007 Restatement at the 2007 Annual Meeting of Shareholders. Should shareholder
approval not be obtained at the 2007 Annual Meeting of Shareholders, the proposed revision to the
term of the Plan will not be implemented. The Plan will, however, continue in effect, and Awards
will continue to be made under the Plan until all the shares available for issuance under the Plan
have been issued pursuant to Awards made under the Plan.

     E. The Plan shall terminate upon the earliest to occur of (i) March 9, 2017, (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 Awards in connection with a Change
in Control. Should the Plan terminate March 9, 2017, all Awards outstanding at that time shall
continue to have force and effect in accordance with the provisions of the documents evidencing
such Awards.

     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 Awards at the time outstanding under the Plan unless the
Optionee or the Participant consents to such amendment or modification. In addition, shareholder
approval will be required for any amendment to the Plan that (i) materially increases the number of
shares of Common Stock available for issuance under the Plan, (ii) materially expands the class of
individuals eligible to receive option grants or other awards under the Plan, (iii) materially
increases the benefits accruing to the Optionees and Participants under the Plan or materially
reduces the price at which shares of Common Stock may be issued or purchased under the Plan, (iv)
materially extends the term of the Plan or (v) expands the types of awards available for issuance
under the Plan.

     B. Awards may be made under the Plan that involve shares of Common Stock in excess of the
number of shares then available for issuance under the Plan, provided no shares shall actually be
issued pursuant to those Awards until the number of shares of Common Stock available for issuance
under the Plan is sufficiently increased either by (1) the automatic annual share increase
provisions of Section V.B. of Article One or (2) shareholder approval of an amendment of the Plan
sufficiently increasing the share reserve. If shareholder approval is required and is not obtained
within twelve (12) months after the date of the first such excess Award, then all Awards made on
the basis of such excess shares shall terminate 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.

21

 

     VI. REGULATORY APPROVALS

     A. The implementation of the Plan, the grant of any Award and the issuance of shares of
Common Stock in connection with the issuance, exercise or vesting of any Award made under the Plan
shall be subject to the Corporation’s procurement of all approvals and permits required by
regulatory authorities having jurisdiction over the Plan, the Awards made under the Plan and the
shares of Common Stock issuable pursuant to those Awards.

     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 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.

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APPENDIX

The following definitions shall be in effect under the Plan:

A. Award shall mean any of the following stock or stock-based awards authorized for
issuance or grant under the Plan: stock option, stock appreciation right, direct stock issuance,
restricted stock or restricted stock unit award or other stock-based award.

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

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

(i) a shareholder-approved 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) a shareholder-approved sale, transfer or other disposition of all or substantially all of
the Corporation’s assets in complete liquidation or dissolution of the Corporation, or

(iii) 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 Securities Exchange Act of 1934, as amended (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 shareholders or pursuant to a private transaction or series of transactions
with one or more of the Corporation’s shareholders.

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

E. Common Stock shall mean the Corporation’s Class A Common Stock.

F. Corporation shall mean Broadcom Corporation, a California corporation, and any
corporate successor to all or substantially all of the assets or voting stock of Broadcom
Corporation that shall by appropriate action adopt the Plan.

G. Director Automatic Grant Program shall mean the director automatic grant program in
effect under Article Four of the Plan for the Eligible Directors.

H. Discretionary Grant Program shall mean the discretionary grant program in effect under
Article Two of the Plan pursuant to which stock options and stock appreciation rights may be
granted to one or more eligible individuals.

I. Eligible Director shall mean a Board member who is not, at the time of such
determination, an employee of the Corporation (or any Parent or Subsidiary) and who is accordingly
eligible to participate in the Director Automatic Grant Program in accordance with the eligibility
provisions of Articles One and Four.

23

 

J. 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.

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

L. 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 Global Select
Marketsm, then the Fair Market Value shall be the closing selling price per
share of Common Stock at the close of regular hours trading (i.e., before after-hours trading
begins) on the Nasdaq Global Select Market on the date in question, as such price is reported
by the National Association of Securities Dealers. 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 at the close of regular
hours trading (i.e., before after-hours trading begins) 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. 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.

M. Family Member means, with respect to a particular Optionee or Participant, any child,
stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece,
nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, bother-in-law or sister-in-law.

N. Hostile Take-Over shall mean either of the following events effecting a change in
control or ownership of the Corporation:

(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 shareholders that the Board does not
recommend such shareholders to accept, 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 composed 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.

O. Incentive Option shall mean an option that satisfies the requirements of Code Section
422.

P. Involuntary Termination shall mean the termination of the Service of any individual
that occurs by reason of:

24

 

(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 that 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.

Q. 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.

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

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

T. Optionee shall mean any person to whom an option is granted under the Discretionary
Grant or Director Automatic Grant Program.

U. Original Effective Date shall mean February 3, 1998.

V. 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.

W. Participant shall mean any person who is issued shares of Common Stock or restricted
stock units or other stock-based awards under the Stock Issuance Program, and any person who is
issued restricted stock units under the Director Automatic Grant Program.

X. 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 which is both (i) expected to result in death or
determined to be total and permanent by two (2) physicians selected by the Corporation or its
insurers and acceptable to the Optionee or the Participant (or the Optionee’s or Participant’s
legal representative), and (ii) entitles the Optionee or the Participant to the payment of
long-term disability benefits from the Corporation’s long-term disability plan. The process for
determining a Permanent Disability in accordance with the foregoing shall be completed no later
than the later of (i) the close of the calendar year in which the Optionee’s or the Participant’s
Service terminates by reason of the physical or mental impairment triggering the determination
process or (ii) the fifteenth day of the third calendar month following such termination of
Service. However, solely for purposes of the Director Automatic Grant Program, Permanent
Disability or

25

 

Permanently Disabled shall mean the inability of the Eligible Director 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.

Y. Plan shall mean the Corporation’s 1998 Stock Incentive Plan, as set forth in this
document.

Z. Plan Administrator shall mean the particular entity, whether the Primary Committee, the
Board or a Secondary Committee, which is authorized to administer the Discretionary 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 then subject to its jurisdiction.

AA. Predecessor Plans shall collectively mean the Corporation’s 1994 Amended and Restated
Stock Option Plan and the Special Stock Option Plan, as in effect immediately prior to the Original
Effective Date hereunder.

BB. Primary Committee shall mean the committee of two (2) or more Eligible Directors
appointed by the Board to administer the Discretionary Grant and Stock Issuance Programs with
respect to Section 16 Insiders.

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

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

EE. Service shall mean the performance of services for the Corporation (or any Parent or
Subsidiary) by a person in the capacity of an Employee, an Eligible Director or a consultant or
independent advisor, except to the extent otherwise specifically provided in the documents
evidencing the Award made to such person. For purposes of the Plan, an Optionee or Participant
shall be deemed to cease Service immediately upon the occurrence of the either of the following
events: (i) the Optionee or Participant no longer performs services in any of the foregoing
capacities for the Corporation or any Parent or Subsidiary or (ii) the entity for which the
Optionee or Participant is performing such services ceases to remain a Parent or Subsidiary of the
Corporation, even though the Optionee or Participant may subsequently continue to perform services
for that entity.

FF. Stock Exchange shall mean the American Stock Exchange, the Nasdaq Global Select
Market, the Nasdaq Global Market or the New York Stock Exchange.

GG. 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.

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

II. 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.

26

 

JJ. 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, if applicable, (ii) the highest reported price per share of Common Stock paid by the
tender offeror in effecting such Hostile Take-Over through the acquisition of such Common Stock.
However, if the surrendered option is an Incentive Option, the Take-Over Price shall not exceed the
clause (i) price per share.

KK. 10% Shareholder 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).

LL. Withholding Taxes shall mean the federal, state and local income and employment taxes
to which the Optionee or Participant may become subject in connection with the issuance, exercise
or vesting of the Award made to him or her under the Plan.

27

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