Document:

EX-10.44

[Anadys Logo]

November 1, 2006

Lawrence C. Fritz, Ph.D.

[address]

[address]

[address]

Dear Larry,

I am very pleased to confirm the offer of employment made to you by Anadys Pharmaceuticals, Inc.
for the position of President and Chief Executive Officer, reporting to the Board of Directors.
You will also be appointed to serve as a member of the Board of Directors of Anadys. We anticipate
your hire date to be no later than November 20, 2006. As we discussed, the details of this offer
are as follows:

	 	 	BASE SALARY

You will receive a base salary of $15,625.00 paid semi-monthly in accordance with the normal Anadys
payroll cycle, which if annualized, amounts to $375,000 per year.

	 	 	STOCK OPTIONS

Upon commencement of your employment with Anadys you will be eligible for an initial stock option
grant allowing you to purchase 570,000 shares of Anadys common stock at a price equal to the
closing price of Anadys common stock one trading day prior to your hire date (the “Initial Stock
Option Grant”). This stock option will be structured as an “inducement grant” pursuant to NASDAQ
Marketplace Rule 4350(i)(1)(A)(iv), will be a non-qualified stock option, will vest over a
four-year period and will be subject to the terms and conditions set forth in the Anadys 2004
Equity Incentive Plan (the “Plan”). You will be provided full details of the Plan once you begin
employment.

	 	 	SIGN-ON BONUS

As a further incentive for you to join Anadys, you will be given a one time sign-on bonus of
$100,000, less applicable taxes, in accordance with Company policy. If you voluntarily choose to
terminate your employment with Anadys within one year of your hire date, you will be required to
reimburse Anadys for the sign-on bonus, due and payable immediately.

	 	 	BONUS

You will be eligible to receive an annual discretionary bonus of between 0 — 50% of your then
current annual base salary, contingent upon your own and the Company’s performance.

1

BENEFITS

You will be eligible for group benefits for yourself and your eligible dependents, effective the
first day of the month following your date of hire, subject to the terms and conditions of the
relevant Company insurance plan. Basic benefits currently include comprehensive health insurance;
dental insurance, and vision care insurance. In addition, you will be eligible for term life
insurance and long-term disability insurance for yourself only. You will be eligible to
participate in the Anadys 401K plan as well as the Anadys ESPP (Employee Stock Purchase Plan), all
in accordance with Company policy. You will also accrue a pro-rata share of fifteen days of paid
vacation per year, and be eligible for paid holidays, all in accordance with Company policy.

Effective on the first day of the month following your hire date, you will be eligible to
participate in the Anadys 401(k) Retirement Savings Plan.

SEVERANCE/CHANGE IN CONTROL

You will be provided with a Severance and Change in Control Agreement (the “Agreement”), which will
provide for the following benefits:

	1.	 	In the event that your employment with the Company is terminated by the Company without Cause
(as defined in the Agreement ) or for Good Reason (as defined in the Agreement) within the
sixty (60) day period immediately preceding or the thirteen (13) month period immediately
following a Change in Control (as defined in the Agreement) of the Company, then contingent
upon your delivery to the Company of an effective Waiver and Release (in the form attached to
the Agreement), you shall be entitled to:

(a) the equivalent of eighteen (18) months of your annual base salary, less standard
deductions and withholdings;

(b) reimbursement for continued health insurance coverage under COBRA, for the same portion
of your COBRA health insurance premium that is paid during your employment up until the
earlier of either (i) eighteen (18) months after your date of termination or (ii) the date
on which you begin full-time employment with another company or business entity, which
provides you with similar benefits;

(c) outplacement services for a period of six (6) months to be provided by an outplacement
firm; and

(d) accelerated vesting of all unvested shares subject to any outstanding stock options then
held by you, such that all shares shall be vested and fully exercisable as of the date of
your termination.

	2.	 	In the event that there is not a Change in Control (as defined in the Agreement) and your
employment with the Company is terminated by the Company without Cause (as defined in the
Agreement) or you resign with Good Reason (as defined in the Agreement), then contingent upon
your delivery to the Company of an effective Waiver and Release (in the form attached to the
Agreement), you shall be entitled to the benefits set forth in Sections 1(a), 1(b) and 1(c) of
the Severance/Change in Control section of this offer letter, except that the benefits
described in 1(a) and 1(b) will be for a twelve (12) month duration. In addition, in the
event that your employment with the Company is terminated by the Company without Cause (as
defined in the Agreement) prior to the one year anniversary of your hire date (and the
corresponding date on which the Initial Stock Option Grant would become 25% vested), then the
vesting and exercisability of the Initial Stock Option Grant will accelerate by the amount
equal to the number of months that you were employed by the Company (rounded up to the next
whole month) multiplied by 1/48th of the Initial Stock Option Grant.

	 	 	EMPLOYMENT AT WILL

Anadys is an at-will employer and as such your employment must be entered into voluntarily and for
no specified period. As a result, you are free to resign or the company may terminate your
employment at any time, for any reason, with or without cause. No one other than the Chairman of
the Board of Directors has the authority to alter this employment relationship, either verbally or
in writing.

Anadys Pharmaceuticals, Inc. expects that you will not disclose to it any proprietary information
or trade secrets of any former employer or bring onto its premises any unpublished documents or any
property belonging to any former employer. Since this would be improper, such conduct could be a
basis for discipline up to and including termination.

The above is subject to your signing a proprietary information and inventions agreement with the
Company, and the Company’s review of any agreement you may have with former employers to ensure
that they do not conflict with your employment with the Company. In addition, within three days
after your date of hire, you will be required to submit proof of identity and eligibility to work
in the United States, in compliance with federal immigration laws.

This offer has been extended to you on behalf of Anadys Pharmaceuticals, Inc. and is valid through
Monday, November 6, 2006 by no later than 12:00 p.m. after which time it will expire. This offer
includes all the terms of your potential employment with the Company, and supersedes all prior and
contemporaneous negotiations, agreements and understandings between you and the Company, oral or
written.

Larry, we believe you will be able to make an immediate contribution to Anadys’ effort, and think
you will enjoy the rewards of working for an innovative, fast-paced, energetic company. One of the
keys to our accomplishments is our outstanding people. We hope you accept our offer to be one of
those people. Please acknowledge your agreement of these terms by signing this letter and
returning it to my attention in the enclosed envelope.

2

Sincerely yours,

ANADYS PHARMACEUTICALS, INC.

/s/ George A. Scangos

George A. Scangos, Ph.D.

Chairman of the Board of Directors

I hereby accept this offer of employment and accept the terms as stated above. I understand that
as an employee of Anadys, I will be expected to comply with all Company policies:

	 	 	 
	/s/ Lawrence C. Fritz

	 	11/6/2006
	 

	 	 
	Lawrence C. Fritz, Ph.D.

	 	Date
	 
	 	 

3EX-10.1

Exhibit 10.1

2004 EQUITY INCENTIVE PLAN

OF

HYPERION SOLUTIONS CORPORATION, AS AMENDED

	 	1.	 	Purpose of this Plan

The purpose of this 2004 Equity Incentive Plan is to enhance the long-term
stockholder value of Hyperion Solutions Corporation, by offering
opportunities to eligible individuals to participate in the growth in value
of the equity of Hyperion Solutions Corporation.

	 	2.	 	Definitions and Rules of Interpretation

2.1 Definitions.

This Plan uses the following defined terms:

	 	(a)	 	“Administrator” means the Board or the Committee, or any officer or
employee of the Company to whom the Board or the Committee delegates authority
to administer this Plan.

	 	(b)	 	“Affiliate” means a “parent” or “subsidiary” (as each is defined in
Section 424 of the Code) of the Company and any other entity that the Board or
Committee designates as an “Affiliate” for purposes of this Plan.

	 	(c)	 	“Applicable Law” means any and all laws of whatever jurisdiction,
within or without the United States, and the rules of any stock exchange or
quotation system on which Shares are listed or quoted, applicable to the
taking or refraining from taking of any action under this Plan, including the
administration of this Plan and the issuance or transfer of Awards or Award
Shares.

	 	(d)	 	“Award” means a Stock Award (e.g. restricted stock unit award), Cash
Award, or Option granted in accordance with the terms of this Plan.

	 	(e)	 	“Award Agreement” means the document evidencing the grant of an
Award.

	 	(f)	 	“Award Shares” means Shares covered by an outstanding Award or
purchased under an Award.

	 	(g)	 	“Awardee” means: (i) a person to whom an Award has been granted,
including a holder of a Substitute Award and (ii) a person to whom an Award
has been transferred in accordance with all applicable requirements of
Sections 6.5, 7(h), and 17.

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

	 	(i)	 	"Brio Plan Shares” means the Shares, which were originally reserved
for issuance under the Brio Software, Inc. 1998 Stock Option Plan and 1998
Directors’ Stock Option Plan but that were not issued or subject to options as
of the consummation of the transactions contemplated by that certain Agreement
and Plan of Merger and Reorganization dated July 23, 2002, among parties
including the Company and Brio Software, Inc., on a post-converted basis under
such agreement, and became available for issuance pursuant to the Former Plan.

	 	(j)	 	“Cash Award” means the right to receive cash as described in Section
8.3.

	 	(k)	 	“Change in Control” means any transaction or event that the Board
specifies as a Change in Control under Section 10.4.

	 	(l)	 	“Code” means the Internal Revenue Code of 1986.

	 	(m)	 	“Committee” means a committee composed of Company Directors appointed
in accordance with the Company’s charter documents and Section 4.

	 	(n)	 	“Company” means Hyperion Solutions Corporation, a Delaware
corporation.

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

	 	(p)	 	“Consultant” means an individual who, or an employee of any entity
that, provides bona fide services to the Company or an Affiliate not in
connection with the offer or sale of securities in a capital-raising
transaction, but who is not an Employee.

	 	(q)	 	“Director” means a member of the Board or a member of the board of
directors of an Affiliate.

	 	(r)	 	“Divestiture” means any transaction or event that the Board specifies
as a Divestiture under Section 10.5.

	 	(s)	 	"Domestic Relations Order” means a “domestic relations order” as
defined in, and otherwise meeting the requirements of, Section 414(p) of the
Code, except that reference to a “plan” in that definition shall be to this
Plan.

	 	(t)	 	"Effective Date” means the later of the date on which this Plan is
approved by the Company’s stockholders and the date on which this Plan is
approved by the Board.

	 	(u)	 	“Employee” means a regular employee of the Company or an Affiliate,
including an Executive, officer or an individual who is also a Director, who
is treated as an employee in the personnel records of the Company or an
Affiliate, but not individuals who are classified by the Company or an
Affiliate as: (i) leased from or otherwise employed by a third party,
(ii) independent contractors, or (iii) intermittent or temporary workers. The
Company’s or an Affiliate’s classification of an individual as an “Employee”
(or as not an “Employee”) for purposes of this Plan shall not be altered
retroactively even if that classification is changed retroactively for another
purpose as a result of an audit, litigation or otherwise. An Awardee shall
not cease to be an Employee due to transfers between locations of the Company,
or between the Company and an Affiliate, or to any successor to the Company or
an Affiliate that assumes the Awardee’s Options under Section 10. Neither
service as a Director nor receipt of a director’s fee shall be sufficient to
make a Director an “Employee.”

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

	 	(w)	 	“Executive” means, if the Company has any class of any equity
security registered under Section 12 of the Exchange Act, an individual who is
subject to Section 16 of the Exchange Act or who is a “covered employee” under
Section 162(m) of the Code, in either case because of the individual’s
relationship with the Company or an Affiliate. If the Company does not have
any class of any equity security registered under Section 12 of the Exchange
Act, “Executive” means any (i) Director, (ii) officer elected or appointed by
the Board, or (iii) beneficial owner of more than 10% of any class of the
Company’s equity securities.

	 	(x)	 	“Expiration Date” means, with respect to an Award, the date stated in
the Award Agreement as the expiration date of the Award or, if no such date is
stated in the Award Agreement, then the last day of the maximum exercise
period for the Award, disregarding the effect of an Awardee’s Termination or
any other event that would shorten that period.

	 	(y)	 	“Fair Market Value” means the value of Shares as determined under
Section 18.2.

	 	(z)	 	"Former Plan” means the Company’s 1995 Stock Option/Stock Issuance
Plan.

	 	(aa)	 	“Fundamental Transaction” means any transaction or event described
in Section 10.3.

	 	(bb)	 	“Grant Date” means the date the Administrator approves the grant of
an Award. However, if the Administrator specifies that an Award’s Grant Date
is a future date or the date on which a condition is satisfied, the Grant Date
for such Award is that future date or the date that the condition is
satisfied.

	 	(cc)	 	“Incentive Stock Option” means an Option intended to qualify as an
incentive stock option under Section 422 of the Code and designated as an
Incentive Stock Option in the Award Agreement for that Option.

	 	(dd)	 	“Nonstatutory Option” means any Option other than an Incentive Stock
Option.

	 	(ee)	 	“Non-Employee Director” means any person who is a member of the
Board but is not an Employee of the Company or any Affiliate of the Company
and has not been an Employee of the Company or any Affiliate of the Company at
any time during the preceding twelve months. Service as a Director does not in
itself constitute employment for purposes of this definition.

	 	(ff)	 	"Objectively Determinable Performance Condition” shall mean a
performance condition (i) that is established (A) at the time an Award is
granted or (B) no later than the earlier of (1) 90 days after the beginning of
the period of service to which it relates, or (2) before the elapse of 25% of
the period of service to which it relates, (ii) that is uncertain of
achievement at the time it is established, and (iii) the achievement of which
is determinable by a third party with knowledge of the relevant facts.
Examples of measures that may be used in Objectively Determinable Performance
Conditions include net order dollars, net profit dollars, net profit growth,
net revenue dollars, revenue growth, individual performance, earnings per
share, return on assets, return on equity, and other financial objectives,
objective customer satisfaction indicators and efficiency measures, each with
respect to the Company and/or an Affiliate or individual business unit.

	 	(gg)	 	“Officer” means an officer of the Company as defined in Rule 16a-1
adopted under the Exchange Act.

	 	(hh)	 	“Option” means a right to purchase Shares of the Company granted
under this Plan.

	 	(ii)	 	“Option Price” means the price payable under an Option for Shares,
not including any amount payable in respect of withholding or other taxes.

	 	(jj)	 	“Option Shares” means Shares covered by an outstanding Option or
purchased under an Option.

	 	(kk)	 	“Plan” means this 2004 Equity Incentive Plan of Hyperion Solutions
Corporation, as amended.

	 	(ll)	 	“Purchase Price” means the price payable under a Stock Award for
Shares, not including any amount payable in respect of withholding or other
taxes.

	 	(mm)	 	“Rule 16b-3” means Rule 16b-3 adopted under Section 16(b) of the
Exchange Act.

	 	(nn)	 	“Securities Act” means the Securities Act of 1933.

	 	(oo)	 	“Share” means a share of the common stock of the Company or other
securities substituted for the common stock under Section 10.

	 	(pp)	 	“Stock Award” means an offer by the Company to sell shares subject
to certain restrictions pursuant to the Award Agreement as described in
Section 8.2 or, as determined by the Committee, a notional account
representing the right to be paid an amount based on Shares.

	 	(qq)	 	“Substitute Award” means a Substitute Option or Substitute Stock
Award granted in accordance with the terms of this Plan.

	 	(rr)	 	“Substitute Option” means an Option granted in substitution for, or
upon the conversion of, an option granted by another entity to purchase equity
securities in the granting entity.

	 	(ss)	 	“Substitute Stock Award” means a Stock Award granted in substitution
for, or upon the conversion of, a stock award granted by another entity to
purchase equity securities in the granting entity.

	 	(tt)	 	“Termination” means that the Awardee has ceased to be, with or
without any cause or reason, an Employee, Director or Consultant. However,
unless so determined by the Administrator, or otherwise provided in this Plan,
“Termination” shall not include a change in status from an Employee,
Consultant or Director to another such status. An event that causes an
Affiliate to cease being an Affiliate shall be treated as the “Termination” of
that Affiliate’s Employees, Directors, and Consultants.

2.2 Rules of Interpretation. Any reference to a “Section,” without more, is to a Section of
this Plan. Captions and titles are used for convenience in this Plan and shall not, by themselves,
determine the meaning of this Plan. Except when otherwise indicated by the context, the singular
includes the plural and vice versa. Any reference to a statute is also a reference to the
applicable rules and regulations adopted under that statute. Any reference to a statute, rule or
regulation, or to a section of a statute, rule or regulation, is a reference to that statute, rule,
regulation, or section as amended from time to time, both before and after the Effective Date and
including any successor provisions.

3. Shares Subject to this Plan; Term of this Plan

3.1 Number of Award Shares. The maximum Shares issuable under this Plan shall only be those
Shares available for grant under the Former Plan (including (a) Shares which were subject to
previous awards under the Former Plan but which become available for subsequent grant under the
terms of the Former Plan and (b) Brio Plan Shares) plus an additional 6,000,000 Shares. If any
Shares subject to an Award are forfeited, canceled, exchanged or surrendered or if an Award
otherwise terminates or expires without a distribution of Shares to the Awardee, the Shares with
respect to such Award shall, to the extent of any such forfeiture, cancellation, exchange,
surrender, termination or expiration, again be available for Awards under the Plan subject to the
above-noted maximum Shares issuable; provided that, to the extent required for the Plan to comply
with Rule 16b-3 promulgated under the Exchange Act, in the case of forfeiture, cancellation,
exchange or surrender of Shares with respect to a Stock Award, the number of Shares with respect to
such Awards shall be not be available for Awards hereunder unless dividends paid on such Shares are
also forfeited, canceled, exchanged or surrendered.

3.2 Source of Shares. Award Shares may be: (a) Shares that have never been issued,
(b) Shares that have been issued but are no longer outstanding, or (c) Shares that are outstanding
and are acquired to discharge the Company’s obligation to deliver Award Shares.

3.3 Term of this Plan

	 	(a)	 	This Plan shall be effective on, and Awards may be granted
under this Plan on and after the Effective Date.

	 	(b)	 	Subject to the provisions of Section 14, Awards may be granted
under this Plan for a period of ten years from the earlier of the date
on which the Board approves this Plan and the date the Company’s
stockholders approve this Plan. Accordingly, Awards may not be granted
under this Plan after the ten-year anniversary of the earlier of those
dates.

4. Administration

4.1 General

	 	(a)	 	The Board shall have ultimate responsibility for administering
this Plan. The Board may delegate certain of its responsibilities to a
Committee, which shall consist of at least two members of the Board.
The Board or the Committee may further delegate its responsibilities to
any Employee of the Company or any Affiliate. Where this Plan specifies
that an action is to be taken or a determination made by the Board, only
the Board may take that action or make that determination. Where this
Plan specifies that an action is to be taken or a determination made by
the Committee, only the Committee may take that action or make that
determination. Where this Plan references the “Administrator,” the
action may be taken or determination made by the Board, the Committee,
or other Administrator. However, only a Committee comprised of
independent directors (as defined in Rule 4200 (15) of the NASD
Marketplace Rules), may grant, and have ultimate responsibility for
administering, Awards to Non-Employee Directors and only the Board or
the Committee may approve grants of Awards to Executives, and an
Administrator other than the Board or the Committee may grant Awards
only within the guidelines established by the Board or Committee.
Moreover, all actions and determinations by any Administrator are
subject to the provisions of this Plan.

	 	(b)	 	So long as the Company has registered and outstanding a class
of equity securities under Section 12 of the Exchange Act, the Committee
shall consist of Company Directors who are “Non-Employee Directors” as
defined in Rule 16b-3 and, after the expiration of any transition period
permitted by Treasury Regulations Section 1.162-27(h)(3), who are
“outside directors” as defined in Section 162(m) of the Code.

4.2 Authority of the Board or the Committee. Subject to the other provisions of this Plan, the
Board or the Committee shall have the authority to:

	 	(a)	 	grant Awards, including Substitute Awards;

	 	(b)	 	determine the Fair Market Value of Shares;

	 	(c)	 	determine the Option Price and the Purchase Price of Awards;

	 	(d)	 	select the Awardees;

	 	(e)	 	determine the times Awards are granted;

	 	(f)	 	determine the number of Shares subject to each Award;

	 	(g)	 	determine the methods of payment that may be used to purchase
Award Shares;

	 	(h)	 	determine the methods of payment that may be used to satisfy
withholding tax obligations;

	 	(i)	 	determine the other terms of each Award, including but not
limited to the time or times at which Awards may be exercised, whether
and under what conditions an Award is assignable, and whether an Option
is a Nonstatutory Option or an Incentive Stock Option;

	 	(j)	 	modify or amend any Award;

	 	(k)	 	authorize any person to sign any Award Agreement or other
document related to this Plan on behalf of the Company;

	 	(l)	 	determine the form of any Award Agreement or other document
related to this Plan, and whether that document, including signatures,
may be in electronic form;

	 	(m)	 	interpret this Plan and any Award Agreement or document related
to this Plan;

	 	(n)	 	correct any defect, remedy any omission, or reconcile any
inconsistency in this Plan, any Award Agreement or any other document
related to this Plan;

	 	(o)	 	adopt, amend, and revoke rules and regulations under this Plan,
including rules and regulations relating to sub-plans and Plan addenda;

	 	(p)	 	adopt, amend, and revoke special rules and procedures which may
be inconsistent with the terms of this Plan, set forth (if the
Administrator so chooses) in sub-plans regarding (for example) the
operation and administration of this Plan and the terms of Awards, if
and to the extent necessary or useful to accommodate non-U.S. Applicable
Laws and practices as they apply to Awards and Award Shares held by, or
granted or issued to, persons working or resident outside of the United
States or employed by Affiliates incorporated outside the United States;

	 	(q)	 	determine whether a transaction or event should be treated as a
Change in Control, a Divestiture or neither;

	 	(r)	 	determine the effect of a Fundamental Transaction and, if the
Board determines that a transaction or event should be treated as a
Change in Control or a Divestiture, then the effect of that Change in
Control or Divestiture; and

	 	(s)	 	make all other determinations the Administrator deems necessary
or advisable for the administration of this Plan.

4.3 Scope of Discretion. Subject to the provisions of this Section 4.3, on all matters for
which this Plan confers the authority, right or power on the Board, the Committee, or other
Administrator to make decisions, that body may make those decisions in its sole and absolute
discretion. Those decisions will be final, binding and conclusive. In making its decisions, the
Board, Committee or other Administrator need not treat all persons eligible to receive Awards, all
Awardees, all Awards or all Award Shares the same way. Notwithstanding anything herein to the
contrary, and except as provided in Section 14.3, the discretion of the Board, Committee or other
Administrator is subject to the specific provisions and specific limitations of this Plan, as well
as all rights conferred on specific Awardees by Award Agreements and other agreements.

5. Persons Eligible to Receive Awards

5.1 Eligible Individuals. Awards (including Substitute Awards) may be granted to, and only
to, Employees, Directors and Consultants, including to prospective Employees, Directors and
Consultants conditioned on the beginning of their service for the Company or an Affiliate.
However, Incentive Stock Options may only be granted to Employees, as provided in Section 7(g).

5.2 Section 162(m) Limitation.

	 	(a)	 	Options. Subject to the provisions of this Section 5.2, for so
long as the Company is a “publicly held corporation” within the meaning
of Section 162(m) of the Code: (i) no Employee may be granted one or
more Options within any fiscal year of the Company under this Plan to
purchase more than 1,050,000 Shares under Options, subject to adjustment
pursuant to Section 10 and (ii) Options may be granted to an Executive
only by the Committee (and, notwithstanding anything to the contrary in
Section 4.1(a), not by the Board). If an Option is cancelled,
forfeited, exchanged, surrendered, terminated or otherwise expires
without being exercised or if the Option Price of an Option is reduced,
that cancelled, forfeited, exchanged, surrendered, terminated, expired
or repriced Option shall continue to be counted against the limit on
Awards that may be granted to any individual under this Section 5.2.
Notwithstanding anything herein to the contrary, a new Employee of the
Company or an Affiliate shall be eligible to receive up to a maximum of
1,800,000 Shares under Options in the calendar year in which they
commence employment, subject to adjustment pursuant to Section 10.

Cash Awards and Stock Awards. Any Cash Award or Stock Award intended as “qualified
performance-based compensation” within the meaning of Section 162(m) of the Code must vest or
become exercisable contingent on the achievement of one or more Objectively Determinable
Performance Conditions. Subject to the limitations set forth in Section 5.2(a) with respect to
Options and Section 8.2(a) with respect to Stock Awards, the Committee shall have the discretion to
determine the time and manner of compliance with Section 162(m) of the Code. No Employee, Director
or Consultant may be granted a Cash Award in excess of $5,000,000 in any fiscal year of the
Company, subject to adjustment pursuant to Section 10.

6. Terms and Conditions of Options

The following rules apply to Options granted pursuant to this Section 6.

6.1 Price. No Incentive Stock Option or Nonstatutory Option may have an Option Price less
than the Fair Market Value of the Shares on the Grant Date.

6.2 Term. No Option shall be exercisable after its Expiration Date. No Option may have an
Expiration Date that is more than six years after its Grant Date. Additional provisions regarding
the term of Incentive Stock Options are provided in Sections 7(a) and 7(e).

6.3 Vesting. Options shall be vested and exercisable in accordance with a schedule related to
the Grant Date, the date the Optionee’s directorship, employment or consultancy begins, or a
different date specified in the Option Agreement provided, however, Options shall not vest or be
exercisable within a six month period starting on the Grant Date.

6.4 Form and Method of Payment.

	 	(a)	 	The Board or Committee shall determine the acceptable form and method of payment for
exercising an Option. So long as variable accounting pursuant to “APB 25” does not apply
and the Board or Committee otherwise determines there is no material adverse accounting
consequence at the time of exercise, the Board or Committee may require the delivery in
Shares for the value of the net appreciation of the Shares at the time of exercise over
the exercise price.

	 	(b)	 	Acceptable forms of payment for all Option Shares are cash, check or wire transfer,
denominated in U.S. dollars except as specified by the Administrator for non-U.S.
Employees or non-U.S. sub-plans.

	 	(c)	 	In addition, the Administrator may permit payment to be made by any of the following
methods:

	 	i.	 	other Shares, or the designation of other Shares,
which (A) are “mature” shares for purposes of avoiding variable
accounting treatment under generally accepted accounting principles
(generally mature shares are those that have been owned by the Optionee
for more than six months on the date of surrender), and (B) have a Fair
Market Value on the date of surrender equal to the Option Price of the
Shares as to which the Option is being exercised;

	 	ii.	 	provided that a public market exists for the
Shares, consideration received by the Company under a procedure under
which a licensed broker-dealer advances funds on behalf of an Optionee
or sells Option Shares on behalf of an Optionee (a “Cashless Exercise
Procedure”), provided that if the Company extends or arranges for the
extension of credit to an Optionee under any Cashless Exercise
Procedure, no Officer or Director may participate in that Cashless
Exercise Procedure;

	 	iii.	 	cancellation of any debt owed by the Company or
any Affiliate to the Optionee by the Company including without
limitation waiver of compensation due or accrued for services previously
rendered to the Company; and

	 	iv.	 	any combination of the methods of payment
permitted by any paragraph of this Section 6.4.

	 	v.	 	The Administrator may also permit any other form
or method of payment for Option Shares permitted by Applicable Law.

6.5 Nonassignability of Options. Except as determined by the Administrator, no Option shall
be assignable or otherwise transferable by the Optionee except by will or by the laws of descent
and distribution. However, Options may be transferred and exercised in accordance with a Domestic
Relations Order and may be exercised by a guardian or conservator appointed to act for the
Optionee. Incentive Stock Options may only be assigned in compliance with Section 7(h).

6.6 Substitute Options. The Board may cause the Company to grant Substitute Options in
connection with the acquisition by the Company or an Affiliate of equity securities of any entity
(including by merger, tender offer, or other similar transaction) or of all or a portion of the
assets of any entity. Any such substitution shall be effective on the effective date of the
acquisition. Substitute Options may be Nonstatutory Options or Incentive Stock Options. Unless
and to the extent specified otherwise by the Board, Substitute Options shall have the same terms
and conditions as the options they replace, except that (subject to the provisions of Section 10)
Substitute Options shall be Options to purchase Shares rather than equity securities of the
granting entity and shall have an Option Price determined by the Board.

6.7 Repricings. Options may not be repriced, replaced or regranted through cancellation or
modification without stockholder approval.

7. Incentive Stock Options

The following rules apply only to Incentive Stock Options and only to the extent these rules
are more restrictive than the rules that would otherwise apply under this Plan. With the consent
of the Optionee, or where this Plan provides that an action may be taken notwithstanding any other
provision of this Plan, the Administrator may deviate from the requirements of this Section,
notwithstanding that any Incentive Stock Option modified by the Administrator will thereafter be
treated as a Nonstatutory Option.

	 	(a)	 	The Expiration Date of an Incentive Stock Option shall not be later than six years
from its Grant Date, with the result that no Incentive Stock Option may be exercised after
the expiration of six years from its Grant Date.

	 	(b)	 	No Incentive Stock Option may be granted more than ten years from the date this Plan
was approved by the Board.

	 	(c)	 	Options intended to be incentive stock options under Section 422 of the Code that are
granted to any single Optionee under all incentive stock option plans of the Company and
its Affiliates, including incentive stock options granted under this Plan, may not vest at
a rate of more than $100,000 in Fair Market Value of stock (measured on the grant dates of
the options) during any calendar year. For this purpose, an option vests with respect to a
given share of stock the first time its holder may purchase that share, notwithstanding
any right of the Company to repurchase that share. Unless the administrator of that option
plan specifies otherwise in the related agreement governing the option, this vesting
limitation shall be applied by, to the extent necessary to satisfy this $100,000 rule,
treating certain stock options that were intended to be incentive stock options under
Section 422 of the Code as Nonstatutory Options. The stock options or portions of stock
options to be reclassified as Nonstatutory Options are those with the highest option
prices, whether granted under this Plan or any other equity compensation plan of the
Company or any Affiliate that permits that treatment. This Section 7(c) shall not cause an
Incentive Stock Option to vest before its original vesting date or cause an Incentive
Stock Option that has already vested to cease to be vested.

	 	(d)	 	In order for an Incentive Stock Option to be exercised for any form of payment other
than those described in Section 6.4(b), that right must be stated at the time of grant in
the Option Agreement relating to that Incentive Stock Option.

	 	(e)	 	Any Incentive Stock Option granted to a Ten Percent Stockholder, must have an
Expiration Date that is not later than five years from its Grant Date, with the result
that no such Option may be exercised after the expiration of five years from the Grant
Date. A “Ten Percent Stockholder” is any person who, directly or by attribution under
Section 424(d) of the Code, owns stock possessing more than ten percent of the total
combined voting power of all classes of stock of the Company or of any Affiliate on the
Grant Date.

	 	(f)	 	The Option Price of an Incentive Stock Option shall never be less than the Fair
Market Value of the Shares at the Grant Date. The Option Price for the Shares covered by
an Incentive Stock Option granted to a Ten Percent Stockholder shall never be less than
110% of the Fair Market Value of the Shares at the Grant Date.

	 	(g)	 	Incentive Stock Options may be granted only to Employees. If an Optionee changes
status from an Employee to a Consultant, that Optionee’s Incentive Stock Options become
Nonstatutory Options if not exercised within the time period described in Section 7(i)
(determined by treating that change in status as a Termination solely for purposes of this
Section 7(g)).

	 	(h)	 	No rights under an Incentive Stock Option may be transferred by the Optionee, other
than by will or the laws of descent and distribution. During the life of the Optionee, an
Incentive Stock Option may be exercised only by the Optionee. The Company’s compliance
with a Domestic Relations Order, or the exercise of an Incentive Stock Option by a
guardian or conservator appointed to act for the Optionee, shall not violate this Section
7(h).

	 	(i)	 	An Incentive Stock Option shall be treated as a Nonstatutory Option if it remains
exercisable after, and is not exercised within, the three-month period beginning with the
Optionee’s Termination for any reason other than the Optionee’s death or disability (as
defined in Section 22(e) of the Code). In the case of Termination due to disability, an
Incentive Stock Option shall be treated as a Nonstatutory Option if it remains exercisable
after, and is not exercised within, one year after the Optionee’s Termination. In the
case of Termination due to death, an Incentive Stock Option shall continue to be treated
as an Incentive Stock Option while it remains exercisable.

	 	(j)	 	An Incentive Stock Option may only be modified by the Board.

8. Stock Awards and Cash Awards

	 	 	 	 	 
	 	 	8.1	 	Reserved.
	8.2

	 	 	 	Stock Awards. The following rules apply to all Stock Awards:

	 	(a)	 	General. Total Stock Awards shall not exceed 4,365,000 Shares plus such restricted
stock awards which do not vest and are repurchased by the Company pursuant to the Former
Plan. No Employee, Director or Consultant may be granted one or more Stock Awards in any
fiscal year of the Company under the Plan in excess of 500,000 Shares, subject to
adjustment pursuant to Section 10. The specific terms and conditions of a Stock Award
applicable to the Awardee shall be provided for in the Award Agreement; provided, however,
that Shares subject to a Stock Award granted after November 16, 2005 shall vest over a
period of at least as long as one of the following vesting periods, as applicable, or such
greater vesting period as may otherwise be set forth in an Award Agreement: 1) for Shares
that vest based upon an Awardee’s continued service with the Company or Affiliate, a
minimum of three (3) years from the date of grant, or 2) for Shares that vest based upon
the satisfaction of Objectively Determinable Performance Conditions, a minimum of one (1)
year from the date of grant; provided that, in each case, vesting may begin immediately
upon the Grant Date. The Award Agreement shall state the number of Shares that the
Awardee shall be entitled to receive or purchase, the terms and conditions on which the
Shares shall vest, the price to be paid, whether Shares are to be delivered at the time of
grant or at some deferred date specified in the Award Agreement (e.g. a restricted stock
unit award agreement), whether the Award is payable solely in Shares, cash or either and,
if applicable, the time within which the Awardee must accept such offer. The offer shall
be accepted by execution of the Award Agreement. The Administrator may require that all
Shares subject to a right of repurchase or risk of forfeiture be held in escrow until such
repurchase right or risk of forfeiture lapses. Subject to Section 5.2(b), the grant or
vesting of a Stock Award may be made contingent on the achievement of Objectively
Determinable Performance Conditions. Acceleration of vesting of any Stock Award shall not
be permitted by the Administrator except as otherwise provided under Section 10 or Section
11, as may be applicable.

	 	(b)	 	Right of Repurchase. If so provided in the Award Agreement and subject to Section
16.2, Award Shares acquired pursuant to a Stock Award may be subject to repurchase by the
Company or an Affiliate if not vested in accordance with the Award Agreement.

Form of Payment. The Administrator shall determine the acceptable form and method of payment
for exercising a Stock Award. Acceptable forms of payment for all Award Shares are cash, check or
wire transfer, denominated in U.S. dollars except as specified by the Administrator for non-U.S.
sub-plans. In addition, the Administrator may permit payment to be made by any of the methods
permitted with respect to the exercise of Options pursuant to Section 6.4.

	 	(c)	 	Nonassignability of Stock Awards. Except as determined by the Administrator, no
Stock Award shall be assignable or otherwise transferable by the Awardee except by will or
by the laws of descent and distribution. Notwithstanding anything to the contrary herein,
Stock Awards may be transferred and exercised in accordance with a Domestic Relations
Order.

	 	(d)	 	Substitute Stock Award. The Board may cause the Company to grant Substitute Stock
Awards in connection with the acquisition by the Company or an Affiliate of equity
securities of any entity (including by merger) or all or a portion of the assets of any
entity. Unless and to the extent specified otherwise by the Board, Substitute Stock
Awards shall have the same terms and conditions as the stock awards they replace, except
that (subject to the provisions of Section 10) Substitute Stock Awards shall be Stock
Awards to purchase Shares rather than equity securities of the granting entity and shall
have a Purchase Price that, as determined by the Board in its sole and absolute
discretion, properly reflects the substitution. Any such Substituted Stock Award shall be
effective on the effective date of the acquisition.

8.3 Cash Awards. The following rules apply to all Cash Awards:

Cash Awards may be granted either alone, in addition to, or in tandem with other Awards
granted under this Plan. After the Administrator determines that it will offer a Cash Award, it
shall advise the Awardee, by means of an Award Agreement, of the terms, conditions and restrictions
related to the Cash Award. Subject to Section 5.2(b), the grant or vesting of any Cash Award may
be made contingent on the achievement of Objectively Determinable Performance Conditions.

9. Exercise of Awards

9.1 In General. An Award shall be exercisable in accordance with this Plan and the Award
Agreement under which it is granted.

9.2 Time of Exercise. Options and Stock Awards shall be considered exercised when the Company
receives: (a) written notice of exercise from the person entitled to exercise the Option or Stock
Award, (b) full payment, or provision for payment, in a form and method approved by the
Administrator, for the Shares for which the Option or Stock Award is being exercised, and (c) with
respect to Nonstatutory Options, payment, or provision for payment, in a form approved by the
Administrator, of all applicable withholding taxes due upon exercise. An Award may not be
exercised for a fraction of a Share.

9.3 Issuance of Award Shares. The Company shall issue Award Shares in the name of the person
properly exercising the Award. If the Awardee is that person and so requests, the Award Shares
shall be issued in the name of the Awardee and the Awardee’s spouse. The Company shall endeavor to
issue Award Shares promptly after an Award is exercised or after the Grant Date of a Stock Award,
as applicable. Until Award Shares are actually issued, as evidenced by the appropriate entry on
the stock register of the Company or its transfer agent, the Awardee will not have the rights of a
stockholder with respect to those Award Shares, even though the Awardee has completed all the steps
necessary to exercise the Award. No adjustment shall be made for any dividend, distribution, or
other right for which the record date precedes the date the Award Shares are issued, except as
provided in Section 10.

9.4 Termination.

	 	(a)	 	In General. Except as provided in an Award Agreement or in
writing by the Administrator, including in an Award Agreement, and as
otherwise provided in Sections 9.4(b), (c), (d) and (e) after an Awardee’s
Termination, the Awardee’s Awards shall be exercisable to the extent (but only
to the extent) they are vested on the date of that Termination and only during
the three months after the Termination, but in no event after the Expiration
Date. To the extent the Awardee does not exercise an Award within the time
specified for exercise, the Award shall automatically terminate. Unless waived
by the Company’s Human Resources department (which determination may be made
on a case by case basis without any requirement to consider whether or not
this provision was waived in any previous case whether similar or not, except
that the Company’s Human Resources department may not exercise such discretion
with respect to a person who is or within six months of his termination was a
reporting person for purposes of Section 16 of the Exchange Act), in the event
the Awardee is terminated by the Company for Cause, any vested Options which
are unexercised as of the date of Awardee’s Termination shall expire and
become unexercisable thereafter. In the case of persons subject to Section 16
of the Exchange Act, such waiver must be made by the Board or Committee if so
required under the rules of the Exchange Act. For purposes of this
Section 9.4, Cause shall mean the commission of any act of fraud, embezzlement
or dishonesty by the Awardee, any unauthorized use or disclosure by such
person of confidential information or trade secrets of the Company, or any
other intentional misconduct by such person adversely affecting the business
or affairs of the Company in a material manner. The foregoing definition shall
not be deemed to be inclusive of all the acts or omissions which the Company
may consider as grounds for the dismissal or discharge of any Awardee or other
person in the service of the Company.

	 	(b)	 	Leaves of Absence. Unless otherwise provided in the Award
Agreement, no Award may be exercised more than three months after the
beginning of a leave of absence, other than a personal or medical leave
approved by an authorized representative of the Company with employment
guaranteed upon return. Awards shall not continue to vest during a leave of
absence, unless otherwise determined by the Administrator with respect to an
approved personal or medical leave with employment guaranteed upon return.

	 	(c)	 	Death or Disability. Unless otherwise provided by the
Administrator, if an Awardee’s Termination is due to death or disability (as
determined by the Administrator with respect to all Awards other than
Incentive Stock Options and as defined by Section 22(e) of the Code with
respect to Incentive Stock Options), all Awards of that Awardee to the extent
exercisable at the date of that Termination may be exercised for one year
after that Termination, but in no event after the Expiration Date. In the
case of Termination due to death, an Award may be exercised as provided in
Section 17. In the case of Termination due to disability, if a guardian or
conservator has been appointed to act for the Awardee and been granted this
authority as part of that appointment, that guardian or conservator may
exercise the Award on behalf of the Awardee. Death or disability occurring
after an Awardee’s Termination shall not cause the Termination to be treated
as having occurred due to death or disability. To the extent an Award is not
so exercised within the time specified for its exercise, the Award shall
automatically terminate.

	 	(d)	 	Divestiture. If an Awardee’s Termination is due to a
Divestiture, the Board may take any one or more of the actions described in
Section 10.3 or 10.4 with respect to the Awardee’s Awards.

	 	(e)	 	Administrator Discretion. Notwithstanding the provisions of
Section 9.4 (a)-(e), the Plan Administrator shall have complete discretion,
exercisable either at the time an Award is granted or at any time while the
Award remains outstanding, to:

	 	i.	 	Extend the period of time for which the Award is to
remain exercisable following the Awardee’s Termination, from
the limited exercise period otherwise in effect for that
Award to such greater period of time as the Administrator
shall deem appropriate, but in no event beyond the Expiration
Date; and/or

	 	ii.	 	Permit the Award to be exercised during the
applicable post-Termination exercise period, not only with
respect to the number of vested Shares for which such Award
may be exercisable at the time of the Awardee’s Termination
but also with respect to one or more additional installments
in which the Awardee would have vested had the Awardee not
been subject to Termination.

	 	(f)	 	Consulting or Employment Relationship. Nothing in this Plan
or in any Award Agreement, and no Award or the fact that Award Shares remain
subject to repurchase rights, shall: (A) interfere with or limit the right of
the Company or any Affiliate to terminate the employment or consultancy of any
Awardee at any time, whether with or without cause or reason, and with or
without the payment of severance or any other compensation or payment, or (B)
interfere with the application of any provision in any of the Company’s or any
Affiliate’s charter documents or Applicable Law relating to the election,
appointment, term of office, or removal of a Director.

10. Certain Transactions and Events

10.1 In General.

Except as provided in this Plan, no change in the capital structure of the Company, merger, sale or
other disposition of assets or a subsidiary, change in control, issuance by the Company of shares
of any class of securities or securities convertible into shares of any class of securities,
exchange or conversion of securities, or other transaction or event shall require or be the
occasion for any adjustments of the type described in this Section 10.

10.2 Mandatory Anti-Dilution Adjustment for Changes in Capital Structure. In the event of any
change to the securities of the Company subject to the Plan, or subject to any Stock Award, without
the receipt of consideration by the Company, including any merger, consolidation, reorganization,
stock split, reverse stock split, recapitalization, reincorporation, exchange, combination or
reclassification of stock, stock dividend, spin-off, extraordinary cash or other property dividend,
liquidating dividend, or any other similar change to the capital structure of the Company not
involving the receipt of consideration by the Company, all appropriate antidilution adjustments
shall be made to: (a) the number and type of Awards that may be granted under this Plan, (b) the
number and type of Options that may be granted to any individual under this Plan, (c) the Purchase
Price of any Stock Award, (d) the Option Price and number and class of securities issuable under
each outstanding Option, and (e) the repurchase price of any securities substituted for Award
Shares that are subject to repurchase rights. For purposes of this Section 10.2, a Fundamental
Transaction or Change in Control or conversion of any convertible securities of the Company shall
not be treated as a transaction “without the receipt of consideration” by the Company.

10.3 Fundamental Transactions. Except for grants to Non-Employee Directors pursuant to
Section 11 herein, in the event of (a) a merger or consolidation in which the Company is not the
surviving corporation (other than a merger or consolidation with a wholly-owned subsidiary, a
reincorporation of the Company in a different jurisdiction, or other transaction in which there is
no substantial change in the stockholders of the Company or their relative stock holdings and the
Awards granted under this Plan are assumed, converted or replaced by the successor corporation,
which assumption shall be binding on all Participants), (b) a merger in which the Company is the
surviving corporation but after which the stockholders of the Company immediately prior to such
merger (other than any stockholder that merges, or which owns or controls another corporation that
merges, with the Company in such merger) cease to own their shares or other equity interest in the
Company, (c) the sale of all or substantially all of the assets of the Company, or (d) the
acquisition, sale, or transfer of more than 50% of the outstanding shares of the Company by tender
offer or similar transaction (each, a “Fundamental Transaction”), any or all outstanding Awards may
be assumed, converted or replaced by the successor corporation (if any), which assumption,
conversion or replacement shall be binding on all participants under this Plan. In the
alternative, the successor corporation may substitute equivalent Awards or provide substantially
similar consideration to participants as was provided to stockholders (after taking into account
the existing provisions of the Awards). The successor corporation may also issue, in place of
outstanding Shares held by the participants, substantially similar shares or other property subject
to repurchase restrictions no less favorable to the participant. In the event such successor
corporation (if any) does not assume or substitute Awards, as provided above, pursuant to a
transaction described in this Subsection 10.3, the vesting with respect to such Awards shall fully
and immediately accelerate or the repurchase rights of the Company shall fully and immediately
terminate, as the case may be, so that the Awards may be exercised or the repurchase rights shall
terminate before, or otherwise in connection with the closing or completion of the Fundamental
Transaction or event, but then terminate. Notwithstanding anything in this Plan to the contrary,
the Committee may, in its sole discretion, provide that the vesting of any or all Award Shares
subject to vesting or right of repurchase shall accelerate or lapse, as the case may be, upon a
transaction described in this Section 10.3. If the Committee exercises such discretion with
respect to Options, such Options shall become exercisable in full prior to the consummation of such
event at such time and on such conditions as the Committee determines, and if such Options are not
exercised prior to the consummation of the Fundamental Transaction, they shall terminate at such
time as determined by the Committee. Subject to any greater rights granted to participants under
the foregoing provisions of this Section 10.3, in the event of the occurrence of any Fundamental
Transaction, any outstanding Awards shall be treated as provided in the applicable agreement or
plan of merger, consolidation, dissolution, liquidation, or sale of assets.

10.4 Changes of Control. The Board may also, but need not, specify that other transactions or
events constitute a “Change in Control”. The Board may do that either before or after the
transaction or event occurs. Examples of transactions or events that the Board may treat as
Changes of Control are: (a) any person or entity, including a “group” as contemplated by
Section 13(d)(3) of the Exchange Act, acquires securities holding 30% or more of the total combined
voting power or value of the Company, or (b) as a result of or in connection with a contested
election of Company Directors, the persons who were Company Directors immediately before the
election cease to constitute a majority of the Board. In connection with a Change in Control,
notwithstanding any other provision of this Plan, the Board may, but need not, take any one or more
of the actions described in Section 10.3. In addition, the Board may extend the date for the
exercise of Awards (but not beyond their original Expiration Date). The Board need not adopt the
same rules for each Award or each Awardee. Notwithstanding anything in this Plan to the contrary,
in the event of an involuntary Termination of services for any reason other than death, disability
or Cause, within 18 months following the consummation of a Fundamental Transaction or Change in
Control, any Awards, assumed or substituted in a Fundamental Transaction or Change in Control,
which are subject to vesting conditions and/or the right of repurchase in favor of the Company or a
successor entity, shall accelerate fully so that such Award Shares are immediately exercisable upon
Termination or, if subject to the right of repurchase in favor of the Company, such repurchase
rights shall lapse as of the date of Termination. Such Awards shall be exercisable for a period of
one (1) year following termination, but in no event after the Expiration Date.

10.5 Divestiture. If the Company or an Affiliate sells or otherwise transfers equity
securities of an Affiliate to a person or entity other than the Company or an Affiliate, or leases,
exchanges or transfers all or any portion of its assets to such a person or entity, then the Board
may specify that such transaction or event constitutes a “Divestiture”. In connection with a
Divestiture, notwithstanding any other provision of this Plan, the Board may, but need not, take
one or more of the actions described in Section 10.3 or 10.4 with respect to Awards or Award Shares
held by, for example, Employees, Directors or Consultants for whom that transaction or event
results in a Termination. The Board need not adopt the same rules for each Award or Awardee.

10.6 Dissolution. If the Company adopts a plan of dissolution, the Board may cause Awards to
be fully vested and exercisable (but not after their Expiration Date) before the dissolution is
completed but contingent on its completion and may cause the Company’s repurchase rights on Award
Shares to lapse upon completion of the dissolution. The Board need not adopt the same rules for
each Award or each Awardee. Notwithstanding anything herein to the contrary, in the event of a
dissolution of the Company, to the extent not exercised before the earlier of the completion of the
dissolution or their Expiration Date, Awards shall terminate immediately prior to the dissolution.

10.7 Cut-Back to Preserve Benefits. If the Administrator determines that the net after-tax
amount to be realized by any Awardee, taking into account any accelerated vesting, termination of
repurchase rights, or cash payments to that Awardee in connection with any transaction or event set
forth in this Section 10 would be greater if one or more of those steps were not taken or payments
were not made with respect to that Awardee’s Awards or Award Shares, then, at the election of the
Awardee, to such extent, one or more of those steps shall not be taken and payments shall not be
made.

11. Non-Employee Director Awards

11.1 Non-Employee Director Awards.

	 	(a)	 	General. Awards may be granted by the Committee pursuant to this
Section 11.1 to: (i) each Non-Employee Director who is first elected or appointed
to the Board at any time after the Effective Date, and (ii) commencing in 2004, on
the date of each annual meeting of stockholders, each individual who is to
continue serving as a Non-Employee Director, provided, however, that such
individual has served as a Non-Employee Director for at least six (6) months.
Subject to this Section 11.1, the Committee shall determine the terms of each such
Award, including, without limitation, the type of Award, the number of Shares
subject to such Award, the Option Price (but not below the Fair Market Value at
the date of grant), of any such Awards, the term of the Award (which shall not
exceed six years) and the time or times at which any such Awards may be exercised.

	 	(b)	 	Termination of Service. Except as otherwise provided in Section
11.3, after Awardee ceases to serve as a Non-Employee Director, Employee or
Consultant (the “Cessation Date”) Awards granted pursuant to Section 11.1 held by
the Awardee on the Cessation Date shall be exercisable to the extent (but only to
the extent) they are vested on the Cessation Date and only during the twelve
months after such Cessation Date, but in no event after the Expiration Date. To
the extent the Awardee does not exercise an Award within the twelve months after
the Cessation Date, the Award shall automatically terminate. In the case of a
cessation of service due to death, an Award may be exercised as provided in
Section 17. In the case of a cessation of service due to disability, if a
guardian or conservator has been appointed to act for the Awardee and been granted
this authority as part of that appointment, that guardian or conservator may
exercise the Award on behalf of the Awardee. Death or disability occurring after
an Awardee’s cessation of service shall not cause the cessation of service to be
treated as having occurred due to death or disability.

	 	(c)	 	Board Discretion. The Awards under this Section 11.1 are not
intended as the exclusive Awards that may be made to Non-Employee Directors under
this Plan. Subject to Section 8.2(a), the Committee may, in its discretion, amend
the Plan with respect to the terms of the Awards herein, may add or substitute
other Awards or may temporarily or permanently suspend Awards hereunder, all
without approval of the Company’s stockholders.

11.2 Reserved.

11.3 Certain Transactions and Events

	 	(a)	 	In the event of a Fundamental Transaction while the Awardee
remains a Non-Employee Director, the Shares at the time subject to each
outstanding Option held by such Awardee pursuant to Section 11, but not
otherwise vested, shall automatically vest in full so that each such Option
shall, immediately prior to the effective date of the Fundamental Transaction,
become exercisable for all the Shares as fully vested Shares and may be
exercised for any or all of those vested Shares. Immediately following the
consummation of the Fundamental Transaction, each Option shall terminate and
cease to be outstanding, except to the extent assumed by the successor
corporation (or Affiliate thereof).

	 	(b)	 	In the event of a Change in Control while the Awardee remains
a Non-Employee Director, the Shares at the time subject to each outstanding
Option held by such Awardee pursuant to Section 11, 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 Shares as fully vested Shares and may be exercised for any or all of
those vested Shares. Each such Option shall remain exercisable for such fully
vested Shares until the expiration or sooner termination of the Option term in
connection with a Change in Control.

	 	(c)	 	Each Option which is assumed in connection with a Fundamental
Transaction shall be appropriately adjusted, immediately after such
Fundamental Transaction, to apply to the number and class of securities which
would have been issuable to the Awardee in consummation of such Fundamental
Transaction had the Option been exercised immediately prior to such
Fundamental Transaction. Appropriate adjustments shall also be made to the
Option Price payable per share under each outstanding Option, provided the
aggregate Option Price payable for such securities shall remain the same. To
the extent the actual holders of the Company’s outstanding Common Stock
receive cash consideration for their Common Stock in consummation of the
Fundamental Transaction, the successor corporation may, in connection with the
assumption of the outstanding Options granted pursuant to Section 11,
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
Fundamental Transaction.

	 	(d)	 	The grant of Options pursuant to Section 11 shall in no way
affect the right of the Company 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.

	 	(e)	 	The remaining terms of each Option granted pursuant to
Section 11 shall, as applicable, be the same as terms in effect for Awards
granted under this Plan. Notwithstanding the foregoing, the provisions of
Section 9.4 and Section 10 shall not apply to Options granted pursuant to
Section 11.

11.4 Limited Transferability of Options. Each Option granted pursuant to Section 11 may be
assigned in whole or in part during the Awardee’s lifetime to one or more members of the Awardee’s
family or to a trust established exclusively for one or more of such family members or to an entity
in which the Awardee is majority owner or to the Awardee ‘s former spouse, to the extent such
assignment is in connection with the Awardee ‘s estate or financial 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 Administrator may deem
appropriate. The Awardee may also designate one or more persons as the beneficiary or beneficiaries
of his or her outstanding Options under Section 11, and those Options shall, in accordance with
such designation, automatically be transferred to such beneficiary or beneficiaries upon the
Awardee ‘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 Award Agreement
evidencing each such transferred Option, including (without limitation) the limited time period
during which the Option may be exercised following the Awardee ‘s death.

12. Withholding and Tax Reporting

12.1 Tax Withholding Alternatives

	 	(a)	 	General. Whenever Award Shares are issued or become free of
restrictions, the Company may require the Awardee to remit to the Company an
amount sufficient to satisfy any applicable tax withholding requirement,
whether the related tax is imposed on the Awardee or the Company. The Company
shall have no obligation to deliver Award Shares or release Award Shares from
an escrow or permit a transfer of Award Shares until the Awardee has satisfied
those tax withholding obligations. Whenever payment in satisfaction of Awards
is made in cash, the payment will be reduced by an amount sufficient to
satisfy all tax withholding requirements.

	 	(b)	 	Method of Payment. The Awardee shall pay any required
withholding using the forms of consideration described in Section 6.4(b),
except that, in the discretion of the Administrator, the Company may also
permit the Awardee to use any of the forms of payment described in Section
6.4(c). The Administrator, in its sole discretion, may also permit Award
Shares to be withheld to pay required withholding. If the Administrator
permits Award Shares to be withheld, the Fair Market Value of the Award Shares
withheld, as determined as of the date of withholding, shall not exceed the
amount determined by the applicable minimum statutory withholding rates.

12.2 Reporting of Dispositions. Any holder of Option Shares acquired under an Incentive Stock
Option shall promptly notify the Administrator, following such procedures as the Administrator may
require, of the sale or other disposition of any of those Option Shares if the disposition occurs
during: (a) the longer of two years after the Grant Date of the Incentive Stock Option and one
year after the date the Incentive Stock Option was exercised, or (b) such other period as the
Administrator has established.

13. Compliance with Law

The grant of Awards and the issuance and subsequent transfer of Award Shares shall be subject
to compliance with all Applicable Law, including all applicable securities laws. Awards may not be
exercised, and Award Shares may not be transferred, in violation of Applicable Law. Thus, for
example, Awards may not be exercised unless: (a) a registration statement under the Securities Act
is then in effect with respect to the related Award Shares, or (b) in the opinion of legal counsel
to the Company, those Award Shares may be issued in accordance with an applicable exemption from
the registration requirements of the Securities Act and any other applicable securities laws. The
failure or inability of the Company to obtain from any regulatory body the authority considered by
the Company’s legal counsel to be necessary or useful for the lawful issuance of any Award Shares
or their subsequent transfer shall relieve the Company of any liability for failing to issue those
Award Shares or permitting their transfer. As a condition to the exercise of any Award or the
transfer of any Award Shares, the Company may require the Awardee to satisfy any requirements or
qualifications that may be necessary or appropriate to comply with or evidence compliance with any
Applicable Law.

14. Amendment or Termination of this Plan or Outstanding Awards

14.1 Amendment and Termination. The Board may at any time amend, suspend, or terminate this
Plan.

14.2 Stockholder Approval. The Company shall obtain the approval of the Company’s
stockholders with respect to any Plan amendment that purports to increase the number of Shares
available for issuance under the Plan except as otherwise provided under Section 3.1 or Section
10.2. Stockholder approval shall also be sought where necessary or desirable to comply with any
Applicable Law or with the requirements applicable to the grant of Awards intended to be Incentive
Stock Options. The Board may also, but need not, require that the Company’s stockholders approve
any other amendments to this Plan.

14.3 Effect. No amendment, suspension, or termination of this Plan, and no modification of
any Award even in the absence of an amendment, suspension, or termination of this Plan, shall
impair any existing contractual rights of any Awardee unless the affected Awardee consents to the
amendment, suspension, termination, or modification. Notwithstanding anything herein to the
contrary, no such consent shall be required if the Board determines, in its sole and absolute
discretion, that the amendment, suspension, termination, or modification: (a) is required or
advisable in order for the Company, this Plan or the Award to satisfy Applicable Law, to meet the
requirements of any accounting standard or to avoid any adverse accounting treatment, or (b) in
connection with any transaction or event described in Section 10, is in the best interests of the
Company or its stockholders. The Board may, but need not, take the tax or accounting consequences
to affected Awardees into consideration in acting under the preceding sentence. Those decisions
shall be final, binding and conclusive. Termination of this Plan shall not affect the
Administrator’s ability to exercise the powers granted to it under this Plan with respect to Awards
granted before the termination of Award Shares issued under such Awards even if those Award Shares
are issued after the termination.

15. Reserved Rights

15.1 Nonexclusivity of this Plan. This Plan shall not limit the power of the Company or any
Affiliate to adopt other incentive arrangements including, for example, the grant or issuance of
stock options, stock, or other equity-based rights under other plans.

15.2 Unfunded Plan. This Plan shall be unfunded. Although bookkeeping accounts may be
established with respect to Awardees, any such accounts will be used merely as a convenience. The
Company shall not be required to segregate any assets on account of this Plan, the grant of Awards,
or the issuance of Award Shares. The Company and the Administrator shall not be deemed to be a
trustee of stock or cash to be awarded under this Plan. Any obligations of the Company to any
Awardee shall be based solely upon contracts entered into under this Plan, such as Award
Agreements. No such obligations shall be deemed to be secured by any pledge or other encumbrance
on any assets of the Company. Neither the Company nor the Administrator shall be required to give
any security or bond for the performance of any such obligations.

16. Special Arrangements Regarding Award Shares

16.1 Escrow of Stock Certificates. To enforce any restrictions on Award Shares, the
Administrator may require their holder to deposit the certificates representing Award Shares, with
stock powers or other transfer instruments approved by the Administrator endorsed in blank, with
the Company or an agent of the Company to hold in escrow until the restrictions have lapsed or
terminated. The Administrator may also cause a legend or legends referencing the restrictions to
be placed on the certificates.

16.2 Repurchase Rights

	 	(a)	 	General. If a Stock Award is subject to vesting conditions, the Company shall have
the right, during the seven months after the Awardee’s Termination, to repurchase any or
all of the Award Shares that were unvested as of the date of that Termination. The
repurchase price shall be determined by the Administrator in accordance with this Section
16.2 which shall be either (i) the Purchase Price for the Award Shares (minus the amount
of any cash dividends paid or payable with respect to the Award Shares for which the
record date precedes the repurchase) or (ii) the lower of (A) the Purchase Price for the
Shares or (B) the Fair Market Value of those Award Shares as of the date of the
Termination. The repurchase price shall be paid in cash. The Company may assign this
right of repurchase.

	 	(b)	 	Procedure. The Company or its assignee may choose to give the Awardee a written
notice of exercise of its repurchase rights under this Section 16.2. However, the
Company’s failure to give such a notice shall not affect its rights to repurchase Award
Shares. The Company must, however, tender the repurchase price during the period
specified in this Section 16.2 for exercising its repurchase rights in order to exercise
such rights.

17. Beneficiaries

An Awardee may file a written designation of one or more beneficiaries who are to receive the
Awardee’s rights under the Awardee’s Awards after the Awardee’s death. An Awardee may change such
a designation at any time by written notice. If an Awardee designates a beneficiary, the
beneficiary may exercise the Awardee’s Awards after the Awardee’s death. If an Awardee dies when
the Awardee has no living beneficiary designated under this Plan, the Company shall allow the
executor or administrator of the Awardee’s estate to exercise the Award or, if there is none, the
person entitled to exercise the Option under the Awardee’s will or the laws of descent and
distribution. In any case, no Award may be exercised after its Expiration Date.

18. Miscellaneous

18.1 Governing Law. This Plan, the Award Agreements and all other agreements entered into
under this Plan, and all actions taken under this Plan or in connection with Awards or Award
Shares, shall be governed by the laws of the State of Delaware.

18.2 Determination of Value. Fair Market Value shall be determined as follows:

	 	(a)	 	Listed Stock. If the Shares are traded on any established
stock exchange or quoted on a national market system, Fair Market Value shall
be the closing sales price for the Shares as quoted on that stock exchange or
system for the date the value is to be determined (the “Value Date”) as
reported in The Wall Street Journal or a similar publication. If no sales are
reported as having occurred on the Value Date, Fair Market Value shall be that
closing sales price for the last preceding trading day on which sales of
Shares are reported as having occurred. If no sales are reported as having
occurred during the five trading days before the Value Date, Fair Market Value
shall be the closing bid for Shares on the Value Date. If Shares are listed
on multiple exchanges or systems, Fair Market Value shall be based on sales or
bid prices on the primary exchange or system on which Shares are traded or
quoted.

	 	(b)	 	Stock Quoted by Securities Dealer. If Shares are regularly
quoted by a recognized securities dealer but selling prices are not reported
on any established stock exchange or quoted on a national market system, Fair
Market Value shall be the mean between the high bid and low asked prices on
the Value Date. If no prices are quoted for the Value Date, Fair Market Value
shall be the mean between the high bid and low asked prices on the last
preceding trading day on which any bid and asked prices were quoted.

	 	(c)	 	No Established Market. If Shares are not traded on any
established stock exchange or quoted on a national market system and are not
quoted by a recognized securities dealer, the Administrator (following
guidelines established by the Board or Committee) will determine Fair Market
Value in good faith. The Administrator will consider the following factors,
and any others it considers significant, in determining Fair Market Value:
(i) the price at which other securities of the Company have been issued to
purchasers other than Employees, Directors, or Consultants, (ii) the Company’s
stockholders’ equity, prospective earning power, dividend-paying capacity, and
non-operating assets, if any, and (iii) any other relevant factors, including
the economic outlook for the Company and the Company’s industry, the Company’s
position in that industry, the Company’s goodwill and other intellectual
property, and the values of securities of other businesses in the same
industry.

18.3 Reservation of Shares. During the term of this Plan, the Company shall at all times
reserve and keep available such number of Shares as are still issuable under this Plan.

18.4 Electronic Communications. Any Award Agreement, notice of exercise of an Award, or other
document required or permitted by this Plan may be delivered in writing or, to the extent
determined by the Administrator, electronically. Signatures may also be electronic if permitted by
the Administrator.

18.5 Notices. Unless the Administrator specifies otherwise, any notice to the Company under
any Option Agreement or with respect to any Awards or Award Shares shall be in writing (or, if so
authorized by Section 18.4, communicated electronically), shall be addressed to the Secretary of
the Company, and shall only be effective when received by the Secretary of the Company.

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