Document:

exv10w1

 

Exhibit 10.1

	 	 	 	 
	 	 	 	 
	 
	 	 	 
	EXECUTIVE EMPLOYMENT AGREEMENT

	 	 	
	 
	 	 	 
	 	 	 	 
	 	 	 	 

	 	 	 	 	 	 	 
	 	 	 
	 	Employee Name:

	 	Effective Date:
	 	Offer Letter Date (if any) :	 
	 	Heidi Melin

	 	June 13, 2005
	 	May 24, 2005	 
	 	 
	 	 	 	 	 
	 	 	 
	 	Position (title) :

	 	Supervisor (title) :	 	 	 
	 	Chief Marketing Officer

	 	Godfrey Sullivan	 	 	 
	 	 
	 	 	 	 	 
	 	 	 
	 	Employment (briefly describe nature of position) :	 	 	 
	 	Responsible for all aspects of the marketing operations of Hyperion.	 
	 	 
	 	 	 	 	 
	 	 	 
	 	Base Salary:
	 	Bonus Percentage:
	 	Continuation Period:	 
	 	Two hundred sixty thousand dollars

	 	Sixty percent (60%)
	 	Twelve (12) months	 
	 	($260,000.00)

	 	 	 	 	 
	 	 
	 	 	 	 	 
	 	 	 
	 	Additional Benefits (if any) :
	 	 	 	 	 
	 	1. Four (4) weeks of vacation per year, provided that no more than two (2) weeks of vacation
shall continue to accrue into subsequent years.	 
	 	 
	 	 	 	 	 
	 	2. Reimbursement for the reasonable and customary cost of an annual physical examination.	 
	 	 
	 	 	 	 	 
	 	3. A stock option for seventy thousand (70,000) shares of Hyperion common stock according to the
terms of the offer letter with the Offer Letter Date, the Hyperion 2004 Equity Incentive Plan,
and the Hyperion 2004 Equity Incentive Plan grant document.	 
	 	 
	 	 	 	 	 
	 	4. A grant of ten thousand (10,000) shares of restricted common stock according to the terms of
the offer letter with the Offer Letter Date, the Hyperion 2004 Equity Incentive Plan, and the
Hyperion Restricted Stock Grant Agreement.	 
	 	 
	 	 	 	 	 
	 	 	 
	 	Additional Terms (if any) :
	 	 	 	 	 
	 	None.
	 	 	 	 	 
	 	 
	 	 	 	 	 
	 	 	 

This Executive Employment Agreement (“Agreement”) is entered into as of the effective date
(“Effective Date”) specified above, by and between Hyperion Solutions Corporation, with offices at
5450 Great America Parkway, Santa Clara, California 95054 (“Hyperion”) and the executive employee
(“Employee”) specified above.

1. Duties and Scope of Employment

a. Subject to the terms of this Agreement, Hyperion agrees to employ Employee in the position
(“Position”) specified in above, or in such other position as Hyperion subsequently may assign to
Employee, to perform the duties of the Position (“Employment”) specified above, or such duties as
Hyperion subsequently may assign to Employee. Employee shall report to the supervisor
(“Supervisor”) specified above, or to such other person as Hyperion subsequently may determine.

b. During the term of Employee’s Employment, Employee shall devote Employee’s full business efforts
and time to Hyperion. Additionally, during the term of Employee’s Employment, without the prior
written approval of Hyperion (which shall not be unreasonably withheld), Employee shall not render
services in any capacity to any other person or entity, and shall not act as a sole proprietor,
partner or managing member of any other entity, or as a shareholder owning more than one percent
(1%) of the stock of any other corporation or entity. The foregoing, however, shall not preclude
Employee from engaging in reasonable community, school or charitable activities.

	 	 	 	 
	 	 	 	 
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c. Employee shall comply with Hyperion’s policies and rules, as they may be in effect from time to
time, during the term of Employee’s Employment.

d. Employee represents and warrants to Hyperion, to the best of Employee’s knowledge and belief,
that Employee is under no obligation or commitment, whether contractual or otherwise, that is
inconsistent with Employee’s obligations under this Agreement. Employee represents and warrants to
Hyperion, to the best of Employee’s knowledge and belief, that Employee’s Employment with Hyperion
will not require the use, or disclosure, of any trade secrets or other proprietary information or
intellectual property in which Employee, or any other person, has any right, title or interest, and
that Employee’s Employment by Hyperion, as contemplated by this Agreement, will not infringe or
violate the rights of any other person or entity. Employee represents and warrants to Hyperion, to
the best of Employee’s knowledge and belief, that Employee has returned all property and
confidential information belonging to any prior employer.

2. Compensation

a. Hyperion shall pay Employee, as compensation for Employee’s services, a base salary at a gross
annual rate of not less than the base salary (“Base Salary”) specified above. Such Base Salary
shall be payable in accordance with Hyperion’s standard payroll procedures. The Base Salary,
together with any increases in such compensation that Hyperion may grant from time to time, shall
be referred to as the base compensation (“Base Compensation”).

b. As described in the offer letter with the date (“Offer Letter Date”) specified above, Employee

shall be eligible to receive an annual incentive bonus (“Incentive Bonus”) with a target amount
equal to the bonus percentage (“Bonus Percentage”) specified above, of Employee’s Base
Compensation. Such bonus (if any) shall be awarded based on objective or subjective criteria
established in advance by Hyperion’s board of directors or its compensation committee. The
determinations of the board or such committee with respect to such bonus shall be final and
binding.

c. During the term of Employee’s Employment, Employee shall be eligible to participate in any
employee benefit plans maintained by Hyperion for similarly situated employees, subject in each
case to the generally applicable terms and conditions of the plan in question, and to the
determinations of any person or committee administering such plan. In addition to the foregoing
benefits, Employee shall be entitled to the additional benefits (“Additional Benefits”) specified
above, if any.

d. During the term of Employee’s Employment, Employee shall be authorized to incur necessary and
reasonable travel, entertainment and other business expenses in connection with Employee’s duties
hereunder. Hyperion shall reimburse Employee for such expenses upon presentation of an itemized
account and appropriate supporting documentation, all in accordance with Hyperion’s generally
applicable policies. Any single expenditure in excess of ten thousand dollars ($10,000.00) shall
require the prior approval of Hyperion’s Chief Executive Officer, President or Chief Financial
Officer.

3. Termination

a. Employee may terminate Employee’s Employment at any time and for any reason (or no reason) by
giving Hyperion thirty (30) days advance written notice. Hyperion may terminate Employee’s
Employment at any time and for any reason (or no reason), and with or without cause, by giving
Employee thirty (30) days advance written notice.

b. Hyperion may also terminate Employee’s Employment due to Employee’s permanent disability, by
giving Employee notice in writing. Permanent disability shall mean that Employee, at the time
notice is given, has failed to perform Employee’s duties under this Agreement for sixty (60), or
more consecutive days, or for ninety (90), or more days, during any twelve (12) month period, as
the result of Employee’s incapacity due to physical or mental injury, disability or illness, and
which Hyperion is unable to accommodate reasonably without undue hardship. Employee’s Employment
shall terminate automatically in the event of Employee’s death.

c. Unless otherwise provided for herein, upon the termination of Employee’s Employment pursuant to
this section, Employee shall only be entitled to the compensation, benefits and reimbursements
described in section 2 for the period preceding the effective date of the termination. A prorated
bonus shall be payable (at the Employee’s target bonus rate) through the effective date of the
termination. The payments under this Agreement shall fully discharge all responsibilities of
Hyperion to Employee. The termination of this Agreement shall not limit or otherwise affect
Employee’s obligations under section 4.

d. Any other provision of this Agreement notwithstanding, subsections e and f, below, shall not
apply unless Employee has executed a general release (in a form prescribed by Hyperion, such as the
current Termination Release Agreement available from the Hyperion legal department) of all known
and unknown claims that Employee may then have against Hyperion or persons affiliated with
Hyperion. Such release shall include, among other things, an agreement not to prosecute any legal
action or other proceeding based upon any of such claims. Employee acknowledges that such release
may provide that in the event of a breach by Employee of the terms of the release, or of Employee’s
obligations under section 4 hereof, Hyperion shall be entitled to recover from Employee all amounts
paid under subsections e and f of this section, as well as all litigation costs (including
attorneys’ fees and expenses) incurred by Hyperion in connection with such breach.

	 	 	 	 
	 	 	 	 
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e. If:

i. Hyperion terminates Employee’s Employment for any reason other than permanent disability,
or cause, as defined below;

ii. Hyperion was subject to a change in ownership and/or control, as defined below, during
the term of this Agreement and:

1/ Hyperion terminates Employee’s Employment for any reason other than permanent
disability, or cause, as defined below, within three (3) months prior to, or within
twelve (12) months thereafter, such a change in ownership and/or control;

2/ Employee resigns for good reason, as defined below, within twelve (12) months
thereafter such, a change in ownership and/or control;

then, for the continuation period (“Continuation Period”) specified above, following Employee’s
termination, Hyperion shall pay Employee Employee’s Base Compensation, at the rate in effect at the
time of the termination of Employment in accordance with Hyperion’s standard payroll procedures,
and continue the coverage of Employee, and Employee’s dependents (if applicable), under the health
benefit plans in effect at the time of the termination. To the extent that such plans or the
insurance contracts or provider agreements associated with such plans do not permit the extension
of Employee’s coverage following the termination of Employee’s active employment, Hyperion shall
pay Employee cash in an amount equal to the cost to Hyperion of the coverage that cannot be
provided. If Employee elects to continue Employee’s health insurance coverage under the
Consolidated Omnibus Budget Reconciliation Act (“COBRA”), following Employee’s termination, then
the date of the “qualifying event” for purposes of COBRA shall be Employee’s last day of active
employment. Upon a termination as defined in this subsection 3(e)(ii), all of Employee’s unvested
stock options, restricted stock, restricted stock units, or other similar forms of equity
compensation, shall immediately vest or otherwise become fully available to the Employee.

	f.  	Termination for cause means:

i. Employee’s failure to perform, in a material fashion, one or more reasonable and lawful
duties assigned to Employee by Hyperion under this Agreement, if such failure continues for
seven (7) days or more after Hyperion has given Employee written notice describing such
failure and advising Employee of the consequences of such failure under this Agreement,
provided that such notice shall be required only with respect to the first such failure;

ii. Employee’s material misconduct relating to Hyperion’s affairs, if such misconduct
continues for seven (7) days or more after Hyperion has given Employee written notice
describing such misconduct and advising Employee of the consequences of such misconduct
under this Agreement, provided that such notice shall be required only with respect to the
first occurrence of such misconduct, provided further there shall be no requirement that the
misconduct continue for seven (7) days or more with respect to acts for which an employee’s
employment is specifically terminable under Hyperion’s policies and procedures applicable to
all employees;

iii. Employee’s conviction of, or a plea of guilty or no contest to, a felony, or a
misdemeanor which calls into question Employee’s honesty, under the laws of any country,
including the United States, or any state thereof;

iv. any breach of this Agreement, the employee agreement, relating to confidential
information and intellectual property rights, between Employee and Hyperion;

v. threats or acts, of violence or harassment, directed at any present, former or
prospective employee, independent contractor, vendor, customer or business partner of
Hyperion; or

vi. fraud or embezzlement involving the assets of Hyperion or its affiliates, customers or
suppliers.

Termination for cause hereunder shall be deemed to be termination for misconduct under Hyperion’s
stock option plans and related agreements.

	g.  	A change in ownership and/or control means:

	 	i.  	a change in ownership or control of Hyperion effected through either of the following
actions:

1/ the acquisition, directly or indirectly, by any person or related group of persons
(other than Hyperion, or a person that directly or indirectly controls, is controlled
by, or is under common control with, Hyperion), 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 Hyperion’s outstanding securities
pursuant to a tender or exchange offer made directly to Hyperion’s stockholders which
the Hyperion board of directors does not recommend such stockholders to accept; or

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

	 	ii.  	either of the following stockholder-approved transactions to which Hyperion is a party:

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

2/ the sale, transfer or other disposition of all or substantially all of Hyperion’s
assets in complete liquidation or dissolution of Hyperion.

	h.  	Good reason means:

i. a change in Employee’s position with Hyperion which materially reduces Employee’s level
of responsibility in effect immediately prior to the change of ownership and/or control;

ii. a reduction in Employee’s level of compensation (including Base Salary, benefits and
participation in corporate-performance based bonus or incentive programs) in effect
immediately prior to the change of ownership and/or control by more than fifteen percent
(15%); or

iii. a relocation of Employee’s place of employment prior to the change of ownership and/or
control by more than fifty (50) miles;

provided and only if such change, reduction or relocation is effected by Hyperion without
Employee’s consent.

4. Employee’s Covenants

a. From the Effective Date of this Agreement and continuing until the second (2nd)
anniversary of Employee’s termination, Employee shall not interfere with the business of Hyperion
by, directly or indirectly, personally or through others, soliciting or attempting to solicit, on
Employee’s own behalf or on behalf of any other person or entity, the employment of any employee of
Hyperion, or any of Hyperion’s affiliates. During this period, Employee shall not encourage or
induce, or take any action that has the effect of encouraging or inducing, any employee of
Hyperion, or any of Hyperion’s corporate affiliates, to terminate that employee’s employment.

b. For a period of one
(1) year following Employee’s termination, Employee shall not hire, or assist any other person in hiring, any person who was an employee of Hyperion on the date of
Employee’s termination, to work at Employee’s new place of employment in a position that reports
either directly to Employee, or to any other person who reports directly to Employee.

c. The parties agree that information relating to the identities, key contact personnel,
preferences, needs and circumstances of Hyperion’s customers are trade secrets belonging to
Hyperion that are, and necessarily will be, used by Employee, during Employee’s Employment, in the
solicitation of business from Hyperion’s customers. As a result, from the Effective Date of this
Agreement and continuing until the second (2nd) anniversary of Employee’s termination,
Employee shall not, directly or indirectly, personally or through others, solicit, or attempt to
solicit (on Employee’s own behalf or on behalf of any other person or entity), the business of any
customer, or prospective customer, of Hyperion, or of any of Hyperion’s affiliates, for services or
products similar to those sold by Hyperion. Prospective customer means any person or entity whom
Employee was involved in contacting or soliciting to become a customer during the six (6) month
period prior to Employee’s termination.

d. Employee has entered into an employee agreement, relating to confidential information and
intellectual property rights, with Hyperion, which is incorporated herein by reference, and
survives the termination or expiration of this Agreement. Given the nature of Employee’s Position,
the parties agree that from Employee’s termination until the third (3rd) anniversary of
such date, it would be practically impossible for Employee to work in a position similar to
Employee’s Position with Hyperion, doing similar tasks involved with Employee’s Employment with
Hyperion, for certain companies, including their subsidiaries and affiliates, that provide services
or products that are similar to those of Hyperion, without disclosing Hyperion’s trade secrets. A
list of such companies, which may be amended from time to time by written notice of Hyperion, is
attached hereto as Schedule A.

e. The state of California has certain statutory and common law restrictions on non-competition
agreements between employers and employees, and it is not the intent of Hyperion to violate or
circumvent those restrictions. However, to the extent that Employee resides and Employee’s
principal place of employment is outside of the state of California, then during the period from
the Effective Date of this Agreement and continuing until the second (2nd) anniversary
of Employee’s termination, Employee shall not, directly or indirectly (other than on behalf of
Hyperion or with Hyperion’s prior written consent), engage in any competitive business activity, as
defined below, in any of the locations listed in Schedule B, attached hereto. If conditions of
subsection 3.e apply, the foregoing two (2) year period shall be reduced to one (1) year.
Competitive business activity means:

i. engaging in, or managing or directing persons engaged in, any business in which Hyperion,
or any of Hyperion’s affiliates, is engaged at the time of Employee’s termination, whether
independently or as an employee, agent, consultant, advisor, independent contractor,
proprietor, partner, officer, director or otherwise; or

ii. acquiring, having an ownership interest in, participating in the financing, operation,
management or control of, any entity that derives more than fifteen percent (15%) of its
gross revenues from any business in which

	 	 	 	 
	 	 	 	 
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Hyperion, or any of Hyperion’s affiliates, is
engaged at the time of Employee’s termination, except for the ownership
of one percent (1%), or less, of any entity whose securities are freely tradable on an
established market.

f. Commencing on Employee’s termination and continuing thereafter, Employee shall not directly or
indirectly, personally or through others, disparage Hyperion, or any of its predecessors, any of
their products or services, any of Hyperion’s current or former officers, directors or employees,
nor make or solicit any comments, statements, or the like to the media, on the internet, or to
others that may be considered derogatory or detrimental to the good name or business reputation of
any of the foregoing parties and entities.

g. Employee acknowledges and agrees that Employee’s failure to perform any of Employee’s covenants
in this section would cause irreparable injury to Hyperion, and cause damages to Hyperion that
would be difficult or impossible to ascertain or quantify. Accordingly, without limiting any other
remedies that may be available with respect to any breach of this Agreement, Employee consents to
the entry of an injunction (without bond) to restrain any breach of this section.

h. The covenants in this section shall survive any termination or expiration of this Agreement, and
the termination of Employee’s Employment with Hyperion, for any reason.

5. General

a. Hyperion may assign its rights under this Agreement to any entity that assumes Hyperion’s
obligations hereunder in connection with any sale or transfer of all or a substantial portion of
Hyperion’s assets to such entity, and such an assignment shall be binding upon any successor
(whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or
otherwise) to all or substantially all of Hyperion’s business and/or assets. This Agreement and
all rights and obligations of Employee hereunder are personal to Employee and may not be
transferred or assigned by Employee at any time. However, subject to the forgoing and where
expressly permitted under this Agreement, all rights of Employee hereunder shall inure to the
benefit of, and be enforceable by, Employee’s personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.

b. The validity, performance and construction of this Agreement shall be governed by the laws of
the State of California, USA (excluding its conflict of laws provisions). Santa Clara County,
California shall be the appropriate venue and jurisdiction for the resolution of disputes
hereunder.

c. All notices or communications to be given under this Agreement shall be in writing and shall be
deemed delivered upon hand delivery, upon delivery by a courier service, upon acknowledged
facsimile communication, or three (3) days after deposit in the United States mail, postage
prepaid, by certified, registered or first class mail. In the case of Employee, notices shall be
addressed to Employee at the home address provided by Employee, or which Employee most recently
communicated to Hyperion in writing, and in the case of Hyperion, notices shall be addressed to its
corporate headquarters and directed to the attention of the general counsel.

d. All payments made under this Agreement shall be subject to reduction to reflect taxes or other
charges required to be withheld by law.

e. In the event that any provision of this Agreement is prohibited by any law governing its
construction, performance or enforcement, such provision shall be ineffective to the extent of such
prohibition without invalidating thereby any of the remaining provisions of the Agreement. The
captions of sections herein are intended for convenience only, and the same shall not be
interpretive of the content of such section.

f. In the event of any dispute or claim relating to or arising out of Employee’s employment
relationship with Hyperion, this Agreement, or the termination of Employee’s employment with
Hyperion, for any reason (including, but not limited to, any claims of breach of contract, wrongful
termination or age, sex, race, national origin, disability or other discrimination or harassment),
the parties agree that all such disputes shall be fully, finally and exclusively resolved by
binding arbitration to the fullest extent permitted by law. The arbitration will be conducted in
accordance with the American Arbitration Association’s “National Rules for the Resolution of
Employment Disputes” then in effect. EMPLOYEE AND HYPERION HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO
HAVE ANY AND ALL DISPUTES OR CLAIMS ADJUDICATED IN COURT OR BEFORE ANY ADMINISTRATIVE AGENCY, OR
TRIED IN COURT OR BEFORE ANY ADMINISTRATIVE AGENCY, JUDGE OR JURY.

g. The terms and conditions of this Agreement may not be superseded, modified, or amended except in
writing which states that it is such a modification, signed by Employee and an authorized officer
of Hyperion (other than Employee). No waiver by either party of any breach of, or of compliance
with, any condition or provision of this Agreement by the other party shall be considered a waiver
of any other condition or provision or of the same condition or provision at another time.

h. This Agreement may be executed in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same instrument.

i. This Agreement, including any additional terms (“Additional Terms”) specified above, Schedules A
and B, the employee agreement (relating to confidential information and intellectual property
rights), and the offer letter with the Offer Letter Date, constitute the entire agreement between
the parties as to the subject matter hereof, and supersede and replace all

	 	 	 	 
	 	 	 	 
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prior or contemporaneous
agreements, written or oral, regarding such subject matter. In the event of any conflict between
the terms of these documents, the terms of this Agreement, unless expressly provided herein, shall have
precedence. Any conflict between any Hyperion equity incentive plan and this Agreement shall be
resolved in favor of this Agreement.

	 	 	 
	Accepted and Agreed:
	 	 
	 
	 	 
	Hyperion Solutions Corporation

	 	Employee
	 
	 	 
	By:
	 	 
	 

	 	 
	signature of authorized representative

	 	signature
	 
	 	 
	Godfrey Sullivan

	 	Heidi Melin
	 

	 	 
	printed name

	 	printed name
	 
	 	 
	President and CEO
	 	 
	 

	 	 
	title
	 	 

	 	 	 	 
	 	 	 	 
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Exhibit 10.1

FINISAR CORPORATION

STOCK OPTION AGREEMENT

     Finisar Corporation has granted to the individual (the “Optionee”) named in the Notice of
Grant of Stock Options (the “Notice”) to which this Stock Option Agreement (the “Option Agreement”)
is attached an option (the “Option”) to purchase certain shares of Stock upon the terms and
conditions set forth in the Notice and this Option Agreement. The Option has been granted pursuant
to and shall in all respects be subject to the terms and conditions of the Finisar Corporation 1999
Stock Option Plan (the “Plan”), as amended to the Date of Option Grant, the provisions of which are
incorporated herein by reference. By signing the Notice, the Optionee: (a) represents that the
Optionee has received copies of and has read and is familiar with the terms and conditions of the
Notice, the Plan and this Option Agreement, (b) accepts the Option subject to all of the terms and
conditions of the Notice and this Option Agreement and (c) agrees to accept as binding, conclusive
and final all decisions or interpretations of the Board upon any questions arising under the
Notice, the Plan or this Option Agreement.

     1. Definitions and Construction.

          1.1 Definitions. Whenever used herein, capitalized terms shall have the meanings assigned to
such terms in the Notice or as set forth below:

               (a) “Board” means the Board of Directors of the Company. If one or more Committees have been
appointed by the Board to administer the Plan, “Board” also means such Committee(s).

               (b) “Code” means the Internal Revenue Code of 1986, as amended, and any applicable regulations
promulgated thereunder.

               (c) “Committee” means the Compensation Committee or other committee of the Board duly
appointed to administer the Plan and having such powers as shall be specified by the Board. Unless
the powers of the Committee have been specifically limited, the Committee shall have all of the
powers of the Board granted herein, including, without limitation, the power to amend or terminate
the Plan at any time, subject to the terms of the Plan and any applicable limitations imposed by
law.

               (d) “Company” means Finisar Corporation, a Delaware corporation, or any successor corporation
thereto.

               (e) “Consultant” means a person engaged to provide consulting or advisory services (other than
as an Employee or a Director) to a Participating Company, provided that the identity of such
person, the nature of such services or the entity to which such services are provided would not
preclude the Company from offering or selling securities to such person pursuant to the Plan in
reliance on registration on a Form S-8 Registration Statement under the Securities Act.

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               (f) “Date of Option Grant” means the effective date of grant of the Option as set forth in the
Notice.

               (g) “Director” means a member of the Board or of the board of directors of any other
Participating Company.

               (h) “Disability” means the inability of the Optionee, in the opinion of a qualified physician
acceptable to the Company, to perform the major duties of the Optionee’s position with the
Participating Company Group because of the sickness or injury of the Optionee.

               (i) “Employee” means any person treated as an employee (including an officer or a Director who
is also treated as an employee) in the records of a Participating Company and, if the Notice
designates this Option as an Incentive Stock Option, who is an employee for purposes of Section 422
of the Code; provided, however, that neither service as a Director nor payment of a director’s fee
shall be sufficient to constitute employment for purposes of the Plan.

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

               (k) “Exercise Price” means the purchase price per share of Stock as set forth in the Notice
and as adjusted from time to time pursuant to Section 9.

               (l) “Fair Market Value” means, as of any date, the value of a share of Stock or other property
as determined by the Board, in its discretion, or by the Company, in its discretion, if such
determination is expressly allocated to the Company herein, subject to the following:

                    (i) If, on such date, the Stock is listed on a national or regional securities exchange or
market system, the Fair Market Value of a share of Stock shall be the closing price of a share of
Stock (or the mean of the closing bid and asked prices of a share of Stock if the Stock is so
quoted instead) as quoted on the Nasdaq National Market, The Nasdaq SmallCap Market or such other
national or regional securities exchange or market system constituting the primary market for the
Stock, as reported in The Wall Street Journal or such other source as the Company deems
reliable. If the relevant date does not fall on a day on which the Stock has traded on such
securities exchange or market system, the date on which the Fair Market Value shall be established
shall be the last day on which the Stock was so traded prior to the relevant date, or such other
appropriate day as shall be determined by the Board, in its discretion.

                    (ii) If, on such date, the Stock is not listed on a national or regional securities exchange
or market system, the Fair Market Value of a share of Stock shall be as determined by the Board in
good faith without regard to any restriction other than a restriction which, by its terms, will
never lapse.

2

 

               (m) “Number of Option Shares” means the total number of shares of Stock subject to the Option
as set forth in the Notice and as adjusted from time to time pursuant to Section 9.

               (n) “Option Expiration Date” means the date listed under the heading “Expiration” in the
Notice.

               (o) “Parent Corporation” means any present or future “parent corporation” of the Company, as
defined in Section 424(e) of the Code.

               (p) “Participating Company” means the Company or any Parent Corporation or Subsidiary
Corporation.

               (q) “Participating Company Group” means, at any point in time, all corporations collectively
which are then Participating Companies.

               (r) “Securities Act” means the Securities Act of 1933, as amended.

               (s) “Service” means the Optionee’s employment or service with the Participating Company Group,
whether in the capacity of an Employee, a Director or a Consultant. The Optionee’s Service shall
not be deemed to have terminated merely because of a change in the capacity in which the Optionee
renders Service to the Participating Company Group or a change in the Participating Company for
which the Optionee renders such Service, provided that there is no interruption or termination of
the Optionee’s Service. Furthermore, the Optionee’s Service with the Participating Company Group
shall not be deemed to have terminated if the Optionee takes any military leave, sick leave, or
other bona fide leave of absence approved by the Company; provided, however, that if any such leave
exceeds ninety (90) days, on the one hundred eighty-first (181st) day following the commencement of
such leave the Option shall thereafter be treated as a Nonstatutory Stock Option (that is, an
option not intended to be an Incentive Stock Option within the meaning of Section 422(b) of the
Code) unless the Optionee’s right to return to Service with the Participating Company Group is
guaranteed by statute or contract. Notwithstanding the foregoing, unless otherwise designated by
the Company or required by law, a leave of absence shall not be treated as Service for purposes of
determining the Optionee’s Vested Shares.. The Optionee’s Service shall be deemed to have
terminated either upon an actual termination of Service or upon the corporation for which the
Optionee performs Service ceasing to be a Participating Company. Subject to the foregoing, the
Company, in its discretion, shall determine whether the Optionee’s Service has terminated and the
effective date of such termination.

               (t) “Stock” means the common stock of the Company, as adjusted from time to time in accordance
with Section 9.

               (u) “Subsidiary Corporation” means any present or future “subsidiary corporation” of the
Company, as defined in Section 424(f) of the Code.

3

 

               (v) “Vested Shares” mean, on any relevant date, that portion of the Number of Option Shares
which has vested in accordance with vesting schedule set forth in the Notice. Provided that the
Optionee’s Service has not terminated prior to the relevant date, that number of shares set forth
in the Notice opposite each respective “Full Vest” date shall become Vested Shares on such date.

          1.2 Construction. Captions and titles contained herein are for convenience only and shall not
affect the meaning or interpretation of any provision of this Option Agreement. Except when
otherwise indicated by the context, the singular shall include the plural and the plural shall
include the singular. Use of the term “or” is not intended to be exclusive, unless the context
clearly requires otherwise.

     2. Tax Consequences.

          2.1 Tax Status of Option. This Option is intended to have the tax status designated in the
Notice.

               (a) Incentive Stock Option. If the Notice so designates, this Option is intended to be an
Incentive Stock Option within the meaning of Section 422(b) of the Code, but the Company does not
represent or warrant that this Option qualifies as such. The Optionee should consult with the
Optionee’s own tax advisor regarding the tax effects of this Option and the requirements necessary
to obtain favorable income tax treatment under Section 422 of the Code, including, but not limited
to, holding period requirements. (NOTE TO OPTIONEE: If the Option is exercised more than three (3)
months after the date on which you cease to be an Employee (other than by reason of your death or
permanent and total disability as defined in Section 22(e)(3) of the Code), the Option will be
treated as a Nonstatutory Stock Option and not as an Incentive Stock Option to the extent required
by Section 422 of the Code.)

               (b) Nonstatutory Stock Option. If the Notice so designates, this Option is intended to be a
Nonstatutory Stock Option and shall not be treated as an Incentive Stock Option within the meaning
of Section 422(b) of the Code.

          2.2 ISO Fair Market Value Limitation. If the Notice designates this Option as an Incentive
Stock Option, then to the extent that the Option (together with all Incentive Stock Options granted
to the Optionee under all stock option plans of the Participating Company Group, including the
Plan) becomes exercisable for the first time during any calendar year for shares having a Fair
Market Value greater than One Hundred Thousand Dollars ($100,000), the portion of such options
which exceeds such amount will be treated as Nonstatutory Stock Options. For purposes of this
Section 2.2, options designated as Incentive Stock Options are taken into account in the order in
which they were granted, and the Fair Market Value of stock is determined as of the time the option
with respect to such stock is granted. If the Code is amended to provide for a different
limitation from that set forth in this Section 2.2, such different limitation shall be deemed
incorporated herein effective as of the date required or permitted by such amendment to the Code.
If the Option is treated as an Incentive Stock Option in part and as a Nonstatutory Stock Option in
part by reason of the limitation set forth in this Section 2.2, the

4

 

Optionee may designate which portion of such Option the Optionee is exercising. In the
absence of such designation, the Optionee shall be deemed to have exercised the Incentive Stock
Option portion of the Option first. Separate certificates representing each such portion shall be
issued upon the exercise of the Option. (NOTE TO OPTIONEE: If the aggregate Exercise Price of the
Option (that is, the Exercise Price multiplied by the Number of Option Shares) plus the aggregate
exercise price of any other Incentive Stock Options you hold (whether granted pursuant to the Plan
or any other stock option plan of the Participating Company Group) is greater than $100,000, you
should contact the Chief Financial Officer of the Company to ascertain whether the entire Option
qualifies as an Incentive Stock Option.)

     3. Administration.

     All questions of interpretation concerning this Option Agreement shall be determined by the
Board. All determinations by the Board shall be final and binding upon all persons having an
interest in the Option. Any officer of a Participating Company shall have the authority to act on
behalf of the Company with respect to any matter, right, obligation, or election which is the
responsibility of or which is allocated to the Company herein, provided the officer has apparent
authority with respect to such matter, right, obligation, or election.

     4. Exercise of the Option.

          4.1 Right to Exercise. Except as otherwise provided herein, the Option shall be exercisable
prior to the termination of the Option (as provided in Section 6) in an amount not to exceed the
number of Vested Shares less the number of shares previously acquired upon exercise of the Option.
In no event shall the Option be exercisable for more shares than the Number of Option Shares.

          4.2 Method of Exercise. Exercise of the Option shall be by notice given in the form
authorized by Company (whether written or electronic) prior to the termination of the Option as set
forth in Section 6, accompanied by full payment of the aggregate Exercise Price for the number of
shares of Stock being purchased. Such notice must state the election to exercise the Option, the
number of whole shares of Stock for which the Option is being exercised and such other
representations and agreements as to the Optionee’s investment intent with respect to such shares
as may be required pursuant to the provisions of this Option Agreement. If exercise of the Option
is by written notice, such notice must be signed by the Optionee and must be delivered in person,
by certified or registered mail, return receipt requested, by confirmed facsimile transmission, or
by such other means as the Company may permit, to the Chief Financial Officer of the Company, or
other authorized representative of the Participating Company Group. The Option shall be deemed to
be exercised upon receipt by the Company of notice in the authorized form and the aggregate
Exercise Price.

          4.3 Payment of Exercise Price.

               (a) Forms of Consideration Authorized. Except as otherwise provided below, payment of the
aggregate Exercise Price for the number of shares of Stock for

5

 

which the Option is being exercised shall be made (i) in cash, by check, or cash equivalent;
(ii) by tender to the Company, or attestation to the ownership, of whole shares of Stock owned by
the Optionee having a Fair Market Value not less than the aggregate Exercise Price; (iii) by means
of a Cashless Exercise, as defined in Section 4.3(b); or (iv) by any combination of the foregoing.

               (b) Limitations on Forms of Consideration.

                    (i) Tender of Stock. Notwithstanding the foregoing, the Option may not be exercised by tender
to the Company, or attestation to the ownership, of shares of Stock to the extent such tender or
attestation would constitute a violation of the provisions of any law, regulation or agreement
restricting the redemption of the Company’s stock. The Option may not be exercised by tender to
the Company, or attestation to the ownership, of shares of Stock unless such shares either have
been owned by the Optionee for more than six (6) months (and not used for another option exercise
by attestation during such period) or were not acquired, directly or indirectly, from the Company.

                    (ii) Cashless Exercise. A “Cashless Exercise” means the delivery of notice of exercise in the
form authorized pursuant to Section 4.2 together with irrevocable instructions to a broker in a
form acceptable to the Company providing for the assignment to the Company of the proceeds of a
sale or loan with respect to some or all of the shares of Stock acquired upon the exercise of the
Option pursuant to a program or procedure approved by the Company (including, without limitation,
through an exercise complying with the provisions of Regulation T as promulgated from time to time
by the Board of Governors of the Federal Reserve System). The Company reserves, at any and all
times, the right, in the Company’s sole and absolute discretion, to decline to approve or terminate
any such program or procedure.

          4.4 Tax Withholding. At the time the Option is exercised, in whole or in part, or at any time
thereafter as requested by the Company, the Optionee hereby authorizes withholding from payroll and
any other amounts payable to the Optionee, and otherwise agrees to make adequate provision for
(including by means of a Cashless Exercise to the extent permitted by the Company), any sums
required to satisfy the federal, state, local and foreign tax withholding obligations of the
Participating Company Group, if any, which arise in connection with the Option. The Company shall
have no obligation to deliver shares of Stock until the tax withholding obligations of the
Participating Company Group have been satisfied by the Optionee.

          4.5 Certificate Registration. Except in the event the Exercise Price is paid by means of a
Cashless Exercise, the certificate for the shares as to which the Option is exercised shall be
registered in the name of the Optionee, or, if applicable, in the names of the heirs of the
Optionee.

          4.6 Restrictions on Grant of the Option and Issuance of Shares. The grant of the Option and
the issuance of shares of Stock upon exercise of the Option shall be subject to

6

 

compliance with all applicable requirements of federal, state or foreign law with respect to
such securities. The Option may not be exercised if the issuance of shares of Stock upon exercise
would constitute a violation of any applicable federal, state or foreign securities laws or other
law or regulations or the requirements of any stock exchange or market system upon which the Stock
may then be listed. In addition, the Option may not be exercised unless (i) a registration
statement under the Securities Act shall at the time of exercise of the Option be in effect with
respect to the shares issuable upon exercise of the Option or (ii) in the opinion of legal counsel
to the Company, the shares issuable upon exercise of the Option may be issued in accordance with
the terms of an applicable exemption from the registration requirements of the Securities Act. THE
OPTIONEE IS CAUTIONED THAT THE OPTION MAY NOT BE EXERCISED UNLESS THE FOREGOING CONDITIONS ARE
SATISFIED. ACCORDINGLY, THE OPTIONEE MAY NOT BE ABLE TO EXERCISE THE OPTION WHEN DESIRED EVEN
THOUGH THE OPTION IS VESTED. The inability of the Company to obtain from any regulatory body
having jurisdiction the authority, if any, deemed by the Company’s legal counsel to be necessary to
the lawful issuance and sale of any shares subject to the Option shall relieve the Company of any
liability in respect of the failure to issue or sell such shares as to which such requisite
authority shall not have been obtained. As a condition to the exercise of the Option, the Company
may require the Optionee to satisfy any qualifications that may be necessary or appropriate, to
evidence compliance with any applicable law or regulation and to make any representation or
warranty with respect thereto as may be requested by the Company.

          4.7 Fractional Shares. The Company shall not be required to issue fractional shares upon the
exercise of the Option.

     5. Nontransferability of the Option.

          The Option may be exercised during the lifetime of the Optionee only by the Optionee or the
Optionee’s guardian or legal representative and may not be assigned or transferred in any manner
except by will or by the laws of descent and distribution. Following the death of the Optionee,
the Option, to the extent provided in Section 7, may be exercised by the Optionee’s legal
representative or by any person empowered to do so under the deceased Optionee’s will or under the
then applicable laws of descent and distribution.

     6. Termination of the Option.

          The Option shall terminate and may no longer be exercised after the first to occur of (a) the
Option Expiration Date, (b) the last date for exercising the Option following termination of the
Optionee’s Service as described in Section 7, or (c) a Change in Control to the extent provided in
Section 8.

7

 

     7. Effect of Termination of Service.

          7.1 Option Exercisability.

               (a) Disability. If the Optionee’s Service terminates because of the Disability of the
Optionee, the Option, to the extent unexercised and exercisable on the date on which the Optionee’s
Service terminated, may be exercised by the Optionee (or the Optionee’s guardian or legal
representative) at any time prior to the expiration of twelve (12) months after the date on which
the Optionee’s Service terminated, but in any event no later than the Option Expiration Date.

               (b) Death. If the Optionee’s Service terminates because of the death of the Optionee, the
Option, to the extent unexercised and exercisable on the date on which the Optionee’s Service
terminated, may be exercised by the Optionee’s legal representative or other person who acquired
the right to exercise the Option by reason of the Optionee’s death at any time prior to the
expiration of twelve (12) months after the date on which the Optionee’s Service terminated, but in
any event no later than the Option Expiration Date. The Optionee’s Service shall be deemed to have
terminated on account of death if the Optionee dies within thirty (30) days after the Optionee’s
termination of Service.

               (c) Termination After Change in Control. If the Optionee’s Service ceases as a result of
Termination After Change in Control (as defined below), (i) the Option, to the extent unexercised
and exercisable on the date on which the Optionee’s Service terminated, may be exercised by the
Optionee (or the Optionee’s guardian or legal representative) at any time prior to the expiration
of six (6) months after the date on which the Optionee’s Service terminated, but in any event no
later than the Option Expiration Date, and (ii) the Option shall become immediately vested and
exercisable in full as of the date on which the Optionee’s Service terminated.

               (d) Other Termination of Service. If the Optionee’s Service terminates for any reason, except
Disability, death or Termination After Change in Control, the Option, to the extent unexercised and
exercisable by the Optionee on the date on which the Optionee’s Service terminated, may be
exercised by the Optionee at any time prior to the expiration of thirty (30) days (or such other
longer period of time as determined by the Board, in its discretion) after the date on which the
Optionee’s Service terminated, but in any event no later than the Option Expiration Date.

          7.2 Extension if Exercise Prevented by Law. Notwithstanding the foregoing, if the exercise of
the Option within the applicable time periods set forth in Section 7.1 is prevented by the
provisions of Section 4.6, the Option shall remain exercisable until three (3) months after the
date the Optionee is notified by the Company that the Option is exercisable, but in any event no
later than the Option Expiration Date.

          7.3 Extension if Optionee Subject to Section 16(b). Notwithstanding the foregoing, if a sale
within the applicable time periods set forth in Section 7.1 of shares acquired

8

 

upon the exercise of the Option would subject the Optionee to suit under Section 16(b) of the
Exchange Act, the Option shall remain exercisable until the earliest to occur of (i) the tenth
(10th) day following the date on which a sale of such shares by the Optionee would no longer be
subject to such suit, (ii) the one hundred and ninetieth (190th) day after the Optionee’s
termination of Service, or (iii) the Option Expiration Date.

          7.4 Certain Definitions.

               (a) “Termination After Change in Control” shall mean either of the following events occurring
upon or within twelve (12) months after a Change in Control:

                    (i) termination by the Participating Company Group of the Optionee’s Service for any reason
other than for Cause (as defined below); or

                    (ii) the Optionee’s resignation for Good Reason (as defined below) from all capacities in
which the Optionee is then rendering Service within a reasonable period of time following the event
constituting Good Reason.

Notwithstanding any provision herein to the contrary, Termination After Change in Control shall not
include any termination of the Optionee’s Service with the Participating Company Group which (1) is
for Cause (as defined below); (2) is a result of the Optionee’s death or disability; (3) is a
result of the Optionee’s voluntary termination of Service other than for Good Reason; or (4) occurs
prior to the effectiveness of a Change in Control.

               (b) “Cause” shall mean any of the following: (i) the Optionee’s theft, dishonesty, or
falsification of any Participating Company documents or records; (ii) the Optionee’s improper use
or disclosure of a Participating Company’s confidential or proprietary information; (iii) any
action by the Optionee which has a detrimental effect on a Participating Company’s reputation or
business; (iv) the Optionee’s failure or inability to perform any reasonable assigned duties after
written notice from a Participating Company of, and a reasonable opportunity to cure, such failure
or inability; (v) any material breach by the Optionee of any employment agreement between the
Optionee and a Participating Company, which breach is not cured pursuant to the terms of such
agreement; or (vi) the Optionee’s conviction (including any plea of guilty or nolo contendere) of
any criminal act which impairs the Optionee’s ability to perform his or her duties with a
Participating Company.

               (c) “Good Reason” shall mean any one or more of the following:

                    (i) without the Optionee’s express written consent, the assignment to the Optionee of any
duties, or any limitation of the Optionee’s responsibilities, substantially inconsistent with the
Optionee’s positions, duties, responsibilities and status with the Participating Company Group
immediately prior to the date of the Change in Control;

                    (ii) without the Optionee’s express written consent, the relocation of the principal place of
the Optionee’s Service to a location that is more than fifty

9

 

(50) miles from the Optionee’s principal place of Service immediately prior to the date of the
Change in Control, or the imposition of travel requirements substantially more demanding of the
Optionee than such travel requirements existing immediately prior to the date of the Change in
Control;

                    (iii) any failure by the Participating Company Group to pay, or any material reduction by the
Participating Company Group of, (1) the Optionee’s base salary in effect immediately prior to the
date of the Change in Control (unless reductions comparable in amount and duration are concurrently
made for all other employees of the Participating Company Group with responsibilities,
organizational level and title comparable to the Optionee’s), or (2) the Optionee’s bonus
compensation, if any, in effect immediately prior to the date of the Change in Control (subject to
applicable performance requirements with respect to the actual amount of bonus compensation earned
by the Optionee); or

                    (iv) any failure by the Participating Company Group to (1) continue to provide the Optionee
with the opportunity to participate, on terms no less favorable than those in effect for the
benefit of any employee or service provider group which customarily includes a person holding the
employment or service provider position or a comparable position with the Participating Company
Group then held by the Optionee, in any benefit or compensation plans and programs, including, but
not limited to, the Participating Company Group’s life, disability, health, dental, medical,
savings, profit sharing, stock purchase and retirement plans, if any, in which the Optionee was
participating immediately prior to the date of the Change in Control, or their equivalent, or (2)
provide the Optionee with all other fringe benefits (or their equivalent) from time to time in
effect for the benefit of any employee or service provider group which customarily includes a
person holding the employment or service provider position or a comparable position with the
Participating Company Group then held by the Optionee.

     8. Change in Control.

          8.1 Definitions.

               (a) An “Ownership Change Event” shall be deemed to have occurred if any of the following
occurs with respect to the Company: (i) the direct or indirect sale or exchange in a single or
series of related transactions by the stockholders of the Company of more than fifty percent (50%)
of the voting stock of the Company; (ii) a merger or consolidation in which the Company is a party;
(iii) the sale, exchange, or transfer of all or substantially all of the assets of the Company; or
(iv) a liquidation or dissolution of the Company.

               (b) A “Change in Control” shall mean an Ownership Change Event or a series of related
Ownership Change Events (collectively, a “Transaction”) wherein the stockholders of the Company
immediately before the Transaction do not retain immediately after the Transaction, in
substantially the same proportions as their ownership of shares of the Company’s voting stock
immediately before the Transaction, direct or indirect beneficial ownership of more than fifty
percent (50%) of the total combined voting power of the

10

 

outstanding voting securities of the Company or, in the case of a Transaction described in
Section 8.1(a)(iii), the corporation or other business entity to which the assets of the Company
were transferred (the “Transferee”), as the case may be. For purposes of the preceding sentence,
indirect beneficial ownership shall include, without limitation, an interest resulting from
ownership of the voting securities of one or more corporations or other business entities which, as
a result of the Transaction, own the Company or the Transferee, as the case may be, either directly
or through one or more subsidiary corporations or other business entities. The Board shall have
the right to determine whether multiple sales or exchanges of the voting securities of the Company
or multiple Ownership Change Events are related, and its determination shall be final, binding and
conclusive.

          8.2 Effect of Change in Control on Option. In the event of a Change in Control, the
surviving, continuing, successor, or purchasing corporation or parent corporation thereof, as the
case may be (the “Acquiring Corporation”), may, without the consent of the Optionee, either assume
the Company’s rights and obligations under the Option or substitute for the Option a substantially
equivalent option for the Acquiring Corporation’s stock. In the event the Acquiring Corporation
elects not to assume the Company’s rights and obligations under the Option or substitute for the
Option in connection with the Change in Control, and provided that the Optionee’s Service has not
terminated prior to such date, any unexercised portion of the Option shall be immediately
exercisable and vested in full as of the date ten (10) days prior to the date of the Change in
Control. Any exercise of the Option that was permissible solely by reason of this Section 8.2
shall be conditioned upon the consummation of the Change in Control. The Option shall terminate
and cease to be outstanding effective as of the date of the Change in Control to the extent that
the Option is neither assumed or substituted for by the Acquiring Corporation in connection with
the Change in Control nor exercised as of the date of the Change in Control. Notwithstanding the
foregoing, shares acquired upon exercise of the Option prior to the Change in Control and any
consideration received pursuant to the Change in Control with respect to such shares shall continue
to be subject to all applicable provisions of this Option Agreement except as otherwise provided
herein. Furthermore, notwithstanding the foregoing, if the corporation the stock of which is
subject to the Option immediately prior to an Ownership Change Event described in Section 8.1(a)(i)
constituting a Change in Control is the surviving or continuing corporation and immediately after
such Ownership Change Event less than fifty percent (50%) of the total combined voting power of its
voting stock is held by another corporation or by other corporations that are members of an
affiliated group within the meaning of Section 1504(a) of the Code without regard to the provisions
of Section 1504(b) of the Code, the Option shall not terminate unless the Board otherwise provides
in its discretion.

          8.3 Fair Market Value Limitation. If the Notice designates this Option as an Incentive Stock
Option, should the exercisability of this Option be accelerated in connection with a Change in
Control in accordance with Section 7.1(c) or 8.2, then to the extent that the aggregate Fair
Market Value of the shares of Stock with respect to which the Optionee may exercise the Option for
the first time during the calendar year of such acceleration, when added to the aggregate Fair
Market Value of the shares subject to any other options designated as Incentive Stock Options
granted to the Optionee under all stock option plans of the Participating Company Group prior to
the Date of Option Grant with respect to which such options are

11

 

exercisable for the first time during the same calendar year, exceeds One Hundred Thousand
Dollars ($100,000) (or such other limit, if any, imposed by Section 422 of the Code), the portion
of the Option which exceeds such amount shall be treated as a Nonstatutory Stock Option. For
purposes of the preceding sentence, options designated as Incentive Stock Options shall be taken
into account in the order in which they were granted, and the Fair Market Value of shares of stock
shall be determined as of the time the option with respect to such shares is granted.

     9. Adjustments for Changes in Capital Structure.

          In the event of any stock dividend, stock split, reverse stock split, recapitalization,
combination, reclassification, or similar change in the capital structure of the Company,
appropriate adjustments shall be made in the number, Exercise Price and class of shares of stock
subject to the Option. If a majority of the shares which are of the same class as the shares that
are subject to the Option are exchanged for, converted into, or otherwise become (whether or not
pursuant to an Ownership Change Event) shares of another corporation (the “New Shares”), the Board
may unilaterally amend the Option to provide that the Option is exercisable for New Shares. In the
event of any such amendment, the Number of Option Shares and the Exercise Price shall be adjusted
in a fair and equitable manner, as determined by the Board, in its discretion. Notwithstanding the
foregoing, any fractional share resulting from an adjustment pursuant to this Section 9 shall be
rounded down to the nearest whole number, and in no event may the Exercise Price be decreased to an
amount less than the par value, if any, of the stock subject to the Option. The adjustments
determined by the Board pursuant to this Section 9 shall be final, binding and conclusive.

     10. Rights as a Stockholder, Employee or Consultant.

          The Optionee shall have no rights as a stockholder with respect to any shares covered by the
Option until the date of the issuance of a certificate for the shares for which the Option has been
exercised (as evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company). No adjustment shall be made for dividends,
distributions or other rights for which the record date is prior to the date such certificate is
issued, except as provided in Section 9. If the Optionee is an Employee, the Optionee understands
and acknowledges that, except as otherwise provided in a separate, written employment agreement
between a Participating Company and the Optionee, the Optionee’s employment is “at will” and is for
no specified term. Nothing in this Option Agreement shall confer upon the Optionee any right to
continue in the Service of a Participating Company or interfere in any way with any right of the
Participating Company Group to terminate the Optionee’s Service as an Employee or Consultant, as
the case may be, at any time.

     11. Notice of Sales Upon Disqualifying Disposition.

          The Optionee shall dispose of the shares acquired pursuant to the Option only in accordance
with the provisions of this Option Agreement. In addition, if the Notice designates this Option as
an Incentive Stock Option, the Optionee shall (a) promptly notify the Chief Financial Officer of
the Company if the Optionee disposes of any of the shares acquired pursuant

12

 

to the Option within one (1) year after the date the Optionee exercises all or part of the Option
or within two (2) years after the Date of Option Grant and (b) provide the Company with a
description of the circumstances of such disposition. Until such time as the Optionee disposes of
such shares in a manner consistent with the provisions of this Option Agreement, unless otherwise
expressly authorized by the Company, the Optionee shall hold all shares acquired pursuant to the
Option in the Optionee’s name (and not in the name of any nominee) for the one-year period
immediately after the exercise of the Option and the two-year period immediately after Date of
Option Grant. At any time during the one-year or two-year periods set forth above, the Company may
place a legend on any certificate representing shares acquired pursuant to the Option requesting
the transfer agent for the Company’s stock to notify the Company of any such transfers. The
obligation of the Optionee to notify the Company of any such transfer shall continue
notwithstanding that a legend has been placed on the certificate pursuant to the preceding
sentence.

     12. Legends.

          The Company may at any time place legends referencing any applicable federal, state or foreign
securities law restrictions on all certificates representing shares of stock subject to the
provisions of this Option Agreement. The Optionee shall, at the request of the Company, promptly
present to the Company any and all certificates representing shares acquired pursuant to the Option
in the possession of the Optionee in order to carry out the provisions of this Section. Unless
otherwise specified by the Company, legends placed on such certificates may include, but shall not
be limited to, the following:

          “THE SHARES EVIDENCED BY THIS CERTIFICATE WERE ISSUED BY THE CORPORATION TO THE REGISTERED
HOLDER UPON EXERCISE OF AN INCENTIVE STOCK OPTION AS DEFINED IN SECTION 422 OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED (“ISO”). IN ORDER TO OBTAIN THE PREFERENTIAL TAX TREATMENT AFFORDED TO
ISOs, THE SHARES SHOULD NOT BE TRANSFERRED PRIOR TO [INSERT DISQUALIFYING DISPOSITION DATE HERE].
SHOULD THE REGISTERED HOLDER ELECT TO TRANSFER ANY OF THE SHARES PRIOR TO THIS DATE AND FOREGO ISO
TAX TREATMENT, THE TRANSFER AGENT FOR THE SHARES SHALL NOTIFY THE CORPORATION IMMEDIATELY. THE
REGISTERED HOLDER SHALL HOLD ALL SHARES PURCHASED UNDER THE INCENTIVE STOCK OPTION IN THE
REGISTERED HOLDER’S NAME (AND NOT IN THE NAME OF ANY NOMINEE) PRIOR TO THIS DATE OR UNTIL
TRANSFERRED AS DESCRIBED ABOVE.”

     13. Miscellaneous Provisions.

          13.1 Binding Effect. Subject to the restrictions on transfer set forth herein, this Option
Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective
heirs, executors, administrators, successors and assigns.

          13.2 Termination or Amendment. The Board may terminate or amend the Plan or the Option at any
time; provided, however, that except as provided in Section 8.2 in

13

 

connection with a Change in Control, no such termination or amendment may adversely affect the
Option or any unexercised portion hereof without the consent of the Optionee unless such
termination or amendment is necessary to comply with any applicable law or government regulation or
is required to enable the Option, if designated an Incentive Stock Option in the Notice, to qualify
as an Incentive Stock Option. No amendment or addition to this Option Agreement shall be effective
unless in writing.

          13.3 Notices. Any notice required or permitted hereunder shall be given in writing (except to
the extent that electronic notice is authorized by the Company) and shall be deemed effectively
given (except to the extent that this Option Agreement provides for effectiveness only upon actual
receipt of such notice) upon personal delivery or upon deposit in the United States Post Office, by
registered or certified mail, with postage and fees prepaid, addressed to the other party at the
address shown below that party’s signature or at such other address as such party may designate in
writing from time to time to the other party.

          13.4 Integrated Agreement. The Notice and this Option Agreement constitute the entire
understanding and agreement of the Optionee and the Participating Company Group with respect to the
subject matter contained herein or therein and supersedes any prior agreements, understandings,
restrictions, representations, or warranties among the Optionee and the Participating Company Group
with respect to such subject matter other than those as set forth or provided for herein or
therein. To the extent contemplated herein or therein, the provisions of the Notice and the Option
Agreement shall survive any exercise of the Option and shall remain in full force and effect.

          13.5 Applicable Law. This Option Agreement shall be governed by the laws of the State of
California as such laws are applied to agreements between California residents entered into and to
be performed entirely within the State of California.

          13.6 Counterparts. The Notice may be executed in counterparts, each of which shall be deemed
an original, but all of which together shall constitute one and the same instrument.

14

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