Document:

exhibit.htm

    Execution
      Copy

    

    OMNIBUS
      TERMINATION AND RELEASE

     

    (Aged
      Truck Revolving Loan Facility)

     

    This
      OMNIBUS TERMINATION AND RELEASE (this “Termination”), dated
      as of February 8, 2008 is made by and among by and among U-HAUL LEASING
& SALES CO., a Nevada corporation, as a Borrower, U-HAUL CO. OF ARIZONA, an
      Arizona corporation, as a Borrower, U-HAUL INTERNATIONAL, INC., a Nevada
      corporation, as a Borrower, as Servicer/Manager and as Guarantor, and MERRILL
      LYNCH COMMERCIAL FINANCE CORP., as Lender.

     

    Recitals:

     

    WHEREAS,
      pursuant to that certain Amended and Restated Credit Agreement, dated as of
      March 12, 2007 (as amended, the “Credit Agreement”),
      by and among the parties hereto, the Lender has from time to time agreed to
      make
      to the Borrowers certain Loans, which Loans are evidenced by the
      Note;

     

    WHEREAS,
      pursuant to that certain Guarantee, dated as of June 28, 2005, made by the
      Guarantor in favor of the Lender (as amended, the “Guarantee”), the
      Guarantor has guaranteed to the Lender the due and complete payment and
      performance by the Borrowers of their respective obligations under the Credit
      Agreement and the other Loan Documents;

     

    WHEREAS,
      pursuant to that certain Amended and Restated Security Agreement, dated as
      of
      March 12, 2007, by and between the Borrowers and the Lender (“Security Agreement”),
      in order to secure the obligations of the Borrowers under the Credit Agreement,
      the Borrowers have granted a first priority perfected security interest to
      the
      Lender in certain Vehicles and other Collateral; and

     

    WHEREAS,
      the Borrowers, the Guarantor and the Lender have mutually agreed to terminate
      the Facility and each of their respective obligations under the Credit
      Agreement, the Security Agreement, the Guarantee, and the other Loan Documents
      and Security Documents (collectively, the “Transaction
      Documents”).

     

    NOW,
      THEREFORE, in consideration of the premises and mutual covenants contained
      herein and for other good and valuable consideration, the receipt and
      sufficiency of which are hereby acknowledged, the parties hereto, intending
      to
      be legally bound, agree as follows:

     

    SECTION
      1.                                
Definitions.  Capitalized
      terms used in this Termination and not otherwise defined herein shall have
      the
      respective meanings assigned to them in the Credit Agreement (such definitions
      to be equally applicable to both the singular and the plural forms of the terms
      defined).  Any term defined by reference to an agreement, instrument
      or other document shall have the meaning so assigned to it whether or not such
      document is in effect.  The words “hereof”, “herein” and “hereunder”
and words of similar import when used in this Termination shall refer to this
      Termination as a whole and not to any particular provision of this
      Termination.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SECTION
      2.                                
Payment of Outstanding
      Amount of Loans.  Each of the parties hereto hereby represent
      and acknowledge that on the date hereof there are no Loans
      outstanding.

    

    SECTION
      3.                                
Cancellation of
      Notes;
      Discharge of Borrowers’ and Guarantor’s Obligations.  After the
      date hereof, the Lender shall promptly deliver the Note to the Borrowers and
      the
      Borrowers shall cancel the Note.  The Lender hereby:

    

    (i)           
      acknowledges that no unpaid amounts remain payable by the Borrowers or the
      Guarantor to or on behalf of the Lender pursuant to the Transaction
      Documents;

    

    (ii)           
      releases (A) its security interest in any and all Collateral granted under
      the
      Security Agreement and other Security Documents, and (B) to the Borrowers
      without recourse and without any representation or warranty of any kind, all
      right, title and interest, if any, in and to any and all
      Collateral;

    

    (iii)           
      agrees that its interests under the Transaction Documents shall and hereby
      do
      terminate; and

    

    (iv)           
      cancels and discharges any and all of the Borrowers’ respective liabilities
      related to the Note or any and all obligations and liabilities owed to the
      Lender under the other Transaction Documents;

    

    provided,
however,
      that the
      Lender acknowledges and agrees that in accordance with Section 12.05 of the
      Credit Agreement, the provisions of Sections 5.09, 5.10 and 12.03 and Article
      XI
      of the Credit Agreement shall survive and remain in full force and effect
      notwithstanding the termination of the Credit Agreement and the other
      Transaction Documents.

    

    SECTION
      4.                                
Discharge of Lender’s
      Obligations.  Each Borrower and the Guarantor, individually,
      hereby:

    

    (i)           
      agrees that its respective interests under the Transaction Documents shall
      and
      hereby do terminate;

    

    (ii)           
      cancels and discharges any and all of the Lender’s obligations and liabilities
      owed to it under the Transaction Documents, including but not limited to the
      Commitments;

    

    provided,
however,
      that each of
      the Borrowers and the Guarantor acknowledges and agrees that in accordance
      with
      Section 12.05 of the Credit Agreement, the provisions of Sections 5.09, 5.10
      and
      12.03 and Article XI of the Credit Agreement shall survive and remain in full
      force and effect notwithstanding the termination of the Credit Agreement and
      the
      other Transaction Documents.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SECTION
      5.                                
Termination Payment;
      No Claims.  On the date hereof, the Lender agrees to pay to
      U-Haul International, Inc. an amount equal to $1,777,000.00 (the “Termination Payment”)
      by wire transfer of immediately available funds to U-Haul International Inc.’s
      account at: JP Morgan Chase Bank; Phoenix, AZ; ABA# 1221 0002 4; For benefit
      of:
      U-Haul; Account # 42 4903.  Each Borrower and the Guarantor,
      individually, hereby represents and warrants that upon receipt by U-Haul
      International of the Termination Payment, such person has no claim of any kind
      against the Lender in connection with this Termination or any of the Transaction
      Documents.

    

    SECTION
      6.                                
Further Assurances;
      Costs.  Each party hereto agrees that it shall, at any time and
      from time to time, promptly and duly execute and deliver any and all such
      instruments and documents of further assurance and all such supplemental
      instruments and take such further action as the Borrowers may reasonably request
      to carry out the purposes and intent of this Termination.  Without
      limiting the generality of the foregoing, the Lender hereby authorizes each
      of
      the Borrowers, the Custodian and the Servicer/Manager to (i) file all necessary
      termination statements relating to UCC-1 financing statements filed in
      connection with the Transaction Documents, (ii) amend or reissue the Certificate
      of Title for each Vehicle comprising Collateral that notes the lien of the
      Lender under the Transaction Documents, or (iii) terminate any notice of lien
      or
      other filing made in a state motor vehicle filing office relating to the lien
      of
      the Lender under the Transaction Documents.  The Lender acknowledges
      that the Limited Power of Attorney, dated August 9, 2005, given by the Lender
      to
      U-Haul Co. of Arizona shall continue in effect for as long as reasonably
      necessary to carry out the authorizations described in the preceding sentence,
      not to exceed one year from the date hereof, whereupon it shall be deemed
      revoked.  Each party shall bear its own costs and expenses incurred in
      connection with this Termination, including but not limited to any fees and
      expenses of outside counsel, and any filing fees or similar costs related to
      terminating financing statements, removing lien notations from or reissuing
      Certificates of Title, or terminating notices of liens or other filings made
      in
      various state motor vehicle filing offices.

    

    SECTION
      7.                                
Binding
      Effect.  This Termination shall be binding upon and inure to
      the benefit of the parties hereto and their respective successors and
      assigns.

    

    SECTION
      8.                                
Execution in
      Counterparts.  This Termination may be executed in any number
      of counterparts and by different parties hereto in separate counterparts, each
      of which when so executed shall be deemed to be an original and all of which
      when taken together shall constitute one and the same agreement.

    

    SECTION
      9.                                
Governing
      Law.  This Termination shall be construed in all respects in
      accordance with, and governed by the internal laws (as opposed to conflicts
      of
      law provisions) of the State of New York. Whenever possible, each provision
      of
      this Termination shall be interpreted in such a manner as to be effective and
      valid under applicable law, but if any provision of this Termination shall
      be
      prohibited by or invalid under applicable law, such provision shall be
      ineffective only to the extent of such prohibition or invalidity, without
      invalidating the remainder of such provisions or the remaining provisions of
      this Termination.

    

     

    [Signature
      Page
      Follows]

     

    
      
        
           

        

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the parties hereto have executed and delivered this Omnibus
      Termination and Release as of the day and year first above set
      forth.

     

    U-HAUL
      LEASING & SALES CO., as a Borrower

     

    

       

    

    U-HAUL
      CO. OF ARIZONA, as a Borrower

     

    

      

    

    

    U-HAUL
      INTERNATIONAL, INC., as a Borrower, as Servicer/Manager, Guarantor and as
      Custodian

     

    

      

    

     

                                

      

      
         

         

         

      

       

      MERRILL
        LYNCH COMMERCIAL FINANCE CORP., as LenderExhibit 10.7

 

    EXHIBIT 10.7

     

 

    SMITH
    MICRO SOFTWARE, INC.

 

    2005 STOCK OPTION/STOCK ISSUANCE PLAN

    As Amended and Restated through September 27, 2007

 

    ARTICLE ONE

    

 

    GENERAL
    

 

		
	
    I.  
	
    PURPOSE
    OF THE PLAN

 

    This 2005 Stock Option/Stock Issuance Plan (the
    “Plan”) is intended to promote the interests of Smith
    Micro Software, Inc., a Delaware corporation (the
    “Corporation”), by providing eligible individuals with
    the opportunity to acquire a proprietary interest, or otherwise
    increase their proprietary interest, in the Corporation as an
    incentive for them to remain in the service of the Corporation
    (or its parent or subsidiary corporations).

 

		
	
    II.  
	
    DEFINITIONS

 

    A. For purposes of the Plan, the following definitions
    shall be in effect:

 

    Applicable Laws:  the legal requirements
    relating to the Plan and the options and direct stock issuances
    under applicable provisions of federal securities laws, state
    corporate and securities laws, the Code, the rules of any
    applicable stock exchange or national market system, and the
    rules of any
    non-U.S. jurisdiction
    applicable to such awards granted to residents therein.

 

    Board:  the Corporation’s Board of
    Directors.

 

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

 

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

 

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

 

    Code:  the Internal Revenue Code of 1986, as
    amended.

 

    Common Stock:  shares of the Corporation’s
    common stock.

 

    Corporate Transaction:  any of the following
    stockholder-approved transactions to which the Corporation is a
    party:

 

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

 

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

    

    A-1

 

    Disability:  the inability of an individual to
    engage in any substantial gainful activity by reason of any
    medically determinable physical or mental impairment which is
    expected to result in death or has lasted or can be expected to
    last for a continuous period of not less than twelve
    (12) months. However, for purposes of the Automatic Option
    Grant Program, Disability shall mean the inability of the
    non-employee Board member to perform his or her usual duties as
    a Board member by reason of any medically determinable physical
    or mental impairment expected to result in death or to be of
    continuous duration of twelve (12) months or more.

 

    Employee:  an individual who performs services
    while in the employ of the Corporation or one or more parent or
    subsidiary corporations, subject to the control and direction of
    the employer entity not only as to the work to be performed but
    also as to the manner and method of performance.

 

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

 

    Fair Market Value:  the Fair Market Value per
    share of Common Stock determined in accordance with the
    following provisions:

 

    (i) If the Common Stock is listed on one or more
    established stock exchanges or national market systems,
    including without limitation The NASDAQ Global Select Market,
    The NASDAQ Global Market or The NASDAQ Capital Market of The
    NASDAQ Stock Market LLC, its Fair Market Value shall be the
    closing sales price for such stock (or the closing bid, if no
    sales were reported) as quoted on the principal exchange or
    system on which the Common Stock is listed (as determined by the
    Plan Administrator) on the date of determination (or, if no
    closing sales price or closing bid was reported on that date, as
    applicable, on the last trading date such closing sales price or
    closing bid was reported), as reported in The Wall Street
    Journal or such other source as the Plan Administrator deems
    reliable;

 

    (ii) If the Common Stock is regularly quoted on an
    automated quotation system (including the OTC
    Bulletin Board) or by a recognized securities dealer, its
    Fair Market Value shall be the closing sales price for such
    stock as quoted on such system or by such securities dealer on
    the date of determination, but if selling prices are not
    reported, the Fair Market Value of a share of Common Stock shall
    be the mean between the high bid and low asked prices for the
    Common Stock on the date of determination (or, if no such prices
    were reported on that date, on the last date such prices were
    reported), as reported in The Wall Street Journal or such other
    source as the Plan Administrator deems reliable; or

 

    (iii) In the absence of an established market for the
    Common Stock of the type described in (i) and (ii), above,
    the Fair Market Value thereof shall be determined by the
    Administrator in good faith.

 

    Incentive Option:  a stock option which
    satisfies the requirements of Code Section 422.

 

    Involuntary Termination:  the termination of
    the Service of any individual which occurs by reason of:

 

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

 

    (ii) such individual’s voluntary resignation following
    (A) a change in his or her position with the Corporation
    which materially reduces his or her level of responsibility,
    (B) a reduction in his or her level of compensation
    (including base salary, fringe benefits and any
    non-discretionary and objective-standard incentive payment or
    bonus award) by more than fifteen percent (15%) or (C) a
    relocation of such individual’s place of employment by more
    than fifty (50) miles, provided and only if such change,
    reduction or relocation is effected by the Corporation without
    the individual’s consent.

 

    Misconduct:  the commission of any act of
    fraud, embezzlement or dishonesty by the Optionee or
    Participant, any unauthorized use or disclosure by such person
    of confidential information or trade secrets of the Corporation
    (or any parent or subsidiary), or any other intentional
    misconduct by such person adversely affecting the business or
    affairs of the Corporation (or any parent or subsidiary) in a
    material manner. The foregoing definition shall not be deemed to
    be inclusive of all the acts or omissions which the Corporation
    (or any parent or subsidiary) may consider as grounds for the
    dismissal or discharge of any Optionee, Participant or other
    person in the Service of the Corporation (or any parent or
    subsidiary).

    

    A-2

 

    1934 Act:  the Securities Exchange Act of
    1934, as amended from time to time.

 

    Non-Statutory Option:  a stock option not
    intended to meet the requirements of Code Section 422.

 

    Optionee:  a person to whom an option is
    granted under the Discretionary Option Grant or Automatic Option
    Grant Program.

 

    Participant:  a person who is issued Common
    Stock under the Stock Issuance Program.

 

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

 

    Primary Committee:  the committee of two
    (2) or more outside Board members appointed by the Board to
    administer the Discretionary Option Grant and Stock Issuance
    Programs with respect to Section 16 Insiders. Each member
    of the Primary Committee must also be a “Non-Employee
    Director” within the meaning of
    Rule 16b-3
    and an “outside director” within the meaning of
    Section 162(m) of the Code.

 

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

 

    Section 12(g) Registration Date:  the date
    on which the initial registration of the Common Stock under
    Section 12(g) of the 1934 Act became effective.

 

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

 

    Service:  means that the provision of services
    to the Corporation (or any parent or subsidiary corporation) in
    any capacity of Employee, a non-employee member of the board of
    directors or an independent consultant or advisor is not
    interrupted or terminated. In jurisdictions requiring notice in
    advance of an effective termination as an Employee, a
    non-employee member of the board of directors or an independent
    consultant or advisor, Service shall be deemed terminated upon
    the actual cessation of providing services to the Corporation
    (or any parent or subsidiary corporation) notwithstanding any
    required notice period that must be fulfilled before a
    termination as an Employee, a non-employee member of the board
    of directors or an independent consultant or advisor can be
    effective under Applicable Laws. A Participant’s Service
    shall be deemed to have terminated either upon an actual
    termination of Service or upon the entity for which the
    Participant provides services ceasing to be a parent or
    subsidiary corporation. Service shall not be considered
    interrupted in the case of (i) any approved leave of
    absence, (ii) transfers among the Corporation, any parent
    or subsidiary corporation, or any successor, in any capacity of
    Employee, a non-employee member of the board of directors or an
    independent consultant or advisor, or (iii) any change in
    status as long as the individual remains in the service of the
    Company or a parent or subsidiary corporation in any capacity of
    Employee, a non-employee member of the board of directors or an
    independent consultant or advisor (except as otherwise provided
    in the agreement evidencing an award). An approved leave of
    absence shall include sick leave, military leave, or any other
    authorized personal leave. For purposes of each Incentive Option
    granted under the Plan, if such leave exceeds three
    (3) months, and reemployment upon expiration of such leave
    is not guaranteed by statute or contract, then the Incentive
    Option shall be treated as a Non-Statutory Option on the day
    three (3) months and one (1) day following the
    expiration of such three (3) month period.

 

    10% Stockholder:  the owner of stock (as
    determined under Code Section 424(d)) possessing more than
    ten percent (10%) of the total combined voting power of all
    classes of stock of the Corporation or any parent or subsidiary
    corporation.

 

    B. The following provisions shall be applicable in
    determining the parent and subsidiary corporations of the
    Corporation:

 

    Any corporation (other than the Corporation) in an unbroken
    chain of corporations ending with the Corporation shall be
    considered to be a parent of the Corporation, provided each such
    corporation in the

    

    A-3

 

    unbroken chain (other than the Corporation) owns, at the time of
    the determination, stock possessing fifty percent (50%) or more
    of the total combined voting power of all classes of stock in
    one of the other corporations in such chain.

 

    Each corporation (other than the Corporation) in an unbroken
    chain of corporations beginning with the Corporation shall be
    considered to be a subsidiary of the Corporation, provided each
    such corporation (other than the last corporation) in the
    unbroken chain owns, at the time of the determination, stock
    possessing fifty percent (50%) or more of the total combined
    voting power of all classes of stock in one of the other
    corporations in such chain.

 

		
	
    III.  
	
    STRUCTURE
    OF THE PLAN

 

    A. Stock Programs.  The Plan shall
    be divided into three (3) separate components: the
    Discretionary Option Grant Program specified in
    Article Two, the Stock Issuance Program specified in
    Article Three and the Automatic Option Grant Program
    specified in Article Four. Under the Discretionary Option
    Grant Program, eligible individuals may, at the discretion of
    the Plan Administrator, be granted options to purchase shares of
    Common Stock in accordance with the provisions of
    Article Two. Under the Stock Issuance Program, eligible
    individuals may be issued shares of Common Stock directly,
    either through the immediate purchase of such shares at a price
    not less than one hundred percent (100%) of the Fair Market
    Value of the shares at the time of issuance or as a bonus for
    services rendered the Corporation or the Corporation’s
    attainment of financial objectives. Under the Automatic Option
    Grant Program, each individual serving as a non-employee Board
    member on the Automatic Option Grant Program Effective Date and
    each individual who first joins the Board as a non-employee
    director at any time after such Effective Date shall at periodic
    intervals receive option grants to purchase shares of Common
    Stock in accordance with the provisions of Article Four.

 

    B. General Provisions.  Unless the
    context clearly indicates otherwise, the provisions of
    Articles One and Five shall apply to the Discretionary
    Option Grant Program, the Automatic Option Grant Program and the
    Stock Issuance Program and shall accordingly govern the
    interests of all individuals under the Plan.

 

		
	
    IV.  
	
    ADMINISTRATION
    OF THE PLAN

 

    A. The Board shall have the authority to administer the
    Discretionary Option Grant and Stock Issuance Programs with
    respect to Section 16 Insiders but may delegate such
    authority in whole or in part to the Primary Committee. Each
    member of the Primary Committee must also be a
    “Non-Employee Director” within the meaning of
    Rule 16b-3
    and an “outside director” with the meaning of
    Section 162(m) of the Code.

 

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

 

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

 

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

 

    E. Administration of the Automatic Option Grant Program
    shall be self-executing in accordance with the express terms and
    conditions of Article Four, and the Plan Administrator
    shall exercise no discretionary functions with respect to option
    grants made pursuant to that program.

    

    A-4

 

		
	
    V.  
	
    OPTION
    GRANTS AND STOCK ISSUANCES

 

    A. The persons eligible to participate in the Discretionary
    Option Grant Program under Article Two and the Stock
    Issuance Program under Article Three shall be limited to
    the following:

 

    (i) officers and other key employees of the Corporation (or
    its parent or subsidiary corporations) who render services which
    contribute to the management, growth and financial success of
    the Corporation (or its parent or subsidiary corporations);

 

    (ii) non-employee members of the Board; and

 

    (iii) those consultants or other independent advisors who
    provide valuable services to the Corporation (or its parent or
    subsidiary corporations).

 

    B. Only non-employee Board members shall be eligible to
    receive automatic option grants pursuant to Article Four.

 

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

 

    D. For any options or direct stock issuances subject to the
    attainment of one or more performance milestones, such
    milestones shall be established by the Plan Administrator and
    may be based on any one of, or combination of, the following:
    (i) increase in share price, (ii) earnings per share,
    (iii) total stockholder return, (iv) operating margin,
    (v) gross margin, (vi) return on equity,
    (vii) return on assets, (viii) return on investment,
    (ix) operating income, (x) net operating income,
    (xi) pre-tax profit, (xii) cash flow,
    (xiii) revenue, (xiv) expenses, (xv) earnings
    before interest, taxes and depreciation, (xvi) economic
    value added and (xvii) market share. The performance
    milestones may be applicable to the Corporation or any parent or
    subsidiary corporation
    and/or any
    individual business units of the Corporation or any parent or
    subsidiary corporation. Partial achievement of the specified
    milestone may result in a payment or vesting corresponding to
    the degree of achievement as specified in the agreement
    evidencing such award.

 

		
	
    VI.  
	
    STOCK
    SUBJECT TO THE PLAN

 

    A. Shares of Common Stock shall be available for issuance
    under the Plan and shall be drawn from either the
    Corporation’s authorized but unissued shares of Common
    Stock or from reacquired shares of Common Stock, including
    shares repurchased by the Corporation on the open market. The
    stock issuable under the Plan shall be shares of authorized but
    unissued or reacquired Common Stock, including shares
    repurchased by the Corporation on the open market. The number of
    shares of Common Stock reserved for issuance over the term of
    the Plan shall not exceed the sum of
    (i) 7,000,000 shares plus (ii) the additional
    shares of Common Stock automatically added to the share reserve
    each year pursuant to the provisions of Section VI.B. of
    this Article One.

 

    B. The number of shares of Common Stock available for
    issuance under the Plan shall automatically increase on the
    first trading day of January each calendar year during the term
    of the Plan, beginning with calendar year 2008, by an amount
    equal to two and one-half percent (2.5%) of the total number of
    shares of Common Stock outstanding on the last trading day in
    December of the immediately preceding calendar year, but in no
    event shall any such annual increase exceed 750,000 shares.

 

    C. In no event shall the aggregate number of shares of
    Common Stock for which any one individual participating in the
    Plan may be granted stock options and direct stock issuances
    exceed 400,000 shares per calendar year. In no event shall
    the number of Incentive Options granted pursuant to the Plan
    exceed 7,000,000 shares.

    

    A-5

 

    D. Should one or more outstanding options under this Plan
    expire or terminate for any reason prior to exercise in full
    (including any option cancelled in accordance with the
    cancellation-regrant provisions of Section IV of
    Article Two of the Plan), then the shares subject to the
    portion of each option not so exercised shall be available for
    subsequent option grants under the Plan. Unvested shares issued
    under the Plan and subsequently repurchased by the Corporation
    pursuant to its repurchase rights under the Plan, shall be added
    back to the number of shares of Common Stock available for
    subsequent issuance under the Plan. In addition, should the
    exercise price of an outstanding option under the Plan be paid
    with shares of Common Stock or should shares of Common Stock
    otherwise issuable under the Plan be withheld by the Corporation
    in satisfaction of the withholding taxes incurred in connection
    with the exercise of an outstanding option under the Plan or the
    vesting of a direct share issuance made under the Plan, then the
    number of shares of Common Stock available for issuance under
    the Plan shall be reduced by the net number of shares of Common
    Stock actually issued to the holder of such option or share
    issuance.

 

    E. Should any change be made to the Common Stock issuable
    under the Plan by reason of any stock split, stock dividend,
    recapitalization, combination of shares, exchange of shares or
    other change affecting the outstanding Common Stock as a class
    without the Corporation’s receipt of consideration, then
    appropriate adjustments shall be made to (i) the maximum
    number
    and/or class
    of securities issuable under the Plan, (ii) the maximum
    number
    and/or class
    of securities for which any one individual participating in the
    Plan may be granted stock options and direct stock issuances in
    the aggregate per calendar year, (iii) the number
    and/or class
    of securities for which automatic option grants are to be
    subsequently made per eligible non-employee Board member under
    the Automatic Option Grant Program, (iv) the number
    and/or class
    of securities and price per share in effect under each option
    outstanding under either the Discretionary Option Grant or
    Automatic Option Grant Program and (v) the maximum number
    and/or class
    of securities by which the share reserve is to increase
    automatically each calendar year pursuant to the provisions of
    Section VI.B. of this Article One. Such adjustments to
    the outstanding options are to be effected in a manner which
    shall preclude the enlargement or dilution of rights and
    benefits under such options. The adjustments determined by the
    Plan Administrator shall be final, binding and conclusive.

 

    ARTICLE TWO

    

 

    DISCRETIONARY
    OPTION GRANT PROGRAM
    

 

		
	
    I.  
	
    TERMS AND
    CONDITIONS OF OPTIONS

 

    Options granted pursuant to the Discretionary Option Grant
    Program shall be authorized by action of the Plan Administrator
    and may, at the Plan Administrator’s discretion, be either
    Incentive Options or Non-Statutory Options. Individuals who are
    not Employees of the Corporation or its parent or subsidiary
    corporations may only be granted Non-Statutory Options. Each
    granted option shall be evidenced by one or more instruments in
    the form approved by the Plan Administrator; provided, however,
    that each such instrument shall comply with the terms and
    conditions specified below. Each instrument evidencing an
    Incentive Option shall, in addition, be subject to the
    applicable provisions of Section II of this
    Article Two.

 

    A. Exercise Price.

 

    1. The exercise price per share of Common Stock subject to
    either an Incentive Option or a Non-Statutory Option shall in no
    event be less than one hundred percent (100%) of the Fair Market
    Value of such Common Stock on the grant date.

 

    2. The exercise price shall become immediately due upon
    exercise of the option and shall, subject to the provisions of
    Section I of Article Five, be payable in cash or check
    made payable to the Corporation. Should the Corporation’s
    outstanding Common Stock be registered under Section 12(g)
    of the 1934 Act at the time the option is exercised, then
    the exercise price may also be paid as follows:

 

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

    

    A-6

 

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

 

    (iii) payment through a “net exercise” such that,
    without the payment of any funds, the Optionee may exercise the
    option and receive the net number of shares equal to
    (i) the number of shares as to which the option is being
    exercised, multiplied by (ii) a fraction, the numerator of
    which is the Fair Market Value per share (on such date as is
    determined by the Plan Administrator) less the exercise price
    per share, and the denominator of which is such Fair Market
    Value per share (the number of net shares to be received shall
    be rounded down to the nearest whole number of shares); or

 

    (iv) any combination of the foregoing methods of payment.

 

    3. Except to the extent such sale and remittance procedure
    is utilized, payment of the exercise price for the purchased
    shares must be made on the Exercise Date.

 

    B. Term and Exercise of
    Options.  Each option granted under this
    Discretionary Option Grant Program shall be exercisable at such
    time or times and during such period as is determined by the
    Plan Administrator and set forth in the instrument evidencing
    the grant. No such option, however, shall have a maximum term in
    excess of ten (10) years from the grant date.

 

    During the lifetime of the Optionee, Incentive Options shall be
    exercisable only by the Optionee and shall not be assignable or
    transferable by the Optionee other than by will or by the laws
    of descent and distribution following the Optionee’s death.
    However, a Non-Statutory Option may be assigned in whole or in
    part during the Optionee’s lifetime to one or more members
    of the Optionee’s immediate family or to a trust
    established exclusively for one or more such family members. The
    assigned option 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 option (or
    portion thereof) shall be the same as those in effect for the
    option immediately prior to such assignment and shall be set
    forth in such documents issued to the assignee as the Plan
    Administrator may deem appropriate.

 

    C. Termination of Service.

 

    1. Except to the extent otherwise provided pursuant to
    subsection C.2 below, the following provisions shall govern the
    exercise period applicable to any options held by the Optionee
    at the time of cessation of Service or death:

 

    (i) Should the Optionee cease to remain in Service for any
    reason other than death or Disability, then the period during
    which each outstanding option held by such Optionee is to remain
    exercisable shall be limited to the three (3)-month period
    following the date of such cessation of Service.

 

    (ii) Should such Service terminate by reason of Disability,
    then the period during which each outstanding option held by the
    Optionee is to remain exercisable shall be limited to the twelve
    (12)-month period following the date of such cessation of
    Service.

 

    (iii) Should the Optionee die while holding one or more
    outstanding options, then the period during which each such
    option is to remain exercisable shall be limited to the twelve
    (12)-month period following the date of the Optionee’s
    death. During such limited period, the option may be exercised
    by the personal representative of the Optionee’s estate or
    by the person or persons to whom the option is transferred
    pursuant to the Optionee’s will or in accordance with the
    laws of descent and distribution.

 

    (iv) Should the Optionee’s Service be terminated for
    Misconduct, then all outstanding options held by the Optionee
    shall terminate immediately and cease to be outstanding.

    

    A-7

 

    (v) Under no circumstances, however, shall any such option
    be exercisable after the specified expiration date of the option
    term.

 

    (vi) Any option designated as an Incentive Option to the
    extent not exercised within the time permitted by law for the
    exercise of Incentive Options following the termination of a
    Participant’s Service shall convert automatically to a
    Non-Statutory Option and thereafter shall be exercisable as such
    to the extent set forth herein.

 

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

 

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

 

    (i) to extend the period of time for which the option is to
    remain exercisable following the Optionee’s cessation of
    Service or death from the limited period in effect under
    subsection C.1 of this Article Two to such greater period
    of time as the Plan Administrator shall deem appropriate;
    provided, that in no event shall such option be exercisable
    after the specified expiration date of the option term; and/or

 

    (ii) to permit one or more options held by the Optionee
    under this Article Two to be exercised, during the limited
    post-Service exercise period applicable under this
    paragraph C., not only with respect to the number of vested
    shares of Common Stock for which each such option is exercisable
    at the time of the Optionee’s cessation of Service but also
    with respect to one or more subsequent installments in which the
    Optionee would otherwise have vested had such cessation of
    Service not occurred.

 

    D. Stockholder Rights.  An Optionee
    shall have no stockholder rights with respect to any shares
    covered by the option until such individual shall have exercised
    the option, paid the exercise price and become the holder of
    record of the purchased shares.

 

    E. Unvested Shares.  The Plan
    Administrator shall have the discretion to authorize the
    issuance of unvested shares of Common Stock under this
    Discretionary Option Grant Program. Should the Optionee cease
    Service while holding such unvested shares, the Corporation
    shall have the right to repurchase, at the exercise price paid
    per share, all or (at the discretion of the Corporation and with
    the consent of the Optionee) any of those unvested shares. The
    terms and conditions upon which such repurchase right shall be
    exercisable (including the period and procedure for exercise and
    the appropriate vesting schedule for the purchased shares) shall
    be established by the Plan Administrator and set forth in the
    agreement evidencing such repurchase right.

 

		
	
    II.  
	
    INCENTIVE
    OPTIONS

 

    Incentive Options may only be granted to individuals who are
    Employees, and the terms and conditions specified below shall be
    applicable to all Incentive Options granted under the Plan.
    Except as modified by the provisions of this Section II,
    all the provisions of Articles One, Two and Five shall be
    applicable to Incentive Options. Any Options specifically
    designated as Non-Statutory shall not be subject to such terms
    and conditions.

 

    A. Dollar Limitation.  The
    aggregate Fair Market Value (determined as of the respective
    date or dates of grant) of the Common Stock for which one or
    more options granted to any Employee under this Plan (or any
    other option plan of the Corporation or its parent or subsidiary
    corporations) may for the first time become exercisable as
    incentive stock options under the Federal tax laws during any
    one calendar year shall not exceed the sum of One Hundred
    Thousand Dollars ($100,000). To the extent the Employee holds
    two (2) or more

    

    A-8

 

    such options which become exercisable for the first time in the
    same calendar year, the foregoing limitation on the
    exercisability of such options as incentive stock options under
    the Federal tax laws shall be applied on the basis of the order
    in which such options are granted. Should the number of shares
    of Common Stock for which any Incentive Option first becomes
    exercisable in any calendar year exceed the applicable One
    Hundred Thousand Dollar ($100,000) limitation, then that option
    may nevertheless be exercised in that calendar year for the
    excess number of shares as a Non-Statutory Option under the
    Federal tax laws.

 

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

 

    III. CORPORATE
    TRANSACTION/CHANGE IN CONTROL

 

    A. In the event of any Corporate Transaction, each
    outstanding option shall automatically accelerate so that each
    such option shall, immediately prior to the effective date of
    the Corporate Transaction, become fully exercisable with respect
    to the total number of shares of Common Stock at the time
    subject to such option and may be exercised for any or all of
    those shares as fully-vested shares of Common Stock. However, an
    outstanding option shall not so accelerate if and to the extent:
    (i) such option is, in connection with the Corporate
    Transaction, either to be assumed by the successor corporation
    (or parent thereof) or to be replaced with a comparable option
    to purchase shares of the capital stock of the successor
    corporation (or parent thereof), (ii) such option is to be
    replaced with a cash incentive program of the successor
    corporation which preserves the spread existing on the unvested
    option shares at the time of the Corporate Transaction and
    provides for subsequent payout in accordance with the same
    vesting schedule applicable to such option or (iii) the
    acceleration of such option is subject to other limitations
    imposed by the Plan Administrator at the time of the option
    grant. The determination of option comparability under
    clause (i) above shall be made by the Plan Administrator,
    and its determination shall be final, binding and conclusive.

 

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

 

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

 

    D. Each option which is assumed in connection with a
    Corporate Transaction shall be appropriately adjusted,
    immediately after such Corporate Transaction, to apply to the
    number and class of securities which would have been issuable to
    the Optionee in consummation of such Corporate Transaction had
    the option been exercised immediately prior to such Corporate
    Transaction. Appropriate adjustments to reflect such Corporate
    Transaction shall also be made to (i) the exercise price
    payable per share under each outstanding option, provided the
    aggregate exercise price payable for such securities shall
    remain the same, (ii) the maximum number
    and/or class
    of securities available for issuance under the remaining term of
    the Plan, (iii) the maximum number
    and/or class
    of securities for which any one person may be granted stock
    options and direct stock issuances under the Plan per calendar
    year and (iv) the maximum number
    and/or class
    of securities by which the share reserve is to increase
    automatically each calendar year.

 

    E. The Plan Administrator shall have full power and
    authority to grant options under the Discretionary Option Grant
    Program which will automatically accelerate in the event the
    Optionee’s Service subsequently terminates by reason of an
    Involuntary Termination within a designated period (not to
    exceed eighteen (18) months) following the effective date
    of any Corporate Transaction in which those options are assumed
    or replaced and do not otherwise accelerate. Any options so
    accelerated shall remain exercisable for fully-vested shares
    until the earlier of (i) the expiration of the option term
    or (ii) the expiration of the one (1)-year period measured
    from the effective date of the Involuntary Termination. In
    addition, the Plan Administrator may

    

    A-9

 

    provide that one or more of the Corporation’s outstanding
    repurchase rights with respect to shares held by the Optionee at
    the time of such Involuntary Termination shall immediately
    terminate, and the shares subject to those terminated repurchase
    rights shall accordingly vest in full.

 

    F. The Plan Administrator shall have full power and
    authority to grant options under the Discretionary Option Grant
    Program which will automatically accelerate in the event the
    Optionee’s Service subsequently terminates by reason of an
    Involuntary Termination within a designated period (not to
    exceed eighteen (18) months) following the effective date
    of any Change in Control. Each option so accelerated shall
    remain exercisable for fully-vested shares until the earlier of
    (i) the expiration of the option term or (ii) the
    expiration of the one (1)-year period measured from the
    effective date of the Involuntary Termination. In addition, the
    Plan Administrator may provide that one or more of the
    Corporation’s outstanding repurchase rights with respect to
    shares held by the Optionee at the time of such Involuntary
    Termination shall immediately terminate, and the shares subject
    to those terminated repurchase rights shall accordingly vest in
    full.

 

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

 

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

 

    ARTICLE THREE

    

 

    STOCK
    ISSUANCE PROGRAM
    

 

    I.  TERMS
    AND CONDITIONS OF STOCK ISSUANCES

 

    Shares of Common Stock may be issued under the Stock Issuance
    Program directly without any intervening option grants. Each
    such stock issuance shall be evidenced by a Stock Issuance
    Agreement which complies with the terms specified below.

 

    A. The shares shall be issued for such valid consideration
    under the Delaware General Corporation Law as the Plan
    Administrator may deem appropriate, but the value of such
    consideration as determined by the Plan Administrator shall not
    be less than one hundred percent (100%) of the Fair Market Value
    of the issued shares of Common Stock on the issuance date.

 

    B. The Plan Administrator shall have full power and
    authority to issue shares of Common Stock under the Stock
    Issuance Program as a bonus for past services rendered to the
    Corporation (or any parent or subsidiary). All such bonus shares
    shall be fully and immediately vested upon issuance.

 

    C. All other shares of Common Stock authorized for issuance
    under the Stock Issuance Program by the Plan Administrator shall
    have a minimum vesting schedule determined in accordance with
    the following requirements:

 

    (i) For any shares which are to vest solely by reason of
    Service to be performed by the Participant, the Plan
    Administrator shall impose a minimum Service period of at least
    two (2) years measured from the issue date of such shares.

 

    (ii) For any shares which are to vest upon the
    Participant’s completion of a designated Service
    requirement and the Corporation’s attainment of one or more
    prescribed performance milestones, the Plan Administrator shall
    impose a minimum Service period of at least one (1) year
    measured from the issue date of such shares.

 

    D. Any new, substituted or additional securities or other
    property (including money paid other than as a regular cash
    dividend) which the Participant may have the right to receive
    with respect to the Participant’s unvested shares of Common
    Stock by reason of any stock dividend, stock split,
    recapitalization, combination

    

    A-10

 

    of shares, exchange of shares or other change affecting the
    outstanding Common Stock as a class without the
    Corporation’s receipt of consideration shall be issued
    subject to (i) the same vesting requirements applicable to
    the Participant’s unvested shares of Common Stock and
    (ii) such escrow arrangements as the Plan Administrator
    shall deem appropriate.

 

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

 

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

 

    G. The Plan Administrator shall have full power and
    authority, exercisable upon a Participant’s termination of
    Service, to waive the surrender and cancellation of any or all
    unvested shares of Common Stock (or other assets attributable
    thereto) at the time held by that Participant, if the Plan
    Administrator determines such waiver to be an appropriate
    severance benefit for the Participant.

 

    H. Prior to the vesting of any shares of Common Stock
    issued to a Participant under the Stock Issuance Program, rights
    to acquire shares may be assigned in whole or in part during the
    Participant’s lifetime to one or more members of the
    Participant’s immediate family or to a trust established
    exclusively for one or more such family members. The assigned
    right to acquire shares may only be exercised by the person or
    persons who acquire a proprietary interest in the shares
    pursuant to the assignment. The terms applicable to the assigned
    shares (or portion thereof) shall be the same as those in effect
    for the shares immediately prior to such assignment and shall be
    set forth in such documents issued to the assignee as the Plan
    Administrator may deem appropriate.

 

    II.  CORPORATE
    TRANSACTION/CHANGE IN CONTROL

 

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

 

    B. The Plan Administrator shall have the discretionary
    authority to structure one or more of the Corporation’s
    repurchase/cancellation rights under the Stock Issuance Program
    in such manner that those rights shall automatically terminate,
    and all the shares of Common Stock subject to those terminated
    rights shall immediately vest in full, in the event the
    Participant’s Service should subsequently terminate by
    reason of an Involuntary Termination within eighteen
    (18) months following the effective date of any Corporate
    Transaction in which those rights are assigned to the successor
    corporation (or parent thereof).

 

    C. The Plan Administrator shall have the discretionary
    authority to structure one or more of the Corporation’s
    repurchase/cancellation rights under the Stock Issuance Program
    in such manner that those rights shall automatically terminate,
    and all the shares of Common Stock subject to those terminated
    rights shall immediately vest in full, in the event the
    Participant’s Service should subsequently terminate by
    reason of an Involuntary Termination within eighteen
    (18) months following the effective date of any Change in
    Control.

    

    A-11

 

    III.  SHARE
    ESCROW/LEGENDS

 

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

 

    ARTICLE FOUR

    

 

    AUTOMATIC
    OPTION GRANT PROGRAM
    

 

    I.  ELIGIBILITY

 

    The individuals eligible to receive automatic option grants
    pursuant to the provisions of this Article Four program
    shall be limited to those individuals who are serving as
    non-employee Board members on the Automatic Option Grant Program
    Effective Date or who are first elected or appointed as
    non-employee Board members on or after such Effective Date,
    whether through appointment by the Board or election by the
    Corporation’s stockholders.

 

    II.  TERMS
    AND CONDITIONS OF AUTOMATIC OPTION GRANTS

 

    A. Grant Dates.  Option grants
    shall be made under this Article Four on the dates
    specified below:

 

    1. Initial Grant.  Each individual
    serving as a non-employee Board member on the Automatic Option
    Grant Program Effective Date and each individual who is first
    elected or appointed as a non-employee Board member after such
    Effective Date shall automatically be granted, on the Automatic
    Option Grant Program Effective Date or on the date of such
    initial election or appointment (as the case may be), a
    Non-Statutory Option to purchase 10,000 shares of Common
    Stock upon the terms and conditions of this Article Four.
    In no event, however, shall a non-employee Board member be
    eligible to receive such an initial option grant if such
    individual has at any time been in the prior employ of the
    Corporation (or any parent or subsidiary corporation).

 

    2. Annual Grant.  On the date of
    each Annual Stockholders Meeting, beginning with the first
    Annual Meeting held after the Section 12(g) Registration
    Date, each individual who will continue to serve as a
    non-employee Board member shall automatically be granted,
    whether or not such individual is standing for re-election as a
    Board member at that Annual Meeting, a Non-Statutory Option to
    purchase an additional 5,000 shares of Common Stock upon
    the terms and conditions of this Article Four, provided he
    or she has served as a non-employee Board member for at least
    six (6) months prior to the date of such Annual Meeting.
    Non-employee Board members who have previously been in the
    employ of the Corporation (or any parent or subsidiary) shall be
    eligible to receive such annual option grants over their
    continued period of Board service through one or more Annual
    Stockholders Meetings.

 

    3. No Limitation.  There shall be
    no limit on the number of shares for which any one non-employee
    Board member may be granted stock options under this
    Article Four over his or her period of Board service.

 

    B. Exercise Price.  The exercise
    price per share of Common Stock subject to each automatic option
    grant made under this Article Four shall be equal to one
    hundred percent (100%) of the Fair Market Value per share of
    Common Stock on the automatic grant date.

 

    C. Payment.  The exercise price
    shall be payable in one of the alternative forms specified below:

 

    (i) full payment in cash or check drawn to the
    Corporation’s order;

 

    (ii) full payment in shares of Common Stock held for the
    requisite period necessary to avoid a charge to the
    Corporation’s earnings for financial reporting purposes and
    valued at Fair Market Value on the Exercise Date (as such term
    is defined below);

    

    A-12

 

    (iii) full payment in a combination of shares of Common
    Stock held for the requisite period necessary to avoid a charge
    to the Corporation’s earnings for financial reporting
    purposes and valued at Fair Market Value on the Exercise Date
    and cash or check drawn to the Corporation’s order; or

 

    (iv) to the extent the option is exercised for vested
    shares, full payment through a sale and remittance procedure
    pursuant to which the Optionee shall provide irrevocable written
    instructions to (I) a Corporation-designated brokerage firm
    to effect the immediate sale of the purchased shares and remit
    to the Corporation, out of the sale proceeds available on the
    settlement date, sufficient funds to cover the aggregate
    exercise price payable for the purchased shares and
    (II) the Corporation to deliver the certificates for the
    purchased shares directly to such brokerage firm in order to
    complete the sale transaction.

 

    Except to the extent the sale and remittance procedure specified
    above is used for the exercise of the option for vested shares,
    payment of the exercise price for the purchased shares must
    accompany the exercise notice.

 

    D. Option Term.  Each automatic
    grant under this Article Four shall have a maximum term of
    ten (10) years measured from the automatic grant date.

 

    E. Exercisability/Vesting.  Each
    automatic grant shall be immediately exercisable for any or all
    of the option shares. However, any shares purchased under the
    option shall be subject to repurchase by the Corporation, at the
    exercise price paid per share, upon the Optionee’s
    cessation of Board service prior to vesting in those shares in
    accordance with the applicable schedule below:

 

    Initial Grant.  Each initial 10,000-share
    automatic grant shall vest, and the Corporation’s
    repurchase right shall lapse, in a series of four (4) equal
    and successive annual installments over the Optionee’s
    period of continued service as a Board member, with the first
    such installment to vest upon Optionee’s completion of one
    (1) year of Board service measured from the automatic grant
    date.

 

    Annual Grant.  Each additional 5,000-share
    automatic grant shall vest, and the Corporation’s
    repurchase right shall lapse, upon the Optionee’s
    completion of one (1) year of Board service measured from
    the automatic grant date.

 

    F. Limited Transferability.  During
    the lifetime of the Optionee, each automatic option grant may be
    assigned in whole or in part to one or more members of the
    Optionee’s immediate family or to a trust established
    exclusively for one or more such family members. 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 option (or
    portion thereof) shall be the same as those in effect for the
    option immediately prior to such assignment and shall be set
    forth in such documents issued to the assignee as the Plan
    Administrator may deem appropriate.

 

    G. Effect of Termination of Board
    Membership.  The following provisions shall
    govern the exercise of any outstanding options held by the
    Optionee under this Article Four at the time the Optionee
    ceases to serve as a Board member:

 

    (i) The Optionee (or, in the event of Optionee’s
    death, the personal representative of the Optionee’s estate
    or the person or persons to whom the option is transferred
    pursuant to the Optionee’s will or in accordance with the
    laws of descent and distribution) shall have a twelve (12)-month
    period following the date of such cessation of Board service in
    which to exercise each such option. However, each option shall,
    immediately upon the Optionee’s cessation of Board service,
    terminate and cease to remain outstanding with respect to any
    option shares in which the Optionee is not vested on the date of
    such cessation of Board service.

 

    (ii) During the twelve (12)-month exercise period, the
    option may not be exercised in the aggregate for more than the
    number of vested shares for which the option is exercisable at
    the time of the Optionee’s cessation of Board service.
    However, should the Optionee cease to serve as a Board member by
    reason of death or Permanent Disability, then all shares at the
    time subject to the option shall

    

    A-13

 

    immediately vest so that such option may, during the twelve
    (12)-month exercise period following such cessation of Board
    service, be exercised for all or any portion of such shares as
    fully-vested shares.

 

    (iii) In no event shall the option remain exercisable after
    the expiration of the option term.

 

    H. Stockholder Rights.  The holder
    of an automatic option grant under this Article Three shall
    have none of the rights of a stockholder with respect to any
    shares subject to such option until such individual shall have
    exercised the option, paid the exercise price and become the
    holder of record of the purchased shares.

 

    I. Remaining Terms.  The remaining
    terms and conditions of each automatic option grant shall be the
    same as the terms for option grants made under the Discretionary
    Option Grant Program.

 

    III.  CORPORATE
    TRANSACTION/CHANGE IN CONTROL

 

    A. In the event of any Corporate Transaction, the shares of
    Common Stock at the time subject to each outstanding option
    under this Article Four but not otherwise vested shall
    automatically vest in full so that each such option shall,
    immediately prior to the specified effective date for the
    Corporate Transaction, become fully exercisable for all of the
    shares of Common Stock at the time subject to that option and
    may be exercised for all or any portion of those shares as fully
    vested shares of Common Stock. Immediately following the
    consummation of the Corporate Transaction, all automatic option
    grants under this Article Four shall terminate and cease to
    be outstanding, except to the extent assumed by the successor
    corporation or parent thereof.

 

    B. Each outstanding option under this Article Four
    which is assumed in connection with a Corporate Transaction
    outstanding shall be appropriately adjusted, immediately after
    such Corporate Transaction, to apply and pertain to the number
    and class of securities which would have been issuable to the
    Optionee in the consummation of such Corporate Transaction, had
    the option been exercised immediately prior to such Corporate
    Transaction. Appropriate adjustments shall also be made to
    (i) the class and number of securities available for
    issuance under the Plan following the consummation of such
    Corporate Transaction, and (ii) the exercise price payable
    per share, provided the aggregate exercise price payable for
    such securities shall remain the same.

 

    C. In connection with any Change in Control of the
    Corporation, the shares of Common Stock at the time subject to
    each outstanding option under this Article Four but not
    otherwise vested shall automatically vest in full so that each
    such option shall, immediately prior to the specified effective
    date for the Change in Control, become fully exercisable for all
    of the shares of Common Stock at the time subject to that option
    and may be exercised for all or any portion of those shares as
    fully vested shares of Common Stock. Each such option shall
    remain so exercisable for all the option shares following the
    Change in Control, until the expiration or sooner termination of
    the option term.

 

    D. The automatic option grants outstanding under this
    Article Four shall in no way affect the right of the
    Corporation to adjust, reclassify, reorganize or otherwise
    change its capital or business structure or to merge,
    consolidate, dissolve, liquidate or sell or transfer all or any
    part of its business or assets.

 

    ARTICLE FIVE
    

 

    MISCELLANEOUS

 

    I.  AMENDMENT
    OF THE PLAN AND AWARDS

 

    The Board has complete and exclusive power and authority to
    amend or modify the Plan (or any component thereof) in any or
    all respects whatsoever. However, no such amendment or
    modification shall adversely affect rights and obligations with
    respect to options at the time outstanding under the Plan, nor
    adversely affect the rights of any Participant with respect to
    Common Stock issued under the Stock Issuance Program prior to
    such action, unless the Optionee or Participant consents to such
    amendment. In addition, certain amendments to the Plan may
    require stockholder approval pursuant to Applicable Laws or
    regulations.

    

    A-14

 

    II.  CONDITIONS
    UPON ISSUANCE OF SHARES

 

    If at any time the Plan Administrator determines that the
    delivery of shares pursuant to the exercise, vesting or any
    other provision of an option or direct stock issuance is or may
    be unlawful under Applicable Laws, the vesting or right to
    exercise an option or to otherwise receive shares pursuant to
    the Plan shall be suspended until the Plan Administrator
    determines that such delivery is lawful and shall be further
    subject to the approval of counsel for the Corporation with
    respect to such compliance. The Corporation shall have no
    obligation to effect any registration or qualification of the
    shares of Common Stock under federal or state laws.

 

    III.  TAX
    WITHHOLDING

 

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

 

    B. The Plan Administrator may, in its discretion and in
    accordance with the provisions of this Section III of this
    Article Five and such supplemental rules as the Plan
    Administrator may from time to time adopt (including the
    applicable safe-harbor provisions of
    Rule 16b-3
    of the Securities and Exchange Commission), provide any or all
    holders of Non-Statutory Options (other than the automatic
    grants made pursuant to Article Four of the Plan) or
    unvested shares under the Plan with the right to use shares of
    Common Stock in satisfaction of all or part of the Federal,
    state and local income and employment tax liabilities incurred
    by such holders in connection with the exercise of their options
    or the vesting of their shares (the “Taxes”). Such
    right may be provided to any such holder in either or both of
    the following formats:

 

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

 

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

 

    IV.  EFFECTIVE
    DATE AND TERM OF PLAN

 

    A. The Plan has been approved by the Board and is subject
    to approval by the stockholders of the Corporation at the annual
    meeting of stockholders to be held on July 28, 2005, and
    will become effective as of the date of such stockholder
    approval.

 

    B. The Plan shall terminate upon the earlier of
    (i) July 27, 2015, or (ii) the date on which all
    shares available for issuance under the Plan shall have been
    issued pursuant to the exercise of the options granted under the
    Plan or the issuance of shares (whether vested or unvested)
    under the Stock Issuance Program. If the date of termination is
    determined under clause (i) above, then all option grants
    and unvested share issuances outstanding on such date shall
    thereafter continue to have force and effect in accordance with
    the provisions of the instruments evidencing such grants or
    issuance.

 

    C. The Board approved an amendment and restatement of the
    Plan in July 2007, which is subject to stockholder
    approval, to (i) increase the maximum number of shares of
    Common Stock reserved under the Plan from 5,000,000 shares
    to 7,000,000 shares (plus the annual increase provided
    under Article VI.B of the Plan), and (ii) to make such
    other administrative changes regarding the operation of the Plan.

    

    A-15

 

    V.  REGULATORY
    APPROVALS

 

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

 

    VI.  USE
    OF PROCEEDS

 

    Any cash proceeds received by the Corporation from the sale of
    shares pursuant to option grants or share issuances under the
    Plan shall be used for general corporate purposes.

 

    VII.  NO
    EMPLOYMENT/SERVICE RIGHTS

 

    Neither the action of the Corporation in establishing the Plan,
    nor any action taken by the Plan Administrator hereunder, nor
    any provision of the Plan shall be construed so as to grant any
    individual the right to remain in the employ or service of the
    Corporation (or any parent or subsidiary corporation) for any
    period of specific duration, and the Corporation (or any parent
    or subsidiary corporation retaining the services of such
    individual) may terminate such individual’s employment or
    service at any time and for any reason, with or without cause.

 

    VIII.  MISCELLANEOUS
    PROVISIONS

 

    A. Except as otherwise expressly provided under the Plan,
    the right to acquire Common Stock or other assets under the Plan
    may not be assigned, encumbered or otherwise transferred by any
    Optionee or Participant.

 

    B. The provisions of the Plan relating to the exercise of
    options and the vesting of shares shall be governed by the laws
    of the State of California as such laws are applied to contracts
    entered into and performed in such State.

 

    C. The provisions of the Plan shall inure to the benefit
    of, and be binding upon, the Corporation and its successors or
    assigns, whether by Corporate Transaction or otherwise, and the
    Participants and Optionees, the legal representatives of their
    respective estates, their respective heirs or legatees and their
    permitted assignees.

    

    A-16

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