Document:

Exhibit 10.14

 

SEPARATION
AGREEMENT AND RELEASE OF ALL CLAIMS

 

THIS SEPARATION AGREEMENT AND RELEASE OF ALL CLAIMS
(the “Agreement”) is entered into between Merit Medical Systems, Inc., a
Utah corporation (“Employer”), and Brian Ferrand (“Employee”).

 

Definitions

 

Employer:  As used herein, the term “Employer”
shall mean and refer to Merit Medical Systems, Inc., a Utah corporation.

 

Affiliate:  As used herein, the term “Affiliate”
shall mean and refer to any officer, director, shareholder, employee, and/or agent
of Employer; and/or any subsidiary, division, or affiliate of Employer
(including without limitation any officer, director, shareholder, employee,
and/or agent of any such subsidiary, division, or affiliate); and/or any entity
(including without limitation any officer, director, shareholder, employee,
and/or agent of such entity) in which Employer owns, directly or indirectly, a
legal or beneficial interest (whether in whole or in part); and/or any
individual or entity (including without limitation any officer, director,
shareholder, employee, and/or agent of such entity) that owns, directly or
indirectly, a legal or beneficial interest (whether in whole or in part) in
Employer.

 

Background

 

Employer has terminated Employee’s employment,
effective October 18, 2004 (the “Termination Date”).  By this Agreement, and the sums paid to or
for the benefit of Employee hereunder, Employer and Employee intend to resolve
any and all disputes of any kind or character, if any, between them, including
without limitation any and all disputes arising from or related to Employee’s
employment with Employer or any Affiliate, the termination of that employment,
or otherwise.  Accordingly, Employer and
Employee hereby agree as follows:

 

Agreement

 

1.                                      Payment to Employee.

 

a.                                       Employer
shall pay Employee the sum of Four Hundred Twenty Three Thousand Seventy-Six
and 95/100 Dollars ($423,076.95), payable in 44 equal, bi-weekly installments
in the amount of $9,615.39 consistent with Employer’s regular and customary
payroll practices, with the first payment to occur on Employer’s first regular
payroll immediately following the Termination Date and continuing thereafter
until paid in full (the “Payout Period”).

 

b.                                       If
Employee properly elects continuation coverage under Employer’s group medical
and/or dental insurance plan pursuant to Sections 601 through 607 of the
Employee 

 

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Retirement Income Security Act of 1974, as
amended (“COBRA”), Employer will pay that portion of the premium which Employer
paid on behalf of Employee and Employee’s enrolled family members prior to the
Termination Date through the earlier of (a) April 30, 2006; (b) the
date Employee first becomes eligible for coverage under any group health plan
maintained by another employer of Employee or his spouse; or (c) the date
such COBRA continuation coverage otherwise terminates as to Employee under the
provisions of Employer’s group medical insurance plan.  Nothing herein shall be deemed to extend the
otherwise applicable maximum period in which COBRA continuation coverage is
provided or supersede the plan provisions relating to early termination of such
COBRA continuation coverage.  Employee
agrees that his portion of the premium for such coverage, if any, shall be
deducted from the payments payable to Employee under Section 1.a. above.

 

Payment of any monies to or
on behalf of Employer under this Section 1 shall be subject to all
applicable federal, state, and local payroll withholding taxes.

 

2.                                      Review and Revocation.  Employee understands and agrees that he has 45 days from the date he
receives this Agreement to consider the terms of and to sign this
Agreement.  Employee understands that, at
his sole and absolute discretion, he may sign this Agreement prior to the expiration
of the 45-day period.

 

Employee further acknowledges and understands that
he may revoke this Agreement for a period of up to 7 days after he signs it
(not counting the day it was signed) and that the Agreement shall not become
effective or enforceable until the 7-day revocation period has
expired.  To revoke this Agreement,
Employee must give written notice stating that he wishes to revoke the
Agreement to Director, Organizational Development, Merit Medical Systems, Inc.,
1600 Merit Drive, South Jordan, UT 84095, Telefax: 801/208-4302.  If Employee mails a notice of revocation to
Employer, it must be postmarked no later than 7 days following the date on
which he signed this Agreement (not counting the day it was signed) or such
revocation shall not be effective.

 

3.                                      Release of All Claims.  In consideration for the payments stated in Section 1 and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Employee, for himself and his heirs, assigns, and all persons
and entities claiming by, through, or under him, hereby irrevocably,
unconditionally, and completely releases, discharges, and agrees to hold
Employer and its Affiliates, individually or in any combination thereof
(hereinafter collectively referred to as “Releasees”), harmless of and from any
and all claims, liabilities, charges, demands, grievances, and causes of action
of any kind or nature whatsoever, including without limitation claims for
contribution, subrogation, or indemnification, whether direct or indirect,
liquidated or unliquidated, known or unknown, which Employee had, has, or may
claim to have against Releasees (hereinafter collectively referred to as “Claim(s)”).

 

The release, discharge, and agreement to hold
harmless set forth in this Section 3 includes without limitation any
Claim(s) that Employee has, had, or may claim to have against Releasees (a) for
wrongful termination or discharge, negligent or intentional infliction of
emotional distress, breach 

 

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of
express or implied contract of employment (including without limitation any
Claim(s) under the Arizona Employment Relationship and Constructive Discharge
Law, the Employment Agreement dated April 1, 1998, between Employer and
Employee, any other written or oral agreement of any type or kind, or
otherwise,), breach of the covenant of good faith and fair dealing, defamation,
breach of privacy, whistleblowing, employment-related torts, negligence, or
personal injury (whether physical or mental); (b) for any Claim(s) arising
under federal or state law, including without limitation Title VII of the Civil
Rights Act of 1964, the Civil Rights Act of 1991, the Americans with
Disabilities Act, the Age Discrimination in Employment Act, the Utah
Antidiscrimination Act, the Arizona Civil Rights Act, or any other federal,
state, or local law prohibiting discrimination or harassment on the basis of
race, color, religion, sex, age, national origin, disability, or any other
protected group status; (c) for any Claim(s) arising under the Employee
Retirement Income Security Act (“ERISA”), (d) for any Claim(s) arising
under the Family and Medical Leave Act or any similar family, medical, school,
or other leave law under any Arizona state, county, or city law or ordinance; (e) for
any Claim(s) for attorney’s fees or costs, and (f) for any other Claim(s)
in any way related to or arising out of Employee’s employment with Employer or
the termination of that employment.

 

Nothing in this Agreement waives Employee’s rights,
if any, to continue Employee’s participation in Employer’s group health
insurance plan, as allowed by COBRA and the terms, conditions, and limitations
of the plan.

 

4.                                      Full and Complete Release. 
Employee understands and agrees that he is releasing and waiving
Claim(s) that he does not know exist or may exist in his favor at the time he
signs this Agreement which, if known by him, would materially affect his
decision to sign this Agreement. 
Nonetheless, for the purpose of implementing a full and complete release
and discharge of Releasees, Employee expressly acknowledges that the release
set forth in Section 3 is intended to include in its effect, without
limitation, all Claim(s) which Employee does not know or suspect to exist in
his favor and that the release set forth in Section 3 contemplates the
extinguishment of any such Claim(s).

 

5.                                      Covenant of Confidentiality.  Employee agrees that, as a
material term of this Agreement and to protect the goodwill, the Confidential
Information (as defined below), and the business of Employer, Employee shall
not, from the date of this Agreement through the end of the Payout Period or at
any time thereafter, without the express, prior written consent of the
President of Employer: (i) ever reveal, disclose, furnish, make
accessible, or disseminate any of Employer’s Confidential Information or any
other matter concerning the business affairs of Employer or of any customer or
vendor of Employer or (ii) ever use or exploit any of Employer’s
Confidential Information or any other matter concerning the business affairs of
Employer or of any customer or vendor of Employer for the personal and/or
financial use, gain, or benefit of Employee or of any other person or entity or
for any other purpose.

 

For purposes of this Agreement, “Confidential
Information” means names, addresses, telephone numbers, contact persons, and
other identifying and confidential information about persons, firms,
corporations, and/or other entities that are or become customers, accounts,
licensors, vendors, and/or suppliers of goods or services to or of Employer;
customer lists; details of client or 

 

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consultant contracts; details of customer usage; non-public pricing
policies; operational methods; marketing plans or strategies; product and
program developments and plans; research projects; technology and technical
processes; business acquisition plans; personnel information and plans,
including without limitation compensation and contract terms; methods of
production; inventions; improvements; designs; original works of authorship;
derivative works; formulas; processes; compositions of matter; computer
software and related information, including without limitation programs, code,
concepts, methods, routines, formulas, algorithms, designs, specifications,
architectures, or inventions embodied therein, as well as all data,
documentation, and copyrights related thereto; patent applications; databases;
mask works; trade secrets; know-how; ideas; service marks; planned or proposed
Website ideas and plans, including but not limited to look and feel; and other
intellectual property or proprietary information rights and any and all rights,
applications, extensions and renewals in connection therewith (either proposed,
filed, or in preparation for filing); and financial information and general
confidential business information of the Employer.  Such information is confidential and unique,
not generally known in the industry, and gives the Employer a competitive
advantage and significantly enhances the Employer’s goodwill.

 

Notwithstanding the foregoing, Confidential
Information excludes information not protected by trademark, copyright, patent,
or other similar state, federal, or worldwide protection and that, through no
fault of Employee, is generally known to the public, is generally employed in
the medical device or equipment manufacturing industry at or after the time
Employee first learns of such information, or generic information or knowledge
which the Employee would have learned in the course of similar employment or
work elsewhere in the medical device or equipment manufacturing industry;
provided, however, that Employee shall bear the burden of proving that any
information disclosed or used by Employee does not meet the definition of
Confidential Information set forth above and/or that the disclosure or use of
Confidential Information occurred through no fault of Employee.

 

6.                                      Covenant Not to Provide Services / Solicit
Existing Customers.  Employee
acknowledges the character of Employer’s business and the substantial amount of
time, money, and effort that Employer has spent and will spend in recruitment
of clients, customers, and/or accounts. 
As a material term of this Agreement and to protect the goodwill, the
Confidential Information, and the business of Employer, Employee covenants
that, from the date of this Agreement through the end of the Payout Period,
Employee shall not, anywhere in the United States, either individually or on behalf of or with any person or entity,
directly or indirectly (a) provide services relating to the manufacture or
sale of medical devices or equipment of the type and kind manufactured and/or
sold by Employer to any individual or entity that was a customer, client, or
account of Employer at the time Employee’s employment with Employer terminated
or at any time during the one (1) year period immediately preceding such
termination, (b) solicit or otherwise attempt to sell medical devices or
equipment of the type and kind manufactured and/or sold by Employer to any
individual or entity that was a customer, client, or account of Employer at the
time Employee’s employment with Employer terminated or at any time during the
one (1) year period immediately preceding such termination, (c) solicit
or otherwise attempt to sell medical devices or equipment of the type and kind
manufactured and/or sold by Employer to any individual or entity that was a
prospective customer, 

 

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client, or
account whose business Employee solicited as a representative of or on behalf
of Employer or with whom Employee became acquainted or whose identity Employee
learned of as a consequence of his employment with Employer within the six (6) month
period immediately preceding the termination of Employee’s employment with
Employer, (d) solicit or otherwise deal with any clients, vendors, or
independent contractors of Employer in any manner designed to (or that
reasonably could) divert business from Employer, and/or (e) solicit or
otherwise induce any employee of Employer to terminate his/her employment with
Employer.

 

7.                                      Return of Goods to Employer.  Employee covenants and represents
that he has returned to Employer all Confidential Information, the cellular
phone provided to him by Employer, all company credit cards, office keys, etc.
that he obtained or that were made available to him as a consequence of his
employment with Employer. 
Notwithstanding the foregoing, Employee may retain the laptop computer
provided for his use by Employer after Employer has had the opportunity to
erase all Confidential Information or other matters Employer deems appropriate
from such laptop computer.

 

8.                                      Limited Covenant Not to Compete.  Employee acknowledges that Boston Scientific
Corporation is a direct competitor of Employer and that any association by
Employee with Boston Scientific Corporation would likely require Employee to
disclose or to rely on information protected by Section 5 of this
Agreement in the satisfactory performance of his job and/or consulting services
for Boston Scientific Corporation. 
Accordingly, to protect the goodwill, the Confidential Information, and
the business of Employer, Employee hereby agrees that, from the date of this
Agreement through the end of the Payout Period, Employee shall not, either
directly or indirectly,  be an employee of, provide consulting
services of any kind or character to, or in any way be connected with Boston
Scientific Corporation or any subsidiary or affiliate of Boston Scientific Corporation
without the prior written consent of the President of Employer.  Except as specifically set forth in this Section 8,
Employee may accept employment with or act as a consultant to any other
individual or entity provided that Employee will not, by satisfying in good
faith the obligations of his position or responsibilities with such individual
or entity, reasonably be likely to violate the provisions of either Sections 5
or 6 of this Agreement.

 

9.                                      Resignation as Officer.  Employee hereby resigns as an
officer of Employer or any Affiliate, effective October 18, 2004.

 

10.                               Wages and Commissions Paid in Full.  Except as specifically set forth in Section 1
above, Employee acknowledges that he has received all monies due and owing to
Employee from Employer, including without limitation any monies due and owing
to Employee for wages, accrued but unused vacation benefits, commissions, or
otherwise and that he has no claim against Employer whatsoever for the payment
of any further wages, commissions, vacation benefits, or other monies except as
specifically set forth in Section 1. 
Employee acknowledges and agrees that he shall not be eligible for
vacation, sick leave, retirement, life insurance, disability insurance, worker’s
compensation, or any other benefit that is or may become available to employees
of Employer.

 

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11.                               Agreement Confidential.  This Agreement is confidential
information owned by Employer.  Employee
agrees that he shall not disclose the terms of this Agreement except to the
extent required by law.  Notwithstanding
the foregoing, Employee may disclose the terms of this Agreement to his spouse,
attorney, and/or tax advisor.  If
Employee discloses the terms of this Agreement to his spouse, attorney, and/or
tax advisor, he will advise such person that, as a condition of such
disclosure, s/he must not disclose the terms of this Agreement except to the
extent required by law.

 

12.                               Nondisparagement.  Employee covenants that,
as an agreed on material term of this Agreement, he will not make any
disparaging remarks about Employer, or any director, officer, or employee of
Employer, and shall refrain from saying or doing anything that could in any way
hold Employer or any director, officer, or employee of Employer up to disrepute
in the eyes of any other person or entity or that could in any way interfere
with Employer’s current or future business plans or activities.

 

13.                               Not an Admission.  This
Agreement does not constitute an admission by Releasees, and Releasees
specifically deny, that Releasees have violated any contract, law, or
regulation or that they, it, or s/he has discriminated against Employee or
otherwise infringed on Employee’s rights and privileges or done any other
wrongful act.

 

14.                               Severability.  If a court of competent jurisdiction shall
find that the provisions of Section 3 of this Agreement is unenforceable,
whether in whole or in part, then Employer shall have the right, at its sole
option and to the extent allowed by applicable law, to rescind this Agreement
and to cease any payments due and/or to recover from Employee all sums paid by
Employer to Employee under Section 1 of this Agreement.  Except as set forth in the immediately
preceding sentence, if any part of this Agreement is found to be unenforceable,
the other provisions shall remain fully valid and enforceable.  It is the intention and agreement of the
parties that all of the terms and conditions hereof be enforced to the fullest
extent permitted by law.

 

15.                               Entire Agreement.  This Agreement constitutes the entire
integrated understanding between the parties regarding the subject matter
hereof and supersedes all negotiations, representations, prior discussions, and
preliminary agreements between the parties with respect to the subject matter
hereof.  No promise, representation,
warranty, or covenant not included in this Agreement has been or is relied upon
by either party.   Notwithstanding any
statute or case law to the contrary, this Agreement may not be modified except
by a written instrument signed by each of the parties, whether or not such
modification is supported by separate consideration.

 

16.                               Governing Law.  Notwithstanding any conflict of laws
provisions to the contrary, this Agreement shall be governed by the laws of the
State of Utah, and each party hereby expressly submits itself or himself to the
exclusive, personal jurisdiction of the courts situate in the State of Utah
with respect to any and all claims, demands, and/or causes of action asserted
or filed by any party in any way relating to, or arising out of, this Agreement
or the subject matter hereof.

 

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17.                               Waiver.  Any waiver by any party hereto of any breach
of any kind or character whatsoever by any other party, whether such waiver be
direct or implied, shall not be construed as a continuing waiver of, or consent
to, any subsequent breach of this Agreement on the part of the other
party.  In addition, no course of dealing
between the parties, nor any delay in exercising any rights or remedies
hereunder or otherwise, shall operate as a waiver of any of the rights or
remedies of the parties.

 

18.                               Binding Nature.  This Agreement shall inure to and
bind the heirs, devisees, executors, administrators, personal representatives,
successors, and assigns (as applicable) of the respective parties hereto.

 

19.                               Headings.  The headings contained in this Agreement are
for ease of reference only and shall not limit or otherwise affect the
interpretation of this Agreement

 

20.                               Entire Agreement.  This Agreement contains the entire integrated understanding of the
parties with respect to the subject matter of this Agreement and shall not be
modified other than by an instrument in writing signed by both Employer and
Employee.

 

21.                               Attorney’s Fees.  If a
civil action or other proceeding is brought to enforce this Agreement, the
prevailing party shall be entitled to recover reasonable attorney’s fees,
costs, and expenses incurred, in addition to any other relief to which such
party may be entitled.

 

22.                               Knowing and Voluntary
Execution.  Employee acknowledges that he has read this
Agreement carefully and fully understands the meaning of the terms of this
Agreement.  Employee acknowledges that he
has signed this Agreement voluntarily and of his own free will and that he is
knowingly and voluntarily releasing and waiving all Claim(s) that he has or may
have against Releasees.  Employee further acknowledges that he has been
advised, by this Agreement, to consult with an attorney of his choice prior to
signing this Agreement.  Each
party agrees that he or it shall be solely responsible for any attorney’s fees
incurred by that party in the negotiation and execution of this Agreement.

 

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  “EMPLOYEE”

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  DATED:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Brian Ferrand

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  “EMPLOYER”

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Merit Medical Systems, Inc.,

  	
   

  
	
   

  	
   

  	
   

  	
     a Utah corporation,

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  DATED:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Its:

  	
   

  	
   

  

 

8Exhibit
10.01

CALIFORNIA
COASTAL COMMUNITIES, INC.

 

AMENDED
AND RESTATED 

 

1993
STOCK OPTION/STOCK ISSUANCE PLAN

(AS
APPROVED BY THE BOARD OF DIRECTORS ON MARCH 4, 2004)

 

 

ARTICLE
ONE

GENERAL

 

I.     PURPOSE OF THE AMENDED AND
RESTATED PLAN

        A.    This
Amended and Restated 1993 Stock Option/Stock Issuance Plan (“Plan”) is intended
to promote the interests of California Coastal Communities, Inc., a
Delaware corporation (the “Corporation”), by providing (i) key employees
(including officers) of the Corporation (or its parent or subsidiary
corporations) who are responsible for the management, growth and financial
success of the Corporation (or its parent or subsidiary corporations), and
(ii) consultants and other independent contractors who provide valuable
services to the Corporation (or its parent or subsidiary corporations) 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).

        B.    The
Plan amends and restates the Corporation’s Amended and Restated 1993 Stock
Option/Stock Issuance Plan (the “1993 Plan”) which became effective immediately
upon adoption by the Board on November 29, 1993 and was approved by the
Corporation’s stockholders on May 20, 1994.

II.    DEFINITIONS

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

        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:

        a.     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) directly or indirectly acquires 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

        b.     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
(rounded up to the next whole number) 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.

 

        Common Stock:    shares of the
Corporation’s Common Stock, par value $.05 per share, on a post 1997 capital
stock combination and one for one hundred (1:100) reverse stock split basis.

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

        Committee:    the committee of
two (2) or more non-employee Board members appointed by the Board to
administer the Plan.

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

        a.     a
merger or consolidation in which the Corporation is not the surviving entity,
except for a transaction the principal purpose of which is to change the state
in which the Corporation is incorporated,

        b.     the
sale, transfer or other disposition of all or substantially all of the assets
of the Corporation in complete liquidation or dissolution of the Corporation,
or

        c.     any
reverse merger in which the Corporation is the surviving entity but 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 merger.

        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:

        a.     If
the Common Stock is not at the time listed or admitted to trading on any
national securities exchange but is traded on the Nasdaq National Market, the
Fair Market Value shall be the closing selling price per share of that security
on the date in question, as such price is reported by the National Association
of Securities Dealers through the Nasdaq National Market or any successor
system. If there is no reported closing selling price for the Common Stock on
the date in question, then the closing selling price per share of that security
on the last preceding date for which such quotation exists shall be
determinative of Fair Market Value.

        b.     If
the Common Stock is at the time listed or admitted to trading on any national
stock exchange, then the Fair Market Value shall be the closing selling price
per share of that security on the date in question on the exchange serving as
the primary market for the Common Stock, as such price is officially quoted in
the composite tape of transactions on such exchange. If there is no reported
sale of Common Stock on such exchange on the date in question, then the Fair
Market Value shall be the closing selling price per share of that security on
the exchange on the last preceding date for which such quotation exists.

        Hostile
Take-Over:    a
change in ownership of the Corporation effected through the following
transaction:

        a.     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) directly or indirectly acquires 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

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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, and

        b.     more
than fifty percent (50%) of the securities so acquired in such tender or
exchange offer are accepted from holders other than the officers and directors
of the Corporation subject to the short-swing profit restrictions of
Section 16 of the 1934 Act.

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

        1934 Act:    the Securities
and Exchange Act of 1934, as amended.

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

        Optionee:    any person to
whom an option is granted under the Discretionary Option Grant Program in
effect under the Plan.

        Permanent Disability
or Permanently Disabled:    the inability of the Optionee or the
Participant to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment expected to result in
death or to be of continuous duration of twelve (12) months or more.

        Plan
Administrator:    the
Committee in its capacity as the administrator of the Plan.

        Service:    the performance
of services on a periodic basis to the Corporation (or any parent or subsidiary
corporation) in the capacity of an Employee, a non-employee member of the board
of directors or an independent consultant or advisor, except to the extent
otherwise specifically provided in the applicable stock option or stock
issuance agreement.

        Take-Over Price:    the greater of (a) the Fair Market Value
per share of the Common Stock subject to the particular option surrendered to
the Corporation in connection with a Hostile Take-Over on the date such option
surrender is effected or (b) the highest reported price per share of that
security paid by the tender offeror in effecting such Hostile Take-Over.
However, if the surrendered option is an Incentive Option, the Take-Over Price
shall not exceed the clause (a) price per share.

        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 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
which begins with the Corporation shall be considered to be a subsidiary of the Corporation, provided
each such corporation in the unbroken chain (other than the last 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.

III.  STRUCTURE OF THE PLAN

        A.    Stock Programs.    The
Plan shall be divided into two (2) separate components: the Discretionary
Option Grant Program specified in Article Two and the Director Fee Program
specified in Article Three. 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

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accordance
with the provisions of Article Two. Under the Director Fee Program, each non-employee
Board member may, in accordance with the provisions of Article Three, elect to
apply all or any portion of his or her annual retainer fee to the acquisition
of unvested shares of Common Stock.

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

IV.    ADMINISTRATION OF THE PLAN

        A.    The
Discretionary Option Grant Program shall be administered by the Committee in
its capacity as Plan Administrator. No non-employee Board member shall be
eligible to serve on the Committee if such individual has, within the twelve (12)-month
period immediately preceding the date of his or her appointment to the
Committee, received an option grant or direct stock issuance under this Plan or
any other stock plan of the Corporation (or any parent or subsidiary
corporation), other than pursuant to the Director Fee Program.

        B.    Members
of the Committee shall serve for such period of time as the Board may determine
and shall be subject to removal by the Board at any time.

        C.    The
Committee as Plan Administrator shall have full power and authority (subject to
the express provisions of the Plan) to establish rules and regulations for the
proper administration of the Discretionary Option Grant Program and to make
such determinations under, and issue such interpretations of, the provisions of
such program and any outstanding option grants 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
Program or any outstanding option or unvested share issuance thereunder.

        D.    Administration
of the Director Fee Program shall be self-executing in accordance with the
express terms and conditions of Article Three and the Committee as Plan
Administrator shall exercise no discretionary functions with respect to option
grants or share issuances made pursuant to those programs.

V.     OPTION GRANTS AND STOCK
ISSUANCES

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

        —    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);

        —    members
of the Board or the members of the board of directors of any parent or
subsidiary corporation; and

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

        B.    Non-employee
Board members who serve as Plan Administrator shall not, during their period of service as such, be eligible to
participate in the Discretionary Option Grant Program or in any other stock
option, stock purchase, stock bonus or other stock plan of the Corporation (or
its parent or subsidiary corporations), other than the Director Fee Program, to
the extent they are eligible for participation in those latter programs in
accordance with the provisions of Articles Three.

        C.    The
Plan Administrator shall have full authority to determine which eligible
individuals are to receive option grants under the Discretionary Option Grant
Program, the number of shares to be

4

 

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 is to
remain outstanding.

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. Nine Hundred Nine Thousand Nine Hundred
and Eighty-Four (909,984) shares of Common Stock may be issued over the term of
the Plan, subject to adjustment from time to time in accordance with the
provisions of this Section VI. Such authorized share reserve is comprised
of the number of shares of Common Stock which remained available for issuance
under the 1993 Plan prior to this amendment, as reduced by this amendment.

        B.    In
no event shall there be issued over the remaining term of the Plan, from the
effective date of this amendment to the 1993 Plan until the termination of the
Plan pursuant to Article Four, Section IV, more than Nine Hundred Nine
Thousand Nine Hundred and Eighty-Four (909,984) shares in the aggregate of
Common Stock. The foregoing share limitations shall be subject to periodic
adjustment in accordance with the provisions of Section F of this
Article VI.

        C.    Should
one or more outstanding options under this Plan expire or terminate for any
reason prior to exercise in full then the shares subject to the portion of each
option not so exercised shall be available for subsequent issuance under the
Plan. Shares subject to any option or portion thereof surrendered in accordance
with Section IV of Article Two and all share issuances under the Plan,
whether or not the shares are subsequently repurchased by the Corporation
pursuant to its repurchase rights under the Plan, shall reduce on a share-for-share
basis 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 (as the
case may be) available for issuance under the Plan shall be reduced by the
gross number of shares for which the option is exercised or which vest under
the share issuance, and not by the net number of shares of Common Stock actually
issued to the holder of such option or share issuance.

        D.    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 in the aggregate for which any one individual participating in
the Plan may be granted stock options, separately exercisable stock
appreciation rights and direct share issuances over the term of the Plan,
(iii) the number and/or class of securities for which share issuances are
subsequently to be made to non-employee Board members under the Director Fee
Program, and (iv) the number and/or class of securities and price per
share in effect under each option outstanding under the Discretionary Option
Grant. 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.

5

 

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 any option granted under this Article Two shall be fixed by the Plan
Administrator at the time of the grant, but in no event shall such exercise
price be less than one hundred percent (100%) of the Fair Market Value per
share of that security on the grant date.

      2.   The exercise price shall become immediately
due upon exercise of the option and, subject to the provisions of
Section I of Article Four and the instrument evidencing the grant, shall
be payable in one of the following alternative forms specified below:

             a.     full
payment in cash or check made payable to the Corporation’s order;

             b.     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;

             c.     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

             d.     to
the extent the option is exercised for vested shares, full payment through a
broker-dealer sale and remittance procedure pursuant to which the Optionee
shall concurrently 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 plus all applicable Federal,
state and local income and employment taxes required to be withheld by the
Corporation in directly to such brokerage firm in order to complete the sale
transaction.

        Except
to the extent the sale and remittance procedure is utilized in connection with
the exercise of the option for vested shares, payment of the exercise price for
the purchased shares must accompany the exercise notice.

        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, the
option, together with any stock appreciation rights pertaining to such option,
shall be exercisable

6

 

only by
the Optionee and shall not be assignable or transferable by the Optionee except
for a transfer of the option effected by will or by the laws of descent and
distribution following the Optionee’s death.

        C.    Termination of Service.

1.     The following provisions shall govern the exercise period
applicable to any outstanding options under this Article Two held by the
Optionee at the time of cessation of Service or death.

—    Should
an Optionee cease Service for any reason (including death or Permanent
Disability) while holding one or more outstanding options under this Article
Two, then none of those options shall (except to the extent otherwise provided
pursuant to subparagraph 3 below) remain exercisable for more than a thirty-six
(36)-month period (or such shorter period determined by the Plan Administrator
and set forth in the instrument evidencing the grant) measured from the date of
such cessation of Service.

—    Any
option held by the Optionee under this Article Two and exercisable in whole or
in part on the date of his or her death may be subsequently exercised by the
personal representative of the Optionee’s estate or by the person or persons to
whom the option is transferred pursuant to the Optionee’s will or in accordance
with the laws of descent and distribution. The right to exercise such option,
however, shall lapse upon the earlier
of (i) the third anniversary of the date of the Optionee’s death (or such
shorter period determined by the Plan Administrator and set forth in the
instrument evidencing the grant) or (ii) the specified expiration date of
the option term. Accordingly, upon the occurrence of the earlier event, the
option shall terminate and cease to be outstanding.

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

—    Under
no circumstances shall any such option be exercisable after the specified
expiration date of the option term.

—    Should
(i) the Optionee’s Service be terminated for misconduct (including, but
not limited to, any act of dishonesty, willful misconduct, fraud or
embezzlement) or (ii) the Optionee make any unauthorized use or disclosure
of confidential information or trade secrets of the Corporation or its parent
or subsidiary corporations, then in any such event all outstanding options held
by the Optionee under this Article Two shall terminate immediately and cease to
be outstanding.

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, 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 subparagraph 1 above, 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 of vested shares for which the
option would otherwise have become exercisable had such cessation of Service
not occurred.

7

3.     The Plan Administrator shall also have full power and authority,
exercisable either at the time the option is granted or at any time while the
option remains outstanding, 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 subparagraph 1 above to such greater
period of time as the Plan Administrator shall deem appropriate. In no event,
however, shall such option be exercisable after the specified expiration date
of the option term.

        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 and paid the
exercise price for the purchased shares.

        E.    Repurchase Rights.    The
shares of Common Stock acquired upon the exercise of any Article Two option
grant may be subject to repurchase by the Corporation in accordance with the
following provisions:

        —    The
Plan Administrator shall have the discretion to authorize the issuance of
unvested shares of Common Stock under this Article Two. Should the Optionee
cease Service while holding such unvested shares, the Corporation shall have
the right to repurchase any or all of those unvested shares at the exercise price
paid per share. 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 instrument evidencing such
repurchase right.

        —    All
of the Corporation’s outstanding repurchase rights under this Article Two shall
automatically terminate, and all shares subject to such terminated rights shall
immediately vest in full, upon the occurrence of a Corporate Transaction,
except to the extent: (i) any such repurchase right is expressly assigned
to the successor corporation (or parent thereof) in connection with the
Corporate Transaction or (ii) such termination is precluded by other
limitations imposed by the Plan Administrator at the time the repurchase right
is issued.

        —    The
Plan Administrator shall have the discretionary authority, exercisable either
before or after the Optionee’s cessation of Service, to cancel the Corporation’s
outstanding repurchase rights with respect to one or more shares purchased or
purchasable by the Optionee under this Discretionary Option Grant Program and
thereby accelerate the vesting of such shares in whole or in part at any time.

II.    INCENTIVE OPTIONS

        The
terms and conditions specified below shall be applicable to all Incentive
Options granted under this Article Two. Incentive Options may only be granted
to individuals who are Employees of the Corporation. Options which are
specifically designated as Non-Statutory Options when issued under the Plan
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 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)

8

 

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 the owner of stock (as
determined under Section. 424(d) of the Code) possessing ten percent (10%) or
more of the total combined voting power of all classes of stock of the
Corporation or any one of its parent or subsidiary corporations, then the
exercise price per share of the Common Stock subject to that option shall not
be less than one hundred and ten percent (110%) of the Fair Market Value per
share of that security on the grant date, and the option term shall not exceed
five (5) years, measured from the grant date.

        Except
as modified by the preceding provisions of this Section II, the provisions
of Articles One, Two and Four of the Plan shall apply to all Incentive Options
granted hereunder.

III.  CORPORATE TRANSACTIONS/CHANGES IN CONTROL

        A.    In
the event of any Corporate Transaction, each option which is at the time
outstanding under this Article Two shall automatically accelerate 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 such option and may be exercised for all or any
portion of such shares. However, an outstanding option under this Article Two
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 option spread existing 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.    Immediately
following the consummation of the Corporate Transaction, all outstanding
options under this Article Two shall terminate and cease to be outstanding,
except to the extent assumed by the successor corporation or its parent
company.

        C.    Each
outstanding option under this Article Two which is assumed in connection with
the Corporate Transaction or is otherwise to continue in effect shall be
appropriately adjusted, immediately after such Corporate Transaction, to apply
and pertain to the number and class of securities which would have been issued
to the option holder, in consummation of such Corporate Transaction, had such
person exercised the option immediately prior to such Corporate Transaction.
Appropriate adjustments shall also be made to the exercise price payable per
share, provided the aggregate
exercise price payable for such securities shall remain the same. In addition,
the class and number of securities available for issuance under the Plan on
both an aggregate and per participant basis following the consummation of the
Corporate Transaction shall be appropriately adjusted.

        D.    The
Plan Administrator shall have the discretion, exercisable either at the time
the option is granted or at any time while the option remains outstanding, to
provide (upon such terms as it may deem appropriate) for both (i) the
automatic acceleration of one or more outstanding options granted under this
Article Two Plan which are assumed or replaced in a Corporate Transaction and
do not otherwise accelerate at that time and (ii) the immediate
termination of one or more of the Corporation’s outstanding repurchase rights
which are assigned in connection with such Corporate Transaction and do not
otherwise terminate at that time, in the event the Optionee’s Service should

9

 

subsequently
terminate within a designated period following the effective date of such
Corporate Transaction.

        E.    The
Plan Administrator shall have the discretionary authority, exercisable either
in advance of any actually-anticipated Change in Control or at the time of an
actual Change in Control, to provide for the automatic acceleration of one or
more outstanding options under this Article Two (and the immediate termination
of one or more of the Corporation’s outstanding repurchase rights under this
Article Two) upon the occurrence of the Change in Control. The Plan
Administrator shall also have full power and authority to condition any such
option acceleration (and the termination of any outstanding repurchase rights)
upon the subsequent termination of the Optionee’s Service within a specified
period following the Change in Control.

        F.     Any
options accelerated in connection with the Change in Control shall remain fully
exercisable until the expiration or sooner termination of the option term.

        G.    The
grant of options under this Article Two 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.

        H.    The
exercisability as incentive stock options under the Federal tax laws of any
options accelerated under this Section III in connection with a Corporate
Transaction or Change in Control shall remain subject to the dollar limitation
of Section II of this Article Two. To the extent such dollar limitation is
exceeded, the accelerated option shall be exercisable as a non-statutory option
under the Federal tax laws.

IV.    STOCK APPRECIATION RIGHTS.

        A.    Provided
and only if the Plan Administrator determines in its discretion to implement
the stock appreciation right provisions of this Section IV, one or more
Optionees may be granted the right, exercisable upon such terms and conditions
as the Plan Administrator may establish, to surrender all or part of an
unexercised option under this Article Two in exchange for a distribution from
the Corporation in an amount equal to the excess of (i) the Fair Market Value (on
the option surrender date) of the number of shares of Common Stock in which the
Optionee is at the time vested under the surrendered option (or surrendered
portion thereof) over (ii) the aggregate exercise price payable for such
vested shares.

        B.    No
surrender of an option shall be effective hereunder unless it is approved by
the Plan Administrator. If the surrender is so approved, then the distribution
to which the Optionee shall accordingly become entitled under this Section IV
may be made in shares of Common Stock valued at Fair Market Value on the option
surrender date, in cash, or partly in shares and partly in cash, as the Plan
Administrator shall in its sole discretion deem appropriate.

        C.    If
the surrender of an option is rejected by the Plan Administrator, then the
Optionee shall retain whatever rights the Optionee had under the surrendered
option (or surrendered portion thereof) on the option surrender date and may
exercise such rights at any time prior to the later
of (i) five (5) business days after the receipt of the rejection
notice or (ii) the last day on which the option is otherwise exercisable
in accordance with the terms of the instrument evidencing such option, but in
no event may such rights be exercised more than ten (10) years after the
date of the option grant.

        D.    One
or more officers of the Corporation subject to the short-swing profit
restrictions of the Federal securities laws may, in the Plan Administrator’s
sole discretion, be granted limited stock appreciation rights with respect to
their outstanding options under the Plan. Upon the occurrence of a Hostile
Take-Over, the officer shall have a thirty (30)-day period in which he or she
may surrender any outstanding options with such a limited stock appreciation
right in effect for at least six (6) months to the Corporation, to the
extent such option is at the time exercisable for fully-vested shares of Common

10

 

Stock.
The officer shall in return be entitled to a cash distribution from the
Corporation in an amount equal to the excess of (i) the Take-Over Price of
the vested shares of Common Stock at the time subject to each surrendered
option (or surrendered portion of such option) over (ii) the aggregate
exercise price payable for such shares. The cash distribution payable upon such
option surrender shall be made within five (5) days following the date the
option is surrendered to the Corporation. Neither the approval of the Plan
Administrator nor the consent of the Board shall be required in connection with
such option surrender and cash distribution. Any unsurrendered portion of the
option shall continue to remain outstanding and become exercisable in
accordance with the terms of the instrument evidencing such grant.

        E.    The
shares of Common Stock subject to any option surrendered for an appreciation
distribution pursuant to this Section IV shall not be available for
subsequent issuance under the Plan.

ARTICLE THREE

DIRECTOR FEE PROGRAM

I.     ELIGIBILITY

        Subject
to the availability of shares of Common Stock under the Plan pursuant to
Article One, Section VI of the Plan, each individual serving as a non-employee
Board member shall be eligible to apply all or any portion of the annual
retainer fee otherwise payable to him or her in cash to the acquisition of
unvested shares of Common Stock under this Article Three Program.

II.    ELECTION PROCEDURE

        A.    Filing.    The
non-employee Board member must make the stock-in-lieu-of-fee election prior to
the start of the calendar year for which the election is to be effective. The
first calendar year for which any such election may be filed shall be the 1994
calendar year. The election must be filed with the Plan Administrator on the
appropriate form provided for this purpose, and the election, once filed, shall
be irrevocable. The election for any upcoming calendar year may be filed at any
time prior to the start of that year, but in no event later than
December 31 of the immediately preceding calendar year. The non-employee
Board member may file a standing election to be in effect for two or more
consecutive calendar years or to remain in effect indefinitely until revoked by
written instrument filed with the Plan Administrator at least six
(6) months prior to the start of the first calendar year for which such
standing election is no longer to remain in effect.

        B.    Election Form.    On
the election form, the non-employee Board member must indicate the percentage
or dollar amount of his or her annual retainer fee to be applied to the
acquisition of unvested shares under this Article Three Program to be issued in
lieu of such fee. The non-employee Board member may elect to apply a portion of
the fee to the acquisition of Common Stock.

III.  SHARE ISSUANCE

        A.    Issue Date.    On
the first trading day in January of the calendar year for which the election is
effective, the portion of the retainer fee subject to such election shall
automatically be applied to the acquisition of the selected shares of Common
Stock by dividing the elected dollar amount by the Fair Market Value per share
of the Common Stock on that trading day. The number of issuable shares shall be
rounded down to the next whole share, and the issued shares shall be held in
escrow by the Secretary of the Corporation until the non-employee Board member
vests in those shares. The non-employee Board member shall have full
stockholder rights, including voting, dividend and liquidation rights, with
respect to all issued shares held in escrow on his or her behalf, but such
shares shall not be assignable or transferable while they remain unvested.

11

        B.    Vesting.    Upon
completion of each calendar quarter of Board service during the year for which
the election is in effect, the non-employee Board member shall vest in
one-fourth of the issued shares, and the stock certificate for those shares
shall be released from escrow. Immediate vesting in all the issued shares shall
occur in the event (i) the non-employee Board member should die or become
Permanently Disabled during his or her period of Board service or
(ii) there should occur a Corporate Transaction or Change in Control while
such individual remains in Board service. Should such individual cease Board
service prior to vesting in one or more quarterly installments of the issued
shares, then those unvested shares shall immediately be surrendered to the
Corporation for cancellation, and the non-employee Board member shall not be
entitled to any cash payment or other consideration from the Corporation with respect
to the cancelled shares and shall have no further stockholder rights with
respect to such shares.

IV.    AMENDMENT OF THE DIRECTOR FEE
PROGRAM

        A.    Limited Amendments.    The
provisions of this Director Fee Program, together with the unvested share
issuances outstanding under this Article Three, may not be amended at intervals
more frequently than once every six (6) months, other than to the extent
necessary to comply with applicable Federal income tax laws and regulations.

ARTICLE FOUR

MISCELLANEOUS

I.     LOANS OR INSTALLMENT PAYMENTS

        A.    The
Plan Administrator may, in its discretion, assist any Optionee (including an
officer of the Corporation) in the exercise of one or more options granted to
such Optionee under the Discretionary Option Grant Program, including the
satisfaction of any Federal, state and local income and employment tax
obligations arising therefrom, by (i) authorizing the extension of a loan
from the Corporation to such Optionee or (ii) permitting the Optionee to pay
the exercise price for the purchased shares in installments over a period of
years. The terms of any loan or installment method of payment (including the
interest rate and terms of repayment) shall be upon such terms as the Plan
Administrator specifies in the applicable option agreement or otherwise deems
appropriate under the circumstances. Loans or installment payments may be
authorized with or without security or collateral. However, the maximum credit
available to the Optionee may not exceed the exercise price of the acquired
shares (less the par value of such shares) plus any Federal, state and local
income and employment tax liability incurred by the Optionee in connection with
the acquisition of such shares.

        B.    The
Plan Administrator may, in its absolute discretion, determine that one or more
loans extended under this financial assistance program shall be subject to
forgiveness by the Corporation in whole or in part upon such terms and
conditions as the Plan Administrator may deem appropriate.

II.    AMENDMENT OF THE PLAN AND AWARDS

        A.    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,
(i) no such amendment or modification shall adversely affect rights and
obligations with respect to options at the time outstanding under the Plan,
unless the Optionee consents to such amendment, and (ii) any amendment
made to the Director Fee Program (or any stock options or share issuances outstanding
thereunder) shall be in compliance with the limitation of Section IV of
Article Four. In addition, the Board may not, without the approval of the
Corporation’s stockholders, amend the Plan to (i) materially increase the
maximum number of shares issuable under the Plan, or increase the maximum
number of shares of Common Stock for which any one participant may receive
stock options, separately exercisable stock appreciation rights and direct
share issuances over the term of the Plan, except for permissible adjustments
under

12

Section
VI.F of Article One, (ii) materially modify the eligibility requirements
for plan participation or (iii) materially increase the benefits accruing
to plan participants.

        B.    Options
to purchase shares of Common Stock may be granted under the Discretionary
Option Grant Program, which are in excess of the number of shares then
available for issuance under the Plan, provided any excess shares actually
issued under the Discretionary Option Grant Program are held in escrow until
stockholder approval is obtained for a sufficient increase in the number of
shares available for issuance under the Plan. If such stockholder approval is
not obtained within twelve (12) months after the date the first such
excess option grants are made, then (i) any unexercised excess options
shall terminate and cease to be exercisable and (ii) the Corporation shall
promptly refund the purchase price paid for any excess shares actually issued
under the Plan and held in escrow, together with interest (at the applicable
Short Term Federal Rate) for the period the shares were held in escrow.

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 and employment tax withholding requirements.

        B.    The
Plan Administrator may, in its discretion and in accordance with the provisions
of this Section III of Article Four and such supplemental rules as the
Plan Administrator may from time to time adopt (including the applicable
safe-harbor provisions of Securities and Exchange Commission Rule 16b-3),
provide any or all holders of Non-Statutory Options or unvested shares (other
than the unvested shares issued under the Director Fee Program) with the right
to use shares of the Corporation’s 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:

        Stock
Withholding:    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 the 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.

        Stock
Delivery:    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 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
1993 Plan originally became effective immediately upon adoption by the Board on
November 29, 1993. The Plan, as amended hereby, will become effective
immediately upon approval by the Company’s stockholders at the Annual Meeting
on May 27, 2004. Stock options may be made under the Plan, as amended
hereby, immediately thereafter upon the effective date of this amendment.

        B.    The
Plan shall terminate upon the earlier
of (i) December 31, 2013 or (ii) the date on which all shares
available for issuance under the Plan shall have been issued or cancelled
pursuant to the exercise, surrender or cash-out of the options granted under
the Plan or the issuance of shares (whether vested or unvested) under the
Director Fee Program. If the date of termination is determined

13

 

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
issuances.

V.     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

VI.   REGULATORY APPROVALS

        A.    The
implementation of the Plan, the granting of any option under the Plan, the
issuance of any shares under the Director Fee Program and the issuance of
Common Stock upon the exercise or surrender 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.

        B.    No
shares of Common Stock or other assets shall be issued or delivered under this
Plan unless and until there shall have been compliance with all applicable
requirements of Federal, and state securities laws, including the filing and
effectiveness of the Form S-8 registration statement for the shares of
Common Stock issuable under the Plan, and all applicable listing requirements
of any securities exchange on which the Common Stock is then listed for trading.

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 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 Service
at any time and for any reason, with or without cause.

VIII.   MISCELLANEOUS PROVISIONS

        A.    Except
to the extent 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 Optionees and any holders of unvested shares under the Plan,
the legal representatives of their respective estates, their respective heirs
or legatees and their permitted assignees.

        IN
WITNESS WHEREOF, the undersigned being the duly authorized and elected
President and Chief Executive Officer of the Corporation has executed this
Amended and Restated 1993 Stock Option/Stock Issuance Plan as of May 27,
2004. 

	
   

  	
   

  	
  /s/ Raymond J. Pacini

  	
   

  
	
   

  	
   

  	
  Raymond J. Pacini

  President and Chief Executive Officer

  

14

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