Document:

Exhibit 10.1

 

SECOND AMENDMENT TO

CASCADE NATURAL GAS CORPORATION

1998 STOCK INCENTIVE PLAN

This
Second Amendment to the 1998 Stock Incentive Plan (“Second Amendment”) is dated
February 17, 2006, and amends that certain 1998 Stock Incentive Plan (the
“Plan”) of Cascade Natural Gas Corporation (the “Corporation”). Capitalized
terms not otherwise defined in this Second Amendment shall have the meanings
set forth in the Plan.

AMENDMENTS

Pursuant
to its authority under Article 10 of the Plan, the Board of Directors of
the Corporation hereby amends the Plan as follows:

1.      Purpose.   Section 1.2 of the Plan
is amended in its entirety to read as follows:

“1.2   Purpose.   The purpose of the Plan is to promote and advance the
interests of shareholders by enabling Corporation to attract, retain, and
reward key employees and directors of Corporation and its subsidiaries. It is
also intended to strengthen the mutuality of interests between Corporation’s
shareholders and its employees and directors. The Plan is designed to serve
these purposes by offering stock options and other equity-based incentive
awards, thereby providing a proprietary interest in pursuing the long-term
growth, profitability, and financial success of Corporation and increasing
shareholder value.”

2.      Definition of Participant.   The
definition of “Participant” in Section 2.1 of the Plan is amended in its
entirety to read as follows:

“Participant” means an employee or director of
Corporation or a Subsidiary, who is granted an Award under the Plan.”

3.      Eligibility.   Article 5 of the Plan
is amended in its entirety to read as follows:

“ARTICLE 5

ELIGIBILITY

Officers,
other key employees, and directors of Corporation and its Subsidiaries
(including employees who may also be directors of Corporation or a Subsidiary) who,
in the Committee’s judgment, are or will be contributors to the long-term
success of Corporation will be eligible to receive Awards under the Plan.”

4.      Types of Awards.   Section 6.1 of
the Plan is amended in its entirety to read as follows:

“ARTICLE 6

AWARDS

6.1   Types of Awards.   The types of Awards that may be granted under the
Plan are:

(a)    Options governed by Exhibit A of the
Plan;

(b)    Stock Appreciation Rights governed by
Exhibit B of the Plan;

(c)    Restricted Awards governed by Exhibit C
of the Plan;

(d)    Performance Awards governed by
Exhibit D of the Plan;

(e)    Other Stock-Based Awards or
combination awards governed by Exhibit E of the Plan; and

(f)     Stock awards to directors under the
Director Stock Award Plan (as amended from time to time) set forth in
Exhibit F of the Plan; provided, however, that such Awards to directors
shall not be subject to the provisions of Sections 6.2 through 6.8 of this
Plan, and such Awards to directors shall be 

 

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governed
by the provisions of the Director Stock Award Plan set forth in Exhibit F
which shall take precedence over any conflicting provisions of this Plan.

In
the discretion of the Committee, any Award may be granted alone, in addition
to, or in tandem with other Awards under the Plan.”

5.      Exhibit F.   The 2000 Directors
Stock Award Plan (as awarded) is incorporated as Exhibit F of the Plan.

6.      Approvals.   This
Second Amendment was duly approved by the Board of Directors of the Corporation
on November 14, 2005, and was approved by the Shareholders of the
Corporation on February 17, 2006.

7.      Other Provisions.   Except as expressly
amended by this Amendment, the Plan shall remain in full force and effect.

 

2Exhibit 10.2

 

FIRST
AMENDMENT TO

CASCADE NATURAL GAS CORPORATION

2000 DIRECTOR STOCK AWARD PLAN

This
First Amendment to the 2000 Director Stock Award Plan (“First Amendment”) is
dated February 17, 2006, and amends that certain 2000 Director Stock Award
Plan (the “Plan”) of Cascade Natural Gas Corporation (the “Corporation”).
Capitalized terms not otherwise defined in this First Amendment shall have the
meanings set forth in the Plan.

AMENDMENTS

Pursuant
to its authority under Section 9.2 of the Plan, the Board of Directors of
the Corporation hereby amends the Plan as follows:

1.      Grant of Stock Awards.   Section 6.1
of the Plan is amended in its entirety to read as follows:

“6.1   Grant
of Stock Awards.   As of each April 24 in 2000 and
subsequent years, Cascade automatically shall grant to each person who served
as a Director during the period since the preceding April 24 a Stock
Award. The Stock Award to be granted in the years 2000 - 2005 shall be 500
Shares. The Stock Award to be granted in 2006 and subsequent years shall be
1,000 Shares. The number of Shares granted each year shall be subject to any
adjustment required or permitted pursuant to Article 8. Each such grant
shall occur automatically during the term of this Plan without further action
of the Board.”

2.      Approvals.   This
First Amendment was duly approved by the Board of Directors of the Corporation
on November 14, 2005, and was approved by the Shareholders of the
Corporation on February 17, 2006.

3.      Other Provisions.   Except as expressly
amended by this First Amendment, the Plan shall remain in full force and
effect.Exhibit 10.3

 

Tapestry Pharmaceuticals, Inc.

2004 Equity Incentive Plan

 

Adopted: April 19, 2004

Approved By Stockholders: July 6, 2004

As Amended: June 10, 2005

Termination Date: April 19, 2014

 

1.             Purposes.

 

(a)           Eligible
Stock Award Recipients. The persons eligible to receive Stock Awards are
Employees and Consultants.

 

(b)           Available
Stock Awards. The purpose of the Plan is to provide a means by which
eligible recipients of Stock Awards may be given an opportunity to benefit from
increases in value of the Common Stock through the granting of the following
Stock Awards: (i) Incentive Stock Options, (ii) Nonstatutory Stock
Options, (iii) Stock Purchase Awards, (iii) Stock Bonus Awards, (iv) Stock
Appreciation Rights, (v) Stock Unit Awards and (vi) Other Stock
Awards.

 

(c)           General
Purpose. The Company, by means of the Plan, seeks to retain the services of
the group of persons eligible to receive Stock Awards, to secure and retain the
services of new members of this group and to provide incentives for such persons
to exert maximum efforts for the success of the Company and its Affiliates.

 

2.             Definitions.

 

(a)           “Affiliate”
means any parent corporation or subsidiary corporation of the Company, whether
now or hereafter existing, as those terms are defined in Sections 424(e) and
(f), respectively, of the Code.

 

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

 

(c)           “Capitalization
Adjustment” has the meaning ascribed to that term in Section 11(a).

 

(d)           “Change in Control”
means the occurrence, in a single transaction or in a series of related
transactions, of any one or more of the following events:

 

(i)            any
Exchange Act Person becomes the Owner, directly or indirectly, of securities of
the Company representing more than fifty percent (50%) of the combined voting
power of the Company’s then outstanding securities other than by virtue of a
merger, consolidation or similar transaction;

 

(ii)           there
is consummated a merger, consolidation or similar transaction involving
(directly or indirectly) the Company if, immediately after the consummation of
such merger, consolidation or similar transaction, the stockholders of the
Company immediately prior thereto do not Own, directly or indirectly, either (A) outstanding
voting securities representing more than fifty percent (50%) of the combined
outstanding voting power of the surviving Entity in such merger, consolidation
or similar transaction or (B) more than fifty percent (50%) of the
combined outstanding voting power of the parent of the surviving Entity in such
merger, consolidation or similar transaction;

 

(iii)         the
stockholders of the Company approve or the Board approves a plan of complete
dissolution or liquidation of the Company, or a complete dissolution or
liquidation of the Company shall otherwise occur;

 

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(iv)          there
is consummated a sale, lease, license or other disposition of all or
substantially all of the consolidated assets of the Company and its
Subsidiaries, other than a sale, lease, license or other disposition of all or
substantially all of the consolidated assets of the Company and its
Subsidiaries to an Entity, more than fifty percent (50%) of the combined voting
power of the voting securities of which are Owned by stockholders of the
Company in substantially the same proportion as their Ownership of the Company
immediately prior to such sale, lease, license or other disposition; or

 

(v)            individuals
who, on the date this Plan is adopted by the Board, are members of the Board
(the “Incumbent Board”) cease for any reason to constitute at least a majority
of the members of the Board; (provided,
however, that if the appointment or election (or nomination for
election) of any new Board member was approved or recommended by a majority
vote of the members of the Incumbent Board then still in office, such new
member shall, for purposes of this Plan, be considered as a member of the
Incumbent Board).

 

The term Change in Control shall not include a sale of assets, merger
or other transaction effected exclusively for the purpose of changing the
domicile of the Company.

 

Notwithstanding the foregoing or any other provision of this Plan, the
definition of Change in Control (or any analogous term) in an individual
written agreement between the Company or any Affiliate and the Participant
shall supersede the foregoing definition with respect to Stock Awards subject
to such agreement (it being understood, however, that if no definition of
Change in Control or any analogous term is set forth in such an individual
written agreement, the foregoing definition shall apply).

 

(e)           “Code” means
the Internal Revenue Code of 1986, as amended.

 

(f)            “Committee”
means a committee of one (1) or more members of the Board appointed by the
Board in accordance with Section 3(c).

 

(g)           “Common Stock”
means the common stock of the Company.

 

(h)           “Company” means
Tapestry Pharmaceuticals, Inc., a Delaware corporation.

 

(i)            “Consultant”
means any person other than a Director or Employee (i) who acts as a
consultant or advisor to the Company or an Affiliate and who is compensated for
such services or (ii) who serves as a member of the Board of Directors of
an Affiliate and who is compensated for such services.

 

(j)            “Continuous Service”
means that the Participant’s service with the Company or an Affiliate, whether
as an Employee, Director or Consultant, is not interrupted or terminated. A
change in the capacity in which the Participant renders service to the Company
or an Affiliate as an Employee, Consultant or Director or a change in the
entity for which the Participant renders such service, provided that there is
no interruption or termination of the Participant’s service with the Company or
an Affiliate, shall not terminate a Participant’s Continuous Service. For
example, a change in status from an employee of the Company to a consultant to
an Affiliate or to a Director shall not constitute an interruption of
Continuous Service. The Board or the chief executive officer of the Company, in
that party’s sole discretion, may determine whether Continuous Service shall be
considered interrupted in the case of any leave of absence approved by that
party, including sick leave, military leave or any other personal leave.
Notwithstanding the foregoing, a leave of absence shall be treated as
Continuous Service for purposes of vesting in a Stock Award only to such extent
as may be provided in the Company’s leave of absence policy or in the written
terms of the Participant’s leave of absence.

 

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(k)           “Corporate Transaction”
means the occurrence, in a single transaction or in a series of related
transactions, of any one or more of the following events:

 

(i)            a
sale or other disposition of all or substantially all, as determined by the
Board in its discretion, of the consolidated assets of the Company and its
Subsidiaries;

 

(ii)           a
sale or other disposition of at least ninety percent (90%) of the outstanding
securities of the Company;

 

(iii)         a
merger, consolidation or similar transaction following which the Company is not
the surviving corporation; or

 

(iv)          a
merger, consolidation or similar transaction following which the Company is the
surviving corporation but the shares of Common Stock outstanding immediately
preceding the merger, consolidation or similar transaction are converted or
exchanged by virtue of the merger, consolidation or similar transaction into
other property, whether in the form of securities, cash or otherwise.

 

(l)            “Covered Employee”
means a covered employee as defined in Section 162(m) of the Code.

 

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

 

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

 

(o)           “Employee”
means any person employed by the Company or an Affiliate. However, service as a
Director, or payment of a fee for such service, shall not cause a Director to
be considered an Employee for purposes of the Plan.

 

(p)           “Entity” means
a corporation, partnership or other entity.

 

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

 

(r)           “Exchange Act Person”
means any natural person, Entity or “group” (within the meaning of Section 13(d) or
14(d) of the Exchange Act), except that “Exchange Act Person” shall not
include (A) the Company or any Subsidiary of the Company, (B) any
employee benefit plan of the Company or any Subsidiary of the Company or any
trustee or other fiduciary holding securities under an employee benefit plan of
the Company or any Subsidiary of the Company, (C) an underwriter
temporarily holding securities pursuant to an offering of such securities, or (D) an
Entity Owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their Ownership of stock of the Company.

 

(s)           “Fair Market Value”
means, as of any date, the value of the Common Stock determined as follows:

 

(i)            If
the Common Stock is listed on any established stock exchange or traded on the
Nasdaq National Market or the Nasdaq SmallCap Market, the Fair Market Value of
a share of Common Stock, unless otherwise determined by the Board, shall be the
closing sales price for such stock (or the closing bid, if no sales were
reported) as quoted on such exchange or market (or the exchange or market with
the greatest volume of trading in the Common Stock) on the day of determination
(or if such day of determination does not fall on a market trading day, then
the last market trading day prior to the day of determination), as reported in The Wall Street Journal or such other
source as the Board deems reliable.

 

(ii)           In
the absence of such markets for the Common Stock, the Fair Market Value shall
be determined by the Board in good faith.

 

(t)            “Incentive Stock
Option” means an Option intended to qualify as an incentive stock
option within the meaning of Section 422 of the Code and the regulations
promulgated thereunder.

 

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(u)           “Non-Employee Director”
means a Director who either (i) is not currently an employee or officer of
the Company or an Affiliate, does not receive compensation, either directly or
indirectly, from the Company or an Affiliate, for services rendered as a
consultant or in any capacity other than as a Director (except for an amount as
to which disclosure would not be required under Item 404(a) of Regulation S-K
promulgated pursuant to the Securities Act (“Regulation S-K”)), does not
possess an interest in any other transaction for which disclosure would be
required under Item 404(a) of Regulation S-K, and is not engaged in a
business relationship for which disclosure would be required pursuant to Item
404(b) of Regulation S-K; or (ii) is otherwise considered a “non-employee
director” for purposes of Rule 16b-3.

 

(v)            “Nonstatutory Stock
Option” means an Option not intended to qualify as an Incentive Stock
Option.

 

(w)           “Officer” means
a person who is an officer of the Company within the meaning of Section 16
of the Exchange Act and the rules and regulations promulgated thereunder.

 

(x)           “Option” means
an Incentive Stock Option or a Nonstatutory Stock Option granted pursuant to
the Plan.

 

(y)           “Option Agreement”
means a written agreement between the Company and an Optionholder evidencing
the terms and conditions of an individual Option grant. Each Option Agreement
shall be subject to the terms and conditions of the Plan.

 

(z)           “Optionholder”
means a person to whom an Option is granted pursuant to the Plan or, if
applicable, such other person who holds an outstanding Option.

 

(aa)         “Other Stock Award” means an award
based in whole or in part by reference to the Common Stock which is granted
pursuant to the terms and conditions of Section 7(e).

 

(bb)         “Other Stock Award Agreement” means a
written agreement between the Company and a holder of an Other Stock Award
evidencing the terms and conditions of an Other Stock Award grant. Each Other
Stock Award Agreement shall be subject to the terms and conditions of the Plan.

 

(cc)         “Outside Director” means a Director
who either (i) is not a current employee of the Company or an “affiliated
corporation” (within the meaning of Treasury Regulations promulgated under Section 162(m)
of the Code), is not a former employee of the Company or an “affiliated
corporation” who receives compensation for prior services (other than benefits
under a tax-qualified retirement plan) during the taxable year, has not been an
officer of the Company or an “affiliated corporation”, and does not receive
remuneration from the Company or an “affiliated corporation,” either directly
or indirectly, in any capacity other than as a Director or (ii) is
otherwise considered an “outside director” for purposes of Section 162(m)
of the Code.

 

(dd)         “Own,” “Owned,” “Owner,” “Ownership” A
person or Entity shall be deemed to “Own,” to have “Owned,” to be the “Owner”
of, or to have acquired “Ownership” of securities if such person or Entity,
directly or indirectly, through any contract, arrangement, understanding,
relationship or otherwise, has or shares voting power, which includes the power
to vote or to direct the voting, with respect to such securities.

 

(ee)         “Participant” means a person to whom a
Stock Award is granted pursuant to the Plan or, if applicable, such other
person who holds an outstanding Stock Award.

 

(ff)           “Plan” means this Tapestry
Pharmaceuticals, Inc. 2004 Equity Incentive Plan, as amended from time to
time.

 

(gg)         “Rule 16b-3” means Rule 16b-3
promulgated under the Exchange Act or any successor to Rule 16b-3, as in
effect from time to time.

 

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

 

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(ii)           “Stock Appreciation Right” means a
right to receive the appreciation on Common Stock that is granted pursuant to
the terms and conditions of Section 7(c).

 

(jj)           “Stock Appreciation Right Agreement”
means a written agreement between the Company and a holder of a Stock
Appreciation Right evidencing the terms and conditions of a Stock Appreciation
Right grant. Each Stock Appreciation Right Agreement shall be subject to the
terms and conditions of the Plan.

 

(kk)        “Stock Award” means any right granted
under the Plan, including an Option, a Stock Purchase Award, a Stock Bonus
Award, a Stock Appreciation Right, a Stock Unit Award or any Other Stock Award.

 

(ll)           “Stock Award Agreement” means a
written agreement between the Company and a Participant evidencing the terms
and conditions of an individual Stock Award grant. Each Stock Award Agreement
shall be subject to the terms and conditions of the Plan.

 

(mm)       “Stock Bonus Award” means an award of
shares of Common Stock which is granted pursuant to the terms and conditions of
Section 7(b).

 

(nn)         “Stock Bonus Award Agreement” means a
written agreement between the Company and a holder of a Stock Bonus Award
evidencing the terms and conditions of a Stock Bonus Award grant. Each Stock
Bonus Award Agreement shall be subject to the terms and conditions of the Plan.

 

(oo)         “Stock Purchase Award” means an award
of shares of Common Stock which is granted pursuant to the terms and conditions
of Section 7(a).

 

(pp)         “Stock Purchase Award Agreement” means
a written agreement between the Company and a holder of a Stock Purchase Award
evidencing the terms and conditions of a Stock Purchase Award grant. Each Stock
Purchase Award Agreement shall be subject to the terms and conditions of the
Plan.

 

(qq)         “Stock Unit Award” means a right to
receive shares of Common Stock which is granted pursuant to the terms and
conditions of Section 7(c).

 

(rr)         “Stock Unit Award Agreement” means a
written agreement between the Company and a holder of a Stock Unit Award
evidencing the terms and conditions of a Stock Unit Award grant. Each Stock
Unit Award Agreement shall be subject to the terms and conditions of the Plan.

 

(ss)         “Subsidiary” means, with respect to
the Company, (i) any corporation of which more than fifty percent (50%) of
the outstanding capital stock having ordinary voting power to elect a majority
of the board of directors of such corporation (irrespective of whether, at the
time, stock of any other class or classes of such corporation shall have or
might have voting power by reason of the happening of any contingency) is at
the time, directly or indirectly, Owned by the Company, and (ii) any
partnership in which the Company has a direct or indirect interest (whether in
the form of voting or participation in profits or capital contribution) of more
than fifty percent (50%).

 

(tt)           “Ten Percent Stockholder” means a
person who Owns (or is deemed to Own pursuant to Section 424(d) of
the Code) stock possessing more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company or of any of its
Affiliates.

 

3.             Administration.

 

(a)           Administration
by Board. The Board shall administer the Plan unless and until the Board
delegates administration of the Plan to a Committee, as provided in Section 3(c).

 

5

 

(b)           Powers
of Board. The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:

 

(i)            To
determine from time to time which of the persons eligible under the Plan shall
be granted Stock Awards; when and how each Stock Award shall be granted; what
type or combination of types of Stock Award shall be granted; the provisions of
each Stock Award granted (which need not be identical), including the time or
times when a person shall be permitted to receive Common Stock pursuant to a
Stock Award; and the number of shares of Common Stock with respect to which a
Stock Award shall be granted to each such person.

 

(ii)           To
construe and interpret the Plan and Stock Awards granted under it, and to
establish, amend and revoke rules and regulations for its administration.
The Board, in the exercise of this power, may correct any defect, omission or
inconsistency in the Plan or in any Stock Award Agreement, in a manner and to
the extent it shall deem necessary or expedient to make the Plan fully
effective.

 

(iii)         To
amend the Plan or a Stock Award as provided in Section 12.

 

(iv)          To
terminate or suspend the Plan as provided in Section 13.

 

(v)            Generally,
to exercise such powers and to perform such acts as the Board deems necessary
or expedient to promote the best interests of the Company and that are not in
conflict with the provisions of the Plan.

 

(c)           Delegation
to Committee.

 

(i)            General.
The Board may delegate some or all of the administration of the Plan to a
Committee or Committees of one (1) or more members of the Board, and the
term “Committee” shall apply to any person or persons to whom such authority
has been delegated. If administration is delegated to a Committee, the
Committee shall have, in connection with the administration of the Plan, the
powers theretofore possessed by the Board that has been delegated to the
Committee, including the power to delegate to a subcommittee any of the
administrative powers the Committee is authorized to exercise (and references
in this Plan to the Board shall thereafter be to the Committee or
subcommittee), subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board. The
Board may retain the authority to concurrently administer the Plan with the
Committee and may, at any time, revest in the Board any or all of the powers
previously delegated.

 

(ii)           Section 162(m)
and Rule 16b-3 Compliance. In the discretion of the Board, the
Committee may consist solely of two or more Outside Directors, in accordance
with Section 162(m) of the Code, and /or solely of two or more
Non-Employee Directors, in accordance with Rule 16b-3. In addition, the
Board or the Committee, in their discretion, may (1) delegate to a
committee of one or more members of the Board who need not be Outside Directors
the authority to grant Stock Awards to eligible persons who are either (a) not
then Covered Employees and are not expected to be Covered Employees at the time
of recognition of income resulting from such Stock Award, or (b) not
persons with respect to whom the Company wishes to comply with Section 162(m)
of the Code, and/or (2) delegate to a committee of one (1) or more
members of the Board who need not be Non-Employee Directors the authority to
grant Stock Awards to eligible persons who are not then subject to Section 16
of the Exchange Act.

 

(d)           Delegation
to an Officer. The Board may delegate to one or more Officers of the
Company the authority to do one or both of the following (i) designate
Employees of the Company or any of its Subsidiaries who are not Officers to be
recipients of Stock Awards and (ii) determine the number of shares of
Common Stock to be subject to such Stock Awards granted to such Employees of
the Company; provided, however,
that the Board resolutions regarding such delegation shall specify the total
number of shares of Common Stock that may be subject to the Stock Awards
granted by such Officer 

 

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and that such Officer may not grant a Stock Award to himself or
herself. Notwithstanding the foregoing, the Board may not delegate authority to
an Officer to determine the Fair Market Value of the Common Stock.

 

(e)           Effect
of Board’s Decision. All determinations, interpretations and constructions
made by the Board in good faith shall not be subject to review by any person
and shall be final, binding and conclusive on all persons.

 

4.             Shares
Subject to the Plan.

 

(a)           Share
Reserve. Subject to the provisions of Section 11(a) relating to
Capitalization Adjustments, the Common Stock that may be issued pursuant to
Stock Awards shall not exceed in the aggregate four million (4,000,000)
shares of Common Stock; provided, however,
that subject to the provisions of Section 11(a) relating to
Capitalization Adjustments, the aggregate maximum number of shares of Common
Stock that may be issued as Stock Purchase Awards, Stock Bonus Awards, Stock
Unit Awards or Other Stock Awards shall be five hundred thousand (500,000)
shares of Common Stock.

 

(b)           Reversion
of Shares to the Share Reserve. If any Stock Award shall for any reason
expire or otherwise terminate, in whole or in part, without having been
exercised in full, or if any shares of Common Stock issued to a Participant
pursuant to a Stock Award are forfeited back to or repurchased by the Company,
including, but not limited to, any repurchase or forfeiture caused by the
failure to meet a contingency or condition required for the vesting of such
shares, then the shares of Common Stock not acquired under such Stock Award
shall revert to and again become available for issuance under the Plan; provided, however, that subject to the
provisions of Section 11(a) relating to Capitalization Adjustments,
the aggregate maximum number of shares of Common Stock that may be issued as
Incentive Stock Options shall be four million (4,000,000) shares of Common
Stock. If any shares subject to a Stock Award are not delivered to a
Participant because such shares are withheld for the payment of taxes or the
Stock Award is exercised through a reduction of shares subject to the Stock
Award (i.e., “net exercised”),
then the number of shares that are not delivered shall revert to and again
become available for issuance under the Plan. If the exercise price of any
Stock Award is satisfied by tendering shares of Common Stock held by the
Participant (either by actual deliver or attestation), then the number of such
tendered shares shall revert to and again become available for issuance under
the Plan.

 

(c)           Source
of Shares. The shares of Common Stock subject to the Plan may be unissued
shares or reacquired shares, bought on the market or otherwise.

 

5.             Eligibility.

 

(a)           Eligibility
for Specific Stock Awards. Incentive Stock Options may be granted only to
Employees. Stock Awards other than Incentive Stock Options may be granted to
Employees and Consultants.

 

(b)           Ten
Percent Stockholders. A Ten Percent Stockholder shall not be granted an
Incentive Stock Option unless the exercise price of such Option is at least one
hundred ten percent (110%) of the Fair Market Value of the Common Stock on the
date of grant and the Option is not exercisable after the expiration of five (5) years
from the date of grant.

 

(c)           Section 162(m)
Limitation on Annual Grants. Subject to the provisions of Section 11(a) relating
to Capitalization Adjustments, no Employee shall be eligible to be granted
Options or Stock Appreciation Rights covering more than one million
(1,000,000) shares of Common Stock during any calendar year.

 

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(d)           Consultants.
A Consultant shall not be eligible for the grant of a Stock Award if, at the
time of grant, a Form S-8 Registration Statement under the Securities Act
(“Form S-8”) is not available to register either the offer or the sale of
the Company’s securities to such Consultant because of the nature of the
services that the Consultant is providing to the Company, because the
Consultant is not a natural person, or because of any other rule governing
the use of Form S-8.

 

6.             Option
Provisions.

 

Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. All Options shall be separately
designated Incentive Stock Options or Nonstatutory Stock Options at the time of
grant, and, if certificates are issued, a separate certificate or certificates
shall be issued for shares of Common Stock purchased on exercise of each type
of Option. The provisions of separate Options need not be identical, but each
Option shall include (through incorporation of provisions hereof by reference
in the Option or otherwise) the substance of each of the following provisions:

 

(a)           Term.
The Board shall determine the term of any Option granted under the Plan; provided that, subject to the provisions
of Section 5(b) regarding Ten Percent Stockholders, no Incentive
Stock Option shall be exercisable after the expiration of ten (10) years
from the date on which it was granted.

 

(b)           Exercise
Price of an Incentive Stock Option. Subject to the provisions of Section 5(b) regarding
Ten Percent Stockholders, the exercise price of each Incentive Stock Option
shall be not less than one hundred percent (100%) of the Fair Market Value of
the Common Stock subject to the Option on the date the Option is granted.
Notwithstanding the foregoing, an Incentive Stock Option may be granted with an
exercise price lower than that set forth in the preceding sentence if such
Option is granted pursuant to an assumption or substitution for another option
in a manner satisfying the provisions of Section 424(a) of the Code.

 

(c)           Exercise
Price of a Nonstatutory Stock Option. The exercise price of each
Nonstatutory Stock Option shall be not less than one-hundred percent (100%) of
the Fair Market Value of the Common Stock subject to the Option on the date the
Option is granted. Notwithstanding the foregoing, a Nonstatutory Stock Option
may be granted with an exercise price lower than that set forth in the
preceding sentence if such Option is granted pursuant to an assumption or
substitution for another option in a manner satisfying the provisions of Section 424(a) of
the Code.

 

(d)           Consideration.
The purchase price of Common Stock acquired pursuant to an Option shall be
paid, to the extent permitted by applicable statutes and regulations, either (i) in
cash or check at the time the Option is exercised or (ii) at the
discretion of the Board at the time of the grant of the Option (or subsequently
in the case of a Nonstatutory Stock Option) (1) by delivery to the Company
of other Common Stock at the time the Option is exercised, (2) according
to a deferred payment or other similar arrangement with the Optionholder or (3) by
a “net exercise” of the Option (as further described below) (4) pursuant
to a program developed under Regulation T as promulgated by the Federal
Reserve Board that, prior to the issuance of Common Stock, results in either
the receipt of cash (or check) by the Company or the receipt of irrevocable
instructions to pay the aggregate exercise price to the Company from the sales
proceeds or (5) in any other form of legal consideration that may be
acceptable to the Board. Unless otherwise specifically provided in the Option,
the purchase price of Common Stock acquired pursuant to an Option that is paid
by delivery to the Company of other Common Stock acquired, directly or
indirectly from the Company, shall be paid only by shares of the Common Stock
of the Company that have been held for more than six (6) months (or such
longer or shorter period of time required to avoid a charge to earnings for
financial accounting purposes). At any time that the Company is incorporated in
Delaware, payment of the Common Stock’s “par value,” as defined in the Delaware
General Corporation Law, shall not be made by deferred payment.

 

8

 

In the case of any deferred payment arrangement, interest shall be
compounded at least annually and shall be charged at the minimum rate of
interest necessary to avoid (1) the treatment as interest, under any
applicable provisions of the Code, of any amounts other than amounts stated to
be interest under the deferred payment arrangement and (2) the treatment
of the Option as a variable award for financial accounting purposes.

 

In the case of a “net exercise” of an Option, the Company will not
require a payment of the exercise price of the Option from the Participant but
will reduce the number of shares of Common Stock issued upon the exercise by
the largest number of whole shares that has a Fair Market Value that does not
exceed the aggregate exercise price. With respect to any remaining balance of
the aggregate exercise price, the Company shall accept a cash payment from the
Participant. Shares of Common Stock will no longer be outstanding under an
Option (and therefore not thereafter be exercisable) following the exercise of
such Option to the extent of (i) shares used to pay the exercise price of
an Option under a “net exercise” (ii) shares actually delivered to the
Participant as a result of such exercise, and (iii) shares withheld for
purposes of tax withholding.

 

(e)           Transferability
of an Incentive Stock Option. An Incentive Stock Option shall not be
transferable except by will or by the laws of descent and distribution and
shall be exercisable during the lifetime of the Optionholder only by the
Optionholder. Notwithstanding the foregoing, the Optionholder may, by
delivering written notice to the Company, in a form provided by or otherwise
satisfactory to the Company, designate a third party who, in the event of the
death of the Optionholder, shall thereafter be entitled to exercise the Option.

 

(f)            Transferability
of a Nonstatutory Stock Option. A Nonstatutory Stock Option shall be
transferable to the extent provided in the Option Agreement. If the
Nonstatutory Stock Option does not provide for transferability, then the
Nonstatutory Stock Option shall not be transferable except by will or by the
laws of descent and distribution and shall be exercisable during the lifetime
of the Optionholder only by the Optionholder. Notwithstanding the foregoing,
the Optionholder may, by delivering written notice to the Company, in a form
provided by or otherwise satisfactory to the Company, designate a third party
who, in the event of the death of the Optionholder, shall thereafter be
entitled to exercise the Option.

 

(g)           Vesting
Generally. The total number of shares of Common Stock subject to an Option
may, but need not, vest and therefore become exercisable in periodic
installments that may, but need not, be equal. The Option may be subject to
such other terms and conditions on the time or times when it may be exercised
(which may be based on performance or other criteria) as the Board may deem
appropriate. The vesting provisions of individual Options may vary. The
provisions of this Section 6(g) are subject to any Option provisions
governing the minimum number of shares of Common Stock as to which an Option
may be exercised.

 

(h)           Termination
of Continuous Service. In the event that an Optionholder’s Continuous
Service terminates (other than upon the Optionholder’s death or Disability),
the Optionholder may exercise his or her Option (to the extent that the
Optionholder was entitled to exercise such Option as of the date of
termination) but only within such period of time ending on the earlier of (i) the
expiration of the term of the Option as set forth in the Option Agreement or (ii) the
date one hundred eighty (180) days (ninety (90) days in the case of
Incentive Stock Options) following the termination of the Optionholder’s
Continuous Service (or such longer or shorter period specified in the Option
Agreement). If, after termination of Continuous Service, the Optionholder does
not exercise his or her Option within the time specified herein or in the
Option Agreement (as applicable), the Option shall terminate.

 

(i)            Extension
of Termination Date. An Optionholder’s Option Agreement may (but need not)
provide that if the exercise of the Option following the termination of the
Optionholder’s Continuous Service (other than upon the Optionholder’s death or
Disability) would be prohibited at any time solely 

 

9

 

because the issuance of shares of Common Stock would violate the
registration requirements under the Securities Act, then the Option shall
terminate on the earlier of (i) the expiration of the term of the Option
set forth in Section 6(a) or (ii) the expiration of a period of
three (3) months after the termination of the Optionholder’s Continuous
Service during which the exercise of the Option would not be in violation of
such registration requirements.

 

(j)            Disability
of Optionholder. In the event that an Optionholder’s Continuous Service
terminates as a result of the Optionholder’s Disability, the Optionholder may exercise
his or her Option (to the extent that the Optionholder was entitled to exercise
such Option as of the date of termination of Continuous Service), but only
within such period of time ending on the earlier of (i) the expiration of
the term of the Option as set forth in the Option Agreement or (ii) the
date twelve (12) months following such termination (or such longer or
shorter period specified in the Option Agreement). If, after termination of
Continuous Service, the Optionholder does not exercise his or her Option within
the time specified herein or in the Option Agreement (as applicable), the
Option shall terminate.

 

(k)           Death
of Optionholder. In the event that (i) an Optionholder’s Continuous
Service terminates as a result of the Optionholder’s death or (ii) the
Optionholder dies within the period (if any) specified in the Option Agreement
after the termination of the Optionholder’s Continuous Service, then the Option
may be exercised (to the extent the Optionholder was entitled to exercise such
Option as of the date of death) by the Optionholder’s estate, by a person who
acquired the right to exercise the Option by bequest or inheritance or by a
person designated to exercise the option upon the Optionholder’s death pursuant
to Section 6(e) or 6(f), but only within the period ending on the
earlier of (i) the expiration of the term of such Option as set forth in
the Option Agreement or (ii) the date eighteen (18) months following
the date of death (or such longer or shorter period specified in the Option
Agreement). If, after the Optionholder’s death, the Option is not exercised
within the time specified herein or in the Option Agreement (as applicable),
the Option shall terminate.

 

(l)            Early
Exercise. The Option may, but need not, include a provision whereby the
Optionholder may elect at any time before the Optionholder’s Continuous Service
terminates to exercise the Option as to any part or all of the shares of Common
Stock subject to the Option prior to the full vesting of the Option. Any
unvested shares of Common Stock so purchased may be subject to a repurchase
option in favor of the Company or to any other restriction the Board determines
to be appropriate. The Company shall not be required to exercise its repurchase
option until at least six (6) months (or such longer or shorter period of
time required to avoid a charge to earnings for financial accounting purposes)
have elapsed following exercise of the Option unless the Board otherwise
specifically provides in the Option.

 

7.             Provisions
of Stock Awards other than Options.

 

(a)           Stock
Purchase Awards. Each Stock Purchase Award Agreement shall be in such form
and shall contain such terms and conditions as the Board shall deem
appropriate. At the Board’s election, shares of Common Stock may be (i) held
in book entry form subject to the Company’s instructions until any restrictions
relating to the Stock Purchase Award lapse; or (ii) evidenced by a
certificate, which certificate shall be held in such form and manner as
determined by the Board. The terms and conditions of Stock Purchase Award
Agreements may change from time to time, and the terms and conditions of
separate Stock Purchase Award Agreements need not be identical, provided, however, that each Stock
Purchase Award Agreement shall include (through incorporation of the provisions
hereof by reference in the agreement or otherwise) the substance of each of the
following provisions:

 

(i)            Purchase
Price. At the time of the grant of a Stock Purchase Award, the Board will
determine the price to be paid by the Participant for each share subject to the
Stock Purchase Award. To the extent required by applicable law, the price to be
paid by the Participant for each share of the Stock Purchase Award will not be
less than the par value of a share of Common Stock.

 

10

 

(ii)           Consideration.
At the time of the grant of a Stock Purchase Award, the Board will determine
the consideration permissible for the payment of the purchase price of the
Stock Purchase Award. The purchase price of Common Stock acquired pursuant to
the Stock Purchase Award shall be paid either: (i) in cash at the time of
purchase or (ii) in any other form of legal consideration that may be
acceptable to the Board and permissible under the Delaware General Corporation
Law.

 

(iii)         Vesting. Shares of Common Stock acquired
under a Stock Purchase Award may be subject to a share repurchase right or
option in favor of the Company in accordance with a vesting schedule to be
determined by the Board.

 

(iv)          Termination
of Participant’s Continuous Service. In the event that a Participant’s
Continuous Service terminates, the Company shall have the right, but not the
obligation, to repurchase or otherwise reacquire, any or all of the shares of
Common Stock held by the Participant that have not vested as of the date of
termination under the terms of the Stock Purchase Award Agreement. At the Board’s
election, the repurchase right may be at the least of: (i) the Fair Market
Value on the relevant date or (ii) the Participant’s original cost. The
Company shall not be required to exercise its repurchase option until at least
six (6) months (or such longer or shorter period of time required to avoid
a charge to earnings for financial accounting purposes) have elapsed following
the purchase of the restricted stock unless otherwise determined by the Board
or provided in the Stock Purchase Award Agreement.

 

(v)            Transferability.
Rights to purchase or receive shares of Common Stock granted under a Stock
Purchase Award shall be transferable by the Participant only upon such terms
and conditions as are set forth in the Stock Purchase Award Agreement, as the
Board shall determine in its sole discretion, and so long as Common Stock
awarded under the Stock Purchase Award remains subject to the terms of the
Stock Purchase Award Agreement.

 

(b)           Stock
Bonus Awards. Each Stock Bonus Award Agreement shall be in such form and
shall contain such terms and conditions as the Board shall deem appropriate. At
the Board’s election, shares of Common Stock may be (i) held in book entry
form subject to the Company’s instructions until any restrictions relating to
the Stock Bonus Award lapse; or (ii) evidenced by a certificate, which
certificate shall be held in such form and manner as determined by the Board.
The terms and conditions of Stock Bonus Award Agreements may change from time
to time, and the terms and conditions of separate Stock Bonus Award Agreements
need not be identical, but each Stock Bonus Award Agreement shall include
(through incorporation of provisions hereof by reference in the agreement or
otherwise) the substance of each of the following provisions:

 

(i)            Consideration.
A Stock Bonus Award may be awarded in consideration for past services actually
rendered to the Company or an Affiliate.

 

(ii)           Vesting.
Shares of Common Stock awarded under the Stock Bonus Award Agreement may be
subject to forfeiture to the Company in accordance with a vesting schedule to
be determined by the Board.

 

(iii)         Termination of Participant’s Continuous
Service. In the event a Participant’s Continuous Service terminates, the
Company may receive via a forfeiture condition, any or all of the shares of
Common Stock held by the Participant which have not vested as of the date of
termination of Continuous Service under the terms of the Stock Bonus Award
Agreement.

 

(iv)          Transferability.
Rights to acquire shares of Common Stock under the Stock Bonus Award Agreement
shall be transferable by the Participant only upon such terms and conditions as
are set forth in the Stock Bonus Award Agreement, as the Board shall determine
in its sole discretion, so long as Common Stock awarded under the Stock Bonus
Award Agreement remains subject to the terms of the Stock Bonus Award
Agreement.

 

11

 

(c)           Stock
Unit Awards. Each Stock Unit Award Agreement shall be in such form and
shall contain such terms and conditions as the Board shall deem appropriate.
The terms and conditions of Stock Unit Award Agreements may change from time to
time, and the terms and conditions of separate Stock Unit Award Agreements need
not be identical, provided, however,
that each Stock Unit Award Agreement shall include (through incorporation of
the provisions hereof by reference in the agreement or otherwise) the substance
of each of the following provisions:

 

(i)            Consideration.
At the time of grant of a Stock Unit Award, the Board will determine the
consideration, if any, to be paid by the Participant upon delivery of each
share of Common Stock subject to the Stock Unit Award. To the extent required
by applicable law, the consideration to be paid by the Participant for each
share of Common Stock subject to a Stock Unit Award will not be less than the
par value of a share of Common Stock. The consideration may be paid in any form
permitted under applicable law.

 

(ii)           Vesting.
At the time of the grant of a Stock Unit Award, the Board may impose such
restrictions or conditions to the vesting of the Stock Unit Award as it, in its
sole discretion, deems appropriate.

 

(iii)         Payment. A Stock Unit Award may be settled
by the delivery of shares of Common Stock, their cash equivalent, any
combination thereof or in any other form of consideration as determined by the
Board and contained in the Stock Unit Award Agreement.

 

(iv)          Additional
Restrictions. At the time of the grant of a Stock Unit Award, the Board, as
it deems appropriate, may impose such restrictions or conditions that delay the
delivery of the shares of Common Stock (or their cash equivalent) subject to a
Stock Unit Award after the vesting of such Stock Unit Award.

 

(v)            Dividend
Equivalents. Dividend equivalents may be credited in respect of shares of
Common Stock covered by a Stock Unit Award, as determined by the Board and
contained in the Stock Unit Award Agreement. At the sole discretion of the
Board, such dividend equivalents may be converted into additional shares of
Common Stock covered by the Stock Unit Award in such manner as determined by
the Board. Any additional shares covered by the Stock Unit Award credited by
reason of such dividend equivalents will be subject to all the terms and
conditions of the underlying Stock Unit Award Agreement to which they relate.

 

(vi)          Termination
of Participant’s Continuous Service. Except as otherwise provided in the
applicable Stock Unit Award Agreement, such portion of the Stock Unit Award
that has not vested will be forfeited upon the Participant’s termination of
Continuous Service.

 

(d)           Stock
Appreciation Rights. Each Stock Appreciation Right Agreement shall be in
such form and shall contain such terms and conditions as the Board shall deem
appropriate. The terms and conditions of Stock Appreciation Right Agreements
may change from time to time, and the terms and conditions of separate Stock
Appreciation Right Agreements need not be identical, provided, however, that each Stock Appreciation Right
Agreement shall include (through incorporation of the provisions hereof by
reference in the agreement or otherwise) the substance of each of the following
provisions:

 

(i)            Strike
Price and Calculation of Appreciation. Each Stock Appreciation Right will
be denominated in share of Common Stock equivalents. The appreciation
distribution payable on the exercise of a Stock Appreciation Right will be not
greater than an amount equal to the excess of (A) the aggregate Fair
Market Value (on the date of the exercise of the Stock Appreciation Right) of a
number of shares of Common Stock equal to the number of share of Common Stock
equivalents in which the Participant is vested under such Stock Appreciation
Right, and with respect to which the Participant is exercising the Stock
Appreciation Right on such date, over (B) an amount (the strike price)
that will be determined by the Board at the time of grant of the Stock
Appreciation Right.

 

12

 

(ii)           Vesting.
At the time of the grant of a Stock Appreciation Right, the Board may impose
such restrictions or conditions to the vesting of such Stock Appreciation Right
as it, in its sole discretion, deems appropriate.

 

(iii)         Exercise. To exercise any outstanding
Stock Appreciation Right, the Participant must provide written notice of
exercise to the Company in compliance with the provisions of the Stock
Appreciation Right Agreement evidencing such Stock Appreciation Right.

 

(iv)          Payment.
The appreciation distribution in respect to a Stock Appreciation Right may be
paid in Common Stock, in cash or check, in any combination of the foregoing or
in any other form of consideration as determined by the Board and contained in
the Stock Appreciation Right Agreement evidencing such Stock Appreciation
Right.

 

(v)            Termination
of Continuous Service. In the event that a Participant’s Continuous Service
terminates, the Participant may exercise his or her Stock Appreciation Right
(to the extent that the Participant was entitled to exercise such Stock
Appreciation Right as of the date of termination) but only within such period
of time ending on the earlier of (i) the date three (3) months
following the termination of the Participant’s Continuous Service (or such
longer or shorter period specified in the Stock Appreciation Right Agreement)
or (ii) the expiration of the term of the Stock Appreciation Right as set
forth in the Stock Appreciation Right Agreement. If, after termination, the
Participant does not exercise his or her Stock Appreciation Right within the
time specified herein or in the Stock Appreciation Right Agreement (as
applicable), the Stock Appreciation Right shall terminate.

 

(e)           Other
Stock Awards. Other forms of Stock Awards valued in whole or in part by
reference to, or otherwise based on, Common Stock may be granted either alone
or in addition to Stock Awards provided for under Section 6 and the
preceding provisions of this Section 7. Subject to the provisions of the
Plan, the Board shall have sole and complete authority to determine the persons
to whom and the time or times at which such Other Stock Awards will be granted,
the number of shares of Common Stock (or the cash equivalent thereof) to be
granted pursuant to such Awards and all other terms and conditions of such
Awards.

 

8.             Covenants
of the Company.

 

(a)           Availability
of Shares. During the terms of the Stock Awards, the Company shall keep
available at all times the number of shares of Common Stock required to satisfy
such Stock Awards.

 

(b)           Securities
Law Compliance. The Company shall seek to obtain from each regulatory
commission or agency having jurisdiction over the Plan such authority as may be
required to grant Stock Awards and to issue and sell shares of Common Stock
upon exercise of the Stock Awards; provided,
however, that this undertaking shall not require the Company to
register under the Securities Act the Plan, any Stock Award or any Common Stock
issued or issuable pursuant to any such Stock Award. If, after reasonable
efforts, the Company is unable to obtain from any such regulatory commission or
agency the authority which counsel for the Company deems necessary for the
lawful issuance and sale of Common Stock under the Plan, the Company shall be
relieved from any liability for failure to issue and sell Common Stock upon
exercise of such Stock Awards unless and until such authority is obtained.

 

9.             Use
of Proceeds from Stock.

 

Proceeds from the sale of Common Stock pursuant to Stock Awards shall constitute
general funds of the Company.

 

13

 

10.          Miscellaneous.

 

(a)           Acceleration
of Exercisability and Vesting. The Board shall have the power to accelerate
the time at which a Stock Award may first be exercised or the time during which
a Stock Award or any part thereof will vest in accordance with the Plan,
notwithstanding the provisions in the Stock Award stating the time at which it
may first be exercised or the time during which it will vest.

 

(b)           Stockholder
Rights. No Participant shall be deemed to be the holder of, or to have any
of the rights of a holder with respect to, any shares of Common Stock subject
to such Stock Award unless and until such Participant has satisfied all
requirements for exercise of the Stock Award pursuant to its terms.

 

(c)           No
Employment or other Service Rights. Nothing in the Plan, any Stock Award
Agreement or any other instrument executed thereunder or any Stock Award
granted pursuant thereto shall confer upon any Participant any right to
continue to serve the Company or an Affiliate in the capacity in effect at the
time the Stock Award was granted or shall affect the right of the Company or an
Affiliate to terminate (i) the employment of an Employee with or without
notice and with or without cause, (ii) the service of a Consultant
pursuant to the terms of such Consultant’s agreement with the Company or an
Affiliate or (iii) the service of a Director pursuant to the Bylaws of the
Company or an Affiliate, and any applicable provisions of the corporate law of
the state in which the Company or the Affiliate is incorporated, as the case
may be.

 

(d)           Incentive
Stock Option $100,000 Limitation. To the extent that the aggregate Fair
Market Value (determined at the time of grant) of Common Stock with respect to
which Incentive Stock Options are exercisable for the first time by any
Optionholder during any calendar year (under all plans of the Company and its
Affiliates) exceeds one hundred thousand dollars ($100,000), the Options or portions
thereof that exceed such limit (according to the order in which they were
granted) shall be treated as Nonstatutory Stock Options, notwithstanding any
contrary provision of the applicable Option Agreement.

 

(e)           Investment
Assurances. The Company may require a Participant, as a condition of
exercising or acquiring Common Stock under any Stock Award, (i) to give
written assurances satisfactory to the Company as to the Participant’s
knowledge and experience in financial and business matters and/or to employ a
purchaser representative reasonably satisfactory to the Company who is
knowledgeable and experienced in financial and business matters and that he or
she is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the Stock Award; and (ii) to
give written assurances satisfactory to the Company stating that the
Participant is acquiring Common Stock subject to the Stock Award for the
Participant’s own account and not with any present intention of selling or
otherwise distributing the Common Stock. The foregoing requirements, and any
assurances given pursuant to such requirements, shall be inoperative if (1) the
issuance of the shares of Common Stock upon the exercise or acquisition of
Common Stock under the Stock Award has been registered under a then currently
effective registration statement under the Securities Act or (2) as to any
particular requirement, a determination is made by counsel for the Company that
such requirement need not be met in the circumstances under the then applicable
securities laws. The Company may, upon advice of counsel to the Company, place
legends on stock certificates issued under the Plan as such counsel deems
necessary or appropriate in order to comply with applicable securities laws,
including, but not limited to, legends restricting the transfer of the Common
Stock.

 

(f)            Withholding
Obligations. To the extent provided by the terms of a Stock Award
Agreement, the Company may, in its sole discretion, satisfy any federal, state
or local tax withholding obligation relating to a Stock Award by any of the
following means (in addition to the Company’s right to withhold from any
compensation paid to the Participant by the Company) or by a combination of
such means: (i) causing the Participant to tender a cash payment; (ii) withholding
shares of Common Stock 

 

14

 

from the shares of Common Stock issued or otherwise issuable to the
Participant in connection with the Stock Award; or (iii) via such other
method as may be set forth in the Stock Award Agreement.

 

11.          Adjustments
upon Changes in Stock.

 

(a)           Capitalization
Adjustments. If any change is made in, or other event occurs with respect
to, the Common Stock subject to the Plan or subject to any Stock Award without
the receipt of consideration by the Company (through merger, consolidation,
reorganization, recapitalization, reincorporation, stock dividend, dividend in
property other than cash, stock split, liquidating dividend, combination of
shares, exchange of shares, change in corporate structure or other transaction
not involving the receipt of consideration by the Company (each a “Capitalization
Adjustment”), the Plan will be appropriately adjusted in the class(es) and
maximum number of securities subject to the Plan pursuant to Sections 4(a) and
4(b) and the maximum number of securities subject to award to any person
pursuant to Section 5(c), and the outstanding Stock Awards will be
appropriately adjusted in the class(es) and number of securities and price per
share of Common Stock subject to such outstanding Stock Awards. The Board shall
make such adjustments, and its determination shall be final, binding and
conclusive. (Notwithstanding the foregoing, the conversion of any convertible
securities of the Company shall not be treated as a transaction “without
receipt of consideration” by the Company.)

 

(b)           Dissolution
or Liquidation. In the event of a dissolution or liquidation of the
Company, then all outstanding Stock Awards shall terminate immediately prior to
the completion of such dissolution or liquidation.

 

(c)           Corporate
Transaction. In the event of a Corporate Transaction, any surviving
corporation or acquiring corporation may (but need not) assume or continue any
or all Stock Awards outstanding under the Plan or may (but need not) substitute
similar stock awards for Stock Awards outstanding under the Plan (including
awards to acquire the same consideration paid to the stockholders of the
Company, as the case may be, pursuant to the Corporate Transaction), and any
reacquisition or repurchase rights held by the Company in respect of Common
Stock issued pursuant to Stock Awards may be assigned by the Company to the
successor of the Company (or the successor’s parent company), if any, in
connection with such Corporate Transaction. In the event that any surviving
corporation or acquiring corporation does not assume or continue all such
outstanding Stock Awards or substitute similar stock awards for all such
outstanding Stock Awards, then with respect to Stock Awards that have been not
assumed, continued or substituted and that are held by Participants whose
Continuous Service has not terminated prior to the effective time of the
Corporate Transaction, the vesting of such Stock Awards (and, if applicable,
the time at which such Stock Awards may be exercised) shall (contingent upon
the effectiveness of the Corporate Transaction) be accelerated in full to a
date prior to the effective time of such Corporate Transaction as the Board
shall determine (or, if the Board shall not determine such a date, to the date
that is five (5) days prior to the effective time of the Corporate
Transaction), and such Stock Awards shall terminate if not exercised (if
applicable) at or prior to such effective time, and any reacquisition or
repurchase rights held by the Company with respect to such Stock Awards shall
(contingent upon the effectiveness of the Corporate Transaction) lapse. With
respect to any other Stock Awards outstanding under the Plan that have not been
assumed, continued or substituted, the vesting of such Stock Awards (and, if
applicable, the time at which such Stock Award may be exercised) shall not be
accelerated, unless otherwise provided in a written agreement between the
Company or any Affiliate and the holder of such Stock Award, and such Stock
Awards shall terminate if not exercised (if applicable) prior to the effective
time of the Corporate Transaction.

 

(d)           Change
in Control. A Stock Award may be subject to additional acceleration of vesting
and exercisability upon or after a Change of Control as may be provided in the
Stock Award Agreement for such Stock Award or as may be provided in any other
written agreement between the Company or any Affiliate and the Participant, but
in the absence of such provision, no such acceleration shall occur.

 

15

 

12.          Amendment
of the Plan and Stock Awards.

 

(a)           Amendment
of Plan. Subject to the limitations, if any of applicable law, the Board at
any time, and from time to time, may amend the Plan. However, except as
provided in Section 11(a) relating to Capitalization Adjustments, no
amendment shall be effective unless approved by the stockholders of the Company
to the extent stockholder approval is necessary to satisfy applicable law or
any securities exchange listing requirements.

 

(b)           Stockholder
Approval. The Board, in its sole discretion, may submit any other amendment
to the Plan for stockholder approval, including, but not limited to, amendments
to the Plan intended to satisfy the requirements of Section 162(m) of the
Code and the regulations thereunder regarding the exclusion of performance-based
compensation from the limit on corporate deductibility of compensation paid to
Covered Employees.

 

(c)           Contemplated
Amendments. It is expressly contemplated that the Board may amend the Plan
in any respect the Board deems necessary or advisable to provide eligible
Employees with the maximum benefits provided or to be provided under the
provisions of the Code and the regulations promulgated thereunder relating to
Incentive Stock Options and /or to bring the Plan and/or Incentive Stock
Options granted under it into compliance therewith.

 

(d)           No
Impairment of Rights. Rights under any Stock Award granted before amendment
of the Plan shall not be impaired by any amendment of the Plan unless (i) the
Company requests the consent of the Participant and (ii) the Participant
consents in writing.

 

(e)           Amendment
of Stock Awards. The Board at any time, and from time to time, may amend
the terms of any one or more Stock Awards, including, but not limited to,
amendments to provide terms more favorable than previously provided in the
agreement evidencing the Stock Award, subject to any specified limits in the
Plan that are not subject to Board discretion; provided,
however, that the rights under any Stock Award shall not be impaired
by any such amendment unless (i) the Company requests the consent of the
Participant and (ii) the Participant consents in writing; and provided further, however, that no
previously granted Stock Award may be repriced, replaced or regranted through
cancellation, or by lowering the exercise price of a previously granted Stock
Award without the prior approval of the Company’s stockholders.

 

13.          Termination
or Suspension of the Plan.

 

(a)           Plan
Term. The Board may suspend or terminate the Plan at any time. Unless
sooner terminated, the Plan shall terminate on the day before the tenth (10th)
anniversary of the date the Plan is adopted by the Board or approved by the
stockholders of the Company, whichever is earlier. No Stock Awards may be
granted under the Plan while the Plan is suspended or after it is terminated.

 

(b)           No
Impairment of Rights. Suspension or termination of the Plan shall not
impair rights and obligations under any Stock Award granted while the Plan is
in effect except with the written consent of the Participant.

 

14.          Effective
Date of Plan.

 

The Plan became effective as of July 6, 2004. Any amendment to the
Plan shall become effective upon the later of (i) the date such amendment
is adopted by the Board, or (ii) if stockholder approval of such amendment
is required by Section 12(a) hereof, the date such amendment is
approved by the stockholders of the Company.

 

15.          Choice
of Law.

 

The law of the State of Delaware shall govern all questions concerning
the construction, validity and interpretation of this Plan, without regard to
such state’s conflict of laws rules.

 

16

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