Document:

exv10w1

 

Exhibit 10.1

CONNETICS CORPORATION

NON-QUALIFIED STOCK OPTION AGREEMENT

     Connetics Corporation, a Delaware corporation (“Connetics” or the “Corporation”), hereby
grants to Shari Geffon (the “Optionee”) an option to purchase 20,000 shares of Common Stock (the
“Option”) subject to the following terms and conditions of this Non-Qualified Stock Option
Agreement (the “Option Agreement”):

	 	 	 	 	 
	I.

	 	NOTICE OF STOCK OPTION GRANT	 	 
	 

	 	Shari Geffon	 	 
	 

	 	3160 Porter Drive	 	 
	 

	 	Palo Alto, CA 94304	 	 
	 
	 	 	 	 
	 

	 	Date of Grant
	 	June 5, 2006
	 
	 	 	 	 
	 

	 	Vesting Commencement Date
	 	June 5, 2006
	 
	 	 	 	 
	 

	 	Exercise Price per Share
	 	$12.11
	 
	 	 	 	 
	 

	 	Total Number of Shares of Common	 	 
	 

	 	Stock Subject to the Option (the “Shares”)
	 	20,000 Shares
	 
	 	 	 	 
	 

	 	Total Exercise Price
	 	$242,200.00
	 
	 	 	 	 
	 

	 	Type of Option:
	 	Nonstatutory Stock Option
	 
	 	 	 	 
	 

	 	Term/Expiration Date:
	 	June 5, 2016

     Vesting Schedule:

          This Option may be exercised, in whole or in part, in accordance with the following schedule:

          1/8 of the Shares subject to the Option shall vest six months after the Vesting Commencement
Date, and 1/48 of the Shares subject to the Option shall vest each month thereafter, subject to the
Optionee continuing to be a Service Provider on such dates.

     Termination Period:

          This Option may be exercised for (3) three months after the Optionee ceases to be a Service
Provider for any reason other than death or Disability. In the event the Optionee ceases to be a
Service Provider as the result of death or Disability, this Option may be exercised for (12) twelve
months after the Optionee ceases to be a Service Provider. In no event shall this Option be
exercised later than the Term/Expiration Date as provided above.

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II. AGREEMENT

     1. Grant of Option. The Corporation hereby grants to the Optionee named in the Notice
of Stock Option Grant (the “Notice”) attached as Part I of this Option Agreement an option (the
“Option”) to purchase the number of Shares, as set forth in the Notice, at the exercise price per
share set forth in the Notice (the “Exercise Price”), subject to the terms and conditions of the
Notice and this Option Agreement.

          This Option is subject to and conditioned upon Optionee’s acceptance of the Option by
returning to the Corporation an executed original of this Option Agreement. This Option shall be
null and void and of no force and effect, unless the Optionee executes and returns to the
Corporation this Option Agreement.

          This Option is granted as an inducement material to the Optionee’s entering into service with
the Corporation as an Employee. The Grantee has not previously been a Service Provider of the
Company or any Parent or Subsidiary of the Company.

          This Option is not intended to be an incentive stock option under Section 422 of the Code.

     2. Exercise of Option.

          (a) Right to Exercise. This Option is exercisable during its term in accordance with
the Vesting Schedule set out in the Notice and the applicable provisions of this Option Agreement.

          (b) Method of Exercise. This Option is exercisable by delivery of an exercise notice
or by such other procedure as specified from time to time by the Board, which shall state the
election to exercise the Option and the number of Shares in respect of which the Option is being
exercised (the “Exercised Shares”). The exercise notice shall be completed by the Optionee and
delivered to Connetics in person, by certified mail, or by such other method (including electronic
transmission) as determined from time to time by the Board. The exercise notice shall be
accompanied by payment of the aggregate Exercise Price as to all Exercised Shares. This Option
shall be deemed to be exercised upon receipt by Connetics of such fully executed exercise notice
accompanied by such aggregate Exercise Price.

          No Shares shall be issued pursuant to the exercise of this Option unless such issuance and
exercise complies with Applicable Laws. Assuming such compliance, for income tax purposes the
Exercised Shares shall be considered transferred to the Optionee on the date the Option is
exercised with respect to such Exercised Shares.

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     3. Method of Payment. Payment of the aggregate Exercise Price shall be by any of the
following, or a combination thereof, at the election of the Optionee:

          (c) cash; or

          (d) check; or

          (e) consideration received by Connetics under a cashless exercise program implemented by
Connetics in connection with this Option Agreement; or

          (f) surrender of other Shares which (i) in the case of Shares acquired upon exercise of an
option, have been owned by the Optionee for more than six (6) months on the date of surrender, and
(ii) have a Fair Market Value on the date of surrender equal to the aggregate Exercise Price of the
Exercised Shares.

     4. Non-Transferability of Option. This Option may not be transferred in any manner
otherwise than by will or by the laws of descent or distribution and may be exercised during the
lifetime of Optionee only by the Optionee. The terms of this Option Agreement shall be binding
upon the executors, administrators, heirs, successors and assigns of the Optionee.

     5. No Obligation to Exercise Option. The grant and acceptance of this Option imposes
no obligation on the Optionee to exercise it.

     6. No Obligation to Continue Business Relationship. The Corporation and any its’
subsidiaries are not by this Option obligated to continue to maintain a business relationship with
the Optionee.

     7. Term of Option. This Option may be exercised only within the term set out in the
Notice, and may be exercised during such term only in accordance with the terms of this Option
Agreement.

     8. Tax Consequences. Some of the federal tax consequences relating to this Option, as
of the date of this Option, are set forth below. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE
TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE
EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.

          (g) Exercising the Option. The Optionee may incur regular federal income tax
liability upon exercise of the Option. The Optionee will be treated as having received
compensation income (taxable at ordinary income tax rates) equal to the excess, if any, of the Fair
Market Value of the Exercised Shares on the date of exercise over their aggregate Exercise Price.
If the Optionee is an Employee or a former Employee, Connetics will be required to withhold from
his or her compensation or collect from Optionee and pay to the applicable taxing authorities an
amount in cash equal to a percentage of this compensation income at the time of exercise, and may
refuse to honor the exercise and refuse to deliver Shares if such withholding amounts are not
delivered at the time of exercise.

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          (h) Disposition of Shares. The Optionee holds the Shares acquired upon exercise of
the Option for at least one year, any gain realized on disposition of the Shares will be treated as
long-term capital gain for federal income tax purposes.

     9. No Rights as Stockholder until Exercise. The Optionee shall have no rights as a
stockholder with respect to the Shares until a stock certificate has been issued to the Optionee
and is fully paid for in accordance with paragraph 3. With respect to certain changes in the
capitalization of the Corporation, no adjustment shall be made for dividends or similar rights for
which the record date is prior to the date such stock certificate is issued.

     10. Adjustments Upon Changes in Capitalization, Dissolution, Merger or Asset Sale.

          (a) Changes in Capitalization. Subject to any required action by the stockholders of
Connetics, the number of shares of Common Stock covered by the Option as well as the Exercise Price
shall be proportionately adjusted for any increase or decrease in the number of issued shares of
Common Stock resulting from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the number of issued
shares of Common Stock effected without receipt of consideration by Connetics; provided, however,
that conversion of any convertible securities of Connetics shall not be deemed to have been
“effected without receipt of consideration.” Such adjustment shall be made by the Board, whose
determination in that respect shall be final, binding and conclusive. Except as expressly provided
in this Option Agreement, no issuance by Connetics of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof
shall be made with respect to, the number or price of shares of Common Stock subject to an Option.

          (b) Dissolution or Liquidation. In the event of the proposed dissolution or
liquidation of Connetics, the Board shall notify the Optionee prior to the effective date of such
proposed transaction. The Board in its discretion may permit the Optionee to exercise the Option
prior to such transaction as to all of the Shares, including Shares as to which the Option would
not otherwise be vested and exercisable. To the extent it has not been previously exercised, an
Option will terminate immediately prior to the consummation of such proposed action.

          (i) Merger or Asset Sale. In the event of a merger of Connetics with or into another
corporation, or the sale of substantially all of the assets of Connetics, the Option shall be
assumed or an equivalent option or right substituted by the successor corporation or a Parent or
Subsidiary of the successor corporation. In the event that the successor corporation refuses to
assume or substitute for the Option, the Optionee shall fully vest in and have the right to
exercise the Option as to all of the Shares, including Shares as to which it would not otherwise be
vested and exercisable. If an Option becomes fully vested and exercisable in lieu of assumption or
substitution in the event of a merger or sale of assets, the Board shall notify the Optionee in
writing or electronically that the Option shall be fully vested and exercisable for a period of
time as determined by the Board, and the Option shall terminate upon the expiration of such period.
For the purposes of this paragraph, the Option shall be considered assumed if, following the
merger or sale of assets, the option confers the right to purchase or receive, for each Share

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subject to the Option immediately prior to the merger or sale of assets, the consideration
(whether stock, cash, or other securities or property) received in the merger or sale of
assets by holders of Common Stock for each share held on the effective date of the transaction (and
if holders were offered a choice of consideration, the type of consideration chosen by the holders
of a majority of the outstanding shares of Common Stock); provided, however, that if such
consideration received in the merger or sale of assets is not solely common stock of the successor
corporation or its Parent, the Board may, with the consent of the successor corporation, provide
for the consideration to be received upon the exercise of the Option, for each Share subject to the
Option, to be solely common stock of the successor corporation or its Parent equal in fair market
value to the per share consideration received by holders of Common Stock in the merger or sale of
assets.

     11. Entire Agreement; Governing Law. This Option Agreement constitutes the entire
agreement of the parties with respect to the subject matter hereof and supersedes in its entirety
all prior undertakings and agreements of Connetics and Optionee with respect to the subject matter
hereof, and may not be modified adversely to the Optionee’s interest except by means of a writing
signed by Connetics and Optionee. This agreement is governed by the internal substantive laws, but
not the choice of law rules, of California.

     12. NO GUARANTEE OF CONTINUED SERVICE. OPTIONEE ACKNOWLEDGES AND AGREES THAT THE
VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE OF THIS AGREEMENT IS EARNED ONLY BY CONTINUING
AS A SERVICE PROVIDER AT THE WILL OF CONNETICS (AND NOT THROUGH THE ACT OF BEING HIRED, BEING
GRANTED AN OPTION OR PURCHASING SHARES UNDER THIS AGREEMENT). OPTIONEE FURTHER ACKNOWLEDGES AND
AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED UNDER THIS AGREEMENT AND THE VESTING
SCHEDULE SET FORTH IN THIS AGREEMENT DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED
ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT
INTERFERE WITH OPTIONEE’S RIGHT OR CONNETICS’ RIGHT TO TERMINATE OPTIONEE’S RELATIONSHIP AS A
SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE.

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III. DEFINITIONS

          A. “Applicable Laws” means the requirements relating to the administration of stock
options under U. S. state corporate laws, U.S. federal and state securities laws, the Code, any
stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable
laws of any foreign country or jurisdiction where the Optionee may be resident.

          B. “Board” means the Board of Directors of Connetics.

          C. “Code” means the Internal Revenue Code of 1986, as amended.

          D. “Common Stock” means the common stock of Connetics.

          E. “Corporation” means Connetics Corporation, a Delaware corporation.

          F. “Consultant” means any person, including an advisor, engaged by Connetics or a
Parent or Subsidiary to render services to such entity.

          G. “Director” means a member of the Board.

          H. “Disability” means total and permanent disability as defined in Section 22(e)(3) of
the Code.

          I. “Employee” means any person, including Officers and Directors, employed by
Connetics or any Parent or Subsidiary of Connetics. A Service Provider shall not cease to be an
Employee in the case of (i) any leave of absence approved by Connetics or (ii) transfers between
locations of Connetics or between Connetics, its Parent, any Subsidiary, or any successor. Neither
service as a Director nor payment of a director’s fee by Connetics shall be sufficient to
constitute “employment” by Connetics.

          J. “Exchange Act” means the Securities Exchange Act of 1934, as amended.

          K. “Fair Market Value” means, as of any date, the value of Common Stock determined as
follows:

(i) If the Common Stock is listed on any established stock exchange or a national
market system, including without limitation the Nasdaq National Market or The Nasdaq
SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall be the
closing sales price for such stock (or the closing bid, if no sales were reported)
as quoted on such exchange or system on the date of determination, as reported in
The Wall Street Journal or such other source as the Board deems reliable;

(ii) If the Common Stock is regularly quoted by a recognized securities dealer but
selling prices are not reported, the Fair Market Value of a Share of Common

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Stock shall be the mean between the high bid and low asked prices for the Common Stock on the date of determination, as reported in The Wall Street Journal or
such other source as the Board deems reliable; or

(iii) In the absence of an established market for the Common Stock, the Fair Market
Value shall be determined in good faith by the Board.

          L. “Officer” means a person who is an officer of Connetics within the meaning of
Section 16 of the Exchange Act and the rules and regulations promulgated under the Exchange Act.

          M. “Parent” means a “parent corporation,” whether now or hereafter existing, as
defined in Section 424(e) of the Code.

          N. “Service Provider” means an Employee, Director or Consultant.

          O. “Subsidiary” means a “subsidiary corporation”, whether now or hereafter existing,
as defined in Section 424(f) of the Code.

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     By your signature and the signature of Connetics’ representative below, you and Connetics
agree that this Option is granted under and governed by the terms and conditions of the this Option
Agreement. Optionee has reviewed this Option Agreement in its’ entirety, has had an opportunity to
obtain the advice of counsel prior to executing this Option Agreement and fully understands all
provisions of this Option Agreement. Optionee hereby agrees to accept as binding, conclusive and
final all decisions or interpretations of the Board upon any questions relating to this Option
Agreement. Optionee further agrees to notify Connetics upon any change in the residence address
indicated below.

	 	 	 
	OPTIONEE:

	 	CONNETICS CORPORATION
	 
	 	 
	 
	 	 
	/s/ Shari Geffon

	 	/s/
Thomas G. Wiggans

	 

	 	 
	Signature

	 	By: Thomas G. Wiggans
	 
	 	 
	Shari Geffon

	 	Chief
Executive Officer

	 

	 	 
	Print Name

	 	Title
	 
	 	 
	3160 Porter Drive
	 	 
	 
	 	 
	Residence Address
	 	 
	 
	 	 
	Palo Alto, CA 94304
	 	 
	 
	 	 

8 --exv10w3

 

Exhibit 10.3

LOOPNET, INC.

2006 EQUITY INCENTIVE PLAN

     1. Purposes of the Plan.

          The purpose of this Plan is to encourage ownership in LoopNet, Inc., a Delaware corporation
(the “Company”), by key personnel whose long-term employment or other service relationship with the
Company is considered essential to the Company’s continued progress and, thereby, encourage
recipients to act in the stockholders’ interest and share in the Company’s success.

     2. Definitions.

          As used herein, the following definitions shall apply:

     (a) “Administrator” means the Board, any Committees or such delegates as shall be
administering the Plan in accordance with Section 4 of the Plan.

     (b) “Affiliate” means any entity that is directly or indirectly controlled by the
Company or any entity in which the Company has a significant ownership interest as
determined by the Administrator.

     (c) “Applicable Laws” means the requirements relating to the administration of stock
option and stock award plans under U.S. federal and state laws, any stock exchange or
quotation system on which the Company has listed or submitted for quotation the Common Stock
to the extent provided under the terms of the Company’s agreement with such exchange or
quotation system and, with respect to Awards subject to the laws of any foreign jurisdiction
where Awards are, or will be, granted under the Plan, the laws of such jurisdiction.

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

     (e) “Awardee” means an Employee, Consultant or Director of the Company or any
Affiliate who has been granted an Award under the Plan.

     (f) “Award Agreement” means a Stock Award Agreement and/or Option Agreement, which
may be in written or electronic format, in such form and with such terms and conditions as
may be specified by the Administrator, evidencing the terms and conditions of an individual
Award. Each Award Agreement is subject to the terms and conditions of the Plan.

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

     (h) “Cause” means (i) any criminal act by the Awardee which is punishable by
imprisonment of twelve (12) months or more, (ii) any act of fraud or dishonesty

 

 

committed by the Awardee in the course of his or her employment or (iii) the Awardee’s
continued refusal to perform the material duties of his or her employment after written
notice has been provided to the Awardee.

     (i) “Change in Control” means any of the following, unless the Administrator provides
otherwise:

     i. any merger or consolidation in which the Company shall not be the
surviving entity (or survives only as a subsidiary of another entity whose
stockholders did not own all or substantially all of the Common Stock in
substantially the same proportions as immediately prior to such transaction),

     ii. the sale of all or substantially all of the Company’s assets to any
other person or entity (other than a wholly-owned subsidiary),

     iii. the acquisition of beneficial ownership of a controlling interest
(including, without limitation, power to vote) the outstanding shares of Common
Stock by any person or entity (including a “group” as defined by or under Section
13(d)(3) of the Exchange Act),

     iv. the dissolution or liquidation of the Company,

     v. a contested election of Directors, as a result of which or in connection
with which the persons who were Directors before such election or their nominees
(the “Incumbent Directors”) cease to constitute a majority of the Board; provided
however that if the election, or nomination for election by the Company’s
stockholders, of any new director was approved by a vote of at least fifty percent
(50%) of the Incumbent Directors, such new Director shall be considered as an
Incumbent Director, or

     vi. any other event specified by the Board or a Committee, regardless of
whether at the time an Award is granted or thereafter.

     (j) “Code” means the United States Internal Revenue Code of 1986, as amended.

     (k) “Committee” means the compensation committee of the Board or a committee of
Directors appointed by the Board in accordance with Section 4 of the Plan.

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

     (m) “Company” means LoopNet, Inc., a Delaware corporation, or its successor.

     (n) “Consultant” means any person engaged by the Company or any Affiliate to render
services to such entity as an advisor or consultant.

     (o) “Conversion Award” has the meaning set forth in Section 4(b)(xi) of the Plan.

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

     (q) “Effective Date” means the effective date of the underwriting agreement entered
into in connection with the initial public offering of the Company’s Common Stock by the
Company and the underwriters managing the initial public offering of the Company’s Common
Stock pursuant to the underwriting agreement’s terms.

     (r) “Employee” means a regular, active employee of the Company or any Affiliate,
including an Officer and/or Inside Director. The Administrator shall determine whether or
not the chairman of the Board qualifies as an “Employee.” Within the limitations of
Applicable Law, the Administrator shall have the discretion to determine the effect upon an
Award and upon an individual’s status as an Employee in the case of (i) any individual who
is classified by the Company or its Affiliate as leased from or otherwise employed by a
third party or as intermittent or temporary, even if any such classification is changed
retroactively as a result of an audit, litigation or otherwise, (ii) any leave of absence
approved by the Company or an Affiliate, (iii) any transfer between locations of employment
with the Company or an Affiliate or between the Company and any Affiliate or between any
Affiliates, (iv) any change in the Awardee’s status from an employee to a Consultant or
Director, and (v) at the request of the Company or an Affiliate an employee becomes employed
by any partnership, joint venture or corporation not meeting the requirements of an
Affiliate in which the Company or an Affiliate is a party.

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

     (t) “Fair Market Value” means, unless the Administrator determines otherwise, as of
any date, the closing sales price for such Common Stock as of such date (or if no sales were
reported on such date, the closing sales price on the last preceding day on which a sale was
made), as reported in such source as the Administrator shall determine.

     (u) “Grant Date” means the date upon which an Award is granted to an Awardee pursuant
to this Plan.

     (v) “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.

     (w) “Insider Director” means a Director who is an Employee.

     (x) “Nasdaq” means the Nasdaq National Market or its successor.

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

     (z) “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.

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     (aa) “Option” means a right granted under Section 8 to purchase a number of Shares at
such exercise price, at such times, and on such other terms and conditions as are specified
in the agreement or other documents evidencing the Option (the “Option Agreement”). Both
Options intended to qualify as Incentive Stock Options and Nonstatutory Stock Options may be
granted under the Plan.

     (bb) “Outside Director” means a Director who is not an Employee.

     (cc) “Participant” means the Awardee or any person (including any estate) to whom an
Award has been assigned or transferred as permitted hereunder.

     (dd) “Plan” means this LoopNet, Inc. 2006 Equity Incentive Plan.

     (ee) “Qualifying Performance Criteria” shall have the meaning set forth in Section
12(b) of the Plan.

     (ff) “Share” means a share of the Common Stock, as adjusted in accordance with
Section 13 of the Plan.

     (gg) “Stock Appreciation Right” means a right to receive cash and/or shares of Common
Stock based on a change in the Fair Market Value of a specific number of shares of Common
Stock between the grant date and the exercise date granted under Section 11.

     (hh) “Stock Award” means an award or issuance of Shares, Stock Units, Stock
Appreciation Rights or other similar awards made under Section 11 of the Plan, the grant,
issuance, retention, vesting and/or transferability of which is subject during specified
periods of time to such conditions (including continued employment or performance
conditions) and terms as are expressed in the agreement or other documents evidencing the
Award (the “Stock Award Agreement”).

     (ii) “Stock Unit” means a bookkeeping entry representing an amount equivalent to the
Fair Market Value of one Share (or a fraction or multiple of such value), payable in cash,
property or Shares. Stock Units represent an unfunded and unsecured obligation of the
Company, except as otherwise provided for by the Administrator.

     (jj) “Subsidiary” means any company (other than the Company) in an unbroken chain of
companies beginning with the Company, provided each company in the unbroken chain (other
than the Company) owns, at the time of determination, stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other companies in such
chain.

     (kk) “Termination of Employment” shall mean ceasing to be an Employee or Director, as
determined in the sole discretion of the Administrator. However, for Incentive Stock Option
purposes, Termination of Employment will occur when the Awardee ceases to be an employee (as
determined in accordance with Section 3401(c) of

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the Code and the regulations promulgated thereunder) of the Company or one of its
Subsidiaries. The Administrator shall determine whether any corporate transaction, such as a
sale or spin-off of a division or business unit, or a joint venture, shall be deemed to
result in a Termination of Employment.

     (ll) “Total and Permanent Disability” shall have the meaning set forth in Section
22(e)(3) of the Code.

     3. Stock Subject to the Plan.

     (a) Aggregate Limits. Subject to the provisions of Section 13 of the Plan, the
maximum aggregate number of Shares that may be sold or issued under the Plan is 7,000,000
shares of Common Stock. This maximum number of Shares shall be cumulatively increased on
the first day of each of the Company’s fiscal years beginning in fiscal year 2007 and for
five (5) more years thereafter by the least of (i) 1,800,000 Shares, (ii) 4% of the
Company’s outstanding Shares as of the last day of the preceding fiscal year or (iii) a
number of Shares determined by the Board.

Shares subject to Awards granted under the Plan that are cancelled, expire or are forfeited
shall be available for re-grant under the Plan. If an Awardee pays the exercise or purchase
price of an Award granted under the Plan through the tender of Shares, or if Shares are
tendered or withheld to satisfy any Company withholding obligations, the number of Shares so
tendered or withheld shall not become available for re-issuance thereafter under the Plan.
The Shares subject to the Plan may be either Shares reacquired by the Company, including
Shares purchased in the open market, or authorized but unissued Shares.

     (b) Code Section 162(m) Limits. Subject to the provisions of Section 13 of the
Plan, the aggregate number of Shares subject to Awards granted under this Plan during any
calendar year to any one Awardee shall not exceed 2,000,000, except that in connection with
his or her first commencing service with the Company or an Affiliate, an Awardee may be
granted Awards covering up to an additional 2,000,000 Shares during the year in which such
service commences. Notwithstanding anything to the contrary in the Plan, the limitations
set forth in this Section 3(b) shall be subject to adjustment under Section 13(a) of the
Plan only to the extent that such adjustment will not affect the status of any Award
intended to qualify as “performance based compensation” under Code Section 162(m).

     4. Administration of the Plan.

     (a) Procedure.

     i. Multiple Administrative Bodies. The Plan shall be administered by the
Board, a Committee and/or their delegates.

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     ii. Section 162. To the extent that the Administrator determines it to be
desirable to qualify Awards granted hereunder as “performance-based compensation”
within the meaning of Section 162(m) of the Code, Awards to “covered employees”
within the meaning of Section 162(m) of the Code or Employees that the Committee
determines may be “covered employees” in the future shall be made by a Committee of
two or more “outside directors” within the meaning of Section 162(m) of the Code.

     iii. Rule 16b-3. To the extent desirable to qualify transactions
hereunder as exempt under Rule 16b-3 promulgated under the Exchange Act (“Rule
16b-3”), Awards to Officers and Directors shall be made by the entire Board or a
Committee of two or more “non-employee directors” within the meaning of Rule 16b-3.

     iv. Other Administration. The Board or a Committee may delegate to an
authorized officer or officers of the Company the power to approve Awards to persons
eligible to receive Awards under the Plan who are not (A) subject to Section 16 of
the Exchange Act or (B) at the time of such approval, “covered employees” under
Section 162(m) of the Code.

     v. Delegation of Authority for the Day-to-Day Administration of the Plan.
Except to the extent prohibited by Applicable Law, the Administrator may delegate to
one or more individuals the day-to-day administration of the Plan and any of the
functions assigned to it in this Plan. Such delegation may be revoked at any time.

     vi. Nasdaq. In addition, the Plan will be administered in a manner that
complies with any applicable Nasdaq or stock exchange listing requirements.

     (b) Powers of the Administrator. Subject to the provisions of the Plan and, in
the case of a Committee or delegates acting as the Administrator, subject to the specific
duties delegated to such Committee or delegates, the Administrator shall have the authority,
in its discretion:

     i. to select the Employees, Consultants and Directors of the Company or
its Affiliates to whom Awards are to be granted hereunder;

     ii. to determine the number of shares of Common Stock or amount of cash to
be covered by each Award granted hereunder;

     iii. to determine the type of Award to be granted to the selected Employees,
Consultants and Directors;

     iii. to approve forms of Award Agreements for use under the Plan;

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     iv. to determine the terms and conditions, not inconsistent with the terms
of the Plan, of any Award granted hereunder. Such terms and conditions include, but
are not limited to, the exercise and/or purchase price (if applicable), the time or
times when an Award may be exercised (which may or may not be based on performance
criteria), the vesting schedule, any vesting and/or exercisability acceleration or
waiver of forfeiture restrictions, the acceptable forms of consideration, the term,
and any restriction or limitation regarding any Award or the Shares relating
thereto, based in each case on such factors as the Administrator, in its sole
discretion, shall determine and may be established at the time an Award is granted
or thereafter;

     v. to correct administrative errors;

     vi. to construe and interpret the terms of the Plan (including sub-plans and
Plan addenda) and Awards granted pursuant to the Plan;

     vii. to adopt rules and procedures relating to the operation and
administration of the Plan to accommodate the specific requirements of local laws
and procedures. Without limiting the generality of the foregoing, the Administrator
is specifically authorized (A) to adopt the rules and procedures regarding the
conversion of local currency, withholding procedures and handling of stock
certificates which vary with local requirements and (B) to adopt sub-plans and Plan
addenda as the Administrator deems desirable, to accommodate foreign laws,
regulations and practice;

     viii. to prescribe, amend and rescind rules and regulations relating to the
Plan, including rules and regulations relating to sub-plans and Plan addenda;

     ix. to modify or amend each Award, including, but not limited to, the
acceleration of vesting and/or exercisability, provided, however, that any such
amendment is subject to Section 14 of the Plan and except as set forth in that
Section, may not impair any outstanding Award unless agreed to in writing by the
Participant;

     x. to allow Participants to satisfy withholding tax amounts by electing to
have the Company withhold from the Shares to be issued upon exercise of a
Nonstatutory Stock Option or vesting of a Stock Award that number of Shares having a
Fair Market Value equal to the amount required to be withheld. The Fair Market Value
of the Shares to be withheld shall be determined in such manner and on such date
that the Administrator shall determine or, in the absence of provision otherwise, on
the date that the amount of tax to be withheld is to be determined. All elections by
a Participant to have Shares withheld for this purpose shall be made in such form
and under such conditions as the Administrator may provide;

7

 

     xi. to authorize conversion or substitution under the Plan of any or all
stock options, stock appreciation rights or other stock awards held by service
providers of an entity acquired by the Company (the “Conversion Awards”). Any
conversion or substitution shall be effective as of the close of the merger,
acquisition or other transaction. The Conversion Awards may be Nonstatutory Stock
Options or Incentive Stock Options, as determined by the Administrator, with respect
to options granted by the acquired entity; provided, however, that with respect to
the conversion of stock appreciation rights in the acquired entity, the Conversion
Awards shall be Nonstatutory Stock Options. Unless otherwise determined by the
Administrator at the time of conversion or substitution, all Conversion Awards shall
have the same terms and conditions as Awards generally granted by the Company under
the Plan;

     xii. to authorize any person to execute on behalf of the Company any
instrument required to effect the grant of an Award previously granted by the
Administrator;

     xiii. to impose such restrictions, conditions or limitations as it determines
appropriate as to the timing and manner of any resales by a Participant or other
subsequent transfers by the Participant of any Shares issued as a result of or under
an Award, including without limitation, (A) restrictions under an insider trading
policy and (B) restrictions as to the use of a specified brokerage firm for such
resales or other transfers;

     xiv. to provide, either at the time an Award is granted or by subsequent
action, that an Award shall contain as a term thereof, a right, either in tandem
with the other rights under the Award or as an alternative thereto, of the
Participant to receive, without payment to the Company, a number of Shares, cash or
a combination thereof, the amount of which is determined by reference to the value
of the Award; and

     xv. to make all other determinations deemed necessary or advisable for
administering the Plan and any Award granted hereunder.

     (c) Effect of Administrator’s Decision. All decisions, determinations and
interpretations by the Administrator regarding the Plan, any rules and regulations under the
Plan and the terms and conditions of any Award granted hereunder, shall be final and binding
on all Participants and on all other persons. The Administrator shall consider such factors
as it deems relevant, in its sole and absolute discretion, to making such decisions,
determinations and interpretations including, without limitation, the recommendations or
advice of any officer or other employee of the Company and such attorneys, consultants and
accountants as it may select.

8

 

     5. Eligibility.

          Awards may be granted to Employees, Consultants and Directors of the Company or any of its
Affiliates; provided that Incentive Stock Options may be granted only to Employees of the Company
or of a Subsidiary of the Company.

     6. Term of Plan.

          The Plan shall become effective on the Effective Date. It shall continue in effect for a term
of ten (10) years from the later of the Effective Date or the date any amendment to add shares to
the Plan is approved by stockholders of the Company unless terminated earlier under Section 14 of
the Plan.

     7. Term of Award.

          The term of each Award shall be determined by the Administrator and stated in the Award
Agreement. In the case of an Option, the term shall be ten (10) years from the Grant Date or such
shorter term as may be provided in the Award Agreement; provided that an Incentive Stock Option
granted to an Employee who on the Grant Date owns stock representing more than ten percent (10%) of
the voting power of all classes of stock of the Company or any Subsidiary shall have a term of no
more than five (5) years from the Grant Date; and provided further that the term may be ten and
one-half (101/2) years (or a shorter period) in the case of Options granted to Employees
in certain jurisdictions outside the United States as determined by the Administrator.

     8. Options.

          The Administrator may grant an Option or provide for the grant of an Option, either from time
to time in the discretion of the Administrator or automatically upon the occurrence of specified
events, including, without limitation, the achievement of performance goals, the satisfaction of an
event or condition within the control of the Awardee or within the control of others.

     (a) Option Agreement. Each Option Agreement shall contain provisions regarding
(i) the number of Shares that may be issued upon exercise of the Option, (ii) the type of
Option, (iii) the exercise price of the Shares and the means of payment for the Shares, (iv)
the term of the Option, (v) such terms and conditions on the vesting and/or exercisability
of an Option as may be determined from time to time by the Administrator, (vi) restrictions
on the transfer of the Option or the Shares issued upon exercise of the Option and
forfeiture provisions and (vii) such further terms and conditions, in each case not
inconsistent with this Plan as may be determined from time to time by the Administrator.

     (b) Exercise Price. The per share exercise price for the Shares to be issued
pursuant to exercise of an Option shall be determined by the Administrator, subject to the
following:

9

 

     i. In the case of an Incentive Stock Option, the per Share exercise price
shall be no less than one hundred percent (100%) of the Fair Market Value per Share
on the Grant Date; provided however, that in the case of an Incentive Stock Option
granted to an Employee who on the Grant Date owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of the Company or any
Subsidiary, the per Share exercise price shall be no less than one hundred ten
percent (110%) of the Fair Market Value per Share on the Grant Date.

     ii. In the case of a Nonstatutory Stock Option, the per Share exercise
price shall be no less than one hundred percent (100%) of the Fair Market Value per
Share on the Grant Date.

     iii. Notwithstanding the foregoing, at the Administrator’s discretion,
Conversion Awards may be granted in substitution and/or conversion of options of an
acquired entity, with a per Share exercise price of less than 100% of the Fair
Market Value per Share on the date of such substitution and/or conversion.

     (c) No Option Repricings. Other than in connection with a change in the Company’s
capitalization (as described in Section 13(a) of the Plan), the exercise price of an Option
may not be reduced without stockholder approval.

     (d) Vesting Period and Exercise Dates. Options granted under this Plan shall vest
and/or be exercisable at such time and in such installments during the period prior to the
expiration of the Option’s term as determined by the Administrator. The Administrator shall
have the right to make the timing of the ability to exercise any Option granted under this
Plan subject to continued employment, the passage of time and/or such performance
requirements as deemed appropriate by the Administrator. At any time after the grant of an
Option, the Administrator may reduce or eliminate any restrictions surrounding any
Participant’s right to exercise all or part of the Option.

     (e) Form of Consideration. The Administrator shall determine the acceptable form
of consideration for exercising an Option, including the method of payment, either through
the terms of the Option Agreement or at the time of exercise of an Option. Acceptable forms
of consideration may include:

     i. cash;

     ii. check or wire transfer (denominated in U.S. Dollars);

     iii. subject to the Company’s discretion to refuse for any reason and at any
time to accept such consideration and subject to any conditions or limitations
established by the Administrator, other Shares held by the Participant which have a
Fair Market Value on the date of surrender equal to the aggregate exercise price of
the Shares as to which said Option shall be exercised;

10

 

     iv. consideration received by the Company under a broker-assisted sale and
remittance program acceptable to the Administrator;

     v. such other consideration and method of payment for the issuance of
Shares to the extent permitted by Applicable Laws; or

     vi. any combination of the foregoing methods of payment.

     (f) Effect of Termination on Options

     i. Generally. Unless otherwise provided for by the Administrator, upon an
Awardee’s Termination of Employment other than as a result of circumstances
described in Sections 8(f)(ii) and (iii) below, any outstanding Option granted to
such Awardee, whether vested or unvested, to the extent not theretofore exercised,
shall terminate immediately upon the Awardee’s Termination of Employment; provided,
however, that the Administrator may in the Option Agreement specify a period of time
(but not beyond the expiration date of the Option) following Termination of
Employment during which the Awardee may exercise the Option as to Shares that were
vested and exercisable as of the date of Termination of Employment. To the extent
such a period following Termination of Employment is specified, the Option shall
automatically terminate at the end of such period to the extent the Awardee has not
exercised it within such period.

     ii. Disability of Awardee. Unless otherwise provided for by the
Administrator, upon an Awardee’s Termination of Employment as a result of the
Awardee’s disability, all outstanding Options granted to such Awardee that were
vested and exercisable as of the date of the Awardee’s Termination of Employment may
be exercised by the Awardee until (A) one (1) year following Awardee’s Termination
of Employment as a result of Awardee’s disability, including Total and Permanent
Disability or (B) the expiration of the term of such Option. If the Participant does
not exercise such Option within the time specified, the Option (to the extent not
exercised) shall automatically terminate.

     iii. Death of Awardee. Unless otherwise provided for by the
Administrator, upon an Awardee’s Termination of Employment as a result of the
Awardee’s death, all outstanding Options granted to such Awardee that were vested
and exercisable as of the date of the Awardee’s death may be exercised until the
earlier of (A) one (1) year following the Awardee’s death or (B) the expiration of
the term of such Option. If an Option is held by the Awardee when he or she dies,
such Option may be exercised, to the extent the Option is vested and exercisable, by
the beneficiary designated by the Awardee (as provided in Section 15 of the Plan),
the executor or administrator of the Awardee’s estate or, if none, by the person(s)
entitled to exercise the Option under the Awardee’s will or the laws of descent or
distribution. If the Option is not so exercised within the time specified, such
Option (to the extent not exercised) shall automatically terminate.

11

 

     iv. Other Terminations of Employment. The Administrator may provide in the
applicable Option Agreement for different treatment of Options upon Termination of
Employment of the Awardee than that specified above.

     (g) Leave of Absence. The Administrator shall have the discretion to determine
whether and to what extent the vesting of Options shall be tolled during any unpaid leave of
absence; provided, however, that in the absence of such determination, vesting of Options
shall be tolled during any leave that is not a leave required to be provided to the Awardee
under Applicable Law. In the event of military leave, vesting shall toll during any unpaid
portion of such leave, provided that, upon an Awardee’s returning from military leave (under
conditions that would entitle him or her to protection upon such return under the Uniform
Services Employment and Reemployment Rights Act), he or she shall be given vesting credit
with respect to Options to the same extent as would have applied had the Awardee continued
to provide services to the Company throughout the leave on the same terms as he or she was
providing services immediately prior to such leave.

     9. Incentive Stock Option Limitations/Terms.

     (a) Eligibility. Only employees (as determined in accordance with Section 3401(c)
of the Code and the regulations promulgated thereunder) of the Company or any of its
Subsidiaries may be granted Incentive Stock Options.

     (b) $100,000 Limitation. Notwithstanding the designation “Incentive Stock Option” in
an Option Agreement, if and to the extent that the aggregate Fair Market Value of the Shares
with respect to which Incentive Stock Options are exercisable for the first time by the
Awardee during any calendar year (under all plans of the Company and any of its
Subsidiaries) exceeds U.S. $100,000, such Options shall be treated as Nonstatutory Stock
Options. For purposes of this Section 9(b), Incentive Stock Options shall be taken into
account in the order in which they were granted. The Fair Market Value of the Shares shall
be determined as of the Grant Date.

     (c) Transferability. An Incentive Stock Option may not be sold, pledged,
assigned, hypothecated, transferred or disposed of in any manner by the Awardee otherwise
than by will or the laws of descent and distribution, and, during the lifetime of such
Awardee, may only be exercised by the Awardee. If the terms of an Incentive Stock Option are
amended to permit transferability, the Option will be treated for tax purposes as a
Nonstatutory Stock Option. The designation of a beneficiary by an Awardee will not
constitute a transfer.

     (d) Exercise Price. The per Share exercise price of an Incentive Stock Option
shall be determined by the Administrator in accordance with Section 8(b)(i) of the Plan.

     (e) Other Terms. Option Agreements evidencing Incentive Stock Options shall
contain such other terms and conditions as may be necessary to qualify, to the extent

12

 

determined desirable by the Administrator, with the applicable provisions of Section 422 of
the Code.

     10. Exercise of Option.

     (a) Procedure for Exercise.

     i. Any Option granted hereunder shall be exercisable according to the
terms of the Plan and at such times and under such conditions as determined by the
Administrator and set forth in the respective Option Agreement.

     ii. An Option shall be deemed exercised when the Company receives (A)
written or electronic notice of exercise (in accordance with the Option Agreement)
from the person entitled to exercise the Option; (B) full payment for the Shares
with respect to which the related Option is exercised; and (C) payment of all
applicable withholding taxes.

     iii. An Option may not be exercised for a fraction of a Share.

     (b) Rights as a Stockholder. The Company shall issue (or cause to be issued) such
Shares as administratively practicable after the Option is exercised. Shares issued upon
exercise of an Option shall be issued in the name of the Participant or, if requested by the
Participant, in the name of the Participant and his or her spouse. Unless provided otherwise
by the Administrator or pursuant to this Plan, until the Shares are issued (as evidenced by
the appropriate entry on the books of the Company or of a duly authorized transfer agent of
the Company), no right to vote or receive dividends or any other rights as a stockholder
shall exist with respect to the Shares subject to an Option, notwithstanding the exercise of
the Option.

     11. Stock Awards.

     (a) Stock Award Agreement. Each Stock Award Agreement shall contain provisions
regarding (i) the number of Shares subject to such Stock Award or a formula for determining
such number, (ii) the purchase price of the Shares, if any, and the means of payment for the
Shares, (iii) the performance criteria (including Qualifying Performance Criteria), if any,
and level of achievement versus these criteria that shall determine the number of Shares
granted, issued, retainable and/or vested, (iv) such terms and conditions on the grant,
issuance, vesting and/or forfeiture of the Shares as may be determined from time to time by
the Administrator, (v) restrictions on the transferability of the Stock Award and (vi) such
further terms and conditions in each case not inconsistent with this Plan as may be
determined from time to time by the Administrator.

     (b) Restrictions and Performance Criteria. The grant, issuance, retention and/or
vesting of each Stock Award or the Shares subject thereto may be subject to such performance
criteria (including Qualifying Performance Criteria) and level of achievement versus these
criteria as the Administrator shall determine, which criteria

13

 

may be based on financial performance, personal performance evaluations and/or completion of
service by the Awardee. Notwithstanding anything to the contrary herein, the performance
criteria for any Stock Award that is intended to satisfy the requirements for
“performance-based compensation” under Section 162(m) of the Code shall be established by
the Administrator based on one or more Qualifying Performance Criteria selected by the
Administrator and specified in writing not later than ninety (90) days after the
commencement of the period of service to which the performance goals relates, provided that
the outcome is substantially uncertain at that time (or in such other manner that complies
with Section 162(m)).

     (c) Forfeiture. Unless otherwise provided for by the Administrator, upon the
Awardee’s Termination of Employment, the Stock Award and the Shares subject thereto shall be
forfeited, provided that to the extent that the Participant purchased any Shares, the
Company shall have a right to repurchase the unvested Shares at such price and on such terms
and conditions as the Administrator determines.

     (d) Rights as a Stockholder. Unless otherwise provided by the Administrator, the
Participant shall have the rights equivalent to those of a stockholder and shall be a
stockholder only after Shares are issued (as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent of the Company) to the Participant.
Unless otherwise provided by the Administrator, a Participant holding Stock Units shall be
entitled to receive dividend payments as if he or she was an actual stockholder.

     (e) Stock Appreciation Rights.

     i. General. Stock Appreciation Rights may be granted either alone, in
addition to, or in tandem with other Awards granted under the Plan. The Board may
grant Stock Appreciation Rights to eligible Participants subject to terms and
conditions not inconsistent with this Plan and determined by the Board. The specific
terms and conditions applicable to the Participant shall be provided for in the
Stock Award Agreement. Stock Appreciation Rights shall be exercisable, in whole or
in part, at such times as the Board shall specify in the Stock Award Agreement.

     ii. Exercise of Stock Appreciation Right. Upon the exercise of a Stock
Appreciation Right, in whole or in part, the Participant shall be entitled to a
payment in an amount equal to the excess of the Fair Market Value on the date of
exercise of a fixed number of Shares covered by the exercised portion of the Stock
Appreciation Right, over the Fair Market Value on the grant date of the Shares
covered by the exercised portion of the Stock Appreciation Right (or such other
amount calculated with respect to Shares subject to the Award as the Board may
determine). The amount due to the Participant upon the exercise of a Stock
Appreciation Right shall be paid in such form of consideration as determined by the
Board and may be in cash, Shares or a combination thereof, over the period or
periods specified in the Stock Award Agreement. A Stock Award Agreement may place
limits on the amount that may be paid over any specified period or

14

 

periods upon the exercise of a Stock Appreciation Right, on an aggregate basis or as
to any Participant. A Stock Appreciation Right shall be considered exercised when
the Company receives written notice of exercise in accordance with the terms of the
Stock Award Agreement from the person entitled to exercise the Stock Appreciation
Right.

     iii. Nonassignability of Stock Appreciation Rights. Except as determined by
the Board, no Stock Appreciation Right shall be assignable or otherwise transferable
by the Participant except by will or by the laws of descent and distribution.

     12. Other Provisions Applicable to Awards.

     (a) Non-Transferability of Awards. Unless determined otherwise by the
Administrator, an Award may not be sold, pledged, assigned, hypothecated, transferred, or
disposed of in any manner other than by beneficiary designation, will or by the laws of
descent or distribution. Subject to Section 9(c), the Administrator may in its discretion
make an Award transferable to an Awardee’s family member or any other person or entity as it
deems appropriate. If the Administrator makes an Award transferable, either at the time of
grant or thereafter, such Award shall contain such additional terms and conditions as the
Administrator deems appropriate, and any transferee shall be deemed to be bound by such
terms upon acceptance of such transfer.

     (b) Qualifying Performance Criteria. For purposes of this Plan, the term
“Qualifying Performance Criteria” shall mean any one or more of the following performance
criteria, either individually, alternatively or in any combination, applied to either the
Company as a whole or to a business unit, Affiliate or business segment, either
individually, alternatively or in any combination, and measured either annually or
cumulatively over a period of years, on an absolute basis or relative to a pre-established
target, to previous years’ results or to a designated comparison group, in each case as
specified by the Administrator in the Award: (i) cash flow; (ii) earnings (including gross
margin; earnings before interest and taxes; earnings before interest, taxes, depreciation
and amortization; earnings before taxes; and net earnings); (iii) earnings per share; (iv)
growth in earnings or earnings per share; (v) stock price; (vi) return on equity or average
stockholders’ equity; (vii) total stockholder return; (viii) return on capital; (ix) return
on assets or net assets; (x) return on investment; (xi) revenue or growth in revenue; (xii)
income or net income; (xiii) operating income or net operating income, in aggregate or per
share; (xiv) operating profit or net operating profit; (xv) operating margin; (xvi) return
on operating revenue; (xvii) market share; (xviii) contract awards or backlog; (xix)
overhead or other expense reduction; (xx) growth in stockholder value relative to the moving
average of the S&P 500 Index or a peer group index; (xxi) credit rating; (xxii) strategic
plan development and implementation (including individual performance objectives that relate
to achievement of the Company’s or any business unit’s strategic plan); (xxiii) improvement
in workforce diversity; (xxiv) growth of revenue, operating income or net income; (xxv)
efficiency ratio; (xxvi) ratio of nonperforming assets to total assets; and (xxvii) any
other similar criteria. The Committee may appropriately adjust any evaluation of performance
under a Qualifying

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Performance Criteria to exclude any of
the following events that occurs during a performance period: (A) asset write-downs; (B)
litigation or claim judgments or settlements; (C) the effect of changes in tax law,
accounting principles or other such laws or provisions affecting reported results; (D)
accruals for reorganization and restructuring programs; and (E) any gains or losses
classified as extraordinary or as discontinued operations in the Company’s financial
statements.

     (c) Certification. Prior to the payment of any compensation under an Award
intended to qualify as “performance-based compensation” under Section 162(m) of the Code,
the Committee shall certify the extent to which any Qualifying Performance Criteria and any
other material terms under such Award have been satisfied (other than in cases where such
relate solely to the increase in the value of the Common Stock).

     (d) Discretionary Adjustments Pursuant to Section 162(m). Notwithstanding
satisfaction of any completion of any Qualifying Performance Criteria, to the extent
specified at the time of grant of an Award to “covered employees” within the meaning of
Section 162(m) of the Code, the number of Shares, Options or other benefits granted, issued,
retainable and/or vested under an Award on account of satisfaction of such Qualifying
Performance Criteria may be reduced by the Committee on the basis of such further
considerations as the Committee in its sole discretion shall determine.

     13. Adjustments upon Changes in Capitalization, Dissolution, Merger or Asset Sale.

     (a) Changes in Capitalization. Subject to any required action by the stockholders
of the Company, (i) the number and kind of Shares covered by each outstanding Award, (ii)
the price per Share subject to each such outstanding Award and (iii) each of the Share
limitations set forth in Section 3 of the Plan, shall be proportionately adjusted for any
increase or decrease in the number or kind of issued shares resulting from a stock split,
reverse stock split, stock dividend, combination or reclassification of the Common Stock, or
any other increase or decrease in the number of issued shares of Common Stock effected
without receipt of consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been “effected without
receipt of consideration.” Such adjustment shall be made by the Administrator, whose
determination in that respect shall be final, binding and conclusive. Except as expressly
provided herein, no issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of shares of Common Stock subject
to an Award.

     (b) Dissolution or Liquidation. In the event of the proposed dissolution or
liquidation of the Company, the Administrator shall notify each Participant as soon as
practicable prior to the effective date of such proposed transaction. To the extent it has
not been previously exercised or the Shares subject thereto issued to the Awardee and unless
otherwise determined by the Administrator, an Award will terminate immediately prior to the
consummation of such proposed transaction.

16

 

     (c) Change in Control. In the event there is a Change in Control of the Company,
as determined by the Board or a Committee, each outstanding Award shall be assumed or an
equivalent award or right shall be substituted by the successor corporation or a parent or
subsidiary of the successor corporation. In the event of a Change in Control and such
successor corporation does not assume or substitute Awards in connection with the Change in
Control, the vesting and exercisability of each outstanding Award shall accelerate such that
the Awards shall become vested and exercisable as to one hundred percent (100%) of the
otherwise then unvested Shares, and any repurchase right of the Company applicable to any
Shares shall lapse as to one hundred percent (100%) of the Shares otherwise subject to such
repurchase right immediately prior to consummation of the Change in Control, in each case
effective as of immediately prior to consummation of the Change in Control. To the extent
that an Award is not exercised prior to consummation of a Change in Control in which the
Award is not being assumed or substituted, such Award shall terminate upon such
consummation.

     Notwithstanding the above, in the event (i) of a Change in Control, and (ii) a
Participant holding an Award assumed or substituted by the successor corporation in the
Change in Control, or holding restricted Shares issued upon exercise of an Award with
respect to which the successor corporation has succeeded to a repurchase right as a result
of the Change in Control, is either not offered full-time employment with the successor
corporation upon general terms and conditions (such as duties, responsibilities, location of
employment and compensation, including without limitation the continued vesting of the Award
in accordance with its terms) not materially less favorable to the Participant than the
terms and conditions of the Participant’s employment with the Company prior to the Change in
Control or such employment is offered and accepted by the Participant (upon such general
terms and conditions) but such employment is terminated by the successor corporation within
twelve (12) months after the Change in Control without Cause, then any assumed or
substituted Award held by the terminated Participant at the time of termination shall
accelerate and become exercisable as to fifty percent (50%) of the otherwise unvested Shares
as of the date of termination, and any repurchase right applicable to any Shares shall lapse
as to fifty percent (50%) of the Shares as to which the repurchase right has not otherwise
lapsed as of the date of termination. The acceleration of vesting and lapse of repurchase
rights provided for in the previous sentence shall occur immediately prior to the effective
date of termination of the Participant’s employment or service relationship.

     For purposes of this Section 13(c), an Award shall be considered assumed, without
limitation, if, at the time of issuance of the stock or other consideration upon a Change in
Control, as the case may be, each holder of an Award would be entitled to receive upon
exercise of the Award the same number and kind of shares of stock or the same amount of
property, cash or securities as such holder would have been entitled to receive upon the
occurrence of the transaction if the holder had been, immediately prior to such transaction,
the holder of the number of Shares covered by the Award at such time (after giving effect to
any adjustments in the number of Shares covered by the Award as provided for in Section
13(a)); provided that if such consideration received in the transaction is not solely common
stock of the successor corporation, the

17

 

Administrator may, with the consent of the successor corporation, provide for the
consideration to be received upon exercise of the Award to be solely common stock of the
successor corporation equal to the Fair Market Value of the per Share consideration received
by holders of Common Stock in the transaction.

     14. Amendment and Termination of the Plan.

     (a) Amendment and Termination. The Administrator may amend, alter or discontinue
the Plan or any Award Agreement, but any such amendment shall be subject to approval of the
stockholders of the Company in the manner and to the extent required by Applicable Law. To
the extent required to comply with Section 162(m), the Company shall seek re-approval of the
Plan from time to time by the stockholders. In addition, without limiting the foregoing,
unless approved by the stockholders of the Company, no such amendment shall be made that
would:

     i. materially increase the maximum number of Shares for which Awards may
be granted under the Plan, other than an increase pursuant to Section 13 of the
Plan;

     ii. reduce the minimum exercise price at which Options may be granted under
the Plan;

     iii. result in a repricing of Options by (x) reducing the exercise price of
outstanding Options or (y) canceling an outstanding Option held by an Awardee and
re-granting to the Awardee a new Option with a lower exercise price, in either case
other than in connection with a change in the Company’s capitalization pursuant to
Section 13 of the Plan; or

     iv. change the class of persons eligible to receive Awards under the Plan.

     (b) Effect of Amendment or Termination. No amendment, suspension or termination
of the Plan shall impair the rights of any Award, unless mutually agreed otherwise between
the Participant and the Administrator, which agreement must be in writing and signed by the
Participant and the Company; provided further that the Administrator may amend an
outstanding Award in order to conform it to the Administrator’s intent (in its sole
discretion) that such Award not be subject to Code Section 409A(a)(1)(B). Termination of the
Plan shall not affect the Administrator’s ability to exercise the powers granted to it
hereunder with respect to Awards granted under the Plan prior to the date of such
termination.

     (c) Effect of the Plan on Other Arrangements. Neither the adoption of the Plan by
the Board or a Committee nor the submission of the Plan to the stockholders of the Company
for approval shall be construed as creating any limitations on the power of the Board or any
Committee to adopt such other incentive arrangements as it or they may deem desirable,
including without limitation, the granting of restricted stock or stock options otherwise
than under the Plan, and such arrangements may be either generally

18

 

applicable or applicable only in specific cases. The value of Awards granted pursuant to the
Plan will not be included as compensation, earnings, salaries or other similar terms used
when calculating an Awardee’s benefits under any employee benefit plan sponsored by the
Company or any Subsidiary except as such plan otherwise expressly provides.

     15. Designation of Beneficiary.

     (a) An Awardee may file a written designation of a beneficiary who is to receive the
Awardee’s rights pursuant to Awardee’s Award or the Awardee may include his or her Awards in
an omnibus beneficiary designation for all benefits under the Plan. To the extent that
Awardee has completed a designation of beneficiary while employed with the Company, such
beneficiary designation shall remain in effect with respect to any Award hereunder until
changed by the Awardee to the extent enforceable under Applicable Law.

     (b) Such designation of beneficiary may be changed by the Awardee at any time by
written notice. In the event of the death of an Awardee and in the absence of a beneficiary
validly designated under the Plan who is living at the time of such Awardee’s death, the
Company shall allow the executor or administrator of the estate of the Awardee to exercise
the Award, or if no such executor or administrator has been appointed (to the knowledge of
the Company), the Company, in its discretion, may allow the spouse or one or more dependents
or relatives of the Awardee to exercise the Award to the extent permissible under Applicable
Law or if no spouse, dependent or relative is known to the Company, then to such other
person as the Company may designate.

     16. No Right to Awards or to Employment.

          No person shall have any claim or right to be granted an Award and the grant of any Award
shall not be construed as giving an Awardee the right to continue in the employ of the Company or
its Affiliates. Further, the Company and its Affiliates expressly reserve the right, at any time,
to dismiss any Employee, Consultant or Awardee at any time without liability or any claim under the
Plan, except as provided herein or in any Award Agreement entered into hereunder.

     17. Legal Compliance.

          Shares shall not be issued pursuant to the exercise of an Option or Stock Award unless the
exercise of such Option or Stock Award and the issuance and delivery of such Shares shall comply
with Applicable Laws and shall be further subject to the approval of counsel for the Company with
respect to such compliance.

     18. Inability to Obtain Authority.

          To the extent the Company is unable to or the Administrator deems it infeasible to obtain
authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s
counsel to be necessary to the lawful issuance and sale of any Shares hereunder, the

19

 

Company shall be relieved of any liability with respect to the failure to issue or sell such
Shares as to which such requisite authority shall not have been obtained.

     19. Reservation of Shares.

          The Company, during the term of this Plan, will at all times reserve and keep available such
number of Shares as shall be sufficient to satisfy the requirements of the Plan.

     20. Notice.

          Any written notice to the Company required by any provisions of this Plan shall be addressed
to the Secretary of the Company and shall be effective when received.

     21. Governing Law; Interpretation of Plan and Awards.

     (a) This Plan and all determinations made and actions taken pursuant hereto shall be
governed by the substantive laws, but not the choice of law rules, of the state of Delaware.

     (b) In the event that any provision of the Plan or any Award granted under the Plan
is declared to be illegal, invalid or otherwise unenforceable by a court of competent
jurisdiction, such provision shall be reformed, if possible, to the extent necessary to
render it legal, valid and enforceable, or otherwise deleted, and the remainder of the terms
of the Plan and/or Award shall not be affected except to the extent necessary to reform or
delete such illegal, invalid or unenforceable provision.

     (c) The headings preceding the text of the sections hereof are inserted solely for
convenience of reference, and shall not constitute a part of the Plan, nor shall they affect
its meaning, construction or effect.

     (d) The terms of the Plan and any Award shall inure to the benefit of and be binding
upon the parties hereto and their respective permitted heirs, beneficiaries, successors and
assigns.

     (e) All questions arising under the Plan or under any Award shall be decided by the
Administrator in its total and absolute discretion. In the event the Participant believes
that a decision by the Administrator with respect to such person was arbitrary or
capricious, the Participant may request arbitration with respect to such decision. The
review by the arbitrator shall be limited to determining whether the Administrator’s
decision was arbitrary or capricious. This arbitration shall be the sole and exclusive
review permitted of the Administrator’s decision, and the Awardee shall as a condition to
the receipt of an Award be deemed to explicitly waive any right to judicial review.

     (f) Notice of demand for arbitration shall be made in writing to the Administrator
within thirty (30) days after the applicable decision by the Administrator. The arbitrator
shall be selected from amongst those members of the Board who are neither

20

 

Administrators nor Employees. If there are no such members of the Board, the arbitrator
shall be selected by the Board. The arbitrator shall be an individual who is an attorney
licensed to practice law in the State of Delaware. Such arbitrator shall be neutral within
the meaning of the Commercial Rules of Dispute Resolution of the American Arbitration
Association; provided, however, that the arbitration shall not be administered by the
American Arbitration Association. Any challenge to the neutrality of the arbitrator shall be
resolved by the arbitrator whose decision shall be final and conclusive. The arbitration
shall be administered and conducted by the arbitrator pursuant to the Commercial Rules of
Dispute Resolution of the American Arbitration Association. The decision of the arbitrator
on the issue(s) presented for arbitration shall be final and conclusive and may be enforced
in any court of competent jurisdiction.

     22. Limitation on Liability.

          The Company and any Affiliate which is in existence or hereafter comes into existence shall
not be liable to a Participant, an Employee, an Awardee or any other persons as to:

     (a) The Non-Issuance of Shares. The non-issuance or sale of Shares as to which
the Company has been unable to obtain from any regulatory body having jurisdiction the
authority deemed by the Company’s counsel to be necessary to the lawful issuance and sale of
any shares hereunder; and

     (b) Tax Consequences. Any tax consequence realized by any Participant, Employee,
Awardee or other person due to the receipt, exercise or settlement of any Option or other
Award granted hereunder.

     23. Unfunded Plan.

     Insofar as it provides for Awards, the Plan shall be unfunded. Although bookkeeping accounts
may be established with respect to Awardees who are granted Stock Awards under this Plan, any such
accounts will be used merely as a bookkeeping convenience. The Company shall not be required to
segregate any assets which may at any time be represented by Awards, nor shall this Plan be
construed as providing for such segregation, nor shall the Company nor the Administrator be deemed
to be a trustee of stock or cash to be awarded under the Plan. Any liability of the Company to any
Participant with respect to an Award shall be based solely upon any contractual obligations which
may be created by the Plan; no such obligation of the Company shall be deemed to be secured by any
pledge or other encumbrance on any property of the Company. Neither the Company nor the
Administrator shall be required to give any security or bond for the performance of any obligation
which may be created by this Plan.

21

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