Document:

exv4w3

 

Exhibit 4.3

1990 INNOVA STOCK OPTION PLAN

     This 1990 Innova Stock Option Plan (the “Plan”) provides for the grant of options to acquire
shares of Common Stock, $0.01 par value (the “Common Stock”), of INNOVA CORPORATION, a Delaware
corporation (the “Company”). Stock options granted under this Plan that qualify under Section 422A
of the Internal Revenue Code of 1986, as amended (the “Code”), are referred to in this Plan as
“Incentive Stock Options.” Incentive Stock Options and stock options that do not qualify under
Section 422A of the Code (“Non-Qualified Stock Options”) granted under this Plan are referred to as
“Options.”

	 	1.	 	PURPOSES.

     The purposes of this Plan are to retain the services of valued key employees and consultants
of the Company and such other persons as the Plan Administrator shall select in accordance with
Section 3 below, to encourage such persons to acquire a greater proprietary interest in the
Company, thereby strengthening their incentive to achieve the objectives of the shareholders of the
Company, and to serve as an aid and inducement in the hiring of new employees, consultants and
other persons selected by the Plan Administrator.

	 	2.	 	ADMINISTRATION.

     This Plan shall
 be administered by the Board of Directors of the Company (the “Board”), except
that the Board may, in its discretion, establish a committee composed of members of the Board or
other persons to administer this Plan, which committee (the “Committee”) may be an executive,
compensation or other committee, including a separate committee especially created for this
purpose. The Committee shall have such of the powers and authority vested in the Board hereunder as
the Board may delegate to it (including the power and authority to interpret any provision of this
Plan or of any Option). The members of any such Committee shall serve at the pleasure of the Board.
The Board, and/or the Committee if one has been established by the Board, are referred to in this
Plan as the “Plan Administrator.” Following registration of any of the Company’s securities under
Section 12 of the Securities Exchange Act of 1934, as amended, no person shall serve as a member
of the Plan Administrator if his or her service would disqualify this Plan from eligibility under
Securities and Exchange Commission Rule 16b-3, as amended from time to time, or any successor rule
or regulatory requirements; provided, that the Plan Administrator shall consist of at least
the minimum number of persons required by Securities and Exchange
Commission Rule 16b-3, as amended,
or any successor rule or regulatory requirements.

     Subject to the provisions of this Plan, and with a view to effecting its purpose, the Plan
Administrator shall have sole authority, in its absolute discretion, to (a) construe and interpret
this Plan; (b) define the terms used in this Plan; (c) prescribe, amend and rescind rules and
regulations relating to this Plan; (d) correct any defect, supply any omission or reconcile any
inconsistency in this Plan; (e) determine the individuals to whom Options shall be granted under
this Plan and whether the Option is an Incentive Stock Option or a Non-Qualified Stock Option; (f)
determine the time or times at which Options shall be granted under this Plan; (g) determine the
number of shares of Common Stock subject to each Option, the exercise price of each Option, the
duration of each Option and the times at which each Option shall become exercisable; (h) determine
all other terms and conditions of Options; and (i) make all other determinations necessary or
advisable for the administration of this Plan. All decisions, determinations and interpretations
made by the Plan Administrator shall be binding and conclusive on ail participants in this Plan and
on their legal representatives, heirs and beneficiaries.

 

 

	 	3.	 	ELIGIBILITY.

     Incentive Stock Options may be granted to any individual who, at the time the Option is
granted, is an employee of the Company or any Related Corporation (as defined below) including
employees who are directors of the Company (“Employees”). Non-Qualified Stock Options may be
granted to Employees and to such other persons or entities other than directors who are not
Employees as the Plan Administrator shall select. Options may be granted in substitution for
outstanding Options of another corporation in connection with the merger, consolidation,
acquisition of property or stock or other reorganization between such other corporation and the
Company or any subsidiary of the Company. Options also may be granted in exchange for outstanding
Options. Any person to whom an Option is granted under this Plan is referred to as an “Optionee.”

     As used in this Plan,
 the term “Related Corporation,” when referring to a subsidiary
corporation, shall mean any corporation (other than the Company) in an unbroken chain of
corporations beginning with the Company if, at the time of the granting of the Option, each of the
corporations other than the last corporation in the unbroken chain owns stock possessing 50 percent
or more of the total combined voting power of all classes of stock of one of the other corporations
in such chain. When referring to a parent corporation, the term “Related Corporation” shall mean
any corporation (other than the Company) in an unbroken chain of corporations ending with the
Company if, at the time of granting of the Option, each of the corporations other than the Company
owns stock possessing 50 percent or more of the total combined voting power of all classes or stock
of one of the other corporations in such chain.

	 	4.	 	STOCK.

     The Plan Administrator is authorized to grant Options to acquire up to a total of 2,000,000
shares of the Company’s authorized but unissued, or reacquired, Common Stock. The number of shares
with respect to which Options may be granted hereunder is subject to adjustment as set forth in
Section 5(m) hereof. In the event that any outstanding Option expires or is terminated for any
reason, the shares of Common Stock allocable to the unexercised portion of such Option may again be
subject to an Option to the same Optionee or to a different person eligible under Section 3 of this
Plan.

	 	5.	 	TERMS AND CONDITIONS OF OPTIONS.

     Each Option granted under this Plan shall be evidenced by a written agreement approved by the
Plan Administrator (the “Agreement”). Agreements may contain such additional provisions, not
inconsistent with this Plan, as the Plan Administrator in its discretion may deem advisable. All
Options also shall comply with the following requirements:

	 	(a)	 	Number of Shares and Type of Option.

     Each Agreement shall state the number of shares of Common Stock to which it pertains and
whether the Option is intended to be an Incentive Stock Option or a Non-Qualified Stock Option. In
the absence of action to the contrary by the Plan Administrator in connection with the grant of an
Option, all Options shall be Non-Qualified Stock Options. The aggregate fair market value
(determined at the Date of Grant, as defined below) of the stock with respect to which Incentive
Stock Options are exercisable for the first time by the Optionee during any calendar year (granted
under this Plan and all other Incentive Stock Option plans of the
Company, a Related Corporation or
a predecessor corporation) shall not exceed $100,000, or such other limit as may
be prescribed by the Code as it may be amended from time to time. Any Option which exceeds the
annual limit shall not be void but rather shall be a Non-Qualified Stock Option.

 

 

	 	(b)	 	Date of Grant.

     Each Agreement shall state the date the Plan Administrator has deemed to be the effective date
of the Option for purposes of this Plan (the “Date of Grant”).

	 	(c)	 	Option Price.

     Each Agreement shall state the price per share of Common Stock at which it is exercisable. The
exercise price shall be fixed by the Plan Administrator at whatever price the Plan Administrator
may determine in the exercise of its sole discretion; provided, that the per share exercise
price for any Option granted following the effective date of registration of any of the Company’s
securities under Section 12 of the Securities Exchange Act of 1934 shall not be less than the fair
market value per share of the Common Stock at the Date of Grant as determined by the Plan
Administrator in good faith; provided further, that the per share exercise price
for an Incentive Stock Option shall not be less than the fair market value per share of the Common
Stock at the Date of Grant as determined by the Plan Administrator in good faith; provided
further, that with respect to Incentive Stock Options granted to greater-than-10 percent
shareholders of the Company (as determined with reference to Section 424(d) of the Code), the
exercise price per share shall not be less than 110 percent of the fair market value per share of
the Common Stock at the Date of Grant; and, provided further, that Incentive Stock
Options granted in substitution for outstanding Options of another corporation in connection with
the merger, consolidation, acquisition of property or stock or other reorganization involving such
other corporation and the Company or any subsidiary of the Company may be granted with an exercise
price equal to the exercise price for the substituted Option of the other corporation, subject to
any adjustment consistent with the terms of the transaction pursuant to which the substitution is
to occur.

	 	(d)	 	Duration of Options.

     At the time of the
grant of the Option, the Plan Administrator shall designate, subject to
paragraph 5(g) below, the expiration date of the Option, which date shall not be later than 10
years from the Date of Grant in the case of Incentive Stock Options; provided, that the
expiration date of any Incentive Stock Option granted to a greater-than-10 percent shareholder of
the Company (as determined with reference to Section 424(d) of the Code) shall not be later than
five years from the Date of Grant. In the absence of action to the contrary by the Plan
Administrator in connection with the grant of a particular Option, and except in the case of
Incentive Stock Options as described above, all Options granted under this Plan shall expire 20
years from the Date of Grant. Notwithstanding anything contained in this Plan to the contrary, if,
in the opinion of a majority of the Board of Directors of the Company, it is probable that the
Company will consummate one of the transactions listed immediately below within sixty (60) days of
such opinion, then the Company may demand, by written notice, that an Optionee exercise the vested
portion of such Optionee’s Option in its entirety (including any portion as to which vesting has
been accelerated by the Plan Administrator under Section 5(f) below). Such Optionee shall have
thirty (30) days from the date of such notice to exercise such Optionee’s Option hereunder; such
Optionee’s entire Option shall terminate at the end of such 30-day period. The events to which
this demand procedure shall apply are as follows: (i) the consummation of a firmly underwritten
public offering of securities of the Company, registered under the Securities Act of 1933, as
amended, with an aggregate offering price of not less than $10,000,000; or (ii) a Change in
Control of the Company, as defined in Section 5(n)(1) hereof.

 

 

	 	(e)	 	Vesting Schedule.

     No Option shall be exercisable until it has vested. The vesting schedule for each Option shall
be specified by the Plan Administrator at the time of grant of the Option; provided, that
if no vesting schedule is specified at the time of grant, the Option shall vest over 60 months at a
rate of 1/60th per month beginning on the month following the Date of Grant.

	 	(f)	 	Acceleration of Vesting.

     The vesting of one or more outstanding Options may be accelerated by the Plan Administrator at
such times and in such amounts as it shall determine in its sole discretion. The vesting of Options
also shall be accelerated under the circumstances described in Sections 5(m) and 5(n).

	 	(g)	 	Term of Option.

     Vested Options shall terminate, to the extent not previously exercised, upon the occurrence of
the first of the following events: (i) the expiration of the Option, as designated by the Plan
Administrator in accordance with Section 5(d) above; (ii) the expiration of 90 days from the date
of an Optionee’s termination of employment or contractual relationship with the Company or any
Related Corporation for any reason whatsoever other than death or Disability (as defined below)
unless, in the case of a Non-Qualified Stock Option, the exercise period is extended by the Plan
Administrator until a date not later than the expiration date of the Option; or (iii) the
expiration of one year from (A) the date of death of the Optionee or (B) cessation of an Optionee’s
employment or contractual relationship by reason of Disability (as defined below) unless, in the
case of a Non-Qualified Stock Option, the exercise period is extended by the Plan Administrator
until a date not later than the expiration date of the Option. If an Optionee’s employment or
contractual relationship is terminated by death, any Option held by the Optionee shall be
exercisable only by the person or persons to whom such Optionee’s rights under such Option shall
pass by the Optionee’s will or by the laws of descent and distribution of the state or county of
the Optionee’s domicile at the time of death. “Disability” shall mean that a person is unable to
engage in any substantial gainful activity by reason of any medically determinable physical or
mental impairment that can be expected to result in death or that has lasted or can be expected to
last for a continuous period of not less than 12 months. The Plan Administrator shall determine
whether an Optionee has incurred a Disability on the basis of medical evidence acceptable to the
Plan Administrator. Upon making a determination of Disability, the Committee shall, for purposes of
this Plan, determine the date of an Optionee’s termination of employment or contractual
relationship.

     Unless accelerated in accordance with Section 5(f) above, unvested Options shall terminate
immediately upon termination of employment of the Optionee by the Company for any reason
whatsoever, including death or Disability. If, in the case of an Incentive Stock Option, an
Optionee’s relationship with the Company changes (e.g., from an Employee to a non-Employee, such as
a consultant), such change shall not constitute a termination of an Optionee’s employment with the
Company but rather the Optionee’s Incentive Stock Option shall automatically be converted into a
Non-Qualified Stock Option.

 

 

	 	(h)	 	Exercise of Options.

     Options shall be exercisable, either all or in part, at any time after vesting, until
termination. If less than all of the shares included in the vested portion of any Option are
purchased, the remainder may be purchased at any subsequent time prior to the expiration of the
Option term. No portion of any Option for less than 50 shares (as adjusted pursuant to Section
5(m) below) may be exercised; provided, that if the vested portion of any Option is less
than 50 shares, it may be exercised with respect to all shares for which it is vested. Only whole
shares may be issued pursuant to an Option, and to the extent that an Option covers less than one
share, it is unexercisable. Options or portions thereof may be
exercised by giving written notice to
the Company, which notice shall specify the number of shares to be purchased, and be accompanied by
payment in the amount of the aggregate exercise price for the Common Stock so purchased, which
payment shall be in the form specified in Section 5(1) below. The Company shall not be obligated to
issue, transfer or deliver a certificate of Common Stock to any Optionee, or to his personal
representative, until the aggregate exercise price has been paid for all shares for which the
Option shall have been exercised and adequate provision has been made by the Optionee for
satisfaction of any tax withholding obligations associated with such exercise. During the lifetime
of an Optionee, Options are exercisable only by the Optionee.

	 	(i)	 	Payment upon Exercise of Option.

     Upon the exercise of any Option, the aggregate exercise price shall be paid to the Company in
cash or by certified cashier’s check. In addition, upon approval of the Plan Administrator, an
Optionee may pay for all or any portion of the aggregate exercise price by (i) delivering to the
Company shares of Common Stock previously held by such Optionee, (ii) having shares withheld from
the amount of shares of Common Stock to be received by the Optionee or (iii) delivery of an
irrevocable subscription agreement obligating the Optionee to take and pay for the shares of Common
Stock to be purchased within one year of the date of such exercise. The shares of Common Stock
received or withheld by the Company as payment for shares of Common Stock purchased upon the
exercise of Options shall have a fair market value at the date of exercise (as determined by the
Plan Administrator) equal to the aggregate exercise price (or portion thereof) to be paid by the
Optionee upon such exercise.

	 	(j)	 	Rights as a Shareholder.

     An Optionee shall have no rights as a shareholder with respect to any shares covered by an
Option until such Optionee becomes a record holder of such shares, irrespective of whether such
Optionee has given notice of exercise. Subject to the provisions of Sections 5(m) and 5(n) hereof,
no rights shall accrue to an Optionee and no adjustments shall be made on account of dividends
(ordinary or extraordinary, whether in cash, securities or other property) or distributions or
other rights declared on, or created in, the Common Stock for which the record date is prior to the
date the Optionee becomes a record holder of the shares of Common Stock covered by the Option,
irrespective of whether such Optionee has given notice of exercise.

	 	(k)	 	Transfer of Option.

     Options granted under this Plan and the rights and privileges conferred by this Plan may not
be transferred, assigned, pledged or hypothecated in any manner (whether by operation of law or
otherwise) other than by will or by applicable laws of descent and distribution, and shall not be
subject to execution, attachment or similar process. Upon any attempt to transfer, assign, pledge,
hypothecate or otherwise dispose of any Option or of any right or privilege conferred by this Plan
contrary to the provisions hereof, or upon the sale, levy or any attachment or similar process upon
the rights and privileges conferred by this Plan, such Option shall thereupon terminate and become
null and void.

 

 

	 	(l)	 	Securities Regulation and Tax Withholding.

                         (1) Shares shall not be issued with respect to an Option unless the exercise of such Option
and the issuance and delivery of such shares shall comply with all relevant provisions of law,
including, without limitation; any applicable state securities laws, the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, the rules and regulations thereunder and
the requirements of any stock exchange upon which such shares may then be listed, and such issuance
shall be further subject to the approval of counsel for the Company with respect to such
compliance, including the availability of an exemption from registration for the issuance and sale
of such shares. The inability of the Company to obtain from any regulatory body the authority
deemed by the Company to be necessary for the lawful issuance and sale of any shares under this
Plan, or the unavailability of an exemption from registration for the issuance and sale of any
shares under this Plan, shall relieve the Company of any liability with respect to the non-issuance
or sale of such shares.

     As a condition to the exercise of an Option, the Plan Administrator may require the Optionee
to represent and warrant in writing at the time of such exercise that the shares are being
purchased only for investment and without any then-present intention to sell or distribute such
shares. At the option of the Plan Administrator, a stop-transfer order against such shares may be
placed on the stock books and records of the Company, and a legend indicating that the stock may
not be pledged, sold or otherwise transferred unless an opinion of counsel is provided stating that
such transfer is not in violation of any applicable law or regulation, may be stamped on the
certificates representing such shares in order to assure an exemption from registration. The Plan
Administrator also may require such other documentation as may from time to time be necessary to
comply with federal and state securities laws. THE COMPANY HAS NO OBLIGATION TO UNDERTAKE
REGISTRATION OF OPTIONS OR THE SHARES OF STOCK ISSUABLE UPON THE EXERCISE OF OPTIONS.

                         (2) As a condition to the exercise of any Option granted under this Plan, the Optionee shall
make such arrangements as the Plan Administrator may require for the satisfaction of any federal,
state or local withholding tax obligations that may arise in connection with such exercise.

                         (3) The issuance, transfer or delivery of certificates of Common Stock pursuant to the
exercise of Options may be delayed, at the discretion of the Plan Administrator, until the Plan
Administrator is satisfied that the applicable requirements of the federal and state securities
laws and the withholding provisions of the Code have been met.

	 	(m)	 	Stock Dividend. Reorganization or Liquidation.

                         (1) If (i) the Company shall at any time be involved in a transaction described in Section
424(a) of the Code (or any successor provision) or any “corporate transaction” described in the
regulations thereunder; (ii) the Company shall declare a dividend payable in, or shall subdivide or
combine, its Common Stock or (iii) any other event with substantially the same effect shall occur,
the Plan Administrator shall, with respect to each outstanding Option, proportionately adjust the
number of shares of Common Stock and/or the exercise price per share so as to preserve the rights
of the Optionee substantially proportionate to the rights of the Optionee prior to such event, and
to the extent that such action shall include an increase or decrease in the number of shares of
Common Stock subject to outstanding Options, the number of shares available under Section 4 of this
Plan shall automatically be increased or, decreased, as the case may be, proportionately, without
further action on the part of the Plan Administrator, the Company or the Company’s shareholders.

 

 

                         (2) If the Company is liquidated or dissolved, the Plan Administrator shall allow the holders
of any outstanding Options to exercise all or any part of the unvested portion of the Options held
by them; provided, however, that such Options must be exercised prior to the
effective date of such liquidation or dissolution. If the Option holders do not exercise their
Options prior to such effective date, each outstanding Option shall terminate as of the effective
date of the liquidation or dissolution.

                         (3) The foregoing adjustments in the shares subject to Options shall be made by the Plan
Administrator, or by any successor administrator of this Plan, or by the applicable terms of any
assumption or substitution document.

                         (4) The grant of an Option shall not affect in any way the right or power of the Company to
make adjustments, reclassifications, reorganizations or changes of its capital or business
structure, to merge, consolidate or dissolve, to liquidate or to sell or transfer all or any part
of its business or assets.

	 	(n)	 	Change in Control; Declaration of Extraordinary Dividend.

                         (1) Change in Control. Subject to the right of the Company to demand the exercise of
Options under Section 5(d) of this Plan, if at any time there is a Change in Control (as defined
below) of the Company, all Options shall accelerate and become fully vested and immediately
exercisable for the duration of the Option term. For purposes of this subsection (n)(1), “Change in
Control” shall mean either one of the following: (i) When
any “person” as such term is used in
sections 13(d) and 14(d) of the Exchange Act (other than the Company, a Subsidiary or a Company
employee benefit plan, including any trustee of such plan acting as trustee) becomes, after the
date of this Plan, the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing 90% or more of the combined
voting power of the Company’s then outstanding securities; or (ii) the occurrence of a transaction
requiring shareholder approval, and involving the sale of all or substantially all of the assets of
the Company or the merger of the Company with or into another corporation.

          
               (2) Declaration
 of Extraordinary Dividend. If at any time the Company declares an
Extraordinary Dividend (as defined below), all Options shall accelerate and thereupon become fully
vested and immediately exercisable for the duration of the Option term. For purposes of this
subsection (n)(2), “Extraordinary Dividend” shall mean a cash dividend payable to holders of
record of the Common Stock in an amount in excess of 10% of the then fair market value of the
Company’s Common Stock. The fair market value of the Company’s Common Stock shall be determined in
good faith by the Board Of Directors of the Company.

	 	6.	 	EFFECTIVE DATE TERM.

     This Plan shall be effective as of February 6, 1990. Incentive Stock Options may be granted by
the Plan Administrator from time to time thereafter until February 7, 2000. Non-Qualified Stock
Options may be granted until this Plan is terminated by the Board in its sole discretion.
Termination of this Plan shall not terminate any Option granted prior to such termination. Any
Incentive Stock Options granted by the Plan Administrator prior to the approval of this Plan by a
majority of the shareholders of the Company shall be granted subject to ratification of this Plan
by the shareholders of the Company within 12 months after this Plan is adopted by the Board, and if
shareholder ratification is not obtained, each and every Incentive Stock Option shall become a
Non-Qualified Stock Option.

 

 

	 	7.	 	NO OBLIGATIONS TO EXERCISE OPTION.

     The grant of an Option shall impose no obligation upon the Optionee to exercise such Option.

	 	8.	 	NO RIGHT TO OPTIONS OR TO EMPLOYMENT.

     Whether or not any Options are to be granted under this Plan shall be exclusively within the
discretion of the Plan Administrator, and nothing contained in this Plan shall be construed as
giving any person any right to participate under this Plan. The grant of an Option shall in no way
constitute any form of agreement or understanding binding on the Company or any Related
Corporation, express or implied, that the Company or any Related Corporation will employ or
contract with an Optionee for any length of time.

	 	9.	 	STOCK SUBJECT TO SHAREHOLDER AGREEMENT.

     Each Optionee shall
 be required, as a condition precedent to such Optionee exercising any
portion of such Optionee’s Option, to execute and deliver to the Company such Optionee’s written
agreement to become a party to and be bound by paragraphs 8.7 and 9 of that certain Preferred Stock
Purchase Agreement dated February 20, 1992, provided, that no such execution and delivery
shall be required after the consummation of a firmly underwritten public offering of securities of
the Company, registered under the Securities Act of 1933, as amended, with an aggregate offering
price of not less than $10,000,000.

	 	10.	 	APPLICATION OF FUNDS.

     The proceeds received by the Company from the sale of Common Stock issued upon the exercise of
Options shall be used for general corporate purposes, unless otherwise directed by the Board.

	 	11.	 	INDEMNIFICATION OF PLAN ADMINISTRATOR.

     In addition to all
 other rights of indemnification they may have as members of the Board,
members of the Plan Administrator shall be indemnified by the Company for all reasonable expenses
and liabilities of any type or nature, including attorneys’ fees, incurred in connection with any
action, suit or proceeding to which they or any of them are a party by reason of, or in connection
with, this plan or any Option granted under this Plan, and against all amounts paid by them in
settlement thereof (provided that such settlement is approved by independent legal counsel
selected by the Company), except to the extent that such expenses relate to matters for which it is
adjudged that such Plan Administrator member is liable for willful
misconduct; provided, that within
15 days after the institution of any such action, suit or proceeding, the Plan Administrator
member involved therein shall in writing notify the Company of such action, suit or proceeding, so
that the Company may have the opportunity to make appropriate arrangements to prosecute or defend
the same.

	 	12.	 	AMENDMENT OF PLAN.

     The Plan Administrator may, at any time, modify, amend or terminate this Plan and Options
granted under this Plan; provided, that no amendment with respect to an outstanding Option
shall be made over the objection of the Optionee thereof; and provided further,
that the approval of the holders of a majority of the Company’s outstanding shares of voting
capital stock is required within 12 months before or after the adoption by the Plan Administrator
of any amendment that will permit the granting of Options to a class of persons other than those
currently
eligible to receive Options under this Plan or that would cause this Plan to no longer comply
with Securities and Exchange Commission Rule 16b-3, as amended, or any successor rule or other
regulatory requirements. Without limiting the generality of the foregoing, the Plan Administrator
may modify grants to persons who are eligible to receive Options under this Plan who are foreign
nationals or employed outside the United States to recognize differences in local law, tax policy
or custom.exv4w4

 

Exhibit 4.4

DIGITAL MICROWAVE CORPORATION

1994 STOCK INCENTIVE PLAN

(As Amended and Restated Effective August 8, 1996; August 5, 1997; March 23,

1998; August 4, 1998; and November 12, 1999)

 

 

ARTICLE ONE

GENERAL

I. PURPOSE OF THE PLAN

     A. This 1994 Stock Incentive Plan (the “Plan”) is intended to promote the interests of Digital
Microwave Corporation, a Delaware corporation (the “Corporation”), by providing (i) key employees
(including officers) of the Corporation (or its Parent or Subsidiary corporations) who are
responsible for the management, growth and financial success of the Corporation, (ii) the
non-employee members of the Corporation’s Board of Directors (the “Board”) or the board of
directors of any Parent or Subsidiary corporation and (iii) those consultants and other independent
contractors who provide valuable services to the Corporation (or its Parent or Subsidiary
corporations) with the opportunity to acquire a proprietary interest, or otherwise increase their
proprietary interest, in the Corporation as an incentive for them to remain in the service of the
Corporation (or its Parent or Subsidiary corporations).

     B. The Plan became effective upon approval by the Corporation’s stockholders at the 1994
Annual Meeting held on July 27, 1994. Such date is hereby designated as the Effective Date of the
Plan.

II. STRUCTURE OF THE PLAN

     A. Stock Programs. The Plan shall be divided into five separate components:

     – The Discretionary Option Grant Program under which eligible individuals may, at the
discretion of the Plan Administrator, be granted options to purchase shares of Common Stock in
accordance with the provisions of Article Two.

     – The Automatic Option Grant Program under which non-employee Board members shall
automatically receive special option grants at periodic intervals to purchase shares of Common
Stock in accordance with the provisions of Article Three.

     – The Stock Fee Program under which the non-employee Board members may elect to apply all
or a portion of their annual cash retainer fee and meeting fees to the acquisition of shares of
Common Stock in accordance with the provisions of Article Four.

     – The Salary Reduction Grant Program under which eligible individuals may, pursuant to the
provisions of Article Five, elect to have a portion of their base salary reduced each year in
return for options to purchase shares of Common Stock at an aggregate discount from the Fair
Market Value of the option shares on the grant date equal to the salary reduction amount.

     – The Stock Issuance Program under which eligible individuals may, pursuant to the
provisions of Article Six, be issued shares of Common Stock directly, through the immediate
purchase of such shares at a price not less than eighty-five percent (85%) of their Fair Market
Value at the time of issuance, as a bonus tied to the performance of services or the
Corporation’s attainment of financial objectives, or pursuant to the individual’s election to
receive such shares in lieu of base salary.

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

     C. Glossary. Capitalized terms shall, except as otherwise specifically defined within the
provisions of the Plan, have the meanings assigned to such terms in the Glossary.

1

 

III. ADMINISTRATION OF THE PLAN

     A. The Committee shall have sole and exclusive authority to administer each program
established under the Plan. Members of the Committee shall serve for such period as the Board may
determine and shall be subject to removal by the Board at any time.

     B. The Committee as Plan Administrator shall have full power and discretion (subject to the
express provisions of the Plan) to establish such rules and regulations as it may deem appropriate
for the proper administration of each program established under the Plan and to make such
determinations under, and issue such interpretations of, the provisions of each such program and
any outstanding option grants or stock issuances thereunder as it may deem necessary or advisable.
Decisions of the Plan Administrator shall be final and binding on all parties who have an interest
in those programs or any outstanding option or stock issuance thereunder.

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

     D. Notwithstanding the foregoing provisions of this Part III, the Subcommittee shall have sole
and exclusive authority to administer the participation of Covered Employees in the Discretionary
Option Grant, Salary Reduction Grant and Stock Issuance Programs to the extent necessary to qualify
the grants under such programs as “performance-based compensation” under Section 162(m) of the
Code. In the case of such grants to Covered Employees, references to the “Plan Administrator” shall
be deemed to be references to the Subcommittee.

IV. ELIGIBILITY

     A. The persons eligible to participate in the Discretionary Option Grant, Salary Reduction
Grant and Stock Issuance Programs are as follows:

     – officers and other key employees of the Corporation (or any Parent or Subsidiary) who
render services which contribute to the management, growth and financial success of the
Corporation; and

     – those consultants or other independent contractors who provide valuable services to the
Corporation (or any Parent or Subsidiary).

     B. Non-employee Board members shall not be eligible to participate in the Discretionary Option
Grant, Salary Reduction Grant or Stock Issuance Program or in any other stock option, stock
purchase, stock bonus or other stock plan of the Corporation (or its Subsidiaries). Such
non-employee Board members shall, however, be eligible to participate in the Automatic Option Grant
and Stock Fee Programs.

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

V. STOCK SUBJECT TO THE PLAN

     A. Shares of Common Stock shall be available for issuance under the Plan and shall be drawn
from either the Corporation’s authorized but unissued shares of Common Stock or from reacquired
 shares of Common Stock, including shares repurchased by the Corporation on the open market.
The number of shares of Common Stock reserved for issuance over the term of the Plan shall be fixed
at 7,166,660 shares, subject to adjustment as provided below.

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     B. The number of shares of Common Stock available for issuance under the Plan shall
automatically increase on the first trading day of each calendar year during each of the first five
years of the term of the Plan, beginning with the 1995 calendar year, by an amount equal to one
percent (1%) of the shares of Common Stock outstanding on December 31 of the immediately preceding
calendar year; but in no event shall any such annual increase exceed 300,000 shares (as adjusted to
reflect the two-for-one stock split effected in November 1997). None of the additional shares
resulting from such annual increases may be made the subject of Incentive Options granted under the
Plan.

     C. No one individual participating in the Plan may be granted stock options, separately
exercisable stock appreciation rights and receive direct stock issuances for more than 750,000
shares in any fiscal year of the Company (subject to adjustment as provided below). In connection
with his or her initial commencement of Service, an individual participating in the Plan may be
granted stock options, separately exercisable stock appreciation rights or receive direct stock
issuances for up to an additional 750,000 shares (subject to adjustment as provided below) which
shall not count against the limit set forth in the previous sentence. To the extent required by
Section 162(m) of the Code or the regulations thereunder, in applying the foregoing limitations, if
any stock option or stock appreciation right is cancelled, the cancelled stock option or stock
appreciation right shall continue to count against the maximum number of shares any individual may
acquire. For this purpose, the repricing of a stock option (or in the case of a stock appreciation
right, the reduction of the base amount on which the stock appreciation is calculated) shall be
treated as the cancellation of the existing stock option or stock appreciation right and the grant
of a new stock option or stock appreciation right.

     D. Should one or more outstanding options under this Plan expire or terminate for any reason
prior to exercise in full, then the shares subject to the portion of each option not so exercised
shall be available for subsequent issuance under the Plan. Shares subject to any stock appreciation
rights exercised under the Plan and all share issuances under the Plan (other than issuances in
payment of exercised stock appreciation rights), whether or not the issued shares are subsequently
repurchased by the Corporation pursuant to its repurchase rights under the Plan, shall reduce on a
share-for-share basis the number of shares of Common Stock available for subsequent issuance under
the Plan. In addition, should the exercise price of an outstanding option under the Plan be paid
with shares of Common Stock or should shares of Common Stock otherwise issuable under the Plan be
withheld by the Corporation in satisfaction of the withholding taxes incurred in connection with
the exercise of an outstanding option under the Plan or the vesting of a share issuance under the
Plan, then the number of shares of Common Stock available for issuance under the Plan shall be
reduced by the gross number of shares for which the option is exercised or which vest under the
share issuance, and not by the net number of shares of Common Stock actually issued to the holder
of such option or share issuance.

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

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ARTICLE TWO

DISCRETIONARY OPTION GRANT PROGRAM

I. TERMS AND CONDITIONS OF OPTIONS

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

     A. Exercise Price.

          1. The exercise price per share shall be fixed by the Plan Administrator in accordance with
the following provisions:

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

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

          2. The exercise price shall become immediately due upon exercise of the option and shall be
payable in one of the alternative forms specified below:

               (i) full payment in cash or check made payable to the Corporation’s order,

               (ii) full payment in shares of Common Stock held for the requisite period necessary to avoid a
charge to the Corporation’s earnings for financial reporting purposes and valued at Fair Market
Value on the date the option is exercised,

               (iii) full payment in a combination of shares of Common Stock held for the requisite period
necessary to avoid a charge to the Corporation’s earnings for financial reporting purposes and
valued at Fair Market Value on the date the option is exercised and cash or check made payable to
the Corporation’s order, or

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

     B. Term and Exercise of Options. Each option shall be exercisable at such time or times,
during such period and for such number of shares as shall be determined by the Plan Administrator
and set forth in the instrument evidencing such option. No option shall, however, have a maximum
term in excess of ten (10) years.

     During the lifetime of the Optionee, each Incentive Option, together with any stock
appreciation rights pertaining to such option, shall be exercisable only by the Optionee and shall
not be assignable or transferable except for a transfer of the option effected by will or by the
laws of descent and distribution following the Optionee’s death. Any Non-Statutory Option shall be
assignable or transferable to the extent determined by the Plan Administrator and provided in the
agreement evidencing such option. However, any assignee or transferee shall be entitled to exercise
any such Non-Statutory Option or any related
Tandem Rights or Limited Rights in the same manner and only to the same extent as the Optionee
or right holder would have been entitled to exercise such option or such related rights had it not
been transferred and shall be subject to the same restrictions, repurchase rights, and other
limitations that bound the Optionee or right holder, unless otherwise determined by the Plan
Administrator.

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     C. Termination of Service.

          1. Except to the extent otherwise expressly authorized by the Plan Administrator, no Optionee
shall have more than a thirty-six (36)-month period measured from the date of such individual’s
cessation of Service in which to exercise his or her outstanding options under the Plan.

          2. Any option exercisable in whole or in part by the Optionee at the time of death may be
subsequently exercised by the personal representative of the Optionee’s estate or by the person or
persons to whom the option is transferred pursuant to the Optionee’s will or in accordance with the
laws of descent and distribution. However, no such option shall remain exercisable for more than
thirty-six (36) months after the date of the Optionee’s death.

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

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

          5. Should the Optionee’s Service be terminated for Misconduct, all outstanding options held by
that individual shall terminate immediately and cease to remain outstanding.

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

     – to permit one or more options to be exercised not only with respect to the number of
vested shares of Common Stock for which each such option is exercisable at the time of the
Optionee’s cessation of Service but also with respect to one or more subsequent installments of
vested shares for which the option would otherwise have become exercisable had such cessation of
Service not occurred;

     – to extend the period of time for which the option is to remain exercisable following the
Optionee’s cessation of Service or death from the limited period otherwise in effect for that
option to such greater period of time as the Plan Administrator shall deem appropriate, but in
no event beyond the specified expiration date of the option term.

     D. Stockholder Rights. An Optionee shall have none of the rights of a stockholder with respect
to any option shares until such individual shall have exercised the option and paid the exercise
price for the purchased shares.

     E. Repurchase Rights. The shares of Common Stock acquired under this Discretionary Grant
Program may be subject to repurchase by the Corporation in accordance with the following
provisions:

          1. The Plan Administrator shall have the discretion to grant options which are exercisable for
unvested shares of Common Stock. Should the Optionee cease Service while holding any unvested
shares purchased under such options, then the Corporation shall have the right to repurchase
any or all of those unvested shares at the exercise price paid per share. The terms and conditions
upon which such repurchase right shall be exercisable (including the period and procedure for
exercise and the appropriate vesting schedule for the purchased shares) shall be established by the
Plan Administrator and set forth in the instrument evidencing such repurchase right.

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

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

II. INCENTIVE OPTIONS

     The terms and conditions specified below shall be applicable to all Incentive Options granted
under the Plan. Incentive Options may only be granted to individuals who are Employees. Options
which are specifically designated as Non-Statutory Options when issued under the Plan shall not be
subject to such terms and conditions.

     A. Dollar Limitation. The aggregate Fair Market Value (determined as of the respective date or
dates of grant) of the Common Stock for which one or more options granted to any Employee under
this Plan (or any other option plan of the Corporation or its Subsidiaries or Parents) may for the
first time become exercisable as incentive stock options under the Federal tax laws during any one
calendar year shall not exceed the sum of One Hundred Thousand Dollars ($100,000). To the extent
the Employee holds two (2) or more such options which become exercisable for the first time in the
same calendar year, the foregoing limitation on the exercisability of such options as incentive
stock options under the Federal tax laws shall be applied on the basis of the order in which such
options are granted. Should the number of shares of Common Stock for which any Incentive Option
first becomes exercisable in any calendar year exceed the applicable One Hundred Thousand Dollar
($100,000) limitation, then the option may nevertheless be exercised in that calendar year for the
excess number of shares as a Non-Statutory Option under the Federal tax laws.

     B. 10% Stockholder. If any individual to whom an Incentive Option is granted is the owner of
stock (as determined under Section 424(d) of the Code) possessing ten percent (10%) or more of the
total combined voting power of all classes of stock of the Corporation or any one of its
Subsidiaries or Parents, then the exercise price per share shall not be less than one hundred ten
percent (110%) of the Fair Market Value per share of Common Stock on the grant date and the option
term shall not exceed five (5) years measured from the grant date.

III. CORPORATE TRANSACTIONS/CHANGES IN CONTROL

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

6

 

     B. The Plan Administrator shall have the discretionary authority, exercisable either at the
time the option is granted or at any time while the option remains outstanding, to provide for the
automatic acceleration of one or more outstanding options upon the occurrence of a Corporate
Transaction, whether or not those options are to be assumed or replaced in the Corporate
Transaction. Alternatively, the Plan Administrator shall have the authority to provide for the
subsequent acceleration of any outstanding options which do not otherwise accelerate at the time of
the Corporate Transaction, or the subsequent termination of any of the Corporation’s outstanding
repurchase rights which do not otherwise terminate at the time of the Corporate Transaction, should
the Optionee’s Service terminate through an Involuntary Termination effected within a designated
period following the effective date of such Corporate Transaction.

     C. Immediately following the consummation of the Corporate Transaction, all outstanding
options shall terminate, except to the extent assumed by the successor corporation or its parent
company.

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

     E. The Plan Administrator shall have the discretionary authority, exercisable either at the
time the option is granted or at any time while the option remains outstanding, to provide for the
automatic acceleration of one or more outstanding options (and the termination of one or more of
the Corporation’s outstanding repurchase rights) upon the occurrence of a Change in Control. The
Plan Administrator shall also have full power and authority to condition any such option
acceleration (and the termination of any outstanding repurchase rights) upon the subsequent
termination of the Optionee’s Service through an Involuntary Termination effected within a
specified period following the Change in Control.

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

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

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

IV. STOCK APPRECIATION RIGHTS/HOSTILE TAKE-OVER

     A. The Plan Administrator shall have full power and authority, exercisable in its sole
discretion, to grant to selected Optionees: (i) Tandem Stock Appreciation Rights (“Tandem Rights”)
and/or Limited Stock Appreciation Rights (“Limited Rights”).

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     B. The following terms and conditions shall govern the grant and exercise of Tandem Rights:

          1. One or more Optionees may be granted the Tandem Right, exercisable upon such terms and
conditions as the Plan Administrator may establish, to elect between the exercise of the underlying
stock option for shares of Common Stock and the surrender of that option in exchange for a
distribution from the Corporation in an amount equal to the excess of (i) the Fair Market Value (on
the option surrender date) of the number of shares in which the Optionee is at the time vested
under the surrendered option (or surrendered portion thereof) over (ii) the aggregate exercise
price payable for such vested shares.

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

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

     C. The following terms and conditions shall govern the grant and exercise of Limited Rights:

          1. One or more officers of the Corporation subject to the short-swing profit restrictions of
the federal securities laws may, in the Plan Administrator’s sole discretion, be granted Limited
Rights with respect to their outstanding options.

          2. Upon the occurrence of a Hostile Take-Over, each such officer holding one or more options
with such a Limited Right shall have the unconditional right (exercisable for a thirty (30)-day
period following such Hostile Take-Over) to surrender each such option to the Corporation, to the
extent the option is at the time exercisable for fully vested shares of Common Stock. The officer
shall in return be entitled to a cash distribution from the Corporation in an amount equal to the
excess of (i) the Take-Over Price of the vested shares of Common Stock at the time subject to each
surrendered option (or surrendered portion of such option) over (ii) the aggregate exercise price
payable for such vested shares. Such cash distribution shall be made within five (5) days following
the option surrender date.

          3. Neither the approval of the Plan Administrator nor the consent of the Board shall be
required in connection with such option surrender and cash distribution. Any unsurrendered portion
of the option shall continue to remain outstanding and become exercisable in accordance with the
terms of the instrument evidencing such grant.

ARTICLE THREE

AUTOMATIC OPTION GRANT PROGRAM

I. ELIGIBILITY

     The individuals eligible to receive automatic option grants pursuant to the provisions of this
Automatic Grant Program shall be limited to (i) those individuals who are first elected as
non-employee Board members at the 1994 Annual Meeting of Stockholders, (ii) those individuals who
are first elected or appointed as non-employee Board members after the date of such Annual Meeting,
whether through appointment by the Board or election by the Corporation’s stockholders, and (iii)
those individuals who are reelected to serve as non-employee Board members at one or more Annual
Stockholder Meetings beginning with the 1995 Annual Meeting. Only individuals who have not been in
the prior Service of the Corporation (or any Parent or Subsidiary) may receive an automatic option
grant under clause (i) or
(ii) above. Any non-employee Board member eligible to participate in the Automatic Grant
Program pursuant to the foregoing criteria is hereby designated an Eligible Director for purposes
of such program.

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II. TERM OF AUTOMATIC OPTION GRANTS PROGRAM

     The Automatic Option Grant Program shall terminate on November 12, 1999. All option grants
under the Automatic Option Grant Program that are outstanding on such date shall thereafter
continue to have force and effect in accordance with the provisions of the instruments evidencing
such grants.

III. TERMS AND CONDITIONS OF AUTOMATIC OPTION GRANTS

     A. Grant Dates. Option grants shall be made on the dates specified below:

          1. Each individual first elected as an Eligible Director at the 1994 Annual Stockholders
Meeting shall automatically be granted on the date of such Meeting a Non-Statutory Option to
purchase 30,000 shares of Common Stock (as adjusted to reflect the two-for-one stock split effected
in November 1997).

          2. Each individual who first becomes an Eligible Director after the date of the 1994 Annual
Stockholders Meeting but before the date of the 1997 Annual Stockholders Meeting, whether through
election by the Corporation’s stockholders or appointment by the Board, shall automatically be
granted, at the time of such initial election or appointment, a Non-Statutory Option to purchase
30,000 shares of Common Stock (as adjusted to reflect the two-for-one stock split effected in
November 1997).

          3. Each individual who first becomes an Eligible Director on or after the date of the 1997
Annual Stockholders Meeting, whether through election by the Corporation’s stockholders or
appointment by the Board, but before November 12, 1999, shall automatically be granted, at the time
of such initial election or appointment, a Non-Statutory Option to purchase 42,000 shares of Common
Stock (as adjusted to reflect the two-for-one stock split effected in November 1997).

          4. On the date of the 1995 Annual Stockholders Meeting, each individual who is at that time
re-elected as a non-employee Board member and who has not otherwise received any prior automatic
option grants during the two preceding calendar years shall automatically be granted a
Non-Statutory Option to purchase an additional 10,000 shares of Common Stock (as adjusted to
reflect the two-for-one stock split effected in November 1997), provided such individual has served
as a Board member for at least twelve (12) months. On the date of the 1996 Annual Stockholders
Meeting, each such individual who is at that time re-elected as a non-employee Board member shall
automatically be granted a Non-Statutory option to purchase an additional 10,000 shares of Common
Stock (as adjusted to reflect the two-for-one stock split effected in November 1997).

          5. On the date of each Annual Stockholders Meeting, beginning with the 1997 Annual Meeting,
that occurs prior to November 12, 1999, each individual who is at that time re-elected as a
non-employee Board member and who has served on the Board for three years shall automatically be
granted each year thereafter a Non-Statutory Option to purchase an additional 14,000 shares of
Common Stock (as adjusted to reflect the two-for-one stock split effected in November 1997).

     B. No Limitation. There shall be no limit on the number of such 14,000-share (as adjusted to
reflect the two-for-one stock split effected in November 1997) annual option grants any one
Eligible Director may receive over his or her period of Board service prior to the termination of
the Automatic Option Grant Program on November 12, 1999.

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

     D. Payment. The exercise price shall be payable in any of the alternative forms authorized
under the Discretionary Option Grant Program. To the extent the option is exercised for any
unvested shares,
the Optionee must execute and deliver to the Corporation a stock purchase agreement for those
unvested shares which provides the Corporation with the right to repurchase, at the exercise price
paid per share, any unvested shares held by the Optionee at the time of cessation of Board service
and which precludes the sale, transfer or other disposition of the purchased shares at any time
while those shares remain subject to such repurchase right.

9

 

     E. Option Term. Each automatic grant shall have a maximum term of ten (10) years measured from
the grant date.

     F. Exercisability/Vesting. Each automatic grant shall be immediately exercisable for any or
all of the option shares. However, any shares purchased under the option shall be subject to
repurchase by the Corporation, at the exercise price paid per share, upon the Optionee’s cessation
of Board service prior to vesting in those shares. Each automatic grant shall vest, and the
Corporation’s repurchase right shall lapse, in a series of three (3) equal and successive annual
installments over the Optionee’s period of continued service as a Board member, with the first such
installment to vest upon Optionee’s completion of one (1) year of Board service measured from the
automatic grant date.

     G. Transferability. The automatic option grant, together with the limited stock appreciation
right pertaining to such option, shall be fully assignable and transferable notwithstanding any
contrary provision of the agreement evidencing such option and related stock appreciation right;
provided, however, that any assignee or transferee shall be entitled to exercise such option and
any related stock appreciation right in the same manner and only to the same extent as the Optionee
would have been entitled to exercise such option and the related stock appreciation right had it
not been transferred and shall be subject to the same restrictions, repurchase rights, and other
limitations that bound the Optionee, unless otherwise determined by the Plan Administrator.

     H. Termination of Board Service.

          1. Should the Optionee cease to serve as a Board member for any reason (other than death or
Permanent Disability) while holding one or more automatic option grants, then such individual shall
have a six (6)-month period following the date of such cessation of Board service in which to
exercise each such option for any or all of the option shares in which the Optionee is vested at
the time of such cessation of Board service. However, each such option shall immediately terminate
and cease to remain outstanding, at the time of such cessation of Board service, with respect to
any option shares in which the Optionee is not otherwise at that time vested under such option.

          2. Should the Optionee die within six (6) months after cessation of Board service, then any
automatic option grant held by the Optionee at the time of death may subsequently be exercised, for
any or all of the option shares in which the Optionee is vested at the time of his or her cessation
of Board service (less any option shares subsequently purchased by the Optionee prior to death), by
the personal representative of the Optionee’s estate or by the person or persons to whom the option
is transferred pursuant to the Optionee’s will or in accordance with the laws of descent and
distribution. The right to exercise each such option shall lapse upon the expiration of the twelve
(12)-month period measured from the date of the Optionee’s death.

          3. Upon the Optionee’s death or Permanent Disability while serving as a Board member, the
shares of Common Stock at the time subject to each automatic option grant held by the Optionee
shall immediately vest in full (and the Corporation’s repurchase right with respect to such shares
shall terminate), and the Optionee (or the representative of the Optionee’s estate or the person or
persons to whom the option is transferred upon the Optionee’s death) shall have a twelve (12)-month
period following the date of such cessation of Board service in which to exercise such option for
any or all of those vested shares of Common Stock.

          4. In no event shall any automatic grant remain exercisable after the expiration date of the
ten (10)-year option term. Upon the expiration of the applicable post-service exercise period
provided above or (if earlier) upon the expiration of the ten (10)-year option term, the automatic
grant shall
terminate and cease to be outstanding for any option shares in which the Optionee was vested
at the time of his or her cessation of Board service but for which such option was not otherwise
exercised.

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     I. Stockholder Rights. The holder of an automatic option grant under this Automatic Grant
Program shall have none of the rights of a stockholder with respect to any shares subject to that
option until such individual shall have exercised the option and paid the exercise price for the
purchased shares.

IV. CORPORATE TRANSACTION/CHANGE IN CONTROL/HOSTILE TAKE-OVER

     A. The shares of Common Stock subject to each automatic option grant outstanding at the time
of any Corporate Transaction but not otherwise vested shall automatically vest in full and the
Corporation’s repurchase right with respect to those shares shall terminate, so that each such
option shall, immediately prior to the specified effective date for the Corporate Transaction,
become fully exercisable for all of the shares of Common Stock at the time subject to that option
and may be exercised for all or any portion of such shares as fully vested shares of Common Stock.
Immediately following the consummation of the Corporate Transaction, all automatic option grants
shall terminate and cease to remain outstanding, except to the extent assumed by the successor
entity or its parent corporation.

     B. The shares of Common Stock subject to each automatic option grant outstanding at the time
of any Change in Control but not otherwise vested shall automatically vest in full and the
Corporation’s repurchase right with respect to those shares shall terminate, so that each such
option shall, immediately prior to the specified effective date for the Change in Control, become
fully exercisable for all of the shares of Common Stock at the time subject to that option and may
be exercised for all or any portion of such shares as fully vested shares of Common Stock. Each
option shall remain so exercisable for all the option shares following the Change in Control until
the expiration or sooner termination of the option term.

     C. Upon the occurrence of a Hostile Take-Over, the Optionee shall also have a thirty (30) day
period in which to surrender to the Corporation each automatic option grant held by him or her. The
Optionee shall in return be entitled to a cash distribution from the Corporation in an amount equal
to the excess of (i) the Take-Over Price of the shares of Common Stock at the time subject to the
surrendered option over (ii) the aggregate exercise price payable for such shares. Such cash
distribution shall be paid within five (5) days following the surrender of the option to the
Corporation. Neither the approval of the Plan Administrator nor the consent of the Board shall be
required in connection with such option surrender and cash distribution. The shares of Common Stock
subject to each option surrendered in connection with the Hostile Take-Over shall not be available
for subsequent issuance under the Plan.

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

ARTICLE FOUR

STOCK FEE PROGRAM

I. ELIGIBILITY

     Each individual serving as a non-employee Board member shall be eligible to elect to apply all
or any portion of the annual retainer fee and meeting fees otherwise payable to such individual in
cash on or before December 31, 1999 to the acquisition of shares of Common Stock upon the terms and
conditions of this Stock Fee Program.

II. TERM OF STOCK FEE PROGRAM

     The Stock Fee Program shall terminate on December 31, 1999, and no portion of the annual
retainer fee or meeting fees payable to a non-employee Board member after that date shall be used
for the acquisition of shares of Common Stock under the Stock Fee Program.

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III. ELECTION PROCEDURE

     A. Filing. The non-employee Board member must make the stock-in-lieu-of-fee election prior to
the start of the calendar year for which the election is to be effective. The first calendar year
for which any such election may be filed shall be the 1995 calendar year and the last year for
which any such election may be filed shall be the 1999 calendar year. The election, once filed,
shall be irrevocable. The election for any upcoming calendar year may be filed at any time prior to
the start of that year, but in no event later than December 31 of the immediately preceding
calendar year. The non-employee Board member may file a standing election to be in effect for two
(2) or more consecutive calendar years or to remain in effect indefinitely until revoked by written
instrument filed with the Plan Administrator at least six (6) months prior to the start of the
first calendar year for which such standing election is no longer to remain in effect.

     B. Election Form. The election must be filed with the Plan Administrator on the appropriate
form provided for this purpose. On the election form, the non-employee Board member must indicate
the percentage or dollar amount of his or her annual retainer fee and/or his or her meeting fees to
be applied to the acquisition of shares.

IV. SHARE ISSUANCE

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

     B. Vesting of Annual Retainer Fee Shares. Upon completion of each calendar month of Board
service during the year for which the election applicable to the annual retainer fee is in effect,
the non-employee Board member shall vest in one-twelfth (1/12) of the issued shares, and the stock
certificate for those shares shall be released from escrow. Immediate vesting in all the issued
shares shall occur in the event (i) the non-employee Board member should die or become Permanently
Disabled during his or her period of Board service or (ii) there should occur a Corporate
Transaction or Change in Control while such individual remains in Board service. Should such
individual cease Board service prior to vesting in one or more monthly installments of the issued
shares, then those unvested shares shall be canceled by the Corporation, and the non-employee Board
member shall not be entitled to any cash payment or other consideration from the Corporation with
respect to the canceled shares and shall have no further shareholder rights with respect to such
shares.

     C. Issue Date for Meeting Fee Shares. On the first trading day following any meeting, in a
calendar year for which the election is effective, the portion of the meeting fee subject to such
election shall automatically be applied to the acquisition of shares of Common Stock by dividing
the elected dollar amount by the Fair Market Value per share of Common Stock on that trading day.
The number of issuable shares shall be rounded down to the next whole share, and the shares shall
be issued as soon as practicable to the non-employee Board member.

ARTICLE FIVE

SALARY REDUCTION GRANT PROGRAM

I. ELIGIBILITY

     The Plan Administrator shall have plenary authority to select, prior to the start of each
calendar year, the particular key employees who shall be eligible for participation in the Salary
Reduction Grant Program for that calendar year. In order to participate for a particular calendar
year, each selected individual must, prior to the start of that calendar year, file with the Plan
Administrator (or its designate) an irrevocable
authorization directing the Corporation to reduce his or her base salary for that calendar
year by a designated multiple of one percent (1%), but in no event less than five percent (5%).

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     The Plan Administrator shall review the filed authorizations and determine whether to approve,
in whole or in part, one or more of those authorizations. To the extent the Plan Administrator
approves one or more authorizations, the individuals who filed those authorizations shall be
granted options under this Salary Reduction Grant Program. Options granted under the Salary
Reduction Grant Program shall be Non-Statutory Options evidenced by instruments in such form as the
Plan Administrator shall from time to time approve; provided, however, that each such instrument
shall comply with and incorporate the terms and conditions specified below.

II. TERMS AND CONDITIONS OF OPTION

     A. Exercise Price.

          1. The exercise price per share shall be thirty-three and one-third percent (33-1/3%) of the
Fair Market Value per share of Common Stock on the grant date.

          2. The exercise price shall become immediately due upon exercise of the option and shall be
payable in any of the alternative forms authorized under the Discretionary Grant Program.

     B. Number of Option Shares. The number of shares of Common Stock for which each grant is to be
made to a selected Optionee shall be determined pursuant to the following formula (rounded down to
the nearest whole number):

     X = A ÷ (B x 66-2/3%), where

     X is the number of option shares,

     A is the dollar amount of the approved reduction in the Optionee’s base salary for
the calendar year, and

     B is the Fair Market Value per share of Common Stock on the date of the grant.

     C. Term and Exercise of Options.

          1. Each option shall have a maximum term of ten (10) years measured from the grant date.
Provided the Optionee continues in Service, the option shall become exercisable for (i) fifty
percent (50%) of the option shares on the last day of June in the calendar year for which the
option is granted and for (ii) the balance of the option shares in a series of six (6) successive
equal monthly installments on the last day of each of the next six (6) calendar months.

          2. The option shall be assignable or transferable to the extent determined by the Plan
Administrator and provided in the agreement evidencing such option. However, any assignee or
transferee shall be entitled to exercise the option in the same manner and only to the same extent
as the Optionee would have been entitled to exercise the option had it not been transferred and
shall be subject to the same restrictions, repurchase rights, and other limitations that bound the
Optionee or right holder, unless otherwise determined by the Plan Administrator.

     D. Effect of Termination of Service.

          1. Should an Optionee cease Service for any reason after his or her outstanding option has
become exercisable in whole or in part, then that option shall remain exercisable, for any or all
of the shares for which the option is exercisable on the date of such cessation of Service, until
the expiration of the ten (10) year option term or any sooner termination in connection with a
Corporate Transaction. Following the Optionee’s death, such option may be exercised, for any or all
of the shares for which the option is exercisable at the time of the Optionee’s death, by the
personal representative of the Optionee’s estate or by the person or persons to whom the option is
transferred pursuant to the Optionee’s will or in
accordance with the laws of descent and distribution. Such right of exercise shall lapse, and
the option shall terminate, upon the expiration of the ten (10)-year option term or any sooner
termination in connection with a Corporate Transaction.

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          2. Should the Optionee die before his or her outstanding option becomes exercisable for any of
the option shares, then the personal representative of the Optionee’s estate or the person or
persons to whom the option is transferred pursuant to the Optionee’s will or in accordance with the
laws of descent and distribution shall nevertheless have the right to exercise such option for up
to that number of option shares equal to (i) one-twelfth (1/12) of the total number of option
shares multiplied by (ii) the number of full calendar months which have elapsed between the first
day of the calendar year for which the option is granted and the last day of the calendar month
during which the Optionee ceases Service. Such right of exercise shall lapse, and the option shall
terminate, upon the earliest to occur of (i) the specified expiration date of the option term, (ii)
the termination of the option in connection with a Corporate Transaction or (iii) the third
anniversary of the date of the Optionee’s death. However, the option shall, with respect to any and
all option shares for which it is not exercisable at the time of the Optionee’s cessation of
Service, terminate immediately upon such cessation of Service and shall cease to remain outstanding
with respect to those option shares.

          3. Should the Optionee become Permanently Disabled and cease by reason thereof to remain in
Service before his or her outstanding option becomes exercisable for any of the option shares, then
the Optionee shall nevertheless have the right to exercise such option for up to that number of
option shares equal to (i) one-twelfth (1/12) of the total number of option shares multiplied by
(ii) the number of full calendar months which elapse between the first day of the calendar year for
which the option is granted and the last day of the calendar month during which the Optionee ceases
Service. Such right of exercise shall lapse, and the option shall terminate, upon the expiration of
the ten (10)-year option term or any sooner termination in connection with a Corporate Transaction.
However, the option shall, with respect to any and all option shares for which it is not
exercisable at the time of the Optionee’s cessation of Service, terminate immediately upon such
cessation of Service and shall cease to remain outstanding with respect to those option shares.

          4. Except to the limited extent specifically provided above, should the Optionee cease for any
reason to remain in Service before his or her outstanding option first becomes exercisable for one
or more option shares, then that option shall immediately terminate upon such cessation of Service
and shall cease to remain outstanding.

     E. Stockholder Rights. The Optionee shall have none of the rights of a stockholder with
respect to any option shares until such individual shall have exercised the option and paid the
exercise price for those shares.

III. CORPORATE TRANSACTION/CHANGE IN CONTROL

     A. Should any Corporate Transaction occur while the Optionee remains in Service, then each
outstanding option held by such Optionee under this Salary Reduction Program shall become
exercisable, immediately prior to the specified effective date of such Corporate Transaction, for
all of the shares at the time subject to such option and may be exercised for any or all of such
shares as fully-vested shares of Common Stock. Immediately following the consummation of the
Corporate Transaction, each such option shall terminate unless assumed by the successor entity or
its parent corporation.

     B. Upon the Involuntary Termination of the Optionee’s Service following a Change in Control,
each outstanding option held by such Optionee under this Salary Reduction Program shall immediately
become exercisable for all of the shares at the time subject to such option and may be exercised
for any or all of such shares as fully-vested shares of Common Stock. The option shall remain so
exercisable until the expiration of the ten (10)-year option term.

     C. Option grants under this Salary Reduction Program shall not affect the Corporation’s right
to adjust, reclassify, reorganize or change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer any or all of its assets.

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ARTICLE SIX

STOCK ISSUANCE PROGRAM

I. TERMS AND CONDITIONS OF STOCK ISSUANCES

     Shares of Common Stock may be issued under the Stock Issuance Program through direct and
immediate purchases without any intervening stock option grants. The issued shares shall be
evidenced by a Stock Issuance Agreement (“Issuance Agreement”) that complies with the terms and
conditions below.

     A. Consideration

          1. Newly Issued Shares shall be issued under the Stock Issuance Program for one or more of the
following items of consideration that the Plan Administrator may deem appropriate in each
individual instance:

               (i) full payment in cash or check made payable to the Corporation’s order,

               (ii) a promissory note payable to the Corporation’s order in one or more installments, which
may be subject to cancellation in whole or in part upon terms and conditions established by the
Plan Administrator, or

               (iii) past services rendered to the Corporation or any Parent or Subsidiary.

     2. Newly Issued Shares must be issued for consideration with a value not less than eighty-five
percent (85%) of the Fair Market Value of such shares at the time of issuance.

     3. Treasury Shares may be issued under the Stock Issuance Program for such consideration
(including one or more of the items of consideration specified above) as the Plan Administrator may
deem appropriate, whether such consideration is in an amount less than, equal to or greater than
the Fair Market Value of the Treasury Shares at the time of issuance. Treasury Shares may, in lieu
of any cash consideration, be issued subject to such vesting requirements tied to the Participant’s
period of future Service or the Corporation’s attainment of specified performance objectives as the
Plan Administrator may establish at the time of issuance.

     4. Shares of Common Stock may also, in the Plan Administrator’s absolute discretion, be issued
pursuant to an irrevocable election by the Participant to receive a portion of his or her base
salary in shares of Common Stock in lieu of such base salary. Any such issuance shall be effected
in accordance with the following guidelines:

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

     – Upon completion of each calendar month of Service during the year for which the election
is in effect, the Participant shall vest in one-twelfth (1/12) of the issued shares, and the
stock certificate for those shares shall be released from escrow. All the issued shares shall
immediately vest upon (i) the consummation of a Corporate Transaction or (ii) the Involuntary
Termination of the Participant’s Service following a Change in Control. Should the Participant
otherwise cease Service prior to vesting in one or more monthly installments of the issued
shares, then those unvested shares shall immediately be surrendered to the Corporation for
cancellation, and the Participant shall not be
entitled to any cash payment or other consideration from the Corporation with respect to
the canceled shares and shall have no further stockholder rights with respect to such shares.

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     B. Vesting Provisions

          1. The shares of Common Stock issued under the Stock Issuance Program (other than shares
issued in lieu of salary) may, in the absolute discretion of the Plan Administrator, be fully and
immediately vested upon issuance or may vest in installments over the Participant’s period of
Service. The elements of the vesting schedule applicable to any unvested shares of Common Stock
issued under the Stock Issuance Program, namely:

               (i) the Service period to be completed by the Participant or the performance objectives to be
achieved by the Corporation,

               (ii) the number of installments in which the shares are to vest,

               (iii) the interval or intervals (if any) which are to lapse between installments, and

               (iv) the effect which death, Permanent Disability or other event designated by the Plan
Administrator is to have upon the vesting schedule,

shall be determined by the Plan Administrator and incorporated into the Issuance Agreement executed
by the Corporation and the Participant at the time such unvested shares are issued.

          2. The Participant shall have full stockholder rights with respect to any shares of Common
Stock issued to him or her under the Stock Issuance Program, whether or not his or her interest in
those shares is vested. Accordingly, the Participant shall have the right to vote such shares and
to receive any regular cash dividends paid on such shares. Any new, additional or different shares
of stock or other property (including money paid other than as a regular cash dividend) which the
Participant may have the right to receive with respect to his or her unvested shares by reason of
any stock dividend, stock split, recapitalization, combination of shares, exchange of shares or
other change affecting the outstanding Common Stock as a class without the Corporation’s receipt of
consideration shall be issued, subject to (i) the same vesting requirements applicable to the
Participant’s unvested shares and (ii) such escrow arrangements as the Plan Administrator shall
deem appropriate.

          3. Should the Participant cease to remain in Service while holding one or more unvested shares
of Common Stock under the Stock Issuance Program, then those shares shall be immediately canceled
by the Corporation, and the Participant shall have no further stockholder rights with respect to
those shares. To the extent the canceled shares were previously issued to the Participant for
consideration paid in cash or cash equivalent (including the Participant’s purchase-money
promissory note), the Corporation shall repay to the Participant the cash consideration paid for
the surrendered shares and shall cancel the unpaid principal balance of any outstanding
purchase-money note of the Participant attributable to such canceled shares. The canceled shares
may, at the Plan Administrator’s discretion, be retained by the Corporation as Treasury Shares or
may be retired to authorized but unissued share status.

          4. The Plan Administrator may in its discretion elect to waive the cancellation of one or more
unvested shares of Common Stock (or other assets attributable thereto) which would otherwise occur
upon the non-completion of the vesting schedule applicable to such shares. Such waiver shall result
in the immediate vesting of the Participant’s interest in the shares of Common Stock as to which
the waiver applies. Such waiver may be effected at any time, whether before or after the
Participant’s cessation of Service or the attainment or non-attainment of the applicable
performance objectives.

II. CORPORATE TRANSACTIONS/CHANGE IN CONTROL

     A. Upon the occurrence of any Corporate Transaction, all unvested shares of Common Stock at
the time outstanding under this Stock Issuance Program shall immediately vest in full and the
Corporation’s repurchase rights shall terminate, except to the extent: (i) any such repurchase
right is expressly assigned to the successor corporation (or parent thereof) in connection with the
Corporate Transaction or (ii) such termination is precluded by other limitations imposed in the
Issuance Agreement.

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     B. The Plan Administrator shall have the discretionary authority, exercisable at any time
while unvested shares remain outstanding under this Stock Issuance Program, to provide for the
immediate and automatic vesting of those shares in whole or in part upon the occurrence of a Change
in Control. The Plan Administrator shall also have full power and authority to condition any such
accelerated vesting upon the subsequent termination of the Participant’s Service through an
Involuntary Termination effected within a specified period following the Change in Control.

III. TRANSFER RESTRICTIONS/SHARE ESCROW

     A. Unvested shares may, in the Plan Administrator’s discretion, be held in escrow by the
Corporation until the Participant’s interest in such shares vests or may be issued directly to the
Participant with restrictive legends on the certificates evidencing such unvested shares. To the
extent an escrow arrangement is utilized, the unvested shares and any securities or other assets
issued with respect to such shares (other than regular cash dividends) shall be delivered in escrow
to the Corporation to be held until the Participant’s interest in such shares (or other securities
or assets) vests. Alternatively, if the unvested shares are issued directly to the Participant, the
restrictive legend on the certificates for such shares shall read substantially as follows:

“THE SHARES REPRESENTED BY THIS CERTIFICATE ARE UNVESTED AND ARE SUBJECT TO (I) CERTAIN TRANSFER
RESTRICTIONS AND (II) CANCELLATION OR REPURCHASE IN THE EVENT THE REGISTERED HOLDER (OR HIS/HER
PREDECESSOR IN INTEREST) CEASES TO REMAIN IN THE CORPORATION’S SERVICE. SUCH TRANSFER
RESTRICTIONS AND THE TERMS AND CONDITIONS OF SUCH CANCELLATION OR REPURCHASE ARE SET FORTH IN A
STOCK ISSUANCE AGREEMENT BETWEEN THE CORPORATION AND THE REGISTERED HOLDER (OR HIS/HER
PREDECESSOR IN INTEREST) DATED      , A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF
THE CORPORATION.”

     B. The Participant shall have no right to transfer any unvested shares of Common Stock issued
to him or her under the Stock Issuance Program. For purposes of this restriction, the term
“transfer” shall include (without limitation) any sale, pledge, assignment, encumbrance, gift, or
other disposition of such shares, whether voluntary or involuntary. Upon any such attempted
transfer, the unvested shares shall immediately be canceled, and neither the Participant nor the
proposed transferee shall have any rights with respect to such canceled shares. However, the
Participant shall have the right to make a gift of unvested shares acquired under the Stock
Issuance Program to the Participant’s spouse or issue, including adopted children, or to a trust
established for such spouse or issue, provided the transferee of such shares delivers to the
Corporation a written agreement to be bound by all the provisions of the Stock Issuance Program and
the Issuance Agreement applicable to the transferred shares.

ARTICLE SEVEN

MISCELLANEOUS

I. LOANS OR INSTALLMENT PAYMENTS

     A. The Plan Administrator may, in its discretion, assist any Optionee or Participant
(including an Optionee or Participant who is an officer of the Corporation), in the exercise of one
or more options granted to such Optionee under the Discretionary Grant Program or the Salary
Reduction Grant Program or the purchase of one or more shares issued to such Participant under the
Stock Issuance Program, including the satisfaction of any Federal, state and local income and
employment tax obligations arising therefrom, by (i) authorizing the extension of a loan from the
Corporation to such Optionee or Participant or (ii) permitting the Optionee or Participant to pay
the exercise price or purchase price for the acquired shares in installments over a period of
years. The terms of any loan or installment method of payment (including the interest rate and
terms of repayment) shall be upon such terms as the Plan Administrator specifies in the applicable
option or issuance agreement or otherwise deems appropriate under the

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circumstances. Loans or installment payments may be authorized with or without security or
collateral. However, the maximum credit available to the Optionee or Participant may not exceed the
exercise or purchase price of the acquired shares (less the par value of such shares) plus any
Federal, state and local income and employment tax liability incurred by the Optionee or
Participant in connection with the acquisition of such shares.

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

II. AMENDMENT OF THE PLAN AND AWARDS

     A. The Board has complete and exclusive power and authority to amend or modify the Plan (or
any component thereof) in any or all respects whatsoever. To the extent necessary to comply with
applicable laws or if the Plan Administrator deems it advisable, the Corporation shall obtain
stockholder approval of any Plan amendment in such manner and to such a degree as required.
However, no such amendment or modification shall adversely affect rights and obligations with
respect to stock options, stock appreciation rights or unvested stock issuances at the time
outstanding under the Plan, unless the Optionee or Participant consents to such amendment.

     B. Unless approved by the stockholders, the Board (or Plan Administrator) shall not reduce the
exercise price of any outstanding stock option or reduce the base amount on which the appreciation
of any outstanding stock appreciation right is calculated to reflect a reduction in the Fair Market
Value of the Common Stock since the grant date of the stock option or stock appreciation right.

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

III. TAX WITHHOLDING

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

     B. The Plan Administrator may, in its discretion, provide any holder of Non-Statutory Options
or unvested shares under the Stock Issuance Program with the right to use shares of Common Stock in
satisfaction of all or part of no more than the minimum amount of the Federal, state and local
income and employment tax liabilities required to be withheld from such holder (the “Taxes”) in
connection with the exercise of their options or the vesting of their shares. Such right may be
provided to any such holder in either or both of the following formats:

     – Stock Withholding: The holder of the Non-Statutory Option or unvested shares may be
provided with the election to have the Corporation withhold, from the shares of Common Stock
otherwise issuable upon the exercise of such Non-Statutory Option or the vesting of such shares,
a portion of those shares with an aggregate Fair Market Value equal to the percentage of the
Taxes (up to one hundred percent (100%)) specified by such holder.

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     – Stock Delivery: The holder of the Non-Statutory Option or the unvested shares may be
provided with the election to deliver to the Corporation, at the time the Non-Statutory Option
is exercised or the shares vest, one or more shares of Common Stock previously acquired by such
individual (other than in connection with the option exercise or share vesting triggering the
Taxes) with an aggregate Fair Market Value equal to the percentage of the Taxes (up to one
hundred percent (100%)) specified by such holder.

IV. EFFECTIVE DATE AND TERM OF PLAN

     A. This Plan shall become effective immediately upon approval by the Corporation’s
stockholders at the 1994 Annual Meeting.

     B. The Automatic Option Grant Program shall terminate on November 12, 1999. All option grants
under the Automatic Option Grant Program that are outstanding on such date shall thereafter
continue to have force and effect in accordance with the provisions of the instruments evidencing
such grants.

     C. The Stock Fee Program shall terminate on December 31, 1999, and no portion of the annual
retainer fee or meeting fees payable to a non-employee Board member after that date shall be used
for the acquisition of shares of Common Stock under the Stock Fee Program.

     D. The Plan shall terminate upon the earlier of (i) April 28, 2004 or (ii) the date on which
all shares available for issuance under the Plan shall have been issued or canceled pursuant to the
exercise of options or stock appreciation rights or the issuance of shares (whether vested or
unvested) under the Plan. If the date of termination is determined under clause (i) above, then all
option grants and unvested stock issuances outstanding on such date shall thereafter continue to
have force and effect in accordance with the provisions of the instruments evidencing such grants
or issuances.

V. USE OF PROCEEDS

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

VI. REGULATORY APPROVALS

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

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

VII. NO EMPLOYMENT/SERVICE RIGHTS

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

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GLOSSARY

     The following definitions shall be in effect under the Plan:

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

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

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

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

     Committee: a committee appointed by the Board to administer the Plan and constituted in such
manner for transactions under the Plan to be exempt from Section 16(b) of the 1934 Act in
accordance with Rule 16b-3 thereunder.

     Common Stock: common stock of the Corporation.

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

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

     – a sale, transfer or other disposition of all or substantially all of the Corporation’s
assets in complete liquidation or dissolution of the Corporation, or

     – any reverse merger in which the Corporation is the surviving entity but in which
securities possessing more than fifty percent (50%) of the total combined voting power of the
Corporation’s outstanding securities are transferred to a person or persons different from the
persons holding those securities immediately prior to such merger.

     Covered Employee: an individual defined as a “Covered Employee” under Section 162(m) of the
Code and the regulations thereunder.

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

     Fair Market Value: the closing selling price per share on the date in question on the NASDAQ
National Market. If there is no reported closing selling price for the Common Stock on the date in
question, then the Fair Market Value shall be the closing selling price on the last preceding date
for which such quotation exists.

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

     – the direct or indirect acquisition by any person or related group of persons of
securities possessing more than fifty percent(50%) of the total combined voting power of the
Corporation’s outstanding securities pursuant to a tender or exchange offer made directly to the
Corporation ’s stockholders which the Board does not recommend such stockholders to accept, and

     – more than fifty percent (50%) of the acquired securities are accepted from holders other
than the officers and directors of the Corporation subject to the short-swing profit
restrictions of Section 16 of the 1934 Act.

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

     Involuntary Termination: the termination of the Service of any Optionee or Participant which
occurs by reason of:

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

     – such individual’s voluntary resignation following (A) a change in his or her position
with the Corporation which materially reduces his or her level of responsibility, (B) a
reduction in his or her level of compensation (including base salary, fringe benefits and any
non-discretionary and objective-standard incentive payment or bonus award) by more than five
percent (5%) or (C) a relocation of such individual’s place of employment by more than fifty
(50) miles, provided and only if such change, reduction or relocation is effected by the
Corporation without the individual’s consent.

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

     Newly Issued Shares: shares of Common Stock drawn from the Corporation’s authorized but
unissued shares of Common Stock.

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

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

     Optionee: any person to whom an option is granted under the Discretionary Grant, Automatic
Grant or Salary Reduction Grant Program in effect under the Plan.

     Parent: each corporation (other than the Corporation) in an unbroken chain of corporations
ending with the Corporation, provided each such corporation (other than the Corporation) in the
unbroken chain owns, at the time of the determination, stock possessing fifty percent (50%) or more
of the total combined voting power of all classes of stock in any other corporation in such chain.

     Participant: any person who receives a direct issuance of Common Stock under the Stock
Issuance Program in effect under the Plan.

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

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     Plan Administrator: the committee of two (2) or more non-employee Board members appointed by
the Board to administer the Discretionary Option Grant, the Salary Reduction and the Stock Issuance
Programs.

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

     Subcommittee: a subcommittee of the Committee comprised solely of two or more “outside
directors” within the meaning of Section 162(m) of the Code and the regulations thereunder.

     Subsidiary: each corporation (other than the Corporation) in an unbroken chain of corporations
beginning with the Corporation, provided each such corporation (other than the last corporation) in
the unbroken chain owns, at the time of the determination, stock possessing fifty percent (50%) or
more of the total combined voting power of all classes of stock in any other corporation in such
chain.

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

     Treasury Shares: shares of Common Stock reacquired by the Corporation and held as treasury
shares.

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