Document:

exv10w3

 

EXHIBIT 10.3

SECOND AMENDMENT TO DISTRIBUTION SERVICES AGREEMENT

THIS SECOND AMENDMENT TO DISTRIBUTION SERVICES AGREEMENT (“Amendment”) is entered into as of
September 29, 2006, by and between Connetics Corporation (“Connetics”) and Cardinal Health, Inc.
(“Cardinal”). Connetics and Cardinal entered into that certain Distribution Services Agreement
dated December 1, 2004 (“Original Agreement”), as amended by that certain Amendment to Distribution
Services Agreement dated as of December 22, 2005 (“First Amendment”; the Original Agreement
together with the First Amendment shall hereinafter be collectively referred to as the
“Agreement”). Capitalized terms not defined herein shall have the meaning ascribed to such terms
in the Agreement.

AGREEMENT

	1.	 	The following definitions in Article 1 of the Agreement are hereby deleted and replaced in
their entirety as follows:

Commitment Period. “Commitment Period” means January 1, 2006 through December 31,
2006, unless this Agreement is terminated earlier under the provisions of Article 4.

Term. “Term” means the date first written above, through and including December 31,
2006, unless this Agreement is terminated earlier under the provisions of Article 4.

	2.	 	Section 2.3.1 of the Agreement is hereby deleted and replaced in its entirety with the
following:

2.3.1 Inventory Levels. During the Term of this Agreement, Cardinal will
use its best efforts to maintain an inventory level of ** inventory level shall be
referred to herein as the “SKU Inventory Level”). The SKU Inventory Level shall be
based on EDI 852 data and shall be calculated by including Product in the NLC, in
transit and in any forward distribution center or other location or facility where
Product is stored or warehoused. If
at any time the inventory level of a particular SKU falls below **, the Parties
shall use best efforts to work together to maintain the inventory level for such SKU
at the SKU Inventory Level. Connetics will not penalize Cardinal for inventory
above this ** level as long as Cardinal is making its best efforts to bring
inventory levels in line with this agreement.

	3.	 	Section 2.3.2 of the Agreement is hereby deleted and replaced in its entirety with the
following:

2.3.2 Purchase Limits. Connetics agrees to ship any Cardinal purchase order
in full with respect to any SKU of Product provided the purchase order is consistent
with the SKU Inventory Level. Connetics has the right to question any purchase
order that exceeds Cardinal’s Average Weekly Movement or that is not consistent with
the SKU Inventory Level. Connetics has the right to cancel any quantities for which
Cardinal is not able to provide reasonable justifications and/or explanations.

	4.	 	Section 2.3.3 of the Agreement is hereby deleted and replaced in its entirety with the
following:

2.3.3 Weekly Purchasing. During the Term of this Agreement, Cardinal will
use its best efforts to purchase Product weekly from Connetics based on the SKU
Inventory Level. The Parties do not intend that any reduction in inventory shall be achieved
by Cardinal’s return of Product to Connetics.

 

			
	**	 	Portions of this exhibit have been omitted and filed separately with the SEC. Confidential
treatment has been requested with respect to the omitted portions.

 

 

	5.	 	The first sentence of Article 4 of the Agreement is hereby deleted and replaced in its
entirety with the following:

This Agreement shall remain in full force through December 31, 2006, unless
terminated earlier in accordance with this Article 4.

	6.	 	The remaining provisions of the Agreement shall continue in full force and effect as though
fully set forth in this Amendment. Any conflict between the provisions of this Amendment and
the Agreement shall be resolved in favor of this Amendment.

The Parties have duly executed this Amendment as of the day first written above.

	 	 	 	 	 	 	 	 	 	 	 
	CARDINAL HEALTH, INC.	 	 	 	CONNETICS CORPORATION	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Sidney Seller
	 	 	 	By:
	 	/s/ Greg Vontz	 	 
	 

	 	 

	 	 	 	 	 	 

	 	 
	Name:

	 	Sidney Seller
	 	 	 	Name:
	 	Greg Vontz	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Title:

	 	V.P. Strategic Purch.
	 	 	 	Title:
	 	President & COOexv10w63

 

Exhibit 10.63

Solexa, Inc.

2005 Equity Incentive Plan

Adopted: June 3, 2005

Approved By Stockholders: July 7, 2005

Amended by Board of Directors: July 28, 2006

Amendment Approved By Stockholders: October 4, 2006

Termination Date: June 2, 2015

	1.	 	Purposes.

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

     (b) Available Stock Awards. The Plan provides for the grant of the following Stock Awards:
(i) Incentive Stock Options, (ii) Nonstatutory Stock Options, (iii) Stock Purchase Awards, (iv)
Stock Bonus Awards, (v) Stock Appreciation Rights, (vi) Stock Unit Awards and (vii) Other Stock
Awards.

     (c) General Purpose. The Company, by means of the Plan, seeks to secure and retain the
services of the group of persons eligible to receive Stock Awards, to provide incentives for such
persons to exert maximum efforts for the success of the Company and its Affiliates and to provide a
means by which such eligible recipients may be given an opportunity to benefit from increases in
value of the Common Stock through the granting of Stock Awards.

	2.	 	Definitions.

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

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

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

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

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

1.

 

consolidation or similar transaction. Notwithstanding the foregoing, a Change in Control
shall not be deemed to occur (A) on account of the acquisition of securities of the Company by an
investor, any affiliate thereof or any other Exchange Act Person from the Company in a transaction
or series of related transactions the primary purpose of which is to obtain financing for the
Company through the issuance of equity securities, or (B) solely because the level of Ownership
held by any Exchange Act Person (the “Subject Person”) exceeds the designated percentage threshold
of the outstanding voting securities as a result of a repurchase or other acquisition of voting
securities by the Company reducing the number of shares outstanding, provided that if a Change in
Control would occur (but for the operation of this sentence) as a result of the acquisition of
voting securities by the Company, and after such share acquisition, the Subject Person becomes the
Owner of any additional voting securities that, assuming the repurchase or other acquisition had
not occurred, increases the percentage of the then outstanding voting securities Owned by the
Subject Person over the designated percentage threshold, then a Change in Control shall be deemed
to occur;

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

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

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

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

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

2.

 

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

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

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

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

     (i) “Consultant” means any person, including an advisor, who (i) is engaged by the Company or
an Affiliate to render consulting or advisory services and is compensated for such services or (ii)
is serving as a member of the Board of Directors of an Affiliate and is compensated for such
services. However, service solely as a Director, or payment of a fee for such service, shall not
cause a Director to be considered a “Consultant” for purposes of the Plan.

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

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

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

          (ii) a sale or other disposition of at least fifty percent (50%) of the outstanding securities
of the Company;

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

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

3.

 

     (l) “Covered Employee” means the chief executive officer and the four (4) other highest
compensated officers of the Company for whom total compensation is required to be reported to
stockholders under the Exchange Act, as determined for purposes of Section 162(m) of the Code.

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

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

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

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

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

     (r) “Exchange Act Person” means any natural person, Entity or “group” (within the meaning of
Section 13(d) or 14(d) of the Exchange Act), except that “Exchange Act Person” shall not include
(i) the Company or any Subsidiary of the Company, (ii) any employee benefit plan of the Company or
any Subsidiary of the Company or any trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any Subsidiary of the Company, (iii) an underwriter
temporarily holding securities pursuant to an offering of such securities, or (iv) an Entity Owned,
directly or indirectly, by the stockholders of the Company in substantially the same proportions as
their Ownership of stock of the Company; or (v) any natural person, Entity or “group” (within the
meaning of Section 13(d) or 14(d) of the Exchange Act) that, as of the effective date of the Plan
as set forth in Section 14, is the Owner, directly or indirectly, of securities of the Company
representing more than fifty percent (50%) of the combined voting power of the Company’s then
outstanding securities.

     (s) “Fair Market Value” means, as of any date, the value of the Common Stock determined as
follows and, if applicable, in a manner consistent with Section 260.140.50 of Title 10 of the
California Code of Regulations:

          (i) If the Common Stock is listed on any established stock exchange or traded on the Nasdaq
National Market, the Nasdaq SmallCap Market or over-the-counter market, the Fair Market Value of a
share of Common Stock shall be the closing sales price for such stock (or the closing bid, if no
sales were reported) as quoted on such exchange or market (or the exchange or market with the
greatest volume of trading in the Common Stock) on the last market trading day prior to the day of
determination, as reported in The Wall Street Journal or such other source as the Board deems
reliable.

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

4.

 

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

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

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

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

     (x) “Option” means a stock option to purchase shares of Common Stock granted pursuant to the
Plan.

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

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

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

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

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

5.

 

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

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

     (ff) “Plan” means this Solexa, Inc. 2005 Equity Incentive Plan.

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

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

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

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

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

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

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

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

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

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

6.

 

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

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

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

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

	3.	 	Administration.

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

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

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

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

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

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

7.

 

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

          (vi) To adopt such procedures and sub-plans as are necessary or appropriate to permit
participation in the Plan by Employees who are foreign nationals or employed outside the United
States.

(c) Delegation to Committee.

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

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

     (d) Delegation to an Officer. The Board may delegate to one or more Officers of the Company
the authority to do one or both of the following (i) designate Officers and Employees of the
Company or any of its Subsidiaries to be recipients of Stock Awards and (ii) determine the number
of shares of Common Stock to be subject to such Stock Awards granted to such Officers and Employees
of the Company; provided, however, that the Board resolutions regarding such delegation shall
specify the total number of shares of Common Stock that may be subject to the Stock Awards granted
by such Officer and that such Officer may not grant a Stock Award to himself or herself.
Notwithstanding anything to the contrary in this Section 3(d), the Board may not delegate to an
Officer authority to determine the Fair Market Value of the Common Stock pursuant to Section
2(s)(ii) above.

8.

 

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

	4.	 	Shares Subject to the Plan.

     (a) Initial Share Reserve. Subject to the provisions of Section 11(a) relating to
Capitalization Adjustments, the Common Stock that may be issued pursuant to Stock Awards shall not
exceed in the aggregate four million nine hundred seventy-eight thousand seven hundred sixty-seven
(4,978,767) shares of Common Stock (which includes a total of one hundred seventy-eight thousand
seven hundred sixty-seven (178,767) shares of Common Stock that were previously held in reserve
under the Lynx Therapeutics, Inc. 1992 Stock Option Plan, but which were unused, and which have
been transferred to this Plan). Additionally, if any outstanding stock options granted under the
Lynx Therapeutics, Inc. 1992 Stock Option Plan shall for any reason expire or otherwise terminate,
in whole or in part, without having been exercised in full, the shares of Common Stock that are not
acquired under any such stock options shall revert to, and become available for issuance under this
Plan. The maximum aggregate number of additional shares of Common Stock that may revert to this
Plan under this provision is one million one hundred seventy-one thousand seven hundred
thirty-seven (1,171,737) shares.

     (b) Reversion of Shares to the Share Reserve. If any Stock Award under this Plan shall for
any reason expire or otherwise terminate, in whole or in part, without having been exercised in
full, or if any shares of Common Stock issued to a Participant pursuant to a Stock Award are
forfeited to or repurchased by the Company, including, but not limited to, any repurchase or
forfeiture caused by the failure to meet a contingency or condition required for the vesting of
such shares, then the shares of Common Stock not issued under such Stock Award, or forfeited to or
repurchased by the Company, shall revert to and again become available for issuance under the Plan.
If any shares subject to a Stock Award are not delivered to a Participant because such shares are
withheld for the payment of taxes or the Stock Award is exercised through a reduction of shares
subject to the Stock Award (i.e., “net exercised”), the number of shares that are not delivered to
the Participant shall remain available for issuance under the Plan. If the exercise price of any
Stock Award is satisfied by tendering shares of Common Stock held by the Participant (either by
actual delivery or attestation), then the number of shares so tendered shall remain available for
issuance under the Plan. Notwithstanding anything to the contrary in this Section 4(b), subject to
the provisions of Section 11(a) relating to Capitalization Adjustments, the aggregate maximum
number of shares of Common Stock that may be issued pursuant to the exercise of Incentive Stock
Options shall be three million one hundred fifty thousand five hundred four (3,150,504) shares of
Common Stock (which includes a total of one million one hundred seventy-one thousand seven hundred
thirty-seven (1,171,737) shares of Common Stock that may revert to this Plan under Section 4(a)).

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

     (d) Share Reserve Limitation. Notwithstanding Section 4(a), to the extent required by Section
260.140.45 of Title 10 of the California Code of Regulations, the total number of shares of Common
Stock issuable upon exercise of all outstanding Options and the total number

9.

 

of shares of Common Stock provided for under any stock bonus or similar plan of the Company
shall not exceed the applicable percentage as calculated in accordance with the conditions and
exclusions of Section 260.140.45 of Title 10 of the California Code of Regulations, based on the
shares of Common Stock of the Company that are outstanding at the time the calculation is made.

	5.	 	Eligibility.

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

     (b) Ten Percent Stockholders.

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

          (ii) To the extent Section 260.140.41 of Title 10 of the California Code of Regulations is
applicable, a Ten Percent Stockholder shall not be granted a Nonstatutory Stock Option unless the
exercise price of the Option is at least (a) one hundred ten percent (110%) of the Fair Market
Value of the Common Stock on the date of grant, or (b) such lower percentage of the Fair Market
Value of the Common Stock on the date of grant as is permitted by Section 260.140.41 of Title 10 of
the California Code of Regulations at the time of the grant of the Option.

          (iii) To the extent Section 260.140.42 of Title 10 of the California Code of Regulations is
applicable, a Ten Percent Stockholder shall not be granted a Stock Purchase Award, Stock
Appreciation Right (if such award could be settled in shares of Common Stock), or a Stock Unit
Award (if such award could be settled in shares of Common Stock), unless the purchase price of the
stock is at least (i) one hundred percent (100%) of the Fair Market Value of the Common Stock on
the date of grant, or (ii) such lower percentage of the Fair Market Value of the Common Stock on
the date of grant as is permitted by Section 260.140.42 of Title 10 of the California Code of
Regulations at the time of the grant of the award.

     (c) Section 162(m) Limitation on Annual Grants. Subject to the provisions of Section 11(a)
relating to Capitalization Adjustments, no Employee shall be eligible to be granted Options or
Stock Appreciation Rights covering more than one million five hundred thousand (1,500,000) shares
of Common Stock during any calendar year.

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

10.

 

	6.	 	Option Provisions.

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

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

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

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

     (d) Consideration. The purchase price of Common Stock acquired pursuant to an Option shall be
paid, to the extent permitted by applicable statutes and regulations, either (i) in cash at the
time the Option is exercised or (ii) at the sole discretion of the Board at the time of the grant
of the Option (or subsequently in the case of a Nonstatutory Stock Option) (1) by delivery to the
Company (either by actual delivery or attestation) of other Common Stock at the time the Option is
exercised, (2) by a “net exercise” of the Option (as further described below), (3) pursuant to a
program developed under Regulation T as promulgated by the Federal Reserve Board that, prior to the
issuance of Common Stock, results in either the receipt of cash (or check) by the Company or the
receipt of irrevocable instructions to pay the aggregate exercise price to the Company from the
sales proceeds, or (4) in any other form of legal consideration that may be acceptable to the
Board. Unless otherwise specifically provided in the Option, the purchase price of Common Stock
acquired pursuant to an Option that is paid by delivery to the Company of other Common Stock
acquired, directly or indirectly from the Company, shall be paid only by

11.

 

shares of the Common Stock of the Company that have been held for more than six (6) months (or
such longer or shorter period of time required to avoid a charge to earnings for financial
accounting purposes). At any time that the Company is incorporated in Delaware, payment of the
Common Stock’s “par value,” as defined in the Delaware General Corporation Law, shall not be made
by deferred payment.

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

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

     (f) Transferability of a Nonstatutory Stock Option. A Nonstatutory Stock Option shall be
transferable pursuant to a domestic relations order and to such further extent provided in the
Option Agreement; provided, however, if the Nonstatutory Stock Option does not provide for
transferability, then the Nonstatutory Stock Option shall not be transferable except by will or by
the laws of descent and distribution and shall be exercisable during the lifetime of the
Optionholder only by the Optionholder. Notwithstanding the foregoing, the Optionholder may, by
delivering written notice to the Company, in a form provided by or otherwise satisfactory to the
Company, designate a third party who, in the event of the death of the Optionholder, shall
thereafter be entitled to exercise the Option. Notwithstanding the above, to the extent Section
260.140.41(d) of Title 10 of the California Code of Regulations is applicable at the time of grant
of the Nonstatutory Stock Option, the Option shall not be transferable except by will or by the
laws of descent and distribution or as otherwise permitted by Section 260.141.41(d) and shall be
exercisable during the lifetime of the Optionholder only by the Optionholder.

     (g) Vesting Generally. The total number of shares of Common Stock subject to an Option may
vest and therefore become exercisable in periodic installments that may be equal. The Option may
be subject to such other terms and conditions on the time or times when it may be exercised (which
may be based on performance or other criteria) as the Board may deem appropriate. The vesting
provisions of individual Options may vary. The provisions of this Section 6(g) are subject to any
Option provisions governing the minimum number of shares of Common Stock as to which an Option may
be exercised.

12.

 

     (h) Minimum Vesting. Notwithstanding the foregoing Section 6(g), to the extent that the
following restrictions on vesting are required by Section 260.140.41(f) of Title 10 of the
California Code of Regulations at the time of the grant of the Option, then:

          (i) Options granted to an Employee who is not an Officer, Director or Consultant shall provide
for vesting of the total number of shares of Common Stock at a rate of at least twenty percent
(20%) per year over five (5) years from the date the Option was granted, subject to reasonable
conditions such as continued employment; and

          (ii) Options granted to Officers, Directors or Consultants may be made fully exercisable,
subject to reasonable conditions such as continued employment, at any time or during any period
established by the Company.

     (i) Termination of Continuous Service. In the event that an Optionholder’s Continuous Service
terminates (other than upon the Optionholder’s death or Disability), the Optionholder may exercise
his or her Option (to the extent that the Optionholder was entitled to exercise such Option as of
the date of termination of Continuous Service) but only within such period of time ending on the
earlier of (i) the expiration of the term of the Option as set forth in the Option Agreement, or
(ii) the date three (3) months following the termination of the Optionholder’s Continuous Service
(or such longer or shorter period specified in the Option Agreement, which period shall not be less
than thirty (30) days in the case of an Option subject to Section 260.140.41(g) of Title 10 of the
California Code of Regulations, unless such termination is for cause). If, after termination of
Continuous Service, the Optionholder does not exercise his or her Option within the time specified
herein or in the Option Agreement (as applicable), the Option shall terminate.

     (j) Extension of Termination Date. An Optionholder’s Option Agreement may provide that if the
exercise of the Option following the termination of the Optionholder’s Continuous Service (other
than upon the Optionholder’s death or Disability) would be prohibited at any time solely because
the issuance of shares of Common Stock would violate the registration requirements under the
Securities Act, then the Option shall terminate on the earlier of (i) the expiration of the term of
the Option set forth in the Option Agreement or (ii) the expiration of a period of three (3) months
after the termination of the Optionholder’s Continuous Service during which the exercise of the
Option would not be in violation of such registration requirements.

     (k) Disability of Optionholder. In the event that an Optionholder’s Continuous Service
terminates as a result of the Optionholder’s Disability, the Optionholder may exercise his or her
Option (to the extent that the Optionholder was entitled to exercise such Option as of the date of
termination of Continuous Service), but only within such period of time ending on the earlier of
(i) the expiration of the term of the Option as set forth in the Option Agreement, or (ii) the date
twelve (12) months following such termination of Continuous Service (or such longer or shorter
period specified in the Option Agreement, which period shall not be less than six (6) months in the
case of an Option subject to Section 260.140.41(g) of Title 10 of the California Code of
Regulations). If, after termination of Continuous Service, the Optionholder does not exercise his
or her Option within the time specified herein or in the Option Agreement (as applicable), the
Option shall terminate.

13.

 

     (l) Death of Optionholder. In the event that (i) an Optionholder’s Continuous Service
terminates as a result of the Optionholder’s death, or (ii) the Optionholder dies within the period
(if any) specified in the Option Agreement after the termination of the Optionholder’s Continuous
Service, then the Option may be exercised (to the extent the Optionholder was entitled to exercise
such Option as of the date of death) by the Optionholder’s estate, by a person who acquired the
right to exercise the Option by bequest or inheritance or by a person designated to exercise the
option upon the Optionholder’s death pursuant to Sections 6(e) or 6(f), but only within the period
ending on the earlier of (i) the expiration of the term of such Option as set forth in the Option
Agreement or (ii) the date eighteen (18) months following the date of death (or such longer or
shorter period specified in the Option Agreement, which period shall not be less than six (6)
months in the case of an Option subject to Section 260.140.41(g) of Title 10 of the California Code
of Regulations). If, after the Optionholder’s death, the Option is not exercised within the time
specified herein or in the Option Agreement (as applicable), the Option shall terminate.

     (m) Early Exercise. The Option may include a provision whereby the Optionholder may elect at
any time before the Optionholder’s Continuous Service terminates to exercise the Option as to any
part or all of the shares of Common Stock subject to the Option prior to the full vesting of the
Option. Subject to the “Repurchase Limitation” in Section 10(i), any unvested shares of Common
Stock so purchased may be subject to a repurchase option in favor of the Company or to any other
restriction the Board determines to be appropriate. Provided that the “Repurchase Limitation” in
Section 10(i) is not violated, the Company shall not be required to exercise its repurchase option
until at least six (6) months (or such longer or shorter period of time required to avoid a charge
to earnings for financial accounting purposes) have elapsed following exercise of the Option unless
the Board otherwise specifically provides in the Option.

     (n) Right of Repurchase. Subject to the “Repurchase Limitation” in Section 10(i), the Option
may, but need not, include a provision whereby the Company may elect to repurchase all or any part
of the vested shares of Common Stock acquired by the Optionholder pursuant to the exercise of the
Option. Provided that the “Repurchase Limitation” in Section 10(i) is not violated, the Company
will not exercise its repurchase option until at least six (6) months (or such longer or shorter
period of time required to avoid a charge to earnings for financial accounting purposes) have
elapsed following exercise of the Option unless otherwise specifically provided in the Option.

     (o) Right of First Refusal. The Option may, but need not, include a provision whereby the
Company may elect to exercise a right of first refusal following receipt of notice from the
Optionholder of the intent to transfer all or any part of the shares of Common Stock received upon
the exercise of the Option. Except as expressly provided in this Section 6(o) or in the Stock
Award Agreement for the Option, such right of first refusal shall otherwise comply with any
applicable provisions of the Bylaws of the Company. The Company will not exercise its right of
first refusal until at least six (6) months (or such longer or shorter period of time required to
avoid a charge to earnings for financial accounting purposes) have elapsed following exercise of
the Option unless otherwise specifically provided in the Option.

14.

 

	7.	 	Provisions of Stock Awards other than Options.

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

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

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

          (iii) Vesting. Subject to the “Repurchase Limitation” in Section 10(i), shares of Common
Stock acquired under a Stock Purchase Award may be subject to a share repurchase right or option in
favor of the Company in accordance with a vesting schedule to be determined by the Board.

          (iv) Termination of Participant’s Continuous Service. Subject to the “Repurchase Limitation”
in Section 10(i), in the event that a Participant’s Continuous Service terminates, the Company
shall have the right, but not the obligation, to repurchase or otherwise reacquire, any or all of
the shares of Common Stock held by the Participant that have not vested as of the date of
termination under the terms of the Stock Purchase Award Agreement. At the Board’s election, the
repurchase right may be the lesser of: (i) the Fair Market Value on the relevant date, or (ii) the
Participant’s original cost. Provided that the “Repurchase Limitation” in Section 10(i) is not
violated, the Company shall not be required to exercise its repurchase option until at least six
(6) months (or such longer or shorter period of time required to avoid a charge to earnings for
financial accounting purposes) have elapsed following the purchase of the restricted stock unless
otherwise determined by the Board or provided in the Stock Purchase Award Agreement.

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

15.

 

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

          (i) Consideration. A Stock Bonus Award may be awarded in consideration for (i) past services
actually rendered to the Company or an Affiliate or (ii) any other form of legal consideration that
may be acceptable to the Board in its sole discretion and permissible under applicable law.

          (ii) Vesting. Subject to the “Repurchase Limitation” in Section 10(i), shares of Common Stock
awarded under the Stock Bonus Award Agreement may be subject to forfeiture to the Company in
accordance with a vesting schedule to be determined by the Board.

          (iii) Termination of Participant’s Continuous Service. Subject to the “Repurchase Limitation”
in Section 10(i), in the event a Participant’s Continuous Service terminates, the Company may
receive via a forfeiture condition, any or all of the shares of Common Stock held by the
Participant which have not vested as of the date of termination of Continuous Service under the
terms of the Stock Bonus Award Agreement.

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

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

          (i) Consideration. At the time of grant of a Stock Unit Award, the Board will determine the
consideration, if any, to be paid by the Participant upon delivery of each share of Common Stock
subject to the Stock Unit Award. The consideration to be paid (if any) by the Participant for each
share of Common Stock subject to a Stock Unit Award may be paid in any form of legal consideration
that may be acceptable to the Board in its sole discretion and permissible under applicable law.

16.

 

          (ii) Vesting. At the time of the grant of a Stock Unit Award, the Board may impose such
restrictions or conditions to the vesting of the Stock Unit Award as it, in its sole discretion,
deems appropriate; provided, however, that a Stock Unit Award that could be settled in shares of
Common Stock shall be subject to the provisions of Section 10(i).

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

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

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

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

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

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

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

17.

 

in its sole discretion, deems appropriate; provided, however, that a Stock Appreciation Right
that could be settled in shares of Common Stock shall be subject to the provisions of Section
10(i).

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

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

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

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

	8.	 	Covenants of the Company.

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

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

18.

 

Company shall be relieved from any liability for failure to issue and sell Common Stock upon
exercise of such Stock Awards unless and until such authority is obtained.

	9.	 	Use of Proceeds from Stock.

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

	10.	 	Miscellaneous.

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

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

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

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

     (e) Investment Assurances. The Company may require a Participant, as a condition of
exercising or acquiring Common Stock under any Stock Award, (i) to give written assurances
satisfactory to the Company as to the Participant’s knowledge and experience in financial and
business matters and/or to employ a purchaser representative reasonably satisfactory to the Company
who is knowledgeable and experienced in financial and business matters and that he or she is
capable of evaluating, alone or together with the purchaser representative, the merits and risks of
exercising the Stock Award; and (ii) to give written assurances satisfactory to the Company stating
that the Participant is acquiring Common Stock subject to the Stock Award for

19.

 

the Participant’s own account and not with any present intention of selling or otherwise
distributing the Common Stock. The foregoing requirements, and any assurances given pursuant to
such requirements, shall be inoperative if (1) the issuance of the shares of Common Stock upon the
exercise or acquisition of Common Stock under the Stock Award has been registered under a then
currently effective registration statement under the Securities Act or (2) as to any particular
requirement, a determination is made by counsel for the Company that such requirement need not be
met in the circumstances under the then applicable securities laws. The Company may, upon advice
of counsel to the Company, place legends on stock certificates issued under the Plan as such
counsel deems necessary or appropriate in order to comply with applicable securities laws,
including, but not limited to, legends restricting the transfer of the Common Stock.

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

     (g) Electronic Delivery. Any reference herein to a “written” agreement or document shall
include any agreement or document delivered electronically or posted on the Company’s intranet.

     (h) Information Obligation. To the extent required by Section 260.140.46 of Title 10 of the
California Code of Regulations, the Company shall deliver financial statements to Participants at
least annually. This Section 10(h) shall not apply to key Employees whose duties in connection
with the Company assure them access to equivalent information.

     (i) Repurchase Limitation. The terms of any repurchase option shall be specified in the Stock
Award, and the repurchase price may be either the Fair Market Value of the shares of Common Stock
on the date of termination of Continuous Service, or the lower of (i) the Fair Market Value of the
shares of Common Stock on the date of repurchase or (ii) their original purchase price. To the
extent required by Section 260.140.41 and Section 260.140.42 of Title 10 of the California Code of
Regulations at the time a Stock Award is made, any repurchase option contained in a Stock Award
granted to a person who is not an Officer, Director or Consultant shall be upon the terms described
below:

          (i) Fair Market Value. If the repurchase option gives the Company the right to repurchase the
shares of Common Stock upon termination of Continuous Service at not less than the Fair Market
Value of the shares of Common Stock to be purchased on the date of termination of Continuous
Service, then (i) the right to repurchase shall be exercised for cash or cancellation of purchase
money indebtedness for the shares of Common Stock within ninety (90) days of termination of
Continuous Service (or in the case of shares of Common Stock issued upon exercise of Stock Awards
after such date of termination, within ninety (90) days after the date of the exercise) or such
longer period as may be agreed to by the Company and the

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Participant (for example, for purposes of satisfying the requirements of Section 1202(c)(3) of
the Code regarding “qualified small business stock”) and (ii) the right terminates when the shares
of Common Stock become publicly traded.

          (ii) Original Purchase Price. If the repurchase option gives the Company the right to
repurchase the shares of Common Stock upon termination of Continuous Service at the lower of (i)
the Fair Market Value of the shares of Common Stock on the date of repurchase or (ii) their
original purchase price, then (x) the right to repurchase at the original purchase price shall
lapse at the rate of at least twenty percent (20%) of the shares of Common Stock per year over five
(5) years from the date the Stock Award is granted (without respect to the date the Stock Award was
exercised or became exercisable) and (y) the right to repurchase shall be exercised for cash or
cancellation of purchase money indebtedness for the shares of Common Stock within ninety (90) days
of termination of Continuous Service (or in the case of shares of Common Stock issued upon exercise
of Options after such date of termination, within ninety (90) days after the date of the exercise)
or such longer period as may be agreed to by the Company and the Participant (for example, for
purposes of satisfying the requirements of Section 1202(c)(3) of the Code regarding “qualified
small business stock”).

	11.	 	Adjustments upon Changes in Stock.

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

     (b) Dissolution or Liquidation. In the event of a dissolution or liquidation of the Company,
all outstanding Stock Awards (other than Stock Awards consisting of vested and outstanding shares
of Common Stock not subject to the Company’s right of repurchase) shall terminate immediately prior
to the completion of such dissolution or liquidation, and the shares of Common Stock subject to the
Company’s repurchase option may be repurchased by the Company notwithstanding the fact that the
holder of such Stock Award is providing Continuous Service, provided, however, that the Board may,
in its sole discretion, cause some or all Stock Awards to become fully vested, exercisable and/or
no longer subject to repurchase or forfeiture (to the extent such Stock Awards have not previously
expired or terminated) before the dissolution or liquidation is completed but contingent on its
completion.

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     (c) Corporate Transaction. In the event of a Corporate Transaction, any surviving corporation
or acquiring corporation may assume or continue any or all Stock Awards outstanding under the Plan
or may substitute similar stock awards for Stock Awards outstanding under the Plan (including but
not limited to, awards to acquire the same consideration paid to the stockholders of the Company,
as the case may be, pursuant to the Corporate Transaction), and any reacquisition or repurchase
rights held by the Company in respect of Common Stock issued pursuant to Stock Awards may be
assigned by the Company to the successor of the Company (or the successor’s parent company), if
any, in connection with such Corporate Transaction. A surviving corporation or acquiring
corporation may not choose to assume or continue only a portion of a Stock Award or substitute a
similar stock award for only a portion of a Stock Award. The terms of any assumption, continuation
or substitution shall be set by the Board in accordance with the provisions of Section 3. In the
event that any surviving corporation or acquiring corporation does not assume or continue all such
outstanding Stock Awards or substitute similar stock awards for all such outstanding Stock Awards,
then with respect to Stock Awards that have been not assumed, continued or substituted and that are
held by Participants whose Continuous Service has not terminated prior to the effective time of the
Corporate Transaction, the vesting of such Stock Awards (and, if applicable, the time at which such
Stock Awards may be exercised) shall (contingent upon the effectiveness of the Corporate
Transaction) be accelerated in full to a date prior to the effective time of such Corporate
Transaction as the Board shall determine (or, if the Board shall not determine such a date, to the
date that is five (5) days prior to the effective time of the Corporate Transaction), and such
Stock Awards shall terminate if not exercised (if applicable) at or prior to such effective time,
and any reacquisition or repurchase rights held by the Company with respect to such Stock Awards
shall (contingent upon the effectiveness of the Corporate Transaction) lapse. With respect to any
other Stock Awards outstanding under the Plan that have not been assumed, continued or substituted,
the vesting of such Stock Awards (and, if applicable, the time at which such Stock Award may be
exercised) shall not be accelerated, unless otherwise provided in a written agreement between the
Company or any Affiliate and the holder of such Stock Award, and such Stock Awards (other than
Stock Awards consisting of vested and outstanding shares of Common Stock not subject to the
Company’s right of repurchase) shall terminate if not exercised (if applicable) prior to the
effective time of the Corporate Transaction.

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

	12.	 	Amendment of the Plan and Stock Awards.

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

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

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

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

     (e) Amendment of Stock Awards. The Board at any time, and from time to time, may amend the
terms of any one or more Stock Awards, including, but not limited to, amendments to provide terms
more favorable than previously provided in the agreement evidencing a Stock Award, subject to any
specified limits in the Plan that are not subject to Board discretion; provided, however, that the
rights under any Stock Award shall not be impaired by any such amendment unless (i) the Company
requests the consent of the Participant and (ii) the Participant consents in writing.

	13.	 	Termination or Suspension of the Plan.

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

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

	14.	 	Effective Date of Plan.

     The Plan shall become effective on June 3, 2005, but no Stock Award shall be exercised (or, in
the case of a stock bonus, shall be granted) unless and until the Plan has been approved by the
stockholders of the Company, which approval shall be within twelve (12) months before or after the
date the Plan is adopted by the Board.

	15.	 	Choice of Law.

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

23.

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