Document:

Prepared by R.R. Donnelley Financial -- First Amendment to Lease Agreement

 Exhibit 10.6D 
  
 FIRST AMENDMENT TO OFFICE LEASE 
  
 This First Amendment to Office Lease (this “Amendment”) is entered into effective as of the 24th day of September,
2003, by and between GATEWAY CENTER LLC, a California limited liability company (“Landlord”) and TERCICA MEDICA, INC., a Delaware corporation (“Tenant”). 
  
 RECITALS 
  
 A. Landlord and Tenant previously entered into that certain “Office Lease 651 Gateway Boulevard” dated July 24, 2003 (the “Lease”),
whereby Landlord leased to Tenant and Tenant leased from Landlord the premises located on the ninth (9th) floor of
the Building located at 651 Gateway Boulevard, South San Francisco, CA, commonly known as Suite 940, containing One Thousand Eight Hundred Sixty-Nine (1,869) rentable square feet (the “Original Premises”). 
  
 B. The parties hereto wish to amend the Lease to expand the size of the
Original Premises, to provide for certain Tenant Improvements (as defined below) to be constructed by Landlord in the Expanded Premises (as defined below), and to otherwise amend the terms and conditions of the Lease as hereinafter set forth.

  
 NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 
  
 AGREEMENT 
  
 1. Recitals. The foregoing recitals are true and correct and are incorporated herein by this reference. 
  
 2. Defined Terms. All capitalized terms used in this Amendment that
are not defined herein shall have the meanings as defined in the Lease. 
  
 3. Expanded Premises. Landlord and Tenant agree that Ten Thousand Two Hundred Seventy-Four (10,274) rentable square feet located on the eighth (8th) floor of the Building shall be added to the Original Premises at the times specified in Paragraph 4, below. The “Expanded Premises” shall consist of (i) the space commonly known as Suite
855, containing Three Thousand Three Hundred Sixty-Four (3,364) rentable square feet (“Suite 855”), (ii) the space commonly known as Suite 860, containing One Thousand Five Hundred Thirteen (1,513) rentable square feet (“Suite
860”), and (iii) the space commonly known as Suite 880, containing Five Thousand Three Hundred Ninety-Seven (5,397) rentable square feet (“Suite 880”). The Expanded Premises are shown in the approximate location and configuration as
shown on Exhibit A attached hereto and incorporated herein by this reference. As used herein, Suite 855, Suite 880 and Suite 860 are sometimes individually called a “Suite” and are collectively called the “Suites”. From
and after the commencement of the lease of the various Suites, as set forth in Paragraph 4, below, the applicable Suite(s) plus the Original Premises shall be deemed to be the Premises for all purposes under the Lease. The Lease (including Section
2.2 of the Summary of Basic Lease Information) is hereby amended accordingly. 

 4. Commencement of Term for Expanded Premises. Landlord and Tenant hereby agree that the following
spaces shall be added to the Original Premises at the following times: 
  
     A. The lease of Suite 855 shall commence on the later to occur of (i) September 24, 2003, or (ii) the date this Amendment is fully executed by the parties hereto (the “Suite 855 Commencement Date”);

  
     B. The lease of Suite 880 shall
commence on the later to occur of (i) October 15, 2003, or (ii) the date that the Tenant Improvements, as defined in Paragraph 6, below, for Suite 880 have been Substantially Completed, as defined in Paragraph 6, below (the “Suite 880
Commencement Date”); and 
  
     C. The
lease of Suite 860 shall commence on the later to occur of (i) November 1, 2003, or (ii) the date that Landlord recovers possession of Suite 860 from the current tenant in such space, Bay Area Cellular, and its subtenant in such space, Aeropart
Group, International, or (iii) the date that the Tenant Improvements for Suite 860 have been Substantially Completed (the “Suite 860 Commencement Date”). 
  
 The lease of the Expanded Premises shall expire on December 14, 2004, concurrently with the lease of the Original Premises.
The Lease (including Sections 3.1 and 3.2 of the Summary of Basic Lease Information) is hereby amended accordingly. 
  
 5. Base Rent. Landlord and Tenant agree that the Base Rent for the Premises shall be as follows: 
  

	 Prior to the Suite 855 Commencement Date: 
	 Two Thousand Nine Hundred Ninety Dollars and Forty Cents ($2,990.40) per month 

  

	 Suite 855 Commencement Date through the day immediately prior to the Suite 880 Commencement Date: 
	 
Eight Thousand Five Hundred Forty One Dollars ($8,541.00) per month 

  

	 Suite 880 Commencement Date through the day immediately prior to the Suite 860 Commencement Date: 
	 
Seventeen Thousand Four Hundred Forty-Six Dollars and Five Cents ($17,446.05) per month 

  

	 Suite 860 Commencement Date through December 14, 2004: 
	 Nineteen Thousand Nine Hundred Forty-Two Dollars and Fifty Cents ($19,942.50) per month 

  

 -2- 

 The Lease (including Section 4 of the Summary of Basic Lease Information) is hereby amended accordingly.

  
 6. Tenant Improvements. Landlord agrees to construct
certain improvements (the “Tenant Improvements”) in the Suites, at Landlord’s sole cost and expense, as follows: 
  
     A. All Suites: Landlord shall provide openings between all three Suites to allow access throughout all three Suites. 

 
     B. Suite 855: Landlord shall have no obligation to
improve, remodel, alter, refurbish or otherwise change the condition or configuration of Suite 855, Tenant hereby agreeing to take Suite 855 in its currently existing “AS-IS WHERE-IS” condition. 
  
     C. Suite 860: Landlord shall install new Building
standard carpeting in a Building standard color throughout Suite 860 and shall repaint all interior walls in Suite 860 with one (1) coat of Building standard paint in a Building standard color. 
  
     D. Suite 880: Landlord shall install new Building
standard carpeting in a Building standard color throughout Suite 880 and shall repaint all interior walls in Suite 880 with one (1) coat of Building standard paint in a Building standard color. In addition, Landlord shall construct an enclosed
kitchen area with a sink, counters and cabinets in Suite 880 where plumbing is already stubbed out for such facilities. The design and finishes of such kitchen shall be Building standard as determined by Landlord. 
  
 The Tenant Improvements for each Suite shall be deemed to be
“Substantially Completed” when Landlord has delivered written notice to Tenant stating that the Tenant Improvements for a particular Suite have been substantially completed in accordance with the provisions of this Paragraph 6, except for
“punch list” items which may be completed without materially impairing Tenant’s use of the particular Suite; 
  
 In the event that the cost of constructing such Tenant Improvements (exclusive of the cost of plans, permits and fees, if any) is less than Forty Seven
Thousand Eight Hundred Seventy-Six Dollars ($47,876.00) (hereinafter, the “Construction Allowance”), Landlord shall make any unused portion of the Construction Allowance, up to the total amount of Eight Hundred Dollars ($800.00), available
to Tenant for use in constructing future permanent improvements to the Premises (the “Future Improvements”), provided that Tenant notifies Landlord in writing of its intent to use the unused portion of the Construction Allowance (not to
exceed the sum of $800.00) for Future Improvements on or before January 31, 2004, which notice shall specify the nature of the Future Improvements Tenant intends to construct; and further provided that any such construction of Future Improvements is
completed on or before March 1, 2004. 
  
 7. Pre-paid Rent;
Security Deposit. Tenant agrees to pay to Landlord, upon the full execution of this Amendment, (i) the first month’s rent on all three Suites in the amount of Sixteen Thousand Nine Hundred Fifty-Two Dollars and Ten Cents ($16,952.10); and
(ii) an additional Security Deposit for the three Suites in the amount of Sixteen Thousand Nine Hundred Fifty-Two Dollars and Ten Cents ($16,952.10), which when added to the Security Deposit currently held by Landlord of Two Thousand Nine Hundred
Ninety Dollars and Forty Cents ($2,990.40) will equal a total Security Deposit held by Landlord of Nineteen Thousand Nine Hundred Forty-Two Dollars and Fifty Cents ($19,942.50). The Lease (including Section 8 of the Summary of Basic Lease
Information) is hereby amended accordingly. 
  

 -3- 

 8. Real Estate Brokers. Landlord and Tenant hereby represent and warrant to the other that neither
party hereto has authorized or employed, or acted by implication to authorize or employ, any real estate broker or salesperson to act for it in connection with this Amendment and the extension of the Lease term contemplated herein except for BT
Commercial, representing Tenant, and CB Richard Ellis, representing Landlord. Each party hereto shall indemnify, defend and hold the other harmless from and against any and all claims by any real estate broker or salesperson whom either party
authorized or employed, or acted by implication to authorize or employ, to act for such party in connection with this Amendment, other than BT Commercial, representing Tenant, and CB Richard Ellis, representing Landlord. Landlord shall be solely
responsible for paying all brokers commissions due in connection with this Amendment pursuant to a separate written agreement between Landlord and CB Richard Ellis. 
  
 9. No Change. Except as set forth herein, all of the terms and conditions of the Lease remain unchanged and in full
force and effect. 
  
 IN WITNESS WHEREOF, Landlord and Tenant have
executed this Amendment as of the day and date first written above. 
  

	Landlord:	 	 	 	Tenant:
			
	 GATEWAY CENTER, LLC,
 a
California limited liability company
	 	 	 	 TERCICA MEDICA, INC.,
 a
Delaware corporation

					
	By:	 	 BOSTON PROPERTIES LIMITED
 PARTNERSHIP,
	 	 	 	 By:
	 	 /s/ Timothy P. Lynch

	 	 	 a Delaware limited partnership,
 its sole
member
	 	 	 	Its:	 	 Chief Executive Officer

					
	By:	 	BOSTON PROPERTIES, INC.,	 	 	 	By:	 	  

	 	 	 a Delaware corporation,
 its general
partner
	 	 	 	Its:	 	  

					
	 	 	 /s/ Bob Pester

 Name: Bob Pester
 Title:   Senior Vice President and
             Regional Manager
	 	 	 	 	 	 

  
 EXECUTED 
 Sep. 25, 2003 
 Boston Properties 
 Embarcadero Center 
  

 -4-LEGATO SYSTEMS 1995 STOCK OPTION/STOCK ISSUANCE PLAN

 EXHIBIT 4.1.1 
  
 LEGATO SYSTEMS, INC. 
 1995 STOCK OPTION/STOCK ISSUANCE PLAN 
 (As Amended and Restated on November 17,2002)

  
 ARTICLE ONE 
  
 GENERAL PROVISIONS 
  

	I.	PURPOSE OF THE PLAN 

  
 This 1995 Stock Option/Stock Issuance Plan is intended to promote the interests of Legato Systems, Inc., a Delaware corporation, by providing eligible
persons 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. 
  
 Capitalized terms shall have the meanings assigned to such terms in the
attached Appendix. 
  

	II.	STRUCTURE OF THE PLAN 

  
 A The Plan shall be divided into three separate equity programs: 
  
 (i) the Discretionary Option Grant Program under which eligible persons may, at the discretion of the Plan
Administrator, be granted options to purchase shares of Common Stock, 
  
 (ii) the Stock Issuance Program under which eligible persons may, at the discretion of the Plan Administrator, be issued shares of Common Stock directly, either through the immediate purchase of such shares or as a
bonus for services rendered the Corporation (or any Parent or Subsidiary), and 
  
 (iii) the Automatic Option Grant Program under which Eligible Directors shall automatically receive option grants at periodic intervals to
purchase shares of Common Stock. 
  
 B The
provisions of Articles One and Five shall apply to all equity programs under the Plan and shall accordingly govern the interests of all persons under the Plan. 
  

	III.	ADMINISTRATION OF THE PLAN 

  
 A The Primary Committee shall have sole and exclusive authority to administer the Discretionary Option Grant and Stock Issuance Programs
with respect to Section 16 Insiders. Administration of the Discretionary Option Grant and Stock Issuance Programs with respect to all other persons eligible to participate in these programs may, at the Board’s discretion, be vested in the
Primary Committee or a 

  

 1 

 
Secondary Committee, or the Board may retain the power to administer these programs with respect to all such persons. The members of the Secondary Committee
may be individuals who are Employees eligible to receive discretionary option grants or direct stock issuances under the Plan or any stock option, stock appreciation, stock bonus or other stock plan of the Corporation (or any Parent or Subsidiary).

  
 B Members of the Primary Committee or any
Secondary Committee shall serve for such period of time as the Board may determine and may be removed by the Board at any time. The Board may also at any time terminate the functions of any Secondary Committee and reassume all powers and authority
previously delegated to such committee. 
  
 C
Each Plan Administrator shall, within the scope of its administrative functions under the Plan, have full power and authority (subject to the provisions of the Plan) to establish such rules and regulations as it may deem appropriate for proper
administration of the Discretionary Option Grant and Stock Issuance Programs and to make such determinations under, and issue such interpretations of, the provisions of such programs and any outstanding options or stock issuances thereunder as it
may deem necessary or advisable. Decisions of the Plan Administrator within the scope of its administrative functions under the Plan shall be final and binding on all parties who have an interest in the Discretionary Option Grant or Stock Issuance
Program under its jurisdiction or any option or stock issuance thereunder. 
  
 D Service on the Primary Committee or the Secondary Committee shall constitute service as a Board member, and members of each such committee shall accordingly be entitled to full indemnification and reimbursement as
Board members for their service on such committee. No member of the Primary Committee or the Secondary Committee shall be liable for any act or omission made in good faith with respect to the Plan or any option grants or stock issuances under the
Plan. 
  
 E Administration of the Automatic
Option Grant Program shall be self-executing in accordance with the terms of that program, and no Plan Administrator shall exercise any discretionary functions with respect to option grants made thereunder. 
  

	IV.	ELIGIBILITY 

  
 A The persons eligible to participate in the Discretionary Option Grant and Stock Issuance Programs are as follows: 
  
 (i) Employees, 
  
 (ii) non-employee members of the Board (other than those
serving as members of the Primary Committee) or the board of directors of any Parent or Subsidiary, and 
  
 (iii) consultants and other independent advisors who provide services to the Corporation (or any Parent or Subsidiary). 
  

 2 

 B Each Plan Administrator shall, within the scope of its administrative jurisdiction
under the Plan, have full authority to determine, (i) with respect to the option grants under the Discretionary Option Grant Program, which eligible persons are to receive option grants, the time or times when such option grants are to be made, the
number of shares to be covered by each such grant, the status of the granted option as either an Incentive Option or a Non-Statutory Option, the time or times at which each option is to become exercisable, the vesting schedule (if any) applicable to
the option shares and the maximum term for which the option is to remain outstanding and (ii) with respect to stock issuances under the Stock Issuance Program, which eligible persons are to receive stock issuances, the time or times when such
issuances are to be made, the number of shares to be issued to each Participant, the vesting schedule (if any) applicable to the issued shares and the consideration to be paid for such shares. 
  
 C The Plan Administrator shall have the absolute discretion
either to grant options in accordance with the Discretionary Option Grant Program or to effect stock issuances in accordance with the Stock Issuance Program. 
  

D The individuals eligible to participate in the Automatic Option Grant Program shall be (1) those individuals who are serving as
non-employee Board members on the Plan Effective Date or who are first elected or appointed as non-employee Board members after such date, whether through appointment by the Board or election by the Corporation’s stockholders, and (ii) those
individuals who continue to serve as non-employee Board members after one or more Annual Stockholders Meetings held after the Plan Effective Date. A non-employee Board member who has previously been in the employ of the Corporation (or any Parent or
Subsidiary) shall not be eligible to receive an option grant under the Automatic Option Grant Program on the Plan Effective Date or at the time he or she first becomes a non-employee Board member, but such individual shall be eligible to receive
periodic option grants under the Automatic Option Grant Program upon his or her continued service as a non-employee Board member following one or more Annual Stockholders Meetings. 
  

	V.	STOCK SUBJECT TO THE PLAN 

  
 A The stock issuable under the Plan shall be shares of authorized but unissued or reacquired Common Stock, including shares repurchased by
the Corporation on the open market. The maximum number of shares of Common Stock which may be issued over the term of the Plan shall not exceed 41,031,055 shares. Such share reserve includes (i) the initial share reserve of 16,736,464 shares of
Common Stock, (ii) increases of 4,000,000 and 3,000,000 shares of Common Stock approved by the stockholders at the 1998 and 1999 Annual Meetings, respectively, and (iii) increases of 2,032,604, 2,132,896, 2,257,626, 2,561,317, 2,621,673, 2,688,475
and 3,000,000 shares of Common Stock pursuant to the automatic annual increase feature of Article I, Section III.B of the Plan for the 1997, 1998, 1999, 2000, 2001, 2002 and 2003 calendar years, respectively. 
  

 3 

 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 the term of the Plan, beginning with the 1997 calendar year, by an amount equal to three percent (3%) of the shares of Common Stock outstanding on December 31 of the
immediately preceding calendar year, up to a maximum annual increase of 3,000,000 shares. 
  
 C No one person participating in the Plan may receive stock options, separately exercisable stock appreciation rights and direct stock
issuances for more than 800,000 shares of Common Stock per calendar year, beginning with the 1995 calendar year; provided, however, that for the calendar year in which such person first commences Service the limit shall be 1,600,000 shares.

  
 D Shares of Common Stock subject to
outstanding options shall be available for subsequent issuance under the Plan to the extent (i) the options (including any options incorporated from the Predecessor Plan) expire or terminate for any reason prior to exercise in full or (ii) the
options are cancelled in accordance with the cancellation-regrant provisions of Article Two. Shares subject to any stock appreciation rights exercised under the Plan and all shares issued under the Plan (including shares issued upon exercise of
options incorporated from the Predecessor Plan), whether or not those 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 option under the Plan (including any option incorporated from the Predecessor 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 option or the vesting of a stock 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 stock issuance, and not by the net number of shares of Common Stock issued to the holder of
such option or stock issuance. 
  
 E Should any
change be made to the Common Stock 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, 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,
(iii) the number and/or class of securities for which any one person may be granted stock options, separately exercisable stock appreciation rights and direct stock issuances per calendar year, (iv) the number and/or class of securities for which
automatic option grants are to be subsequently made per Eligible Director under the Automatic Option Grant Program and (v) the number and/or class of securities and the exercise price per share in effect under each outstanding option (including any
option incorporated from the Predecessor Plan) in order to prevent the dilution or enlargement of benefits thereunder. The adjustments determined by the Plan Administrator shall be final, binding and conclusive. 
  

 4 

 ARTICLE TWO 
  
 DISCRETIONARY OPTION GRANT PROGRAM 
  

	I.	OPTION TERMS 

  
 Each option shall be evidenced by one or more documents in the form approved by the Plan Administrator; provided, however, that each such document
shall comply with the terms specified below. Each document evidencing an Incentive Option shall, in addition, be subject to the provisions of the Plan applicable to such options. 
  
 A Exercise Price. 
  
 1. The exercise price per share shall be fixed by the Plan Administrator but shall not be less than
eighty-five percent (85%) of the Fair Market Value per share of Common Stock on the option grant date. 
  
 2. The exercise price shall become immediately due upon exercise of the option and shall, subject to the provisions of Section I of
Article Five and the documents evidencing the option, be payable in one or more of the forms specified below: 
  
 (i) cash or check made payable to the Corporation, 
  
 (ii) shares of Common Stock held for the requisite period necessary to avoid a charge to the
Corporation’s earnings for financial reporting purposes and valued at Fair Market Value on the Exercise Date, or 
  
 (iii) to the extent the option is exercised for vested shares, through a special sale and remittance procedure pursuant to which the
Optionee shall concurrently provide irrevocable written instructions to (a) a brokerage firm (reasonably acceptable to the Corporation for purposes of administering such procedure in compliance with applicable pre-clearance/pre-notification
requirements) 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 by reason of such exercise and (b) the Corporation to deliver the certificates for the purchased shares directly to such brokerage firm in
order to complete the sale transaction. 
  
 Except to the extent
such sale and remittance procedure is utilized, payment of the exercise price for the purchased shares must be made on the Exercise Date. 
  

 5 

 B Exercise and Term 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 documents evidencing the option. However, no option shall have a term in excess often (10) years measured from the option
grant date. 
  
 C Effect of Termination of
Service. 
  
 (i) The following provisions
shall govern the exercise of any options held by the Optionee at the time of cessation of Service or death: 
  
 (i) Any option outstanding at the time of the Optionee’s cessation of Service for any reason shall remain exercisable for such
period of time thereafter as shall be determined by the Plan Administrator and set forth in the documents evidencing the option, but no such option shall be exercisable after the expiration of the option term. 
  
 (ii) Any option exercisable in whole or in part by the
Optionee at the time of death may be subsequently exercised, during the applicable time period set forth in the documents evidencing the option, 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. 
  
 (iii) During the applicable post-Service exercise period, the option may not be exercised in the aggregate for more than the number of
vested shares for which the option is exercisable on the date of the Optionee’s cessation of Service. Upon the expiration of the applicable exercise period or (if earlier) upon the expiration of the option term, the option shall terminate and
cease to be outstanding for any vested shares for which the option has not been exercised. However, the option shall, immediately upon the Optionee’s cessation of Service, terminate and cease to be outstanding to the extent it is not
exercisable for vested shares on the date of such cessation of Service. 
  
 (iv) Should the Optionee’s Service be terminated for Misconduct, then all outstanding options held by the Optionee shall terminate immediately and cease to be outstanding. 
  
 (v) In the event of an Involuntary Termination following a
Corporate Transaction, the provisions of Section III of this Article Two shall govern the period for which the outstanding options are to remain exercisable following the Optionee’s cessation of Service and shall supersede any provisions to the
contrary in this section. 
  

 6 

 2. The Plan Administrator shall have the discretion, exercisable either at the time an
option is granted or at any time while the option remains outstanding, to: 
  
 (i) extend the period of time for which the option is to remain exercisable following the Optionee’s cessation of Service from the 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 expiration of the option term, and/or 
  
 (ii) permit the option to be exercised, during the applicable post-Service exercise period, not only with respect to the number of vested
shares of Common Stock for which such option is exercisable at the time of the Optionee’s cessation of Service but also with respect to one or more additional installments in which the Optionee would have vested under the option had the
Optionee continued in Service. 
  
 D
Stockholder Rights. The holder of an option shall have no stockholder rights with respect to the shares subject to the option until such person shall have exercised the option, paid the exercise price and become a holder of record of the
purchased shares. 
  
 E Repurchase Rights.
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 such unvested shares, the Corporation shall have the right to repurchase, at
the exercise price paid per share, any or all of those unvested shares. The terms 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 document evidencing such repurchase right. 
  
 F Limited Transferability of Options. During the lifetime of the Optionee, the option shall be exercisable only by the Optionee and
shall not be assignable or transferable other than by will or by the laws of descent and distribution following the Optionee’s death. However, a Non-Statutory Option may be assigned in accordance with the terms of a Qualified Domestic Relations
Order. The assigned option may only be exercised by the person or persons who acquire a proprietary interest in the option pursuant to such Qualified Domestic Relations Order. The terms applicable to the assigned option (or portion thereof) shall be
the same as those in effect for the option immediately prior to such assignment and shall be set forth in such documents issued to the assignee as the Plan Administrator may deem appropriate. 
  

	II.	INCENTIVE OPTIONS 

  
 The terms specified below shall be applicable to all Incentive Options. Except as modified by the provisions of this Section II, all the provisions of
Articles One, Two and Five shall be applicable to Incentive Options. Options which are specifically designated as Non-Statutory Options when issued under the Plan shall not be subject to the terms of this Section II. 
  
 A Eligibility. Incentive Options may only be granted
to Employees. 
  

 7 

 B Exercise Price. The exercise price per share shall not be less than one hundred
percent (100%) of the Fair Market Value per share of Common Stock on the option grant date. 
  
 C Dollar Limitation. The aggregate Fair Market Value of the shares of Common Stock (determined as of the respective date or dates
of grant) for which one or more options granted to any Employee under the Plan (or any other option plan of the Corporation or any Parent or Subsidiary) may for the first time become exercisable as Incentive Options during any one (1) calendar year
shall not exceed the sum of $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
Options shall be applied on the basis of the order in which such options are granted. 
  
 D 10% Stockholder. If any Employee to whom an Incentive Option is granted is a 10% Stockholder, 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 option grant date, and the option term shall not exceed five (5) years measured from the option grant date. 
  

	III.	CORPORATE TRANSACTION/CHANGE 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 effective date of the Corporate Transaction, become fully exercisable for all of the shares of Common Stock at the time subject to such option and may be exercised for any or all of those shares as fully-vested shares of
Common Stock. 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 spread existing on the
unvested option shares at the time of the Corporate Transaction and provides for subsequent payout in accordance with the same vesting schedule applicable to such option or (iii) the acceleration of such option is subject to other limitations
imposed by the Plan Administrator at the time of the option grant. The determination of option comparability under clause (i) above shall be made by the Plan Administrator, and its determination shall be final, binding and conclusive. 
  
 B All outstanding repurchase rights shall also terminate
automatically, and the shares of Common Stock subject to those terminated rights shall immediately vest in full, in the event of any Corporate Transaction, except to the extent: (i) those repurchase rights are to be assigned to the successor
corporation (or parent 

  

 8 

 
thereof) in connection with such 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. 
  
 C
Immediately following the consummation of the Corporate Transaction, all outstanding options shall terminate and cease to be outstanding, except to the extent assumed by the successor corporation (or parent thereof). 
  
 D Any options which are assumed or replaced in the Corporate
Transaction and do not otherwise accelerate at that time shall automatically accelerate (and any of the Corporation’s outstanding repurchase rights which do not otherwise terminate at the time of the Corporate Transaction shall automatically
terminate and the shares of Common Stock subject to those terminated rights shall immediately vest in full) in the event the Optionee’s Service should subsequently terminate by reason of an Involuntary Termination within eighteen (18) months
following the effective date of such Corporate Transaction. Any options so accelerated shall remain exercisable for fully-vested shares until the earlier of (i) the expiration of the option term or (ii) the expiration of the one (1)-year period
measured from the effective date of the Involuntary Termination. 
  
 E The Plan Administrator shall have the discretion, exercisable either at the time the option is granted or at any time while the option remains outstanding, to (i) provide for the automatic acceleration of one or
more outstanding options (and the automatic termination of one or more outstanding repurchase rights with the immediate vesting of the shares of Common Stock subject to those rights) upon the occurrence of a Change in Control or (ii) condition any
such option acceleration (and the termination of any outstanding repurchase rights) upon the subsequent Involuntary Termination of the Optionee’s Service within a specified period following the effective date of such Change in Control. Any
options accelerated in connection with a Change in Control shall remain fully exercisable until the expiration or sooner termination of the option term. 
  
 F The portion of any Incentive Option accelerated in connection with a Corporate Transaction or Change in Control shall remain exercisable
as an Incentive Option only to the extent the applicable $100,000 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. 
  
 G Each option which is assumed or
otherwise continued in effect in connection with a Corporate Transaction or Change in Control shall be appropriately adjusted, immediately after such Corporate Transaction Change in Control, to apply to the number and class of securities which would
have been issuable to the Optionee in consummation of such Corporate Transaction or Change in Control had the option been exercised immediately prior to such transaction. Appropriate adjustments shall also be made to (i) the number and class of
securities available for issuance under the Plan on both an aggregate and per individual basis following the consummation of such Corporate Transaction or Change in Control and (ii) the exercise price payable per 

  

 9 

 
share under each outstanding option, provided the aggregate exercise price payable for such securities shall remain the same. To the extent the actual
holders of the Corporation’s outstanding Common Stock receive cash consideration for their Common Stock in consummation of the Corporate Transaction or Change in Control, the successor corporation may, in connection with the assumption of the
outstanding options under the Discretionary Option Grant Program, substitute one or more shares of its own common stock with a fair market value equivalent to the cash consideration paid per share of Common Stock in such Change in Control
transaction. 
  
 H The grant of options under the
Discretionary Option Grant Program 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. 
  

	IV.	CANCELLATION AND REGRANT OF OPTIONS 

  
 The Plan Administrator shall have the authority to effect, at any time and from time to time, with the consent of the affected option holders, the
cancellation of any or all outstanding options under the Discretionary Option Grant Program (including outstanding options incorporated from the Predecessor Plan) and to grant in substitution new options covering the same or different number of
shares of Common Stock but with an exercise price per share based on the Fair Market Value per share of Common Stock on the new option grant date. 
  

	V.	STOCK APPRECIATION RIGHTS 

  
 A The Plan Administrator shall have full power and authority to grant to selected Optionees tandem stock appreciation rights and/or
limited stock appreciation rights. 
  
 B The
following terms shall govern the grant and exercise of tandem stock appreciation rights: 
  
 (i) One or more Optionees may be granted the right, exercisable upon such terms as the Plan Administrator may establish, to elect between
the exercise of the underlying 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 (A) 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 (B) the aggregate exercise price payable for such shares. 
  
 (ii) 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 be 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. 
  

 10 

 (iii) 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 (A) five (5) business days after the
receipt of the rejection notice or (B) the last day on which the option is otherwise exercisable in accordance with the terms of the documents evidencing such option, but in no event may such rights be exercised more than ten (10) years after the
option grant date. 
  
 C The following terms
shall govern the grant and exercise of limited stock appreciation rights: 
  
 (i) One or more Section 16 Insiders may be granted limited stock appreciation rights with respect to their outstanding options. 
  

(ii) Upon the occurrence of a Hostile Take-Over, each such individual holding one or more options with such a limited stock
appreciation 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 vested shares
of Common Stock. In return for the surrendered option, the Optionee shall receive a cash distribution from the Corporation in an amount equal to the excess of (A) the Take-Over Price of the shares of Common Stock which are at the time vested under
each surrendered option (or surrendered portion thereof) over (B) the aggregate exercise price payable for such shares. Such cash distribution shall be paid within five (5) days following the option surrender date. 
  
 (iii) At the time such limited stock appreciation right is
granted, the Primary Committee shall pre-approve any subsequent exercise of that right in accordance with the terms of this Paragraph C. Accordingly, no further approval of the Primary Committee or the Board shall be required in connection with the
actual option surrender and cash distribution. 
  
 (iv) The balance of the option (if any) shall continue in full force and effect in accordance with the documents evidencing such option. 
  

 11 

 ARTICLE THREE 
  
 STOCK ISSUANCE PROGRAM 
  

	I.	STOCK ISSUANCE TERMS 

  
 Shares of Common Stock may be issued under the Stock Issuance Program through direct and immediate issuances without any intervening option grants. Each
such stock issuance shall be evidenced by a Stock Issuance Agreement which complies with the terms specified below. 
  
 A Purchase Price. 
  
 1. The purchase price per share shall be fixed by the Plan Administrator, but shall not be less than eighty-five percent (85%) of the Fair
Market Value per share of Common Stock on the stock issuance date. 
  
 2. Subject to the provisions of Section I of Article Five, shares of Common Stock may be issued under the Stock Issuance Program for one or both of the following items of consideration which the Plan Administrator may
deem appropriate in each individual instance: 
  
 (i) cash or check made payable to the Corporation, or 
  
 (ii) past services rendered to the Corporation (or any Parent or Subsidiary). 
  
 B Vesting Provisions. 
  
 1. Shares of Common Stock issued under the Stock Issuance Program may, in the discretion of the Plan Administrator, be fully and
immediately vested upon issuance or may vest in one or more installments over the Participant’s period of Service or upon attainment of specified performance objectives. 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 attained, 
  
 (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 
  

 12 

 (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 Stock Issuance Agreement. 
  
 2. Any new, substituted or additional securities 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 the Participant’s unvested shares of Common Stock 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 of Common Stock and (ii) such escrow
arrangements as the Plan Administrator shall deem appropriate. 
  
 3. The Participant shall have full stockholder rights with respect to any shares of Common Stock issued to the Participant under the Stock Issuance Program, whether or not the Participant’s 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. 
  
 4. Should the Participant cease to remain in Service while holding one or more unvested shares of Common Stock issued under the Stock
Issuance Program or should the performance objectives not be attained with respect to one or more such unvested shares of Common Stock, then those shares shall be immediately surrendered to the Corporation for cancellation, and the Participant shall
have no further stockholder rights with respect to those shares. To the extent the surrendered shares were previously issued to the Participant for consideration paid in cash or cash equivalent (including the Participant’s purchase-money
indebtedness), 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
surrendered shares. 
  
 5. The Plan Administrator
may in its discretion waive the surrender and cancellation of one or more unvested shares of Common Stock (or other assets attributable thereto) which would otherwise occur upon the cessation of the Participant’s Service or 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. 
  

 13 

	II.	CORPORATE TRANSACTION/CHANGE IN CONTROL 

  
 A All of the outstanding repurchase rights under the Stock Issuance Program shall terminate automatically, and all the shares of Common
Stock subject to those terminated rights shall immediately vest in full, in the event of any Corporate Transaction, except to the extent (i) those repurchase rights are assigned to the successor corporation (or parent thereof) in connection with
such Corporate Transaction or (ii) such accelerated vesting is precluded by other limitations imposed in the Stock Issuance Agreement. 
  
 B The Plan Administrator shall have the discretion, exercisable either at the time the unvested shares are issued or at any time while the
Corporation’s repurchase right remains outstanding, to provide for the automatic termination of one or more outstanding repurchase rights, and the immediate vesting of the shares of Common Stock subject to those rights, upon the occurrence of a
Corporate Transaction. 
  
 C Any repurchase
rights that are assigned in the Corporate Transaction shall automatically terminate, and all the shares of Common Stock subject to those terminated rights shall immediately vest in full, in the event the Optionee’s Service should subsequently
terminate by reason of an Involuntary Termination within eighteen (18) months following the effective date of such Corporate Transaction. 
  
 D The Plan Administrator shall have the discretion, exercisable either at the time the unvested shares are issued or at any time while the
Corporation’s repurchase right remains outstanding, to (i) provide for the automatic termination of one or more outstanding repurchase rights and the immediate vesting of the shares of Common Stock subject to those rights upon the occurrence of
a Change in Control or (ii) condition any such accelerated vesting upon the subsequent Involuntary Termination of the Participant’s Service within a specified period following the effective date of such Change in Control. 
  

	III.	SHARE ESCROW/LEGENDS 

  
 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 those unvested shares. 
  

 14 

 ARTICLE FOUR 
  
 AUTOMATIC OPTION GRANT PROGRAM 
  

	I.	OPTION TERMS 

  
 A Grant Dates. Option grants shall be made on the dates specified below: 
  
 1. Each Eligible Director who is first elected or appointed
as a non-employee Board member on or after the date of the 2003 Annual Meeting shall automatically be granted, on the date of such initial election or appointment (as the case may be), a Non-Statutory Option to purchase 125,000 shares of Common
Stock. 
  
 2. On the date of each Annual
Stockholders Meeting, beginning with the 2003 Annual Meeting, each individual who is to continue to serve as an Eligible Director shall automatically be granted, whether or not such individual is standing for re-election as a Board member at that
Annual Meeting, a Non-Statutory Option to purchase an additional 40,000 shares of Common Stock, provided such individual has served as a non-employee Board member for at least six (6) months prior to the date of such Annual Meeting. There shall be
no limit on the number of such 40,000-share option grants any one Eligible Director may receive over his or her period of Board service. 
  
 B Exercise Price. 
  
 1. The exercise price per share shall be equal to one hundred percent (100%) of the Fair Market Value per share of Common Stock on the
option grant date. 
  
 2. The exercise price
shall be payable in one or more of the alternative forms authorized under the Discretionary Option Grant Program. Except to the extent the sale and remittance procedure specified thereunder is utilized, payment of the exercise price for the
purchased shares must be made on the Exercise Date. 
  
 C Option Term. Each option shall have a term of ten (10) years measured from the option grant date. 
  
 D Exercise and Vesting of Options. Each option 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 initial grant shall vest, and the
Corporation’s repurchase right shall lapse, in a series of four (4) 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 the
Optionee’s completion of one (1) year of Board service measured from 

  

 15 

 
the option grant date. Each annual grant shall vest, and the Corporation’s repurchase right shall lapse, in two (2) equal and successive annual
installments upon the Optionee’s completion of each year of Board service over the two (2)-year measured from the option grant date. 
  
 E Effect of Termination of Board Service. The following provisions shall govern the exercise of any options held by the Optionee at
the time the Optionee ceases to serve as a Board member: 
  
 (i) The Optionee (or, in the event of Optionee’s death, 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 have a twelve (12)-month period following the date of such cessation of Board service in which to exercise each such option. 
  
 (ii) During the twelve (12)-month exercise period, the
option may not be exercised in the aggregate for more than the number of vested shares of Common Stock for which the option is exercisable at the time of the Optionee’s cessation of Board service. 
  
 (iii) Should the Optionee cease to serve as a Board member
by reason of death or Permanent Disability, then all shares at the time subject to the option shall immediately vest so that such option may, during the twelve (12)-month exercise period following such cessation of Board service, be exercised for
all or any portion of such shares as fully-vested shares of Common Stock. 
  
 (iv) In no event shall the option remain exercisable after the expiration of the option term. Upon the expiration of the twelve (12)-month exercise period or (if earlier) upon the expiration of the option term, the
option shall terminate and cease to be outstanding for any vested shares for which the option has not been exercised. However, the option shall, immediately upon the Optionee’s cessation of Board service, terminate and cease to be outstanding
to the extent it is not exercisable for vested shares on the date of such cessation of Board service. 
  

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

  
 A In the event of any Corporate Transaction, the shares of Common Stock at the time subject to each option outstanding under the Automatic
Option Grant Program but not otherwise vested shall automatically vest in full so that each such option shall, immediately prior to the effective date of the Corporate Transaction, become fully exercisable for all of the shares of Common Stock at
the time subject to such option and may be exercised for all or any portion of such shares as fully-vested shares of Common Stock. Immediately following the consummation of the Corporate Transaction, each automatic option grant shall terminate and
cease to be outstanding, except to the extent assumed by the successor corporation (or parent thereof). 
  

 16 

 B In connection with any Change in Control, the shares of Common Stock at the time
subject to each option outstanding under the Automatic Option Grant Program but not otherwise vested shall automatically vest in full so that each such option shall, immediately prior to the effective date of the Change in Control, become fully
exercisable for all of the shares of Common Stock at the time subject to such option and may be exercised for all or any portion of such shares as fully-vested shares of Common Stock. Each such option shall remain exercisable for such fully-vested
option shares until the expiration or sooner termination of the option term or the surrender of the option in connection with a Hostile Take-Over. 
  
 C Upon the occurrence of a Hostile Take-Over, the Optionee shall have a thirty (30)-day period in which to surrender to the Corporation
each option held by him under the Automatic Option Grant Program. 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 (whether or not the Optionee is otherwise at the time vested in those shares) 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. No approval or consent of the Board shall be required in connection with such option surrender and cash distribution. 
  
 D Each option which is assumed or otherwise continued in effect in connection with a Corporate Transaction
or Change in Control shall be appropriately adjusted, immediately after such Corporate Transaction Change in Control, to apply to the number and class of securities which would have been issuable to the Optionee in consummation of such Corporate
Transaction or Change in Control had the option been exercised immediately prior to such transaction. Appropriate adjustments shall also be made to the exercise price payable per share under each outstanding option, provided the aggregate
exercise price payable for such securities shall remain the same. To the extent the actual holders of the Corporation’s outstanding Common Stock receive cash consideration for their Common Stock in consummation of the Corporate Transaction or
Change in Control, the successor corporation may, in connection with the assumption of the outstanding options under the Automatic Option Grant Program, substitute one or more shares of its own common stock with a fair market value equivalent to the
cash consideration paid per share of Common Stock in such Corporate Transaction or Change in Control transaction. 
  
 E The grant of options under the Automatic Option Grant Program 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. 
  

	III.	REMAINING TERMS 

  
 The remaining terms of each option granted under the Automatic Option Grant Program shall be the same as the terms in effect for option grants made under
the Discretionary Option Grant Program. 
  

 17 

 ARTICLE FIVE 
  
 MISCELLANEOUS 
  

	I.	FINANCING 

  
 The Plan Administrator may permit any Optionee or Participant (other than an executive officer or Board member) to pay the option exercise price under the
Discretionary Option Grant Program or the purchase price for shares issued under the Stock Issuance Program by delivering a full-recourse promissory note payable in one or more installments and bearing interest at a market rate determined by the
Plan Administrator. Subject to the foregoing, the terms of any such promissory note shall be established by the Plan Administrator in its sole discretion. Promissory notes may be authorized with or without security or collateral. In all events, the
maximum credit available to the Optionee or Participant may not exceed the sum of (i) the aggregate option exercise price or purchase price payable for the purchased shares plus (ii) any Federal, state and local income and employment tax liability
incurred by the Optionee or the Participant in connection with the option exercise or share purchase. 
  

	II.	TAX WITHHOLDING 

  
 A The Corporation’s obligation to deliver shares of Common Stock upon the exercise of options or stock appreciation rights or upon
the issuance or vesting of such shares under the Plan shall be subject to the satisfaction of all applicable Federal, state and local income and employment tax withholding requirements. 
  
 B The Plan Administrator may, in its discretion, provide any or all holders of Non-Statutory Options or
unvested shares of Common Stock under the Plan (other than the options granted or the shares issued under the Automatic Option Grant Program) with the right to use shares of Common Stock in satisfaction of all or part of the Withholding Taxes to
which such holders may become subject 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: 
  
 1. Stock Withholding: 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
Withholding Taxes (not to exceed one hundred percent (100%)) designated by the holder. 
  
 2. Stock Delivery: 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 holder (other than in connection with the option exercise or share vesting triggering the Withholding Taxes) with an aggregate Fair Market Value equal to the percentage of the
Withholding Taxes (not to exceed one hundred percent (100%)) designated by the holder. 
  

 18 

	III.	EFFECTIVE DATE AND TERM OF THE PLAN 

  
 A The Plan became effective on the Plan Effective Date and the initial options under the Automatic Option Grant Program were made to the
Eligible Directors at that time. The Plan was amended and restated on March 13, 1998 to (i) increase the share reserve by an additional 4,000,000 shares of Common Stock, (ii) limit the annual increases to the share reserve, and (iii) expand the
Board’s authority to administer the Plan and to amend the Plan without stockholder approval. The 1998 restatement was approved by the Corporation’s stockholders on May 14, 1998. The Plan was amended and restated on March 26, 1999 to
increase the share reserve by an additional 3,000,000 shares of Common Stock, and such amendment was approved by the Corporation’s stockholders at the 1999 Annual Meeting. The Plan was amended and restated on November 17, 2002, subject to
stockholder approval at the 2003 Annual Meeting, to (i) increase the size of the initial option grants to each newly-appointed or elected non-employee Board member under the Automatic Option Grant Program from 96,000 shares of Common Stock to
125,000 shares of Common Stock and (ii) increase the size of the annual option grants to each continuing non-employee Board member under the Automatic Option Grant Program from 24,000 shares of Common Stock to 40,000 shares of Common Stock. The
November 17, 2002 restatement also effected the following additional amendments to the Plan: (a) revise the definition of Hostile Take-Over, (b) eliminate the authority of the Plan Administrator to provide financing under Article V. Section I. to
executive officers and Board members, (c) eliminate the six (6)-month holding period requirement for the exercise of limited stock appreciation rights granted under the Plan and (d) effect certain other administrative revisions to the Plan. All
share numbers reflect two for one stock splits effected on July 5, 1996, April 17, 1998 and August 13, 1999. 
  
 B The Plan shall serve as the successor to the Predecessor Plan, and no further option grants shall be made under the Predecessor Plan
after the Plan Effective Date. All options outstanding under the Predecessor Plan as of such date shall, immediately upon approval of the Plan by the Corporation’s stockholders, be incorporated into the Plan and treated as outstanding options
under the Plan. However, each outstanding option so incorporated shall continue to be governed solely by the terms of the documents evidencing such option, and no provision of the Plan shall be deemed to affect or otherwise modify the rights or
obligations of the holders of such incorporated options with respect to their acquisition of shares of Common Stock. 
  
 C One or more provisions of the Plan, including (without limitation) the option/vesting acceleration provisions of Article Two relating to
Corporate Transactions and Changes in Control, may, in the Plan Administrator’s discretion, be extended to one or more options incorporated from the Predecessor Plan which do not otherwise contain such provisions. 
  
 D The Plan shall terminate upon the earliest of (i) April
30, 2005, (ii) the date on which all shares available for issuance under the Plan shall have been issued pursuant to the exercise of the options or the issuance of shares (whether vested or unvested) under the Plan or (iii) the termination of all
outstanding options in 

  

 19 

 
connection with a Corporate Transaction. Upon such Plan termination, all options and unvested stock issuances outstanding on such date shall thereafter
continue to have force and effect in accordance with the provisions of the documents evidencing such options or issuances. 
  

	IV.	AMENDMENT OF THE PLAN 

  
 A The Board shall have complete and exclusive power and authority to amend or modify the Plan in any or all respects. However, no such
amendment or modification shall adversely affect the rights and obligations with respect to options, stock appreciation rights or unvested stock issuances at the time outstanding under the Plan unless the Optionee or the Participant consents to such
amendment or modification. The Board shall obtain the approval of the Corporation’s stockholders to any Plan amendment to the extent required by law or to the extent that the Board deems it advisable. 
  
 B Options to purchase shares of Common Stock may be granted
under the Discretionary Option Grant Program and shares of Common Stock may be issued under the Stock Issuance Program that are in each instance in excess of the number of shares then available for issuance under the Plan, provided that to the
extent stockholder approval is required of any such increase, any excess shares actually issued under those programs shall be held in escrow until there is obtained stockholder approval of an amendment sufficiently increasing the number of shares of
Common Stock available for issuance under the Plan. If such stockholder approval is not obtained within twelve (12) months after the date the first such excess issuances are made, then (i) any unexercised options granted on the basis of such excess
shares shall terminate and cease to be outstanding and (ii) the Corporation shall promptly refund to the Optionees and the Participants the exercise or purchase price paid for any excess shares 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, and such shares shall thereupon be automatically cancelled and cease to be outstanding. 
  

	V.	USE OF PROCEEDS 

  
 Any cash proceeds received by the Corporation from the sale of shares of Common Stock 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 and the issuance of any shares of
Common Stock (1) upon the exercise of any option or stock appreciation right or (ii) under the Stock Issuance Program shall be subject to the Corporation’s procurement of all approvals and permits required by regulatory authorities having
jurisdiction over the Plan, the options and stock appreciation rights granted under it and the shares of Common Stock issued pursuant to it. 
  

 20 

 B No shares of Common Stock or other assets shall be issued or delivered under the 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 stock exchange (or the Nasdaq National Market, if applicable) on which Common Stock is then listed for trading. 
  

	VII.	NO EMPLOYMENT/SERVICE RIGHTS 

  
 Nothing in the Plan shall confer upon the Optionee or the Participant any right to continue in Service for any period of specific duration or interfere
with or otherwise restrict in any way the rights of the Corporation (or any Parent or Subsidiary employing or retaining such person) or of the Optionee or the Participant, which rights are hereby expressly reserved by each, to terminate such
person’s Service at any time for any reason, with or without cause. 
  

 21 

 APPENDIX 
  
 The following definitions shall be in effect under the Plan: 
  
 A. Automatic Option Grant Program shall mean the automatic option grant program in effect under the Plan.

  
 B. Board shall mean the Corporation’s Board
of Directors. 
  
 C. Change in Control shall mean a
change in ownership or control of the Corporation effected through either of the following transactions: 
  
 (i) the acquisition, directly or indirectly, 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 
  
 (ii) a change in the composition of the Board over a period
of thirty-six (36) consecutive months or less such that a majority of the Board members 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 the Board approved
such election or nomination. 
  
 D. Code shall mean
the Internal Revenue Code of 1986, as amended. 
  
 E. Common
Stock shall mean the Corporation’s common stock. 
  
 F. Corporate Transaction shall mean either of the following stockholder-approved transactions to which the Corporation is a party: 
  
 (i) a merger or consolidation in which securities possessing more than fifty percent (50°/a) 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 immediately prior to such transaction; or 
  
 (ii) the sale, transfer or other disposition of all or substantially all of the Corporation’s assets in
complete liquidation or dissolution of the Corporation. 
  
 G.
Corporation shall mean Legato Systems, Inc., a Delaware corporation. 
  

 A-1 

 H. Discretionary Option Grant Program shall mean the discretionary option grant program in
effect under the Plan. 
  
 I. Domestic Relations
Order shall mean any judgment, decree or order (including approval of a property settlement agreement) which provides or otherwise conveys, pursuant to applicable State domestic relations laws (including community property laws), marital
property rights to any spouse or former spouse of the Optionee. 
  
 J. Eligible Director shall mean a non-employee Board member eligible to participate in the Automatic Option Grant Program in accordance with the eligibility provisions of Article One. 
  
 K. Employee shall mean an individual who is in the employ of
the Corporation (or any Parent or Subsidiary), subject to the control and direction of the employer entity as to both the work to be performed and the manner and method of performance. 
  
 L. Exercise Date shall mean the date on which the Corporation shall have received written notice of the option
exercise. 
  
 M. Fair Market Value per share of
Common Stock on any relevant date shall be determined in accordance with the following provisions: 
  
 (i) If the Common Stock is at the time traded on the Nasdaq National Market, then the Fair Market Value shall be the closing selling price
per share of Common Stock on the date in question, as such price is reported by the National Association of Securities Dealers on the Nasdaq National Market or any successor system. If there is no 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. 
  
 (ii) If the Common Stock is at the time listed on any Stock Exchange, then the Fair Market Value shall be the closing selling price per
share of Common Stock on the date in question on the Stock Exchange determined by the Plan Administrator to be the primary market for the Common Stock, as such price is officially quoted in the composite tape of transactions on such exchange. If
there is no 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. 
  
 (iii) For purposes of option grants made on the Plan
Effective Date, the Fair Market Value shall be deemed to be equal to the established initial offering price per share. 
  
 N. Hostile Take-Over shall mean a change in ownership of the Corporation effected through the acquisition, directly or indirectly, by any
person or related group of persons (other than the Corporation or a person that directly or indirectly 

  

 A-2 

 
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. 
  
 O. Incentive
Option shall mean an option which satisfies the requirements of Code Section 422. 
  
 P. Involuntary Termination shall mean the termination of the Service of any individual which occurs by reason of. 
  

(i) such individual’s involuntary dismissal or discharge by the Corporation for reasons other than Misconduct, or 
  
 (ii) 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 fifteen percent (15%) 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. 
  
 Q. Misconduct shall mean the commission of any act of fraud, embezzlement or dishonesty by the Optionee or Participant, any unauthorized use or disclosure by such person of confidential information or trade secrets of the
Corporation (or any Parent or Subsidiary), or any other intentional misconduct by such person adversely affecting the business or affairs of the Corporation (or any Parent or Subsidiary) 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 person in the Service of the Corporation (or any
Parent or Subsidiary). 
  
 R. 1934 Act shall mean
the Securities Exchange Act of 1934, as amended. 
  
 S.
Non-Statutory Option shall mean an option not intended to satisfy the requirements of Code Section 422. 
  
 T. Optionee shall mean any person to whom an option is granted under the Discretionary Option Grant or Automatic Option Grant Program.

  

 A-3 

 U. Parent shall mean any corporation (other than the Corporation) in an unbroken chain of
corporations ending with the Corporation, provided each corporation in the unbroken chain (other than the Corporation) owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain. 
  
 V. Participant shall mean any person who is issued shares of Common Stock under the Stock Issuance Program. 
  
 W. Permanent Disability or Permanently Disabled shall mean 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. However, solely for the purposes of the Automatic Option Grant Program,
Permanent Disability or Permanently Disabled shall mean the inability of the non-employee Board member to perform his or her usual duties as a Board member 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. 
  
 X. Plan shall mean the Corporation’s 1995 Stock Option/Stock Issuance Plan, as set forth in this document. 
  
 Y. Plan Administrator shall mean the particular entity, whether the Primary Committee, the Board or the Secondary Committee, which is
authorized to administer the Discretionary Option Grant and Stock Issuance Programs with respect to one or more classes of eligible persons, to the extent such entity is carrying out its administrative functions under those programs with respect to
the persons under its jurisdiction. 
  
 Z. Plan Effective
Date shall mean the date on which the Underwriting Agreement is executed and the initial public offering price of the Common Stock is established. 
  
 AA. Predecessor Plan shall mean the Corporation’s existing 1989 Stock Option and Restricted Stock Plan. 
  
 BB. Primary Committee shall mean the committee of two (2) or
more non-employee Board members appointed by the Board to administer the Discretionary Option Grant and Stock Issuance Programs with respect to Section 16 Insiders. 
  
 CC. Qualified Domestic Relations Order shall mean a Domestic Relations Order which substantially complies with
the requirements of Code Section 414(p). The Plan Administrator shall have the sole discretion to determine whether a Domestic Relations Order is a Qualified Domestic Relations Order. 
  
 DD. Secondary Committee shall mean a committee of two (2) or more Board members appointed by the Board to
administer the Discretionary Option Grant and Stock Issuance Programs with respect to eligible persons other than Section 16 insiders. 
  

 A-4 

 EE. Section 16 Insider shall mean an officer or director of the Corporation subject to the
short-swing profit liabilities of Section 16 of the 1934 Act. 
  
 FF. Section 12(g) Registration Date shall mean the first date on which the Common Stock is registered under Section 12(g) of the 1934 Act. 
  
 GG. Service shall mean the provision of services to the Corporation (or any Parent or Subsidiary) by a person
in the capacity of an Employee, a non-employee member of the board of directors or a consultant or independent advisor, except to the extent otherwise specifically provided in the documents evidencing the option grant or stock issuance. 

 
 HH. Stock Exchange shall mean either the American Stock
Exchange or the New York Stock Exchange. 
  
 II. Stock
Issuance Agreement shall mean the agreement entered into by the Corporation and the Participant at the time of issuance of shares of Common Stock under the Stock Issuance Program. 
  
 JJ. Stock Issuance Program shall mean the stock issuance program in effect under the Plan. 
  
 KK. Subsidiary shall mean any corporation (other than the
Corporation) in an unbroken chain of corporations beginning with the Corporation, provided each 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 one of the other corporations in such chain. 
  
 LL. Take-Over Price shall mean the greatest 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 offeror in effecting such Hostile Take-Over. However, if the surrendered option is an Incentive Option, the
Take-Over Price shall not exceed the clause (i) price per share. 
  
 NN. 10% Stockholder shall mean the owner of stock (as determined under Code Section 424(d)) possessing ten percent (10%) or more of the total combined voting power of all classes of stock of the Corporation (or any Parent or
Subsidiary). 
  
 OO. Underwriting Agreement shall
mean the agreement between the Corporation and the underwriter or underwriters managing the initial public offering of the Common Stock. 
  
 MM. Withholding Taxes shall mean the Federal, state and local income and employment tax liabilities to which the holder of Non-Statutory
Options or unvested shares of Common Stock may become subject in connection with the exercise of such holder’s options or the vesting of his or her shares. 
  

 A-5 

  

 A-6

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00057-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00057-of-00352.parquet"}]]