Document:

Loan and Share Pledge Agreement between Sohu.com Inc. and Jinmei He

 Exhibit 10.1 
  

	

	

  

  
 Loan and Share Pledge Agreement 
  

	

	

  
 between

  
 Sohu.com, Inc. 
  
 and 
  
 He Jinmei 
  
 June 2003 
  
  

 THIS LOAN AND SHARE PLEDGE AGREEMENT (this “Agreement”) is entered into on this 9th day of
June 2003 in Beijing, People’s Republic of China (“PRC”) 
  
 among 
  
 (1)    Sohu.com, Inc., a U.S.
corporation, of Delaware, U.S. (“Party A”), 
  
 and

  
 (2)    He Jinmei, a PRC citizen whose ID
number is 510103197003077369 and residential address is 1-2-301, 17 Dujiakan, Fengtai, Beijing, PRC (“Party B”) 
  
 (individually a “Party” and together the “Parties”). 
  
 RECITALS 
  

	A.	 	Party B and Beijing Century High-Tech Investment Co., Ltd wish to establish a domestic limited liability company in Beijing, PRC (“Domestic Company”), in which they
will hold 20% and 80% equity, respectively. 

  

	B.	 	The Domestic Company will be established to engage in the business of Internet information services, Internet technology services, e-commerce, technology development, consulting,
and training.  

  

	C.	 	Party B wishes to borrow the amount specified in Article 2.1 below (the “Loan”) from Party A, and Party A has agreed to provide the Loan to Party B on an
interest-free basis, for the sole purpose of establishing the Domestic Company and developing the Domestic Company’s business, which shall specifically include the entering into of a series of agreements with Party A and its Affiliates (as
defined below). 

  

	D.	 	As security for the Loan and their performance of this Agreement, Party B has agreed to pledge her portion of the equity interest in the Domestic Company (the
“Shares”) to Party A. 

  
 NOW, THEREFORE,
the Parties agree as follows: 
  

	1.	 	DEFINITIONS AND INTERPRETATIONS 

  

	 	1.1	 	Definitions.    Unless otherwise indicated, the following terms in this Agreement shall have the meanings set forth below: 

  

	 	    	 	“Affiliate” any affiliate entity or business associate of Party A, including without limitation the WFOE – Sohu ITC Information Technology (Beijing) Co., Ltd.

  

	 	    	 	“Certificate” as defined in Article 3.1.9; 

  

	 	    	 	“Conversion Date” as defined in Article 7.2.1; 

  

	 	    	 	“Conversion Notice” as defined in Article 7.1; 

  

	 	    	 	“Designee” an individual, corporation or other appropriate entity designated by Party A to be the recipient of a Share Transfer; 

  

	 	    	 	“Event of Default” as defined in Article 6; 

  

	 	    	 	“Loan Date” with respect to Party B, the date on which the portion of the Loan amount borrowed by Party B is paid into her designated bank account;

  

	 	    	 	“PRC Law” any published and available laws and regulations of the PRC; 

  

	 	    	 	“Repayment Date” as defined in Article 2.3; 

  

	 	    	 	“RMB” Renminbi, the lawful currency of the PRC; 

  

	 	    	 	“Share Transfer” as defined in Article 7.2.1; 

  

	 	    	 	“USD” United States Dollar, the lawful currency of the United States of America. 

  

	 	    	 	“WFOE” A wholly-owned subsidiary established by Party A in the PRC. 

  

	 	1.2	 	Interpretations.    The headings herein are for reference purposes only and do not affect the meaning or interpretation of any provision hereof. Any
reference herein to an Article or Appendix is to an article or appendix of this Agreement. The use of the plural shall include the use of the singular, and vice versa. Unless otherwise indicated, a reference herein to a day, month or year is to a
calendar day, month or year. A reference to a business day is to a day on which commercial banks are open for business in both the PRC and the U.S. The use of the masculine shall include the use of the feminine, and vice versa.

  
 2.    AMOUNT AND REPAYMENT OF THE
LOAN 
  

	 	2.1	 	Loan Amount.    Party A agrees, subject to the terms and conditions of this Agreement, to cause its Affiliate to extend the Loan to Party B in a total
amount of RMB1,000,000. The Loan shall be interest-free. 

  

	 	2.2	 	Provision of Loan.    The Loan shall be deemed to have been provided to Party B on the Loan Date. 

  

	 	2.3	 	Date of Repayment.    The Loan, together with any other moneys owing under this Agreement by Party B, shall become repayable upon the earliest to occur of
any of the following events (each a “Repayment Date”): 

  

	 	2.3.1	 	in full, on the occurrence of an Event of Default; 

  

	 	2.3.2	 	in full, on the resignation or removal of Party B from the position of director, general manager, supervisor of the Domestic Company; 

  

	 	2.3.3	 	in full, with respect to Party B, the date on which such Party’s employment relationship with Party A or any Affiliate terminates for any reason; 

  

	 	2.3.4	 	in full, where Party A intends to replace this Agreement with another agreement, the date of the written notice from Party A to Party B confirming such intention; or

  

	 	2.3.5	 	in full or in part, at Party A’s sole discretion upon any date selected by Party A after the second anniversary of the date of signing of this Agreement.

  

	 	2.4	 	Method of Repayment.    Repayment will be made only by means of converting the Loan into Shares, as described in Article 7 below, with the final amount of
the Loan being due and repayable on the final Conversion Date. The Loan may not be repaid prior to the Repayment Date or by any means not specifically permitted in this Article 2.4 without the express written consent of Party A.

  
 3.    UNDERTAKINGS AND WARRANTIES OF
PARTY B 
  

	 	3.1	 	Undertakings and Warranties. Party B hereby undertakes and warrants to Party A that: 

  

	 	3.1.1	 	the Loan will be used solely for the purpose of establishing the Domestic Company and developing its business activities; 

  

	 	3.1.2	 	she shall use the proceeds from the Loan solely for the purpose of contributing her amount of the registered capital in the Domestic Company; 

  

	 	3.1.3	 	she has and shall maintain the full power and authority to enter into this Agreement, to borrow the Loan and to perform her obligations hereunder; 

  

	 	3.1.4	 	there are no civil or criminal, claims, actions, suits, investigations or proceedings pending or, to her knowledge, threatened against her; 

  
  

	 	3.1.5	 	there is no provision of any Agreement, enforceable judgement or order of any court binding on her or affecting her property, which would in any way prevent or materially adversely
affect her execution or performance of this Agreement; 

  

	 	3.1.6	 	the execution and performance of this Agreement and the realization of Party A’s rights hereunder will not violate any mortgage right, contract, judgement, decree or law which
is binding upon her or her assets; 

  

	 	3.1.7	 	upon her investment in the Domestic Company, she shall be the sole legal and beneficial owner of his Shares, free and clear of all pledges and encumbrances other than the security
interest created by this Agreement; 

  

	 	3.1.8	 	she shall cause the pledge of her respective Shares to Party A to be recorded on the Domestic Company’s register of shareholders; 

  

	 	3.1.9	 	upon the establishment of the Domestic Company, she shall provide to Party A a certificate from the Domestic Company evidencing her ownership of the Shares (a
“Certificate”) together with an Assignment Agreement, substantially in the form attached hereto as an Appendix; 

  

	 	3.1.10	 	for the duration of this Agreement, she will not cause the Domestic Company, without the written consent of 

	 	    	 	Party A, to engage directly or indirectly in any business activities which compete with those of Party A other than those described in Recital B above; 

  

	 	3.1.11	 	she will, at any time and at Party A’s expense, defend the Shares against any third party claims; 

  

	 	3.1.12	 	without the consent of Party A, except as expressly permitted hereunder, she will not arrange for or otherwise permit or cause the issuance of any new shares of capital stock of the
Domestic Company; 

  

	 	3.1.13	 	she shall do or cause to be done all such acts, and execute or cause to be executed any necessary documents and registrations, such that the conversion of the Loan, the Share
Transfers and all other transactions contemplated hereunder are effected in a legal and valid manner; and 

  

	 	3.1.14	 	she shall maintain as strictly confidential the existence and provisions of this Agreement, as well as of any correspondence, resolutions, ancillary agreements and any other
documentation associated herewith. 

  
 4.    COVENANTS 
  

	 	4.1	 	Affirmative Covenants.    Party B hereby covenants that she will furnish to Party A, within 10 days after the end of each month after the Domestic Company
has been established, with financial statements of the Domestic Company and such additional information as Party A may from time to time reasonably request 

  

	 	4.2	 	Further Covenants.    Party B further covenants that, from the date hereof until full repayment of the Loan has been effected, she will not, and will
ensure that the Domestic Company does not, except with the prior written consent of 

	 	    	 	Party A: 

  

	 	4.2.1	 	incur or assume any debt that is not due and payable in the ordinary course of its business (except indebtedness to Party A hereunder or as otherwise specifically permitted
hereunder); 

  

	 	4.2.2	 	incur or assume any mortgage, pledge or other encumbrance of any kind upon any assets of the Domestic Company, whether now owned or hereafter acquired; 

  

	 	4.2.3	 	enter into any agreement, arrangement, commitment or understanding to, or actually acquire all or part of the substantial assets of any third party; 

  

	 	4.2.4	 	enter into any agreement, arrangement, commitment or understanding to, or actually sell, lease, or otherwise dispose of any assets of the Domestic Company except in the ordinary
course of business; 

  

	 	4.2.5	 	enter into any agreement, arrangement, commitment or understanding to, or actually, make loans or advances to any third party; 

  

	 	4.2.6	 	enter into any agreement, arrangement, commitment or understanding to, or actually, assume, guarantee, endorse or otherwise become liable for the obligation of any third party or
other entity; or 

  

	 	4.2.7	 	permit the Domestic Company to conduct any business not expressly described in Recital B of this Agreement. 

  

	 	4.3	 	Rights of Party A. 

  

	 	4.3.1	 	Party B agrees that she shall obtain Party A’s written approval prior to undertaking any of the following, namely: 

  

	 	4.3.1.1	 	appointing and removing the directors of the Domestic Company; 

  

	 	4.3.1.2	 	appointing and removing the general manager of the Domestic Company; and 

  

	 	4.3.1.3	 	approving the terms of employment of the general manager. 

  

	 	4.3.2	 	Party B agrees that she shall obtain Party A’s written approval prior to undertaking any of the following, namely: 

  

	 	4.3.2.1	 	appointing and removing of the senior management personnel and any key personnel of the Domestic Company; and 

  

	 	4.3.2.2	 	approving the terms of employment of the senior management personnel and key personnel of the Domestic Company. 

  
 5.    SHARE PLEDGE 
  

	 	5.1	 	Share Pledge.    As security for the performance in full of the obligations of Party B under this Agreement, Party B hereby pledges to Party A, and
creates in favor of Party A or the Designee (as appropriate), a first priority security interest in all of the rights, title and interest in and to: 

  

	 	5.1.1	 	the Shares; and 

  

	 	5.1.2	 	all of her incidental rights with respect to the Shares, now or hereafter acquired. 

  

	 	    	 	Such security interest is to be perfected by compliance by Party B with Article 3.1.9 of this Agreement. 

  

	 	5.2	 	Power of Attorney.    Party B hereby irrevocably grants to Party A or the Designee (as appropriate) full power of attorney for the purpose of carrying out
the provisions of this Agreement, as well as taking any action and executing any instrument which Party A in good faith deems necessary to accomplish for purposes of this Agreement. 

  
 6.    EVENTS OF DEFAULT 
  

	    	 	The occurrence of any of the following events shall constitute a default of the Loan hereunder and a breach of this Agreement by Party B (as appropriate) (an “Event of
Default”): 

  

	 	6.1	 	a Share Transfer has not been effected by Party B within 20 working days after the corresponding Conversion Date or such time as may otherwise be agreed upon by the Parties;

  
  

	 	6.2	 	Party B is in breach of any of the terms and conditions hereof, and such breach has not been rectified for a period of 10 days after receipt of Party A’s written notice
requesting such rectified; 

  

	 	6.3	 	any undertaking or warranty made by Party B herein shall prove to have been false or misleading in any material respect; 

  

	 	6.4	 	Party B makes any arrangement with her respective creditors or takes or suffers any similar action in consequence of debt; or 

  

	 	6.5	 	any judgment is made under any applicable law against Party which exceeds USD 50,000. 

  
 7.    LOAN CONVERSION 
  

	 	7.1	 	Share Conversion.    As of the Repayment Date, the Loan shall be convertible into Shares on the basis that 100 percent of the Loan amount equals 100
percent of the Shares. For the avoidance of doubt, if 10 percent of the Loan were repayable by Party B, then Party B would be required to transfer 10% of the total number of the Shares to Party A. The Loan shall become repayable to such extent as
Party A may from time to time request, until the entire Loan amount has been repaid. Party A shall request to convert all or a percentage of the Loan by means of a written notice to Party B that specifies the percentage of the Loan to be
converted into Shares (“Conversion Notice”). 

  

	 	7.2	 	Share Transfer.  

  

	 	7.2.1	 	Within 20 working days after receipt of a Conversion Notice (“Conversion Date”), Party B shall effect the transfer of the portion of the Shares designated in the
Conversion Notice, either to Party A directly or to the Designee specified by Party A in the Conversion Notice (each a “Share Transfer”). 

  

	 	7.2.2	 	For the avoidance of doubt, upon the completion of the conversion of the Loan and the transfer of all of the Shares of Party B (whether pursuant to this Article 7 or an Event of
Default), Party A shall hold as many of the Shares as is permissible under PRC Law, and the remainder of the Shares (if applicable) shall be held by the Designees, with Party B no longer holding any Shares. At such time, this Agreement shall be
deemed to have terminated, and the obligations of Party B hereunder to have been fulfilled (with the exception of those under 3.1.13 and 3.1.14). 

  

	 	7.3	 	Delay.    Party B undertakes to notify Party A immediately of any delay in effecting a Share Transfer or completing the procedures described in Article
7.2 above, together with the reason for such delay and revised effective date of the Share Transfer. 

  

	 	7.4	 	Repayment of Loan.    The corresponding portion of the Loan shall be deemed to have been repaid as of the effective date of each Share Transfer. Once
Party B has completed the Share Transfer in accordance with the provisions of this Article 7, the Loan shall be deemed to have been repaid in full and Party B shall be deemed to have performed her repayment obligations hereunder.

  
 8.    MISCELLANEOUS

  

	 	8.1	 	Notices and Delivery.    All notices and communications among the Parties shall be made in writing and in the English language by facsimile transmission
with confirmation of transmission, delivery in person (including courier service) or registered airmail letter to the appropriate correspondence addresses set forth below: 

  

	 	    	 	Party A 

	 	    	 	Sohu.com, Inc. 

	 	    	 	15/F, Tower 2, Bright China Chang An Building, 7 Jianguomen Nei Avenue, Beijing 100005 

	 	    	 	Tel     :     8610-6510-2160 

	 	    	 	Fax     :     8610-6510-2159 

  

	 	    	 	Party B 

	 	    	 	He Jinmei 

  

	 	    	 	Tel     :     8610-6510-2160 

  

	 	8.2	 	Timing.    The time of receipt of the notice or communication shall be deemed to be: 

  

	 	8.2.1	 	If by facsimile transmission with confirmation of transmission, at the time displayed in the corresponding transmission record, unless such facsimile is sent after 5:00 p.m. or on a
non-business day in the place where it is received, in which case the date of receipt shall be deemed to be the following business day; 

  

	 	8.2.2	 	if in person (including express mail), on the date that the receiving Party or a person at the receiving Party’s address signs for the document; or 

  

	 	8.2.3	 	if by registered mail, on the 10th day after the
date that is printed on the receipt of the registered mail. 

  

	 	8.3	 	Payments.    All amounts payable by Party B hereunder shall be paid in RMB. 

  

	 	8.4	 	Amendments.    The provisions of this Agreement may not be waived, modified or amended except by an instrument in writing signed by the Parties (which
instrument shall be attached as an Appendix hereto). 

  

	 	8.5	 	No Waiver.    Failure or delay on the part of any Party to exercise any right under this Agreement shall not operate as a waiver thereof.

  

	 	8.6	 	Severability.    The invalidity of any provision of this Agreement shall not affect the validity of any other provision of this Agreement which is
unrelated to that provision. 

  

	 	8.7	 	Survival.    The confidentiality obligations of the Parties hereunder shall remain in full force and effect regardless of the termination of this
Agreement for any reason. 

  

	 	8.8	 	Taxes and Duties.    Party A shall be responsible for all stamp duties and other governmental fees, taxes and reasonable  out-of-pocket expenses
(including reasonable legal fees) incurred by the Parties in connection with the conversion of the Loan and each Share Transfer made hereunder and in the preparation of this Agreement.  

  

	 	8.9	 	Successors.    This Agreement shall be binding upon the Parties and upon their respective successors and assigns (if any). 

  

	 	8.10	 	Assignment.    Party B may neither assign nor otherwise transfer his rights or obligations under this Agreement without the prior written consent of Party
A. 

  

	 	8.11	 	Governing Law.    The execution, validity, interpretation and implementation of this Agreement and the settlement of disputes thereunder shall be governed
by PRC Law. 

  

	 	8.12	 	Arbitration.    All disputes arising out of or in connection with this Agreementshall be finally settled under the Rules of Arbitration of the
International Chamber of Commerce as administered by the International Court of Arbitration of the International Chamber of Commerce in Hong Kong by a sole arbitratorappointed in accordance with the said Rules conducted in the English
language. 

  

	 	8.13	 	Entire Agreement.    This Agreement and the Appendix hereto constitute the entire agreement between the Parties and supersede all prior discussions,
negotiations and agreements. The Appendix form an integral part hereof and have the same legal effect as this Agreement. If there is any inconsistency between the provisions of this Agreement and any of the Appendix, the provisions of this Agreement
shall prevail to the extent of such inconsistency. 

  

	 	8.14	 	Language.    This Agreement will be signed in 3 sets of originals in the Chinese and English languages, with 1 original for each Party. The two language
versions shall have equal validity and the wording of each version shall be deemed to carry the same meaning. In the event of any discrepancy between the wordings of the said two versions, such discrepancy shall be interpreted according to the
purpose of this Agreement and based on the English text. 

  

 IN WITNESS WHEREOF, the Parties hereto have executed or caused this Agreement to be executed by their duly
authorised representatives (as the case may be) as of the date first indicated above. 
  
  
 For and on behalf of Sohu.com, Inc. 
  

By /s/Derek Palashcuk 
  
 Name: Derek Palaschuk 
 Title: Chief Financial Officer 
  
 By He Jinmei 
  
  
 /s/He Jinmei1993 Stock Option Issuance Plan (as amended and restated through March 18, 2003)

 EXHIBIT 10.43 
  
 QRS CORPORATION 
  
 1993 STOCK OPTION/STOCK ISSUANCE PLAN 
  
 (As Amended and Restated Through March 18, 2003) 
  
 ARTICLE ONE 
  
 GENERAL 
  

	 	I.	 	PURPOSE OF THE PLAN 

  
 A.    This 1993 Stock Option/Stock Issuance Plan (“Plan”) is intended to promote the interests of QRS Corporation, a
Delaware corporation (the “Corporation”), by providing (i) key employees (including officers) of the Corporation (or its parent or subsidiary corporations) who are responsible for the management, growth and financial success of the
Corporation (or its parent or subsidiary corporations), (ii) the non-employee members of the Corporation’s Board of Directors and (iii) consultants and other independent contractors who provide valuable services to the Corporation (or its
parent or subsidiary corporations) with the opportunity to acquire a proprietary interest, or otherwise increase their proprietary interest, in the Corporation as an incentive for them to remain in the service of the Corporation (or its parent or
subsidiary corporations). 
  
 B.    The
Discretionary Option Grant and Stock Issuance Programs under this Plan became effective on the date on which the shares of the Corporation’s Common Stock were first registered under Section 12(g) of the Securities Exchange Act of 1934, as
amended (the “1934 Act”). Such date is hereby designated as the Effective Date for those two programs. The Automatic Option Grant Program under this Plan became effective immediately on the execution and final pricing of the Underwriting
Agreement for the initial public offering of the Corporation’s Common Stock. The execution date of such Underwriting Agreement is hereby designated as the Effective Date of the Automatic Option Grant Program. 
  
 C.    This Plan shall serve as the successor to the
Corporation’s amended and restated 1990 Stock Option Plan (the “1990 Plan”), and no further option grants or stock issuances shall be made under the 1990 Plan from and after the Effective Date of this Plan. All options outstanding
under the 1990 Plan on the Effective Date of the Discretionary Option Grant Program are hereby incorporated into this Plan and shall accordingly be treated as outstanding options under this Plan. However, each outstanding option so incorporated
shall continue to be governed solely by the express terms and conditions of the instrument evidencing such grant, and no provision of this 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 the Corporation’s Common Stock thereunder. 
  
 D.    All share numbers in this March 2003 Restatement reflect the 3-for-2 split of the Common Stock which was effected on July 21,
1999. 

	 	II.	 	DEFINITIONS 

  
 A.    For purposes of the Plan, the following definitions shall be in effect: 
  
 1.    Board:  the Corporation’s
Board of Directors. 
  
 2.    Change in
Control:  a change in ownership or control of the Corporation effected through either of the following transactions: 
  
 a.    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) directly or indirectly acquires 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; or 
  
 b.    there is 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 (rounded up to the next whole number) ceases, by reason of one or more proxy contests for the election of Board members, to be comprised of individuals who either (A) have
been Board members continuously since the beginning of such period or (B) have been elected or nominated for election as Board members during such period by at least a majority of the Board members described in clause (A) who were still in office at
the time such election or nomination was approved by the Board. 
  
 3.    Code:  the Internal Revenue Code of 1986, as amended. 
  
 4.    Common Stock:  Common Stock, $0.001 par value, of the Corporation. 
  
 5.    Corporate Transaction:  any of
the following stockholder-approved transactions to which the Corporation is a party: 
  
 a.    a merger or consolidation in which the Corporation is not the surviving entity, except for a transaction the
principal purpose of which is to change the State in which the Corporation is incorporated, 
  
 b.    the sale, transfer or other disposition of all or substantially all of the assets of the Corporation in
complete liquidation or dissolution of the Corporation, or 
  
 c.    any reverse merger in which the Corporation is the surviving entity but in which securities possessing more than fifty percent (50%) of the total combined voting power of the
Corporation’s outstanding securities are 

  

 2 

 
transferred to a person or persons different from those who held such securities immediately prior to such merger. 
  
 6.    Employee:  an individual who
performs services while in the employ of the Corporation or one or more parent or subsidiary corporations, subject to the control and direction of the employer entity not only as to the work to be performed but also as to the manner and method of
performance. 
  
 7.    Fair Market
Value:  the fair market value per share of Common Stock determined in accordance with the following provisions: 
  
 a.    If the Common Stock is not at the time listed or admitted to trading on any national stock exchange but is
traded on the Nasdaq National Market, the Fair Market Value shall be the closing selling price per share on the date in question, as such price is reported by the National Association of Securities Dealers on the Nasdaq National Market and published
in The Wall Street Journal. If there is no reported closing selling price for the Common Stock on the date in question, then the closing selling price on the last preceding date for which such quotation exists shall be determinative of Fair
Market Value. 
  
 b.    If
the Common Stock is at the time listed or admitted to trading on any national stock exchange, then the Fair Market Value shall be the closing selling price per share on the date in question on the 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 and published in The Wall Street Journal. If there is no reported sale of Common Stock on such exchange on the
date in question, then the Fair Market Value shall be the closing selling price on the exchange on the last preceding date for which such quotation exists. 
  
 8.    Hostile Take-Over:  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 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. 
  
 9.    Incentive Option:  an option which satisfies the requirements of Code Section 422. 
  
 10.    Non-statutory Option:  an option not intended to satisfy the requirements of Code Section 422. 
  

 3 

 11.    Optionee:  any person to whom an option is granted under
either the Discretionary Option Grant or Automatic Option Grant Program in effect under the Plan. 
  
 12.    Participant:  any person who receives a direct issuance of Common Stock under the Stock Issuance Program in
effect under the Plan. 
  
 13.    Plan
Administrator:  the particular entity, whether the Board, the Primary Committee, the Secondary Committee or a delegate, 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. 
  
 14.    Permanent Disability or Permanently Disabled:  the inability of the Optionee or
the Participant to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment expected to result in death or to be of continuous duration of twelve (12) months or more. 
  
 15.    Primary Committee:  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. 
  
 16.    Secondary Committee:  a
committee of one 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. 
  
 17.    Section 16 Insider:  an officer
or director of the Corporation subject to the short-swing profit liabilities rule of Section 16 of the 1934 Act. 
  
 18.    Service:  the performance of services on a periodic basis to the Corporation (or any parent or subsidiary
corporation) in the capacity of an Employee, a non-employee member of the board of directors or an independent consultant or advisor, except to the extent otherwise specifically provided in the applicable stock option or stock issuance agreement.

  
 19.    Take-Over
Price:  the greater of (a) 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 (b) 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 (a) price per share. 
  
 20.    Withholding Taxes:  the Federal,
state and local income and employment withholding taxes to which the holder of Non-statutory Options or unvested shares of Common Stock may become subject in connection with the exercise of those options or the vesting of those shares. 

 

 4 

 B.    The following provisions shall be applicable in determining the parent and
subsidiary corporations of the Corporation: 
  
 1.    Any corporation (other than the Corporation) in an unbroken chain of corporations ending with the Corporation shall be considered to be a parent of the Corporation, provided each such 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. 
  
 2.    Each corporation (other than the Corporation) in
an unbroken chain of corporations beginning with the Corporation shall be considered to be a subsidiary of the Corporation, provided each such corporation (other than the last corporation) in the unbroken chain owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. 
  

	 	III.	 	STRUCTURE OF THE PLAN 

  
 A.    Stock Programs. The Plan shall be divided into three separate components: the Discretionary Option Grant Program
specified in Article Two, the Automatic Option Grant Program specified in Article Three and the Stock Issuance Program specified in Article Four. Under the Discretionary Option Grant Program, eligible individuals may, at the discretion of the Plan
Administrator, be granted options to purchase shares of Common Stock in accordance with the provisions of Article Two. Under the Automatic Option Grant Program, non-employee members of the Board will receive at periodic intervals special option
grants to purchase shares of Common Stock in accordance with the provisions of Article Three. Under the Stock Issuance Program, eligible individuals may be issued shares of Common Stock directly, either through the immediate purchase of such shares
at a price not less than the Fair Market Value of the shares at the time of issuance or as a bonus tied to the performance of services or the Corporation’s attainment of financial objectives, without any cash payment required of the recipient.

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

	 	IV.	 	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 those programs may, at the Board’s discretion, be vested in
the Primary Committee or a Secondary Committee, or the Board may retain the power to administer those programs with respect to all such persons. However, any discretionary option grants or stock issuances for members of the Primary Committee must be
authorized by a disinterested majority of the Board. Members of the Primary and Secondary Committee shall serve for such period of time as the Board may determine and shall be subject to removal by the 
  

 5 

 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. Additionally, the Board, or the Primary or Secondary Committee, may at any time delegate to an officer of the Corporation the authority, subject to such limitations as it may impose, to
administer the Discretionary Option Grant and Stock Issuance Programs to the limited extent allowed under Delaware law. 
  
 B.    Each Plan Administrator shall have full power and authority (subject to the express provisions of the Plan) to establish rules
and regulations for the 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 option grants
or stock issuances thereunder as it may deem necessary or advisable. Decisions of the Plan Administrator shall be final and binding on all parties who have an interest in the Discretionary Option Grant or Stock Issuance Program or any outstanding
option or share issuance thereunder. 
  
 C.    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. 
  

	 	V.	 	OPTION GRANTS AND STOCK ISSUANCES 

  
 A.    The persons eligible to participate in the Discretionary Option Grant Program under Article Two or the Stock Issuance Program
under Article Four are as follows: 
  
 1.    officers and other key employees of the Corporation (or its parent or subsidiary corporations) who render services which contribute to the management, growth and financial success of the Corporation (or its parent
or subsidiary corporations); 
  
 2.    non-employee Board members; and 
  
 3.    those consultants or other independent contractors who provide valuable services to the Corporation (or its parent or subsidiary corporations). 
  
 B.    Non-employee Board members shall also be eligible to receive automatic option grants pursuant to
the provisions of Article Three. 
  
 C.    The
Plan Administrator shall have full authority to determine, (i) with respect to the option grants made under the Plan, which eligible individuals are to receive option grants, 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 granted option is to become exercisable and the maximum term for which the option may remain outstanding and (ii), with respect to stock
issuances under the Stock Issuance Program, the number of shares to be 
  

 6 

 issued to each Participant, the vesting schedule (if any) to be applicable to the issued shares, and the consideration to
be paid by the individual for such shares. 
  

	 	VI.	 	STOCK SUBJECT TO THE PLAN 

  
 A.    Shares of Common Stock shall be available for issuance under the Plan and shall be drawn from either the Corporation’s
authorized but unissued shares of Common Stock or from reacquired shares of Common Stock, including shares repurchased by the Corporation on the open market. The maximum number of shares of Common Stock which may be issued over the term of the Plan
shall not exceed 6,200,000 shares. Such authorized share reserve is comprised of (i) the number of shares which remained available for issuance, as of the Effective Date, under the 1990 Plan as last approved by the Corporation’s stockholders
prior to such Effective Date, including the shares subject to the outstanding options incorporated into this Plan and any other shares which would have been available for future option grant under the 1990 Plan as last approved by the stockholders
(estimated to be 1,083,000 shares in the aggregate), (ii) an increase of 192,000 shares authorized by the Board under this Plan as of the Effective Date, (iii) an additional increase of 750,000 shares authorized by the Board on February 27, 1995 and
approved by the stockholders at the 1995 Annual Meeting, (iv) a further increase of an additional 750,000 shares authorized by the Board on February 16, 1996 and approved by the stockholders at the 1996 Annual Meeting, (v) an additional increase of
another 525,000 shares authorized by the Board on February 16, 1998 and approved by the stockholders at the 1998 Annual Meeting, (vi) an additional increase of 600,000 shares authorized by the Board on February 15, 1999 and approved by the
stockholders at the 1999 Annual Meeting, (vii) an additional increase of 800,000 shares authorized by the Board on February 22, 2000 and approved by the stockholders at the 2000 Annual Meeting, (viii) an additional increase of 750,000 shares
approved by the Board on March 1, 2001 and approved by the stockholders at the 2001 Annual Meeting, and (ix) an additional increase of 750,000 shares approved by the Board on March 20, 2002 and approved by the stockholders at the 2002 Annual
Meeting. 
  
 B.    To the extent one or more
outstanding options under the 1990 Plan which have been incorporated into this Plan are subsequently exercised, the number of shares issued with respect to each such option shall reduce, on a share-for-share basis, the number of shares available for
issuance under this Plan. 
  
 C.    Should one
or more outstanding options under this Plan (including outstanding options under the 1990 Plan incorporated into this Plan) expire or terminate for any reason prior to exercise in full, then the shares subject to the portion of each option not so
exercised shall be available for subsequent option grants under the Plan. Unvested shares issued under the Plan and subsequently cancelled or repurchased by the Corporation, at the original option exercise or direct issue price paid per share,
pursuant to the Corporation’s repurchase rights under the Plan shall be added back to the number of shares of Common Stock reserved for issuance under the Plan and shall accordingly be available for reissuance through one or more subsequent
option grants or direct stock issuances under the Plan. However, the shares subject to any option or portion thereof surrendered in accordance with Section IV of Article Two or Section III.B. of Article Three shall reduce on a share-for-share basis
the number of shares of Common Stock available for subsequent option grants under the Plan. In addition, should the 
  

 7 

 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. 
  
 D.    In no event may any one individual participating in the Plan be granted stock options, separately exercisable stock appreciation rights and direct stock issuances for more than 750,000 shares
in the aggregate over the term of the Plan. However, any stock options, stock appreciation rights or direct stock issuances granted prior to January 1, 1994 shall not be taken into account for purposes of such limitation. 
  
 E.    Should any change be made to the Common Stock
issuable under the Plan by reason of any stock split, stock dividend, recapitalization, combination of shares, exchange of shares or other change affecting the outstanding Common Stock as a class without the Corporation’s receipt of
consideration, then appropriate adjustments shall be made to (i) the maximum number and/or class of securities issuable under the Plan, (ii) the maximum number and/or class of securities for which any one individual participating in the Plan may be
granted stock options, separately exercisable stock appreciation rights and direct stock issuances under the Plan after December 31, 1993, (iii) the number and/or class of securities for which automatic option grants are to be subsequently made to
each new or continuing non-employee Board member under the Automatic Option Grant Program, (iv) the number and/or class of securities and price per share in effect under each option outstanding under either the Discretionary Option Grant or
Automatic Option Grant Program and (v) the number and/or class of securities and price per share in effect under each outstanding option incorporated into this Plan from the 1990 Plan. Such adjustments to the outstanding options are to be effected
in a manner which shall preclude the enlargement or dilution of rights and benefits under such options. The adjustments determined by the Plan Administrator shall be final, binding and conclusive. 
  

 8 

 ARTICLE TWO 
 DISCRETIONARY OPTION GRANT PROGRAM 
  

	 	I.	 	TERMS AND CONDITIONS OF OPTIONS 

  
 Options granted pursuant to the Discretionary Option Grant Program shall be authorized by action of the Plan Administrator and may, at the Plan
Administrator’s discretion, be either Incentive Options or Non-statutory Options. Individuals who are not Employees of the Corporation or its parent or subsidiary corporations may only be granted Non-statutory Options. Each granted option shall
be evidenced by one or more instruments in the form approved by the Plan Administrator; provided, however, that each such instrument shall comply with the terms and conditions specified below. Each instrument evidencing an Incentive Option
shall, in addition, be subject to the applicable provisions of Section II of this Article Two. 
  
 A.    Option Price. 
  
 1.    The option price per share shall be fixed by the Plan Administrator but in no event shall be less than one hundred percent (100%) of the Fair Market Value per share of such Common Stock on
the grant date. 
  
 2.    The option price
shall become immediately due on exercise of the option and, subject to the provisions of Section I of Article Five and the instrument evidencing the grant, shall be payable in one of the following alternative forms specified below: 
  

	 	•	 	full payment in cash or check drawn to the Corporation’s order; 

  

	 	•	 	full payment in shares of Common Stock held for the requisite period necessary to avoid a charge to the Corporation’s earnings for financial reporting purposes and valued at
Fair Market Value on the Exercise Date (as such term is defined below); 

  

	 	•	 	full payment in a combination of shares of Common Stock held for the requisite period necessary to avoid a charge to the Corporation’s earnings for financial reporting purposes
and valued at Fair Market Value on the Exercise Date and cash or check drawn to the Corporation’s order; or 

  

	 	•	 	if and to the extent authorized by the Plan Administrator, full payment through a broker-dealer sale and remittance procedure pursuant to which the Optionee (I) shall provide
irrevocable instructions to a brokerage firm to effect the immediate sale of the purchased shares and remit to the Corporation, out of the sale proceeds available on the settlement date, sufficient funds to cover the aggregate option price payable
for the purchased shares plus all applicable Withholding Taxes required to be withheld by the Corporation in connection with such purchase and (II) shall provide directives to the Corporation to deliver the 

  

 9 

	 	 
certificates for the purchased shares directly to such brokerage firm in order to complete the sale transaction. 

  
 For purposes of this subparagraph (2), the Exercise Date shall be the date on
which written notice of the option exercise is delivered to the Corporation. Except to the extent the sale and remittance procedure is utilized in connection with the exercise of the option, payment of the option price for the purchased shares must
accompany such notice. 
  
 B.    Term
and Exercise of Options. Each option granted under this Discretionary Option Grant Program shall be exercisable at such time or times and during such period as is determined by the Plan Administrator and set forth in the instrument
evidencing the grant. No such option, however, shall have a maximum term in excess of ten (10) years from the grant date. 
  
 C.    Termination of Service. 
  

1.    The following provisions shall govern the exercise period applicable to any outstanding options held by the Optionee at the
time of cessation of Service or death. 
  

	 	•	 	Should an Optionee cease Service for any reason (including death or Permanent Disability) while holding one or more outstanding options under this Article Two, then none of those
options shall (except to the extent otherwise provided pursuant to subparagraph C.3 below) remain exercisable for more than a thirty-six (36)-month period (or such shorter period determined by the Plan Administrator and set forth in the instrument
evidencing the grant) measured from the date of such cessation of Service. 

  

	 	•	 	Any option held by the Optionee at the time of his or her death and which is exercisable in whole or in part on the date of his or her death may be subsequently exercised by the
personal representative of the Optionee’s estate or by the person or persons to whom the option is transferred pursuant to the Optionee’s will or in accordance with the laws of descent and distribution or by the designated beneficiary or
beneficiaries of the option. Such exercise, however, must occur prior to the earlier of (i) the third anniversary of the date of the Optionee’s death (or such shorter period determined by the Plan Administrator and set forth in the
instrument evidencing the grant) or (ii) the specified expiration date of the option term. On the occurrence of the earlier event, the option shall terminate and cease to be outstanding. 

  

	 	•	 	During the applicable post-Service period, the option may not be exercised in the aggregate for more than the number of shares (if any) in which the Optionee is vested at the time
of cessation of Service. On the expiration of the limited post-Service exercise period or (if earlier) on the specified expiration date of the option term, each such option shall terminate and cease to be outstanding with respect to any vested
shares for which it has not otherwise been exercised. However, each outstanding option shall immediately 

  

 10 

	 	 
terminate and cease to be outstanding, at the time of the Optionee’s cessation of Service, with respect to any shares for which it is not otherwise at
that time exercisable or in which Optionee is not otherwise vested. 

  

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

  

	 	•	 	Should (i) the Optionee’s Service be terminated for misconduct (including, but not limited to, any act of dishonesty, willful misconduct, fraud or embezzlement) or (ii) the
Optionee make any unauthorized use or disclosure of confidential information or trade secrets of the Corporation or its parent or subsidiary corporations, then in any such event all outstanding options held by the Optionee under this Article Two
shall terminate immediately and cease to be outstanding. 

  
 2.    The Plan Administrator shall have complete discretion, exercisable either at the time the option is granted or at any time while the option remains outstanding, to permit one or more options held by the Optionee
under this Article Two to be exercised, during the limited post-Service exercise period applicable under subparagraph (1) above, not only with respect to the number of vested shares of Common Stock for which each such option is exercisable at the
time of the Optionee’s cessation of Service but also with respect to one or more subsequent installments of vested shares for which the option would otherwise have become exercisable had such cessation of Service not occurred. 
  
 3.    The Plan Administrator shall also have full power
and authority to extend the period of time for which the option is to remain exercisable following the Optionee’s cessation of Service or death from the limited period in effect under subparagraph 1 above to such greater period of time as the
Plan Administrator shall deem appropriate. In no event, however, shall such option be exercisable after the specified expiration date of the option term. 
  
 D.    Stockholder Rights. An Optionee shall have no stockholder rights with respect to any shares covered by the option
until such individual shall have exercised the option and paid the option price for the purchased shares. 
  
 E.    Limited Transferability of Options. During the lifetime of the Optionee, Incentive Options 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, in connection with the Optionee’s estate
plan, be assigned in whole or in part during the Optionee’s lifetime to one or more members of the Optionee’s immediate family or to a trust established exclusively for one or more such family members. The assigned portion may only be
exercised by the person or persons who acquire a proprietary interest in the option pursuant to the assignment. The terms applicable to the assigned portion 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. Notwithstanding the foregoing, the Optionee may also designate one or more persons as the beneficiary or beneficiaries of his or her
outstanding 
  

 11 

 options under this Article Two, and those options shall, in accordance with such designation, automatically be
transferred to such beneficiary or beneficiaries on the Optionee’s death while holding those options. Such beneficiary or beneficiaries shall take the transferred options subject to all the terms and conditions of the applicable agreement
evidencing each such transferred option, including (without limitation) the limited time period during which the option may be exercised following the Optionee’s death. 
  
 F.    Repurchase Rights. The shares of Common Stock acquired on the exercise of any
Article Two option grant may be subject to repurchase by the Corporation in accordance with the following provisions: 
  
 1.    The Plan Administrator shall have the discretion to authorize the issuance of unvested shares of Common Stock under this
Article Two. Should the Optionee cease Service while holding such unvested shares, the Corporation shall have the right to repurchase any or all of those unvested shares at the option price paid per share. The terms and conditions on which such
repurchase right shall be exercisable (including the period and procedure for exercise and the appropriate vesting schedule for the purchased shares) shall be established by the Plan Administrator and set forth in the instrument evidencing such
repurchase right. 
  
 2.    All of the
Corporation’s outstanding repurchase rights under this Article Two shall automatically terminate, and all shares subject to such terminated rights shall immediately vest in full, on the occurrence of a Corporate Transaction, except to the
extent: (a) any such repurchase right is expressly assigned to the successor corporation (or parent thereof) in connection with the Corporate Transaction or (b) such termination is precluded by other limitations imposed by the Plan Administrator at
the time the repurchase right is issued. 
  
 3.    The Plan Administrator shall have the discretionary authority, exercisable either before or after the Optionee’s cessation of Service, to cancel the Corporation’s outstanding repurchase rights with
respect to one or more shares purchased or purchasable by the Optionee under this Discretionary Option Grant Program and thereby accelerate the vesting of such shares in whole or in part at any time. 
  

	 	II.	 	INCENTIVE OPTIONS 

  
 The terms and conditions specified below shall be applicable to all Incentive Options granted under this Article Two. Incentive Options may only be
granted to individuals who are Employees of the Corporation. Options which are specifically designated as “non-statutory” options when issued under the Plan shall not be subject to such terms and conditions. 
  
 A.    Dollar Limitation. The aggregate Fair
Market Value (determined as of the respective date or dates of grant) of the Common Stock for which one or more options granted to any Employee under this Plan (or any other option plan of the Corporation or its parent or subsidiary corporations)
may for the first time become exercisable as Incentive Options during any one calendar year shall not exceed the sum of One Hundred Thousand Dollars ($100,000). To the extent the Employee holds two (2) or more such options which become exercisable
for the 
  

 12 

 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. Should the number of shares of Common Stock for which any Incentive Option first becomes exercisable in any calendar year exceed the applicable One Hundred Thousand Dollar
($100,000) limitation, then that option may nevertheless be exercised in that calendar year for the excess number of shares as a Non-statutory Option. 
  
 B.    10% Stockholder. If any Employee to whom an Incentive Option is granted is the owner of stock (as determined under
Section 424(d) of the Internal Revenue Code) possessing ten percent (10%) or more of the total combined voting power of all classes of stock of the Corporation or any one of its parent or subsidiary corporations, then the option price per share
shall not be less than one hundred and ten percent (110%) of the Fair Market Value per share of Common Stock on the grant date, and the option term shall not exceed five (5) years, measured from the grant date. 
  
 Except as modified by the preceding provisions of this Section II, the
provisions of Articles One, Two and Five of the Plan shall apply to all Incentive Options granted hereunder. 
  

	 	III.	 	CORPORATE TRANSACTIONS/CHANGES IN CONTROL 

  
 A.    In the event of any Corporate Transaction, each option which is at the time outstanding under this Article Two shall
automatically accelerate so that each such option shall, immediately prior to the specified effective date for the Corporate Transaction, become fully exercisable with respect to the total number of shares of Common Stock at the time subject to such
option and may be exercised for all or any portion of such shares. However, an outstanding option under this Article Two shall not so accelerate if and to the extent: (i) such option is, in connection with the Corporate Transaction, either to
be assumed by the successor corporation or parent thereof or to be replaced with a comparable option to purchase shares of the capital stock of the successor corporation or parent thereof, (ii) such option is to be replaced with a cash incentive
program of the successor corporation which preserves the option spread existing at the time of the Corporate Transaction and provides for subsequent payout in accordance with the same vesting schedule applicable to such option, or (iii) the
acceleration of such option is subject to other limitations imposed by the Plan Administrator at the time of the option grant. The determination of option comparability under clause (i) above shall be made by the Plan Administrator, and its
determination shall be final, binding and conclusive. 
  
 B.    On the consummation of the Corporate Transaction, all outstanding options under this Article Two shall terminate and cease to be outstanding, except to the extent assumed by the successor corporation or its parent
company. 
  
 C.    Each outstanding option
under this Article Two which is assumed in connection with the Corporate Transaction or is otherwise to continue in effect shall be appropriately adjusted, immediately after such Corporate Transaction, to apply and pertain to the number and class of
securities which would have been issued to the option holder, in consummation of such Corporate Transaction, had such person exercised the option immediately prior to such Corporate Transaction. Appropriate adjustments shall also be made to the
option 
  

 13 

 price payable per share, provided the aggregate option price payable for such securities shall remain the same. In
addition, the class and number of securities available for issuance under the Plan following the consummation of the Corporate Transaction shall be appropriately adjusted. 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, 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 Corporate Transaction. 
  
 D.    The Plan Administrator shall have the discretion, exercisable either in advance of any
actually-anticipated Corporate Transaction or at the time of an actual Corporate Transaction, to provide (On such terms as it may deem appropriate) for the automatic acceleration of one or more outstanding options under this Article Two which are
assumed or replaced in the Corporate Transaction and do not otherwise accelerate at that time, in the event the Optionee’s Service should subsequently terminate within a designated period following the effective date of such Corporate
Transaction. The Plan Administrator may also structure one or more option grants under this Article Two so that those options will automatically accelerate at the time of a Corporate Transaction, whether or not those options are to be assumed or
replaced by successor corporation. 
  
 E.    The grant of options under this Article Two 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. 
  
 F.    The Plan Administrator shall have the discretionary authority, exercisable either in advance of any actually-anticipated Change in Control or at the time of an actual Change in Control, to
provide for the automatic acceleration of one or more outstanding options under this Article Two (and the termination of one or more of the Corporation’s outstanding repurchase rights under this Article Two) on the occurrence of the Change in
Control. The Plan Administrator shall also have full power and authority to condition any such option acceleration (and the termination of any outstanding repurchase rights) on the subsequent termination of the Optionee’s Service within a
specified period following the Change in Control. 
  
 G.    Any options accelerated in connection with the Change in Control shall remain fully exercisable until the expiration or sooner termination of the option term. 
  
 H.    Any Incentive Option accelerated under this Section
III in connection with a Corporate Transaction or Change in Control shall remain exercisable as an Incentive Option only to the extent the dollar limitation of Section II of this Article Two is not exceeded. To the extent such limitation is
exceeded, the accelerated portion of such option shall be exercisable as a Non-statutory Option. 
  

 14 

	 	IV.	 	STOCK APPRECIATION RIGHTS 

  
 A.    Provided and only if the Plan Administrator determines in its discretion to implement the stock appreciation right provisions of
this Section IV, one or more Optionees may be granted the right, exercisable on such terms and conditions as the Plan Administrator may establish, to surrender all or part of an unexercised option under this Article Two in exchange for a
distribution from the Corporation in an amount equal to the excess of (i) the Fair Market Value (on the option surrender date) of the number of shares at the time subject to the surrendered option (or surrendered portion thereof) over (ii) the
aggregate option price payable for such shares. The distribution 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 determined by the Plan
Administrator. 
  
 B.    If the surrender of
an option is rejected by the Plan Administrator, then the Optionee shall retain whatever rights the Optionee had under the surrendered option (or surrendered portion thereof) on the option surrender date and may exercise such rights at any time
prior to the later of (i) five (5) business days after the receipt of the rejection notice or (ii) the last day on which the option is otherwise exercisable in accordance with the terms of the instrument evidencing such option, but in no
event may such rights be exercised more than ten (10) years after the date of the option grant. 
  
 C.    One or more officers of the Corporation subject to the short-swing profit restrictions of the Federal securities laws may, in
the Plan Administrator’s sole discretion, be granted limited stock appreciation rights in tandem with their outstanding options under the Plan. On the occurrence of a Hostile Take-Over, the officer will have a thirty (30)-day period in which he
or she may surrender any outstanding options with such a limited stock appreciation right to the Corporation. The officer shall in return be entitled to a cash distribution from the Corporation in an amount equal to the excess of (i) the Take-Over
Price of the shares of Common Stock at the time subject to each surrendered option over (ii) the aggregate exercise price payable for such shares. The cash distribution payable on such option surrender shall be made within five (5) days following
the consummation of the Hostile Take-Over. At the time such limited stock appreciation right is granted, the Plan Administrator shall pre-approve the subsequent exercise of that right in accordance with the terms of this Paragraph D. Accordingly, no
further approval of the Plan Administrator or the Board shall be required at the time of the actual option surrender and cash distribution. Any unsurrendered portion of the option shall continue to remain outstanding and become exercisable in
accordance with the terms of the instrument evidencing such grant. 
  
 D.    The shares of Common Stock subject to any option surrendered for an appreciation distribution pursuant to this Section IV shall not be available for subsequent option grant under the Plan. 
  

 15 

 ARTICLE THREE 
 AUTOMATIC OPTION GRANT PROGRAM 
  
 The following provisions set forth the terms and conditions of the Automatic Option Grant Program as amended and restated by the Board on March 18, 2003 and approved by our stockholders on May 14, 2003 at the 2003
Annual Meeting of Stockholders. Stockholder approval of the March 2003 Restatement shall also constitute pre-approval of each option grant made under this amended Automatic Option Grant Program on or after the date of the 2003 Annual Meeting and the
subsequent exercise of that option in accordance with the terms of such program as set forth below. 
  

	 	I.	 	ELIGIBILITY 

  
 The individuals eligible to receive automatic option grants pursuant to the provisions of this Article Three program as amended February 22, 2000, March
22, 2000, March 20, 2002, January 1, 2003 and March 18, 2003 shall be limited to (i) those individuals who are first elected or appointed as non-employee Board members on or after the date of the 2000 Annual Stockholders Meeting, 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 the date of the 2000 Annual Stockholders Meeting. 
  

	 	II.	 	TERMS AND CONDITIONS OF AUTOMATIC OPTION GRANTS 

  
 A.    Grant Dates. Option grants shall be made under this amended and restated Article Three on the dates specified
below: 
  
 (i)    For each
individual who first becomes a non-employee Board member on or after the date of the 2000 Annual Meeting, whether through election by the Corporation’s stockholders or appointment by the Board, shall automatically be granted on (or, with
respect to individuals who first become non-employee Board members after March 18, 2003, on the first trading day following) the date of such initial election or appointment, a Non-statutory Option to purchase 15,000 shares of Common Stock on the
terms and conditions of this Article Three, provided that such individual has not previously been in the employ of the Corporation or any parent or subsidiary. 
  

(ii)    On the first trading day in January of 2001 and 2002 and on the first trading day after each Annual
Meeting that occurs during or after 2003, each individual who is to continue to serve as a non-employee Board member, whether or not that individual is standing for re-election to the Board at that particular Annual Meeting, shall automatically be
granted a Non-statutory option to purchase 10,000 shares of Common Stock, provided such individual has served as a non-employee Board member for at least six (6) months. There shall be no limit on the number of such 10,000-share option grants any
one non-employee Board member may receive over his or her period of Board service. 
  

 16 

 
Non-employee Board members who have previously been in the employ of the Corporation or who have otherwise received one or more stock option grants from the
Corporation shall be eligible to receive one or more such annual option grants over their period of continued Board service. 
  
 The number of shares for which the automatic grants are to be made to each newly-elected or continuing non-employee director shall be subject to periodic
adjustment pursuant to the applicable provisions of Section V.C. of Article One. 
  
 B.    Exercise Price. The exercise price per share of Common Stock subject to each automatic option grant made under this Article Three shall be equal to one hundred percent (100%) of
the Fair Market Value per share of Common Stock on the automatic grant date. 
  
 C.    Payment. The exercise price shall be payable in one of the alternative forms specified below: 
  
 (i)    full payment in cash or check made payable to the Corporation’s order; or

  
 (ii)    full payment in
shares of Common Stock held for the requisite period necessary to avoid a charge to the Corporation’s reported earnings and valued at Fair Market Value on the Exercise Date; or 
  
 (iii)    full payment in a combination of shares of Common Stock held for the requisite
period necessary to avoid a charge to the Corporation’s reported earnings and valued at Fair Market Value on the Exercise Date and cash or check payable to the Corporation’s order; or 
  
 (iv)    full payment through a sale and
remittance procedure pursuant to which the non-employee Board member (a) shall provide irrevocable written instructions to a brokerage firm to effect the immediate sale of the purchased shares and remit to the Corporation, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate exercise price payable for the purchased shares and shall (b) concurrently provide written directives to the Corporation to deliver the certificates for the purchased shares
directly to such brokerage firm in order to complete the sale transaction. 
  
 The Exercise Date shall be the date on which written notice of the option exercise is delivered to the Corporation. Except to the extent the sale and remittance procedure is utilized for the exercise of the option,
payment of the option price for the purchased shares must accompany the exercise notice. 
  
 D.    Option Term. Each automatic grant under this Article Three shall have a maximum term of ten (10) years measured from the automatic grant date. 
  

 17 

 E.    Exercisability. The shares subject to each initial 15,000-share
option grant shall vest and become exercisable as follows: (i) the option shall become exercisable for fifty percent (50%) of the option shares on Optionee’s completion of one (1) year of Board service measured from the grant date, and (ii) the
option shall become exercisable for the balance of the option shares on the Optionee’s completion of an additional one (1) year of Board service measured from the one-year anniversary of the grant date. The shares subject to each annual
10,000-share option grant shall vest and become exercisable for all of the 10,000 option shares on the Optionee’s completion of one (1) year of Board service measured from the grant date.1 For the initial 15,000-share and annual 10,000-share option grants, if a director terminates Board service at an Annual Meeting that occurs within one (1)
month before the one (1) year anniversary of the grant date, the director shall be deemed to have completed one (1) year of Board service for vesting purposes. The exercisability of each automatic grant shall be subject to acceleration in accordance
with the provisions of Section II.G. and Section III of this Article Three. 
  
 F.    Limited-Transferability. During the lifetime of the Optionee, each automatic option grant, together with the limited stock appreciation right pertaining to such option, shall be
exercisable only by the Optionee and shall not be assignable or transferable by the Optionee other than (i) a transfer of the option effected by will or by the laws of descent and distribution following Optionee’s death or (ii) an assignment of
the option in whole or in part during the Optionee’s lifetime to one or more members of the Optionee’s immediate family or to a trust established exclusively for one or more such family members, to the extent such assignment is effected
for estate planning purposes. The assigned portion may only be exercised by the person or persons who acquire a proprietary interest in the option pursuant to the assignment. The terms applicable to the assigned portion 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. Notwithstanding the foregoing, the Optionee may also designate one or more
persons as the beneficiary or beneficiaries of his or her outstanding options under this Article Three, and those options shall, in accordance with such designation, automatically be transferred to such beneficiary or beneficiaries on the
Optionee’s death while holding those options. Such beneficiary or beneficiaries shall take the transferred options subject to all the terms and conditions of the applicable agreement evidencing each such transferred option, including (without
limitation) the limited time period during which the option may be exercised following the Optionee’s death. 

	1	 	Prior to the February 2000 Restatement, each automatic option grant made under this Article Three was to become exercisable in a series of four (4) successive equal
annual installments over the Optionee’s period of Service on the Board, with the first such installment to become exercisable six (6) months after the automatic grant date. Following the February 2000 Restatement and prior to the March 2003
Restatement, each automatic option grant made under this Article Three was to become exercisable in a series of installments over the Optionee’s period of Service on the Board, with the first such installment for twenty-five (25%) of the option
shares to become exercisable six (6) months after the automatic grant date and the remainder of the option shares to become exercisable in thirty-six (36) successive equal monthly installments over the following thirty-six (36) months. The new
vesting schedule for the automatic option grants has been approved by our stockholders at the 2003 Annual Meeting and will be in effect for all options granted under the Automatic Option Grant Program after the date of such stockholder approval.

  

 18 

	 	G.	 	Termination of Board Service. 

  
 1.    Should the Optionee cease service as a Board member cease for any reason (other than death or Permanent Disability) while
holding one or more automatic option grants under this Article Three, then such individual shall have a six (6)-month period following the date of such cessation of Board service in which to exercise each such option for any or all of the shares of
Common Stock for which the option is exercisable at the time of such cessation of Board service. However, each such option shall immediately terminate and cease to be outstanding, at the time of such cessation of Board service, with respect to any
shares for which the option is not otherwise at that time exercisable. 
  
 2.    Should the Optionee die within six (6) months after cessation of Board service, then each outstanding automatic option grant held by the Optionee at the time of death may subsequently be exercised, for any or all
of the shares of Common Stock for which such option is exercisable at the time of the Optionee’s cessation of Board service (less any option shares subsequently purchased by the Optionee prior to death), by the personal representative of the
Optionee’s estate or by the person or persons to whom the option is transferred pursuant to the Optionee’s will or in accordance with the laws of descent and distribution or by the designated beneficiary or beneficiaries of the option. Any
such exercise must occur within twelve (12) months after the date of the Optionee’s death. 
  
 3.    Should the Optionee die or become Permanently Disabled while serving as a Board member, then each automatic option grant held
by such Optionee under this Article Three shall accelerate in full, and the Optionee (or the representative of the Optionee’s estate or the person or persons to whom the option is transferred on the Optionee’s death) shall have a twelve
(12)-month period following the date of the Optionee’s cessation of Board service in which to exercise each such option for any or all of the shares of Common Stock subject to that option at the time of such cessation of Board service.

  
 4.    In no event shall any automatic
grant under this Article Three remain exercisable after the specified expiration date of the ten (10)-year option term. On the expiration of the applicable post-service exercise period under subparagraph 1, 2 or 3 above or (if earlier) on the
expiration of the ten (10)-year option term, the automatic grant shall terminate and cease to be outstanding for any unexercised shares for which the option was otherwise exercisable at the time of the Optionee’s cessation of Board service.

  
 H.    Stockholder Rights.
The holder of an automatic option grant under this Article Three shall have none of the rights of a stockholder with respect to any shares subject to such option until such individual shall have exercised the option and paid the exercise price for
the purchased shares. 
  
 I.    Remaining Terms. The remaining terms and conditions of each automatic option grant shall be as set forth in the prototype Non-statutory Stock Option Agreement as approved by the Board. 
  

 19 

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

  
 A.    In the event of any Corporate Transaction, each automatic option grant at the time outstanding under this Article Three shall
automatically accelerate so that each such option shall, immediately prior to the specified effective date for the Corporate Transaction, become 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. On the consummation of the Corporate Transaction, all automatic option grants under this Article Three shall terminate and cease to be outstanding. 
  
 B.    In the event of any Change in Control of the
Corporation, each automatic option grant at the time outstanding under this Article Three shall automatically accelerate so that each such option shall, immediately prior to the specified effective date for the Change in Control, become 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. 
  
 C.    The Optionee shall have the right, exercisable at any time during the thirty (30)-day period immediately following a Hostile
Take-Over, to surrender each option held by him or her under this Article Three to the Corporation. 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 option is otherwise at the time exercisable for such shares) over (ii) the aggregate exercise price payable for such shares. Such cash distribution shall be
paid within five (5) days following the consummation of the Hostile Take-Over. Stockholder approval of the February 2000 Restatement at the 2000 Annual Meeting shall constitute pre-approval of each such option surrender right granted under this
Automatic Option Grant Program on or after the date of such Annual Meeting and the subsequent exercise of each such right in accordance with the terms and provisions of this Section III.C. No additional approval or consent of the Plan Administrator
or the Board shall be required at the time of the actual option surrender and cash distribution. 
  
 D.    On the consummation of the Corporate Transaction, all options granted under this Article Three shall terminate and cease to be
outstanding, except to the extent assumed by the successor corporation (or parent thereof) in such Corporate Transaction. 
  
 E.    Each outstanding option under this Automatic Option Grant Program which is assumed in connection with the Corporate Transaction
or is otherwise to continue in effect shall be appropriately adjusted, immediately after such Corporate Transaction, to apply and pertain to the number and class of securities which would have been issued to the option holder, in consummation of
such Corporate Transaction, had such person exercised the option immediately prior to such Corporate Transaction. Appropriate adjustments shall also be made to the option price payable per share, provided the aggregate option price payable
for such securities shall remain the same. In addition, the class and number of securities available for issuance under the Plan following the consummation of the Corporate Transaction shall be appropriately adjusted. 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, the successor corporation may, in connection with the assumption of the outstanding options
under 
  

 20 

 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. 
  
 F.    The shares of Common Stock subject to each option surrendered in connection with the Hostile Take-Over shall not be
available for subsequent option grant under this Plan. 
  
 G.    The automatic option grants outstanding under this Article Three 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. 
  

 21 

 ARTICLE FOUR 
 STOCK ISSUANCE PROGRAM 
  

	 	I.	 	TERMS AND CONDITIONS OF STOCK ISSUANCES 

  
 Shares of Common Stock may be issued under the Stock Issuance Program through direct and immediate purchases without any intervening stock option grants.
The issued shares shall be evidenced by a Stock Issuance Agreement (“Issuance Agreement”) that complies with the terms and conditions of this Article Four. 
  
 A.    Consideration. 
  
 1.    Shares of Common Stock drawn from the Corporation’s authorized but unissued shares of Common
Stock (“Newly Issued Shares”) shall be issued under the Stock Issuance Program for one or more of the following items of consideration which the Plan Administrator may deem appropriate in each individual instance: 
  
 (i)    cash or check drawn to the
Corporation’s order; 
  
 (ii)    past services rendered to the Corporation or any parent or subsidiary corporation. 
  
 2.    All Newly Issued Shares shall be issued for consideration with a value less not less than one hundred percent (100%) of the
Fair Market Value of such shares at the time of issuance. 
  
 3.    Shares of Common Stock reacquired by the Corporation and held as treasury shares (“Treasury Shares”) may be issued under the Stock Issuance Program for such consideration (including one or more of the
items of consideration specified in subparagraph 1. above) as the Plan Administrator may deem appropriate, provided such consideration is in an amount not less than the Fair Market Value of the Treasury Shares at the time of issuance. Treasury
Shares may, in lieu of any cash consideration, be issued subject to such vesting requirements tied to the Participant’s period of future Service or the Corporation’s attainment of specified performance objectives as the Plan Administrator
may establish at the time of issuance. The Treasury Share provisions shall be in effect only for such period or periods (if any) during which the Corporation is incorporated under the laws of the State of Delaware. 
  
 B.    Vesting Provisions. 
  
 1.    Shares of Common Stock issued under the Stock
Issuance Program may, in the absolute discretion of the Plan Administrator, be fully and immediately vested on issuance or may vest in one or more installments over the Participant’s period of Service. The elements of the vesting schedule
applicable to any unvested shares of Common Stock issued under the Stock Issuance Program, namely: 
  

 22 

 (i)    the Service period to be completed by the Participant or the
performance objectives to be achieved by the Corporation, 
  
 (ii)    the number of installments in which the shares are to vest, 
  
 (iii)    the interval or intervals (if any) which are to lapse between installments, and 
  
 (iv)    the effect which death,
Permanent Disability or other event designated by the Plan Administrator is to have on the vesting schedule, shall be determined by the Plan Administrator and incorporated into the Issuance Agreement executed by the Corporation and the Participant
at the time such unvested shares are issued. 
  
 2.    The Participant shall have full stockholder rights with respect to any shares of Common Stock issued to him or her under the Plan, whether or not his or her interest in those shares is vested. Accordingly, the
Participant shall have the right to vote such shares and to receive any regular cash dividends paid on such shares. Any new, additional or different shares of stock or other property (including money paid other than as a regular cash dividend) which
the Participant may have the right to receive with respect to his or her unvested shares by reason of any stock dividend, stock split, recapitalization, combination of shares, exchange of shares or other change affecting the outstanding Common Stock
as a class without the Corporation’s receipt of consideration or by reason of any Corporate Transaction shall be issued, subject to (i) the same vesting requirements applicable to his or her unvested shares and (ii) such escrow arrangements as
the Plan Administrator shall deem appropriate. 
  
 3.    Should the Participant cease to remain in Service while holding one or more unvested shares of Common Stock under the Stock Issuance Program, then those shares shall be immediately 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, the
Corporation shall repay to the Participant the cash consideration paid for the surrendered shares. The surrendered shares may, at the Plan Administrator’s discretion, be retained by the Corporation as Treasury Shares or may be retired to
authorized but unissued share status. Treasury Shares will only be an available election during the period or periods (if any) the Corporation is incorporated under the laws of the State of Delaware. 
  
 4.    The Plan Administrator may in its discretion elect
to waive the surrender and cancellation of one or more unvested shares of Common Stock (or other assets attributable thereto) which would otherwise occur on 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. 
  

 23 

	 	II.	 	CORPORATE TRANSACTIONS/CHANGE IN CONTROL 

  
 A.    On the occurrence of any Corporate Transaction, all of the Corporation’s outstanding repurchase rights under this Article
Three shall automatically terminate, and all shares subject to such terminated rights shall immediately vest in full, except to the extent: (i) any such repurchase right is expressly assigned to the successor corporation (or parent thereof) in
connection with the Corporate Transaction or (ii) such termination is precluded by other limitations imposed by the Plan Administrator at the time the repurchase right is issued. 
  
 B.    The Plan Administrator shall have the discretionary authority, exercisable either in advance of
any actually-anticipated Change in Control or at the time of an actual Change in Control, to provide for the immediate and automatic vesting of one or more unvested shares outstanding under the Stock Issuance Program at the time of such Change in
Control. The Plan Administrator shall also have full power and authority to condition any such accelerated vesting on the subsequent termination of the Participant’s Service within a specified period following the Change in Control. 

 

	 	III.	 	SHARE ESCROW/TRANSFER RESTRICTIONS 

  
 A.    Unvested shares may, in the Plan Administrator’s discretion, be held in escrow by the Corporation until the
Participant’s interest in such shares vests or may be issued directly to the Participant with restrictive legends on the certificates evidencing such unvested shares. To the extent an escrow arrangement is utilized, the unvested shares and any
securities or other assets issued with respect to such shares (other than regular cash dividends) shall be delivered in escrow to the Corporation to be held until the Participant’s interest in such shares (or other securities or assets) vests.
Alternatively, if the unvested shares are issued directly to the Participant, the restrictive legend on the certificates for such shares shall read substantially as follows: 
  
 “THE SHARES REPRESENTED BY THIS CERTIFICATE ARE UNVESTED AND ARE ACCORDINGLY SUBJECT TO (I) CERTAIN
TRANSFER RESTRICTIONS AND (II) CANCELLATION OR REPURCHASE IN THE EVENT THE REGISTERED HOLDER (OR HIS/HER PREDECESSOR IN INTEREST) CEASES TO REMAIN IN THE CORPORATION’S SERVICE. SUCH TRANSFER RESTRICTIONS AND THE TERMS AND CONDITIONS OF SUCH
CANCELLATION OR REPURCHASE ARE SET FORTH IN A STOCK ISSUANCE AGREEMENT BETWEEN THE CORPORATION AND THE REGISTERED HOLDER (OR HIS/HER PREDECESSOR IN INTEREST) DATED
                        ,             , A COPY OF WHICH
IS ON FILE AT THE PRINCIPAL OFFICE OF THE CORPORATION.” 
  
 B.    The Participant shall have no right to transfer any unvested shares of Common Stock issued to him or her under the Stock Issuance Program. For purposes of this restriction, the term “transfer” shall
include (without limitation) any sale, pledge, assignment, encumbrance, gift, or other disposition of such shares, whether voluntary or involuntary. On any such attempted transfer, the unvested shares shall immediately be cancelled in accordance
with 
  

 24 

 substantially the same procedure in effect under Section I.B.3 of this Article Four, and neither the Participant nor the
proposed transferee shall have any rights with respect to such cancelled shares. However, the Participant shall have the right to make a gift of unvested shares acquired under the Stock Issuance Program to his or her spouse or issue, including
adopted children, or to a trust established for such spouse or issue, provided the donee of such shares delivers to the Corporation a written agreement to be bound by all the provisions of the Stock Issuance Program and the Issuance Agreement
applicable to the gifted shares. 
  

 25 

 ARTICLE FIVE 
 MISCELLANEOUS 
  

	 	I.	 	AMENDMENT OF THE PLAN AND AWARDS 

  
 A.    The Board has complete and exclusive power and authority to amend or modify the Plan (or any component thereof) in any or all
respects whatsoever. However, no such amendment or modification shall adversely affect rights and obligations with respect to options at the time outstanding under the Plan, nor adversely affect the rights of any Participant with respect to Common
Stock issued under the Stock Issuance Program prior to such action, unless the Optionee or Participant consents to such amendment. The Plan Administrator may amend the terms of any outstanding options or stock issuances; however, such amendment
shall not adversely affect the holders of such awards, unless such Optionee or Participant consents to such amendment. Additionally, no outstanding stock option or stock issuance may be amended to lower the exercise price or be canceled by the Board
for the purpose of reissuing a replacement stock option or stock issuance at a lower price without stockholder approval. In addition, certain other amendments to the Plan may require stockholder approval pursuant to applicable laws or regulations.

  
 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, which are in both instances in excess of the number of shares then available for issuance under the Plan,
provided any excess shares actually issued under the Discretionary Option Grant Program or the Stock Issuance Program are held in escrow until stockholder approval is obtained for a sufficient increase in the number of shares available for issuance
under the Plan. If such stockholder approval is not obtained within twelve (12) months after the date the first such excess option grants or excess share issuances are made, then (I) any unexercised excess options shall terminate and cease to be
exercisable and (II) the Corporation shall promptly refund the purchase price paid for any excess shares actually issued under the Plan and held in escrow, together with interest (at the applicable Short Term Federal Rate) for the period the shares
were held in escrow. 
  

	 	II.	 	TAX WITHHOLDING 

  
 A.    The Corporation’s obligation to deliver shares of Common Stock on the exercise of stock options for such shares or the
vesting of such shares under the Plan shall be subject to the satisfaction of all applicable Withholding Taxes. 
  
 B.    The Plan Administrator may, in its discretion and in accordance with the provisions of this Section II of Article Five and such
supplemental rules as the Plan Administrator may from time to time adopt, provide any or all holders of Non-statutory Options (other than the automatic grants made pursuant to Article Three of the Plan) or unvested shares under the Plan with the
right to use shares of the Common Stock in satisfaction of all or part of the Withholding Taxes to which such holders may become subject in connection with the 
  

 26 

 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 holder of the Non-statutory Option or unvested shares may be provided with the election to have the Corporation withhold, from the shares of Common Stock otherwise issuable on
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 applicable Withholding Taxes (not to exceed one hundred percent (100%)) designated
by the holder. 
  
 2.    Stock
Delivery: The Plan Administrator may, in its discretion, provide the holder of the Non-statutory Option or the unvested shares with the election to deliver to the Corporation, at the time the Non-statutory Option is exercised or the shares
vest, one or more shares of Common Stock previously acquired by such individual (other than in connection with the option exercise or share vesting triggering the Withholding Taxes) with an aggregate Fair Market Value equal to the percentage of the
Withholding Taxes incurred in connection with such option exercise or share vesting (not to exceed one hundred percent (100%)) designated by the holder. 
  

	 	III.	 	EFFECTIVE DATE AND TERM OF PLAN 

  
 A.    This Plan as successor to the Corporation’s 1990 Stock Option Plan became effective as of the applicable Effective Date for
each of the equity incentive programs in effect hereunder, and no further option grants or stock issuances shall be made under the 1990 Plan from and after such Effective Date. Each option issued and outstanding under the 1990 Plan immediately prior
to the Effective Date of the Discretionary Option Grant Program shall be incorporated into this Plan and treated as an outstanding option under this Plan, but each such option shall continue to be governed solely by the terms and conditions of the
instrument evidencing such grant, and nothing in this Plan shall be deemed to affect or otherwise modify the rights or obligations of the holders of such options with respect to their acquisition of shares of Common Stock thereunder. 
  
 B.    The option/vesting acceleration provisions of
Section III of Article Two relating to Corporate Transactions and Changes in Control may, in the Plan Administrator’s discretion, be extended to one or more stock options outstanding under the 1990 Plan on the Effective Date of the
Discretionary Option Grant Program, but which do not otherwise provide for such acceleration. 
  
 C.    The Plan shall terminate on the earlier of (i) December 31, 2007 or (ii) the date on which all shares available for issuance under the Plan shall have been issued or cancelled pursuant
to the exercise, surrender or cash-out of the options granted under the Plan or the issuance of shares (whether vested or unvested) under the Stock Issuance Program. If the date of termination is determined under clause (i) above, then all option
grants and unvested stock issuances outstanding on such date shall thereafter continue to have force and effect in accordance with the provisions of the instruments evidencing such grants or issuances. 
  

 27 

	 	IV.	 	USE OF PROCEEDS 

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

	 	V.	 	REGULATORY APPROVALS 

  
 A.    The implementation of the Plan, the granting of any stock option or stock appreciation right under the Plan, the issuance of any
shares under the Stock Issuance Program, and the issuance of Common Stock on the exercise of the stock options or stock appreciation rights granted hereunder shall be subject to the Corporation’s procurement of all approvals and permits
required by regulatory authorities having jurisdiction over the Plan, the stock options and stock appreciation rights granted under it, and the Common Stock issued pursuant to it. 
  
 B.    No shares of Common Stock or other assets shall be issued or delivered under this Plan unless and
until there shall have been compliance with all applicable requirements of Federal and State securities laws, including the filing and effectiveness of the Form S-8 registration statement for the shares of Common Stock issuable under the Plan, and
all applicable listing requirements of any securities exchange or the Nasdaq National Market on which stock of the same class is then listed. 
  

	 	VI.	 	NO EMPLOYMENT/SERVICE RIGHTS 

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

	 	VII.	 	MISCELLANEOUS PROVISIONS 

  
 A.    Except to the extent otherwise expressly provided in the Plan, the right to acquire Common Stock or other assets under the Plan
may not be assigned, encumbered or otherwise transferred by any Optionee or Participant. 
  
 B.    The provisions of the Plan relating to the exercise of options and the vesting of shares shall be governed by the laws of the State of California without resort to that State conflict-of-laws
rules. 
  
 C.    The provisions of the Plan
shall inure to the benefit of, and be binding on, the Corporation and its successors or assigns, whether by Corporate Transaction or otherwise, and the Participants and Optionees, the legal representatives of their respective estates, their
respective heirs or legatees and their permitted assignees. 
  

 28

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