Document:

exv4w1

 

EXHIBIT 4.1

FIRST AMENDED AND RESTATED RIGHTS AGREEMENT

between

ROYAL GOLD, INC.

and

COMPUTERSHARE TRUST COMPANY, N.A.

as Rights Agent

Dated as of September 10, 2007

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	 	 	Page
	Section 1.
	 	Certain Definitions	 	2
	Section 2.
	 	Appointment of Rights Agent	 	5
	Section 3.
	 	Issue of Rights Certificates	 	6
	Section 4.
	 	Form of Rights Certificates	 	7
	Section 5.
	 	Countersignature and Registration	 	8
	Section 6.
	 	Transfer, Split Up, Combination and Exchange of Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates	 	9
	Section 7.
	 	Exercise of Rights; Purchase Price; Expiration Date of Rights	 	9
	Section 8.
	 	Cancellation of Rights Certificates	 	11
	Section 9.
	 	Reservation and Availability of Capital Stock	 	11
	Section 10.
	 	Preferred Stock Record Date	 	13
	Section 11.
	 	Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights	 	13
	Section 12.
	 	Certificate of Adjusted Purchase Price or Number of Shares	 	21
	Section 13.
	 	Consolidation, Merger or Sale or Transfer of Assets or Earning Power	 	21
	Section 14.
	 	Fractional Rights and Fractional Shares	 	25
	Section 15.
	 	Rights of Action	 	26
	Section 16.
	 	Agreement of Rights Holders	 	26
	Section 17.
	 	Rights Certificate Holder Not Deemed a Stockholder	 	27
	Section 18.
	 	Compensation and Indemnification of the Rights Agent	 	27
	Section 19.
	 	Merger or Consolidation or Change of Name of Rights Agent	 	28
	Section 20.
	 	Duties of Rights Agent	 	29
	Section 21.
	 	Change of Rights Agent	 	31
	Section 22.
	 	Issuance of New Rights Certificates	 	31
	Section 23.
	 	Redemption	 	32
	Section 24.
	 	Exchange	 	33
	Section 25.
	 	Notice of Certain Events	 	34
	Section 26.
	 	Notices	 	35
	Section 27.
	 	Supplements and Amendments	 	35
	Section 28.
	 	Successors	 	36
	Section 29.
	 	Benefits of this Agreement	 	36
	Section 30.
	 	Severability	 	36
	Section 31.
	 	Governing Law	 	36
	Section 32.
	 	Counterparts	 	36
	Section 33.
	 	Descriptive Headings	 	37
	Section 34.
	 	Determinations and Actions by the
Board, Etc.	 	37

i

 

FIRST AMENDED AND RESTATED RIGHTS AGREEMENT

     This FIRST AMENDED AND RESTATED RIGHTS AGREEMENT (this “Agreement”), dated as of
September 10, 2007, between ROYAL GOLD, INC., a Delaware corporation (the “Company”), and
COMPUTERSHARE TRUST COMPANY, N.A. (the “Rights Agent”).

     WHEREAS, the Company and American Securities Transfer, Incorporated (as predecessor to the
Rights Agent) entered into a Rights Agreement dated as of September 10, 1997 (the “1997 Rights
Agreement”);

     WHEREAS, in connection with the 1997 Rights Agreement, the Board of Directors of the Company
(the “Board”) authorized and declared a dividend of one preferred stock purchase right (a
“Right”) for each share of Common Stock (as hereinafter defined) of the Company outstanding
as of the Close of Business (as hereinafter defined) on September 11, 1997 (the “Record
Date”), each Right representing the right to purchase one one-hundredth (subject to adjustment)
of a share of Preferred Stock (as hereinafter defined), upon the terms and subject to the
conditions set forth in the 1997 Rights Agreement, and further authorized and directed the issuance
of one Right (subject to adjustment as provided in the 1997 Rights Agreement) with respect to each
share of Common Stock that shall become outstanding between the Record Date and the earliest of the
Distribution Date, the Redemption Date and the Final Expiration Date (as such terms are defined in
the 1997 Rights Agreement);

     WHEREAS, the “Final Expiration Date” under the 1997 Rights Agreement is September 10, 2007 and
the Board, pursuant to its authority under Section 27 of the 1997 Rights Agreement, desires
to amend the 1997 Rights Agreement to, among other things, extend the Final Expiration Date;

     WHEREAS, pursuant to a resolution, duly adopted on August 23, 2007, the Board has adopted and
authorized an amendment and restatement of the 1997 Rights Agreement, in the form of this
Agreement, so that, among other things, (i) the Final Expiration Date shall be extended until
September 10, 2017, (ii) each Right shall represent the right to purchase one one-thousandth
(subject to adjustment) of a share of Preferred Stock, upon the terms and subject to the conditions
herein set forth, and (iii) the Purchase Price (as hereinafter defined) shall be increased to
$175.00 for each one one-thousandth of a share of Preferred Stock; and

     WHEREAS, the Board has resolved and determined that the amendments set forth in this Agreement
are in the best interests of the Company and its stockholders and are desirable and consistent
with, and for the purposes of fulfilling, the objectives of the Board in connection with the
adoption of the 1997 Rights Agreement.

     NOW THEREFORE, in consideration of the premises and the mutual agreements herein set forth,
the undersigned parties hereby agree as follows:

1

 

          Section 1. Certain Definitions.

          For purposes of this Agreement, the following terms have the meanings indicated:

          (a) “Acquiring Person” shall mean any Person which, together with all Affiliates and
Associates of such Person, shall be the Beneficial Owner of 15% or more of the shares of Common
Stock of the Company then outstanding, but shall not include (i) the Company, (ii) any Subsidiary
of the Company, or (iii) any employee benefit plan of the Company or any Subsidiary of the
Company, or any Person holding shares of Common Stock for or pursuant to the terms of any such
plan to the extent, and only to the extent, of such shares of Common Stock so held.
Notwithstanding anything in this definition of “Acquiring Person” to the contrary:

               (i) no Person shall become an “Acquiring Person” as the result of an acquisition of shares of
Common Stock by the Company which, by reducing the number of shares of Common Stock outstanding,
increases the proportionate number of shares of Common Stock beneficially owned by such Person to
15% or more of the shares of Common Stock of the Company then outstanding; provided,
however, that if a Person shall become the Beneficial Owner of 15% or more of the shares of
Common Stock of the Company then outstanding by reason of share acquisitions by the Company and
shall, after such share acquisitions by the Company, become the Beneficial Owner of any additional
shares of Common Stock of the Company (other than pursuant to a dividend or distribution paid or
made by the Company on the outstanding Common Stock or pursuant to a split or subdivision of the
outstanding Common Stock), then such Person shall be deemed to be an “Acquiring Person” if such
Person is then the Beneficial Owner of 15% or more of the Common Stock then outstanding; and

               (ii) if the Board determines in good faith that a Person who would otherwise be an “Acquiring
Person,” as defined pursuant to the foregoing provisions of this paragraph (a), has become such
inadvertently (including, without limitation, because (A) such Person was unaware that it
beneficially owned a percentage of Common Stock that would otherwise cause such Person to be an
“Acquiring Person” or (B) such Person was aware of the extent of its Beneficial Ownership of Common
Stock but had no actual knowledge of the consequences of such Beneficial Ownership under this
Agreement), and such Person divests as promptly as practicable (as determined in good faith by the
Board) a sufficient number of shares of Common Stock so that such Person would no longer be an
“Acquiring Person,” as defined pursuant to the foregoing provisions of this paragraph (a), then
such Person shall not be deemed an “Acquiring Person” for any purposes of this Agreement unless and
until such Person shall again become an “Acquiring Person.”

          (b) “Affiliate” and “Associate” shall have the respective meanings ascribed
to such terms in Rule 12b-2 of the General Rules and Regulations under the Exchange Act as in
effect on the date of this Agreement.

          (c) A Person shall be deemed the “Beneficial Owner” of, and shall be deemed to
“beneficially own,” any securities:

2

 

               (i) which such Person or any of such Person’s Affiliates or Associates, directly or
indirectly, has the right to acquire (whether such right is exercisable immediately or only after
the passage of time) pursuant to any agreement, arrangement or understanding (whether or not in
writing), or upon the exercise of conversion rights, exchange rights, other rights (other than
these Rights), warrants or options, or otherwise; provided, however, that a Person
shall not be deemed the “Beneficial Owner” of, or to “beneficially own,” (A) securities tendered
pursuant to a tender or exchange offer made by or on behalf of such Person or any of such Person’s
Affiliates or Associates until such tendered securities are accepted for purchase or exchange, (B)
securities issuable upon exercise of Rights at any time prior to the occurrence of a Triggering
Event, or (C) securities issuable upon exercise of Rights from and after the occurrence of a
Triggering Event which Rights were acquired by such Person or any of such Person’s Affiliates or
Associates prior to the Distribution Date or pursuant to Section 3(a) or Section 22
hereof (the “Original Rights”) or pursuant to Section 11(i) hereof in connection
with an adjustment made with respect to any Original Rights;

               (ii) which such Person or any of such Person’s Affiliates or Associates, directly or
indirectly, has the right to vote or dispose of or has “beneficial ownership” of (as determined
pursuant to Rule 13d-3 of the General Rules and Regulations under the Exchange Act), including
pursuant to any agreement, arrangement or understanding, whether or not in writing;
provided, however, that a Person shall not be deemed the “Beneficial Owner” of, or
to “beneficially own,” any security under this subparagraph (ii) as a result of an agreement,
arrangement or understanding to vote such security if such agreement, arrangement or understanding
(A) arises solely from a revocable proxy given in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the applicable provisions of the General
Rules and Regulations under the Exchange Act and (B) is not also then reportable by such Person on
Schedule 13D under the Exchange Act (or any comparable or successor report); or

               (iii) which are beneficially owned, directly or indirectly, by any other Person (or any
Affiliate or Associate thereof) with which such Person or any of such Person’s Affiliates or
Associates has any agreement, arrangement or understanding (whether or not in writing), for the
purpose of acquiring, holding, voting (except pursuant to a revocable proxy as described in the
proviso to subparagraph (ii) of this paragraph (c)) or disposing of any securities of the Company;

provided, however, that nothing in this paragraph (c) shall cause a Person engaged
in business as an underwriter of securities to be the “Beneficial Owner” of, or to “beneficially
own,” any securities acquired through such Person’s participation in good faith in a firm
commitment underwriting until the expiration of forty days after the date of such acquisition;
provided further, however, that no Person who is an officer, director or employee
of the Company or any Subsidiary of the Company shall be deemed, solely by reason of such Person’s
status or authority as such, to be the “Beneficial Owner” of, or to “beneficially own,” any
securities that are “beneficially owned” (as defined in this paragraph (c)), including, without
limitation, in a fiduciary capacity, by the Company or any Subsidiary of the Company, or by any
other such officer, director or employee of the Company or any Subsidiary of the Company.

          (d) “Board” shall have the meaning set forth in the Recitals.

3

 

          (e) “Business Day” shall mean any day other than a Saturday, a Sunday, or a day on
which banking or trust institutions in the State of Colorado are authorized or obligated by law or
executive order to close.

          (f) “Close of Business” on any given date shall mean 5:00 P.M., Denver time, on such
date; provided, however, that if such date is not a Business Day it shall mean
5:00 P.M., Denver time, on the next succeeding Business Day.

          (g) “Common Stock” when used with reference to the Company shall mean the shares of
Common Stock, par value $0.01 per share, of the Company. “Common Stock” when used with reference
to any Person other than the Company shall mean the class of capital stock with the greatest
aggregate voting power, or the class of equity securities or other equity interests having power
to control or direct the management of such Person.

          (h) “Company” shall have the meaning set forth in the Recitals.

          (i) “Distribution Date” shall mean the earlier of (i) the Close of Business on the
tenth day after the Stock Acquisition Date (or, if the tenth day after the Stock Acquisition Date
occurs before the Record Date, the Close of Business on the Record Date) or (ii) the Close of
Business on the tenth Business Day (or, if such tenth Business Day occurs before the Record Date,
the Close of Business on the Record Date), or such specified or unspecified later date on or after
the Record Date as may be determined by action of the Board prior to such time as any Person
becomes an Acquiring Person, after the date of the commencement by any Person (other than the
Company, any Subsidiary of the Company or any employee benefit plan of the Company or of any
Subsidiary of the Company or any Person holding shares of Common Stock for or pursuant to the
terms of any such plan) of, or of the first public announcement of the intention of any Person
(other than any of the Persons referred to in the preceding parenthetical) to commence, a tender
or exchange offer the consummation of which would result in such Person becoming the beneficial
owner of 15% or more of the outstanding shares of Common Stock.

          (j) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, as in
effect on the date of this Agreement.

          (k) “Exchange Date” shall have the meaning set forth in Section 7(a) hereof.

          (l) “Expiration Date” shall have the meaning set forth in Section 7(a)
hereof.

          (m) “Final Expiration Date” shall have the meaning set forth in Section 7(a)
hereof.

          (n) “Person” shall mean any individual, firm, corporation, partnership or other
entity, and shall include any successor (by merger or otherwise) of such entity.

          (o) “Preferred Stock” shall mean shares of Series A Junior Participating Preferred
Stock, par value $0.01 per share, of the Company, having the rights, powers and preferences set
forth in the form of the Amended and Restated Certificate of Designations attached to this
Agreement as Exhibit A.

4

 

          (p) “Principal Party” shall have the meaning set forth in Section 13(b)
hereof.

          (q) “Purchase Price” shall have the meaning set forth in Section 4(a) and
Section 11(a)(ii) hereof.

          (r) “Record Date” shall have the meaning set forth in the Recitals.

          (s) “Redemption Date” shall have the meaning set forth in Section 7(a)
hereof.

          (t) “Redemption Period” shall have the meaning set forth in Section 23(a)
hereof.

          (u) “Right” shall have the meaning set forth in the Recitals.

          (v) “Rights Agent” shall have the meaning set forth in the Recitals and shall include
any successor thereto pursuant to this Agreement.

          (w) “Rights Certificate” shall have the meaning set forth in Section 3(d)
hereof.

          (x) “Section 11(a)(ii) Event” shall mean any event described in Section
11(a)(ii) hereof.

          (y) “Section 13 Event” shall mean any event described in clause (x), (y) or (z) of
Section 13(a) hereof.

          (z) “Securities Act” shall mean the Securities Act of 1933, as amended, as in effect
on the date of this Agreement.

          (aa) “Stock Acquisition Date” shall mean the first date of public announcement
(which, for purposes of this definition, shall include, without limitation, a report filed
pursuant to Section 13(d) of the Exchange Act) by the Company or an Acquiring Person that an
Acquiring Person has become such.

          (bb) “Subsidiary” of any Person shall mean any corporation or other entity of which a
majority of the voting power of the voting equity securities or equity interests is owned,
directly or indirectly, by such Person, or is otherwise controlled by such Person.

          (cc) “Triggering Event” shall mean any Section 11(a)(ii) Event or any Section 13
Event.

          Section 2. Appointment of Rights Agent.

          The Company hereby appoints the Rights Agent to act as agent for the Company and the holders
of the Rights (who, in accordance with Section 3 hereof, shall, prior to the Distribution
Date, also be the holders of Common Stock) in accordance with the terms and conditions hereof, and
the Rights Agent hereby accepts such appointment. The Company may from time to time appoint such
co-Rights Agents as it may deem necessary or desirable.

5

 

          Section 3. Issue of Rights Certificates.

          (a) As promptly as practicable following the Record Date, the Company shall send or deliver a
copy of a Summary of Rights to Purchase Preferred Stock to each record holder of Common Stock as
of the Close of Business on the Record Date (other than any Acquiring Person or any Associate or
Affiliate of any Acquiring Person) at the address of such holder shown on the records of the
Company. With respect to certificates for shares of Common Stock outstanding as of the Record
Date, until the Distribution Date, the Rights shall be evidenced by such certificates for the
Common Stock and the registered holders of the Common Stock shall also be the registered holders
of the associated Rights. Until the Distribution Date (or the earlier Expiration Date or Final
Expiration Date), the transfer of any certificate representing shares of Common Stock in respect
of which Rights have been issued shall also constitute the transfer of the Rights associated with
the shares of Common Stock represented thereby.

          (b) Rights shall be issued in respect of all shares of Common Stock issued (whether
originally issued or from the Company’s treasury) after the Record Date but prior to the earlier
of the Distribution Date and the Expiration Date; provided, however, Rights shall
also be issued to the extent provided in Section 22 hereof in respect of all shares of
Common Stock which are issued (whether originally issued or from the Company’s treasury) after the
Distribution Date and prior to the Expiration Date. Certificates representing such shares of
Common Stock shall also be deemed to be certificates for Rights, and shall bear the following
legend (in addition to any other legends that may be required):

This certificate also evidences and entitles the holder hereof to certain
rights as set forth in the Rights Agreement between Royal Gold, Inc.
(the “Company”) and Computershare Trust Company (the
“Rights Agent”) dated as of September 11, 1997, as
amended and restated by that certain First Amended and Restated
Rights Agreement dated as of September 10, 2007 (the
“Rights Agreement”), the terms of which are incorporated
herein by this reference and a copy of which is on file at the
principal offices of the Company. Under certain circumstances, as
set forth in the Rights Agreement, such rights will be evidenced by
separate certificates and will no longer be evidenced by this
certificate. The Company will mail to the holder of this certificate
a copy of the Rights Agreement, as in effect on the date of mailing,
without charge promptly after receipt of a written request therefore.
Under certain circumstances set forth in the Rights Agreement, rights
issued to or held by any person who is, was or becomes an Acquiring
Person or any affiliate or associate thereof (as such terms are
defined in the Rights Agreement), whether currently held by or on
behalf of such person or by any subsequent holder, may become null
and void.

With respect to such certificates containing the foregoing legend, until the earlier of the
Distribution Date and the Expiration Date, the Rights associated with the Common Stock represented
by such certificates shall be evidenced by such certificates alone and registered holders of Common
Stock shall also be the registered holders of the associated Rights, and the transfer of any such
certificate shall also constitute the transfer of the Rights associated with the

6

 

Common Stock represented thereby. Notwithstanding this paragraph (b), the omission of the
foregoing legend shall not affect the enforceability of any part of this Agreement or the rights of
any holder of the Rights.

          (c) Until the Distribution Date, (i) the Rights shall be evidenced (subject to the provisions
of paragraph (a) of this Section 3) by the certificates for Common Stock registered in the
names of the holders thereof (which certificates for Common Stock shall also be deemed to be
Rights Certificates) and not by separate Rights Certificates, and (ii) the Rights shall be
transferable only in connection with the transfer of the underlying shares of Common Stock
(including a transfer to the Company).

          (d) As soon as practicable after the Distribution Date, the Company shall prepare and
execute, the Rights Agent shall countersign and the Company shall send or cause to be sent (and
the Rights Agent shall, if requested, send) by first-class, insured, postage-prepaid mail, to each
record holder of Common Stock as of the Close of Business on the Distribution Date, at the address
of such holder shown on the records of the Company, a rights certificate, in substantially the
form of Exhibit B hereto (the “Rights Certificate”), evidencing one Right for each
share of Common Stock so held, subject to adjustment as provided herein. In the event that an
adjustment in the number of Rights per share of Common Stock has been made pursuant to Section
11 hereof, at the time of distribution of the Rights Certificates, the Company shall make
necessary and appropriate rounding adjustments (in accordance with Section 14(a) hereof)
so that Rights Certificates representing only whole numbers of Rights are distributed and cash is
paid in lieu of any fractional Rights. As of and after the Distribution Date, the Rights shall be
evidenced solely by such Rights Certificates.

          Section 4. Form of Rights Certificates.

          (a) The Rights Certificates (and the forms of election to purchase and of assignment to be
printed on the reverse thereof) shall be substantially the same as Exhibit B hereto and
may have such marks of identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate, and as are not inconsistent with the
provisions of this Agreement, or as may be required to comply with any applicable law or with any
rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange on
which the Rights may from time to time be listed, or to conform to usage. Subject to the
provisions of Section 11 and Section 22 hereof, the Rights Certificates, whenever
issued, shall be dated as of the Record Date, shall show the date of countersignature, and on
their face shall entitle the holders thereof to purchase such number of one one-thousandths of a
share of Preferred Stock as shall be set forth therein at the price set forth therein (such
exercise price per one one-thousandth of a share, the “Purchase Price”), but the amount
and type of securities purchasable upon exercise of each Right and the Purchase Price thereof
shall be subject to adjustment as provided herein.

          (b) Any Rights Certificate issued pursuant to Section 3(d) or Section 22
hereof that represents Rights beneficially owned by (i) an Acquiring Person or any Associate or
Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee after the Acquiring Person becomes such or (iii)
a transferee of an Acquiring Person (or of any such Associate or Affiliate) who becomes a

7

 

transferee prior to or concurrently with the Acquiring Person becoming such and receives such
Rights pursuant to either (A) a transfer (whether or not for consideration) from the Acquiring
Person to holders of equity interests in such Acquiring Person or to any Person with whom such
Acquiring Person has any continuing agreement, arrangement or understanding regarding the
transferred Rights or (B) a transfer which a majority of the authorized number of members of the
Board has determined is part of an agreement, arrangement or understanding which has as a primary
purpose or effect avoidance of Section 7(e) hereof, and any Rights Certificate issued
pursuant to Section 6 or Section 11 hereof upon transfer, exchange, replacement or
adjustment of any other Rights Certificate referred to in this sentence, shall contain (to the
extent feasible) the following legend:

The Rights represented by this Rights Certificate are or were beneficially
owned by a Person who was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person (as such terms are defined in the Rights
Agreement). Accordingly, this Rights Certificate and the Rights represented
hereby may become null and void in the circumstances specified in Section
7(e) of such Rights Agreement.

The Company shall instruct the Rights Agent in writing of the Rights which should be so legended
and shall supply the Rights Agent with such legended Rights Certificates.

          Section 5. Countersignature and Registration.

          (a) The Rights Certificates shall be executed on behalf of the Company by its President,
Chief Executive Officer, Chief Financial Officer, Vice President or General Counsel and shall be
attested by its Secretary or Assistant Secretary either manually or by facsimile signature. The
Rights Certificates shall be manually countersigned by the Rights Agent and shall not be valid for
any purpose unless so countersigned. In case any officer of the Company who shall have signed any
of the Rights Certificates shall cease to be such officer of the Company before countersignature
by the Rights Agent and issuance and delivery by the Company, such Rights Certificates,
nevertheless, may be countersigned by the Rights Agent, and issued and delivered by the Company
with the same force and effect as though the Person who signed such Rights Certificates had not
ceased to be such officer of the Company; and any Rights Certificate may be signed on behalf of
the Company by any Person who, at the actual date of the execution of such Rights Certificate,
shall be a proper officer of the Company to sign such Rights Certificate, although at the date of
the execution of this Rights Agreement any such Person was not such an officer.

          (b) Following the Distribution Date, the Rights Agent shall keep or cause to be kept, at its
principal office or at offices designated as the appropriate place for surrender of Rights
Certificates upon exercise or transfer, books for registration and transfer of the Rights
Certificates issued hereunder. Such books shall show the names and addresses of the respective
holders of the Rights Certificates, the number of Rights evidenced on its face by each of the
Rights Certificates and the date of each of the Rights Certificates.

8

 

     Section 6. Transfer, Split Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights Certificates.

          (a) Subject to the provisions of Section 4(b), Section 7(e) and Section
14 hereof, at any time after the Close of Business on the Distribution Date and at or prior to
the Close of Business on the Expiration Date, any Rights Certificate or Certificates may be
transferred, split up, combined or exchanged for another Rights Certificate or Certificates,
entitling the registered holder to purchase a like number of one one-thousandths of a share of
Preferred Stock (or following a Triggering Event, Common Stock, other securities, cash, or other
assets, as the case may be) as the Rights Certificate or Certificates surrendered then entitled
such holder (or former holder in the case of a transfer) to purchase. Any registered holder
desiring to transfer, split up, combine or exchange any Rights Certificate shall make such request
in writing delivered to the Rights Agent, and shall surrender the Rights Certificate or
Certificates to be transferred, split up, combined or exchanged at the office of the Rights Agent
designated for such purpose. Neither the Rights Agent nor the Company shall be obligated to take
any action whatsoever with respect to the transfer of any such surrendered Rights Certificate
until the registered holder shall have properly completed and signed the certificate contained in
the form of assignment on the reverse side of such Rights Certificate and shall have provided such
additional evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall reasonably request. Thereupon the Rights
Agent shall, subject to Section 4(b), Section 7(e) and Section 14 hereof,
countersign and deliver to the Person entitled thereto a Rights Certificate or Certificates, as
the case may be, as so requested. The Company may require payment by the holder of Rights of a
sum sufficient to cover any tax or governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Rights Certificates.

          (b) Upon receipt by the Company and the Rights Agent of evidence reasonably satisfactory to
them of the loss, theft, destruction or mutilation of a Rights Certificate, and, in case of loss,
theft or destruction, of indemnity or security reasonably satisfactory to them, and, at the
Company’s request, reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of the Rights
Certificate, if mutilated, the Company shall execute and deliver a new Rights Certificate of like
tenor to the Rights Agent for counter-signature and delivery to the registered owner in lieu of
the Rights Certificate so lost, stolen, destroyed or mutilated.

     Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.

          (a) Subject to Section 7(e) hereof, the registered holder of any Rights Certificate
may exercise the Rights evidenced thereby (except as otherwise provided herein including, without
limitation, in the restrictions on exercisability set forth in Section 9(c), Section
11(a)(iii) and Section 23(a) hereof) in whole or in part at any time after the
Distribution Date upon surrender of the Rights Certificate, with the form of election to purchase
and the certificate on the reverse side thereof duly and properly executed, to the Rights Agent at
the office of the Rights Agent designated for such purpose, together with payment of the Purchase
Price for each one one-thousandth of a share of Preferred Stock (or other securities, cash or
other assets, as the case may be) as to which the Rights are exercised, at or prior to the
earliest

9

 

of (i) the Close of Business on September 10, 2017 (the “Final Expiration Date”),
(ii) the time at which the Rights are redeemed (the “Redemption Date”) as provided in
Section 23 hereof or (iii) the time at which the Rights are exchanged (the “Exchange
Date”) as provided in Section 24 hereof (the earliest of (i), (ii) and (iii) being
herein referred to as the “Expiration Date”).

          (b) Each Right shall entitle the registered holder thereof to purchase one one-thousandth of
a share of Preferred Stock. The Purchase Price for each one one-thousandth of a share of
Preferred Stock pursuant to the exercise of a Right shall initially be $175.00, and shall be
subject to adjustment from time to time as provided in Section 11 and Section 13
hereof and shall be payable in lawful money of the United States of America in accordance with
paragraph (c) of this Section 7.

          (c) Upon receipt of a Rights Certificate representing exercisable Rights, with the form of
election to purchase and the certificate duly and properly executed, accompanied by payment, with
respect to each Right so exercised, of the Purchase Price per one one-thousandth of a share of
Preferred Stock (or Common Stock, other securities, cash or other assets, as the case may be) to
be purchased and an amount equal to any applicable transfer tax or governmental charge in cash, or
by certified check or cashier’s check payable to the order of the Company, the Rights Agent shall,
subject to Section 18(k) hereof, thereupon promptly (i) (A) requisition from any transfer
agent of the shares of Preferred Stock (or make available, if the Rights Agent is the transfer
agent) certificates for the total number of one one-thousandths of a share of Preferred Stock to
be purchased, and the Company hereby irrevocably authorizes its transfer agent to comply with all
such requests, or (B) if the Company shall have elected to deposit the total number of shares of
Preferred Stock issuable upon exercise of the Rights hereunder with a depositary agent,
requisition from the depositary agent depositary receipts representing such number of one
one-thousandths of a share of Preferred Stock as are to be purchased (in which case certificates
for the shares of Preferred Stock represented by such receipts shall be deposited by the transfer
agent with the depositary agent), and the Company shall direct the depositary to comply with such
request, (ii) requisition from the Company the amount of cash, if any, to be paid in lieu of
issuance of fractional shares in accordance with Section 14 hereof, (iii) promptly after
receipt of such certificates or depositary receipts, cause the same to be delivered to or upon the
order of the registered holder of such Rights Certificate, registered in such name or names as may
be designated by such holder, and (iv) after receipt thereof, promptly deliver such cash, if any,
to or upon the order of the registered holder of such Rights Certificate. In the event that the
Company is obligated to issue other securities (including Common Stock) of the Company, pay cash
and/or distribute other property pursuant to Section 11(a) hereof, the Company shall make
all arrangements necessary so that such securities, cash and/or other property are available for
distribution by the Rights Agent, if and when appropriate.

          (d) In case the registered holder of any Rights Certificate shall exercise less than all the
Rights evidenced thereby, a new Rights Certificate evidencing Rights equivalent to the Rights
remaining unexercised shall be issued by the Rights Agent and delivered to, or upon the order of,
the registered holder of such Rights Certificate, registered in such name or names as may be
designated by such holder, subject to the provisions of Section 14 hereof.

10

 

          (e) Notwithstanding anything in this Agreement to the contrary, from and after the first
occurrence of a Section 11(a)(ii) Event, any Rights beneficially owned by (i) an Acquiring Person
or any Associate or Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate) who becomes a transferee after the Acquiring Person becomes
such, or (iii) a transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring Person becoming such and receives
such Rights pursuant to either (A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring Person or to any Person with
whom such Acquiring Person has any continuing agreement, arrangement or understanding regarding
the transferred Rights or (B) a transfer which a majority of the authorized number of members of
the Board has determined is part of an agreement, arrangement or understanding which has as a
primary purpose or effect the avoidance of this Section 7(e), shall become null and void
without any further action, and no holder of such Rights shall have any rights whatsoever with
respect to such Rights, whether under any provision of this Agreement or otherwise. The Company
shall use all reasonable efforts to ensure that the provisions of this Section 7(e) and of
Section 4(b) hereof are complied with, but shall have no liability to any holder of Rights
Certificates or other Person as a result of its failure to make any determinations with respect to
an Acquiring Person or its Affiliates, Associates or transferees hereunder. The Rights Agent
shall endeavor to comply with the provisions hereof to the extent it has received instructions
from the Company concerning such matters.

          (f) Notwithstanding anything in this Agreement to the contrary, neither the Rights Agent nor
the Company shall be obligated to undertake any action with respect to a registered holder upon
the occurrence of any purported exercise as set forth in this Section 7 unless such
registered holder shall have (i) properly completed and signed the certificate contained in the
form of election to purchase set forth on the reverse side of the Rights Certificate surrendered
for such exercise, and (ii) provided such additional evidence of the identity of the Beneficial
Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the Company shall
reasonably request.

          Section 8. Cancellation of Rights Certificates.

          All Rights Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its agents, be delivered
to the Rights Agent for cancellation or in cancelled form, or, if surrendered to the Rights Agent,
shall be cancelled by it, and no Rights Certificates shall be issued in lieu thereof except as
expressly permitted by any provisions of this Rights Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so cancel and retire, any
other Rights Certificate purchased or acquired by the Company otherwise than upon the exercise
thereof. The Rights Agent shall deliver all cancelled Rights Certificates to the Company.

          Section 9. Reservation and Availability of Capital Stock.

          (a) The Company shall cause to be reserved and kept available out of its authorized and
unissued shares of Preferred Stock (and following the occurrence of a

11

 

Triggering Event, out of its authorized and unissued shares of Common Stock and/or other
securities or out of its authorized and issued shares held in its treasury), the number of shares
of Preferred Stock (and, following the occurrence of a Triggering Event, shares of Common Stock
and/or other securities) that, as provided in this Agreement, including Section 11(a)(iii)
hereof, shall be sufficient to permit the exercise in full of all outstanding Rights.

          (b) In the event the shares of Preferred Stock (and, following the occurrence of a Triggering
Event, Common Stock and/or other securities) issuable upon the exercise of Rights become listed on
any national securities exchange or (for so long as it is not a national securities exchange) the
NASDAQ Global Select Market, the Company shall use its best efforts to cause, from and after such
time as the Rights become exercisable, all shares reserved for such issuance to be listed on such
exchange or (for so long as it is not a national securities exchange) the NASDAQ Global Select
Market upon official notice of issuance upon such exercise.

          (c) The Company shall use its best efforts to (i) file, as soon as practicable following the
earliest date after the first occurrence of a Section 11(a)(ii) Event on which the consideration
to be delivered by the Company upon exercise of the Rights has been determined in accordance with
this Agreement, or as soon as is required by law following the Distribution Date, as the case may
be, a registration statement under the Securities Act with respect to the securities purchasable
upon exercise of the Rights on an appropriate form, (ii) cause such registration statement to
become effective as soon as practicable after such filing, and (iii) cause such registration
statement to remain effective (with a prospectus at all times meeting the requirements of the
Securities Act) until the earlier of (A) the date as of which the Rights are no longer exercisable
for such securities, and (B) the Expiration Date. The Company shall also take such action as may
be appropriate under, or to ensure compliance with, the securities or “blue sky” laws of the
various states in connection with the exercisability of the Rights. The Company may temporarily
suspend, for a period of time not to exceed 90 days after the date set forth in clause (i) of the
first sentence of this Section 9(c), the exercisability of the Rights in order to prepare
and file such registration statement and permit it to become effective. In addition, if the
Company shall determine that a registration statement is required following the Distribution Date,
the Company may temporarily suspend the exercisability of the Rights until such time as a
registration statement has been declared effective. Upon any suspension of exercisability of
Rights referred to in this Section 9(c), the Company shall issue a public announcement
stating that the exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect, in each case with simultaneous
written notice to the Rights Agent. Notwithstanding any provision of this Agreement to the
contrary, the Rights shall not be exercisable and shall be null and void so long as held by a
holder in any jurisdiction where the requisite qualification to the issuance to such holder, or
the exercise by such holder, of the Rights in such jurisdiction shall not have been obtained or be
obtainable, or the exercise thereof shall not be permitted under applicable law or a registration
statement shall not have been declared effective. The Rights Agent may assume that any Right
exercised is permitted to be exercised under applicable law and shall have no liability for acting
in reliance upon such assumption.

          (d) The Company shall take all such action as may be necessary to ensure that all one
one-thousandths of a share of Preferred Stock (and, following the occurrence of a Triggering
Event, Common Stock and/or other securities) delivered upon exercise of Rights

12

 

shall, at the time of delivery of the certificates for such shares (subject to payment of the
Purchase Price), be duly and validly authorized and issued and fully paid and non-assessable.

          (e) The Company shall pay when due and payable any and all federal and state transfer taxes
and charges which may be payable in respect of the issuance or delivery of the Rights Certificates
or of any certificates for a number of one one-thousandths of a share of Preferred Stock (or
Common Stock and/or other securities, as the case may be) upon the exercise of Rights. The
Company shall not, however, be required to pay any transfer tax or charge which may be payable in
respect of any transfer or delivery of Rights Certificates to a Person other than, or the issuance
or delivery of certificates for a number of one one-thousandths of a share of Preferred Stock (or
Common Stock and/or other securities, as the case may be) in a name other than that of the
registered holder of the Rights Certificate evidencing Rights surrendered for exercise or to issue
or deliver any certificates for a number of one one-thousandths of a share of Preferred Stock (or
Common Stock and/or other securities, as the case may be) in a name other than that of the
registered holder upon the exercise of any Rights until any such tax or charge shall have been
paid (any such tax or charge being payable by the holder of such Rights Certificate at the time of
surrender) or until it has been established to the Company’s satisfaction that no such tax or
charge is due.

          Section 10. Preferred Stock Record Date.

          Each Person in whose name any certificate for a number of one one-thousandths of a share of
Preferred Stock (or Common Stock and/or other securities, as the case may be) is issued upon the
exercise of Rights shall for all purposes be deemed to have become the holder of record of such
fractional shares of Preferred Stock (or Common Stock and/or other securities, as the case may be)
represented thereby on, and such certificate shall be dated, the date upon which the Rights
Certificate evidencing such Rights was duly surrendered and payment of the Purchase Price (and any
applicable transfer taxes and charges) was made; provided, however, that if the
date of such surrender and payment is a date upon which the Preferred Stock (or Common Stock and/or
other securities as the case may be) transfer books of the Company are closed, such Person shall be
deemed to have become the record holder of such shares (fractional or otherwise) on, and such
certificate shall be dated, the next succeeding Business Day on which the Preferred Stock (or
Common Stock and/or other securities as the case may be) transfer books of the Company are open.
Prior to the exercise of the Rights evidenced thereby, the holder of a Rights Certificate shall not
be entitled to any rights of a stockholder of the Company with respect to shares for which the
Rights shall be exercisable, including, without limitation, the right to vote, to receive dividends
or other distributions or to exercise any preemptive rights, and shall not be entitled to receive
any notice of any proceedings of the Company, except as provided herein.

     Section 11. Adjustment of Purchase Price, Number and Kind of Shares or Number of
Rights.

          The Purchase Price, the number and kind of shares covered by each Right and the number of
Rights outstanding are subject to adjustment from time to time as provided in this Section
11.

13

 

          (a) (i) In the event the Company shall at any time after the date of this Agreement (A)
declare a dividend on the Preferred Stock payable in shares of Preferred Stock, (B) subdivide the
outstanding Preferred Stock, (C) combine the outstanding
Preferred Stock into a smaller number of shares or (D) issue any shares of its capital stock in a reclassification of the Preferred Stock
(including any such reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), except as otherwise provided in this
Section 11(a) and in Section 7(e) hereof, the Purchase Price in effect at the time
of the record date for such dividend or of the effective date of such subdivision, combination or
reclassification, and the number and kind of shares of Preferred Stock or the number and kind of
 shares of capital stock issuable on such date, as the case may be, shall be proportionately
adjusted so that the holder of any Right exercised after such time shall be entitled to receive,
upon payment of the aggregate adjusted Purchase Price then in effect necessary to exercise a Right
in full, the aggregate number and kind of shares of Preferred Stock or the number and kind of
 shares of capital stock, as the case may be, which, if such Right had been exercised immediately
prior to such date and at a time when the transfer books of the Company for the Preferred Stock
(or other capital stock, as the case may be) were open, such holder would have owned upon such
exercise and been entitled to receive by virtue of such dividend, subdivision, combination or
reclassification; provided, however, that in no event shall the consideration to
be paid upon the exercise of one Right be less than the aggregate par value of the shares of
capital stock of the Company issuable upon exercise of one Right. If an event occurs which would
require an adjustment under both this Section 11(a)(i) and Section 11(a)(ii)
hereof, the adjustment provided for in this Section 11(a)(i) shall be in addition to, and
shall be made prior to, any adjustment required pursuant to Section 11(a)(ii) hereof.

          (ii) Subject to Section 23 and Section 24 hereof, in the event that any Person
(other than the Company, any Subsidiary of the Company, any employee benefit plan of the Company or
of any Subsidiary of the Company, or any Person organized, appointed or established by the Company
for or pursuant to the terms of any such plan), alone or together with its Affiliates and
Associates, shall become an Acquiring Person, unless the event causing such Person to become an
Acquiring Person is a transaction set forth in Section 13(a) hereof, proper provision shall
be made so that promptly following the Redemption Period (as defined in Section 23(a)
hereof), each holder of a Right (except as provided below and in Section 7(e) hereof) shall
thereafter have the right to receive, upon exercise thereof and payment of an amount equal to the
then current Purchase Price in accordance with the terms of this Agreement, in lieu of a number of
one one-thousandths of a share of Preferred Stock, such number of shares of Common Stock of the
Company as shall equal the result obtained by (x) multiplying the then current Purchase Price by
the then number of one one-thousandths of a share of Preferred Stock for which a Right was or would
have been exercisable immediately prior to the first occurrence of a Section 11(a)(ii) Event,
whether or not such Right was then exercisable, and (y) dividing that product (which, following
such first occurrence, shall thereafter be referred to as the “Purchase Price” for each
Right and for all purposes of this Agreement except to the extent set forth in Section 13
hereof) by 50% of the current per share market price of Common Stock (determined pursuant to
Section 11(d) hereof) on the date of such first occurrence (such number of shares, the
“Adjustment Shares”).

          (iii) The Company at its option may substitute for a share of Common Stock issuable upon the
exercise of Rights in accordance with the foregoing subparagraph (ii)

14

 

such number or fractions of shares of Preferred Stock having an aggregate market value equal
to the current per share market price of one share of Common Stock. In the event that the number
of shares of Common Stock which is authorized by the Company’s Amended and Restated Certificate of
Incorporation but not outstanding, or reserved for issuance for purposes other than upon exercise
of the Rights, is not sufficient to permit the exercise in full of the Rights in accordance with
the foregoing subparagraph (ii), the Board shall, to the extent permitted by applicable law and by
any agreements or instruments then in effect to which the Company is a party, (A) determine the
excess of (x) the value of the Adjustment Shares issuable upon the exercise of a Right (the
“Current Value”) over (y) the Purchase Price (such excess, the “Spread”), and (B)
with respect to each Right (subject to Section 7(e) hereof), make adequate provision to
substitute for some or all of the Adjustment Shares, upon exercise of a Right and payment of the
applicable Purchase Price, (1) cash, (2) a reduction in the Purchase Price, (3) Common Stock or
other equity securities of the Company (including, without limitation, shares, or units of shares,
of Preferred Stock which the Board has deemed to have the same value as shares of Common Stock)
(such shares of equity securities being herein called “common stock equivalents”), (4) debt
securities of the Company, (5) other assets or (6) any combination of the foregoing, having an
aggregate value equal to the Current Value, where such aggregate value has been determined by the
Board based upon the advice of an investment banking firm selected by the Board; provided,
however, if the Company shall not have made adequate provision to deliver value pursuant to
clause (B) above within 30 days following the later of (x) the first occurrence of a Section
11(a)(ii) Event and (y) the date on which the Company’s right of redemption pursuant to Section
23(a) hereof expires (the later of (x) and (y) being referred to herein as the “Section
11(a)(ii) Trigger Date”), then the Company shall be obligated to deliver, upon the surrender
for exercise of a Right and without requiring payment of the Purchase Price, shares of Common Stock
(to the extent available), and then, if necessary such number of fractions of shares of Preferred
Stock (to the extent available) and then, if necessary, cash, which shares and/or cash have an
aggregate value equal to the Spread.

If, upon the occurrence of a Section 11(a)(ii) Event, the Board shall determine in good faith that
it is likely that sufficient additional shares of Common Stock could be authorized for issuance
upon exercise in full of the Rights, then if the Board so elects, the 30 day period set forth above
may be extended to the extent necessary, but not more than 90 days after the Section
11(a)(ii) Trigger Date, in order that the Company may seek stockholder approval for the
authorization of such additional shares (such period, as it may be extended, the “Substitution
Period”). To the extent that action is to be taken pursuant to the preceding provisions of
this Section 11(a)(iii), the Company (x) shall provide, subject to Section 7(e)
hereof, that such action shall apply uniformly to all outstanding Rights, and (y) may suspend the
exercisability of the Rights until the expiration of the Substitution Period in order to seek any
authorization of additional shares and/or to decide the appropriate form of distribution to be made
pursuant to the first sentence of this Section 11(a)(iii) and to determine the value
thereof. In the event of any such suspension, the Company shall issue a public announcement
stating that the exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect. For purposes of this
Section 11(a)(iii), the value of the Common Stock shall be the current market price (as
determined pursuant to Section 11(d) hereof) per share of the Common Stock on the
Section 11(a)(ii) Trigger Date and the value of any “common stock equivalent” shall be
deemed to have the same value as the Common Stock on such date. The Board may, but shall not be
required to, establish procedures to allocate the right to receive

15

 

shares of Common Stock upon the exercise of the Rights among holders of Rights pursuant to this
Section 11(a)(iii).

          (b) In case the Company shall fix a record date for the issuance of rights, options or
warrants to all holders of Preferred Stock entitling them (for a period expiring within 45
calendar days after such record date) to subscribe for or purchase Preferred Stock (or shares
having the same rights, privileges and preferences as the shares of Preferred Stock
(“equivalent preferred stock”)) or securities convertible into Preferred Stock or
equivalent preferred stock at a price per share of Preferred Stock or per share of equivalent
preferred stock (or having a conversion price per share, if a security convertible into Preferred
Stock or equivalent preferred stock) less than the current per share market price of the Preferred
Stock (as determined pursuant to Section 11(d) hereof) on such record date, the Purchase
Price to be in effect after such record date shall be determined by multiplying the Purchase Price
in effect immediately prior to such record date by a fraction, the numerator of which shall be the
number of shares of Preferred Stock or equivalent preferred stock outstanding on such record date,
plus the number of shares of Preferred Stock or equivalent preferred stock which the aggregate
offering price of the total number of shares of Preferred Stock and/or equivalent preferred stock
so to be offered (and/or the aggregate initial conversion price of the convertible securities so
to be offered) would purchase at such current market price, and the denominator of which shall be
the number of shares of Preferred Stock or equivalent preferred stock outstanding on such record
date, plus the number of additional shares of Preferred Stock and/or equivalent preferred stock to
be offered for subscription or purchase (or into which the convertible securities so to be offered
are initially convertible); provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less than the aggregate par value of
the shares of capital stock of the Company issuable upon exercise of one Right. In case such
subscription price may be paid in a consideration part or all of which shall be in a form other
than cash, the value of such consideration shall be as determined in good faith by the Board,
whose determination shall be described in a statement filed with the Rights Agent and shall be
conclusive for all purposes. Shares of Preferred Stock or equivalent preferred stock owned by or
held for the account of the Company shall not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever such a record date is fixed; and
in the event that such rights, options or warrants are not so issued, the Purchase Price shall be
adjusted to be the Purchase Price which would then be in effect if such record date had not been
fixed.

          (c) In case the Company shall fix a record date for a distribution to all holders of
Preferred Stock (including any such distribution made in connection with a consolidation or merger
in which the Company is the continuing or surviving corporation) of evidences of indebtedness,
cash (other than a regular quarterly cash dividend out of the earnings or retained earnings of the
Company), assets (other than a dividend payable in Preferred Stock, but including any dividend
payable in stock other than Preferred Stock), or subscription rights or warrants (excluding those
referred to in Section 11(b) hereof), the Purchase Price to be in effect after such record
date shall be determined by multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the current per share market price of
the Preferred Stock (as determined pursuant to Section 11(d) hereof) on such record date,
less the fair market value (as determined in good faith by the Board, whose determination shall be
described in a statement filed with the Rights Agent and shall be conclusive for all purposes) of
the portion of the cash, assets or evidences of indebtedness so to

16

 

be distributed or of such subscription rights or warrants applicable to a share of Preferred
Stock, and the denominator of which shall be such current per share market price of the Preferred
Stock; provided, however, that in no event shall the consideration to be paid upon
the exercise of one Right be less than the aggregate par value of the shares of capital stock of
the Company issuable upon exercise of one Right. Such adjustment shall be made successively
whenever such a record date is fixed; and in the event that such distribution is not so made, the
Purchase Price shall again be adjusted to be the Purchase Price which would then be in effect if
such record date had not been fixed.

          (d) (i) For the purpose of any computation under this Agreement, the “current per share
market price” of the Common Stock on any date shall be deemed to be the average of the daily
closing prices per share of such Common Stock for the 30 consecutive Trading Days (as such term is
hereinafter defined) immediately prior to, but not including, such date; provided,
however, that in the event that the current per share market price of the Common Stock is
determined during a period following the announcement by the issuer of such Common Stock of (i) a
dividend or distribution on such Common Stock payable in shares of such Common Stock or securities
convertible into such Common Stock (other than the Rights), or (ii) any subdivision, combination
or reclassification of such Common Stock, and prior to the expiration of the requisite 30 Trading
Day period, as set forth above, after the ex-dividend date for such dividend or distribution, or
the record date for such subdivision, combination or reclassification, then, and in each such
case, the “current per share market price” shall be appropriately adjusted to take into account
ex-dividend trading. The closing price for each day shall be the last sale price, regular way,
or, in case no such sale takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on the NASDAQ Global Select Market or, if
the shares of Common Stock are not listed or admitted to trading on the NASDAQ Global Select
Market, as reported in the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which the shares of Common
Stock are listed or admitted to trading or, if the shares of Common Stock are not listed or
admitted to trading on any national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the over-the-counter market, as
reported by the National Association of Securities Dealers, Inc. Automated Quotations System
(“NASDAQ”) or such other system then in use, or, if on any such date the shares of Common
Stock are not quoted by any such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the shares of Common Stock selected by
the Board.

If on any such date no market maker is making a market in the Common Stock, the fair value of such
shares on such date as determined in good faith by the Board shall be used. The term “Trading Day”
shall mean a day on which the principal national securities exchange on which the shares of Common
Stock are listed or admitted to trading is open for the transaction of business, or, if the shares
of Common Stock are not listed or admitted to trading on any national securities exchange, the term
“Trading Day” shall mean a Monday, a Tuesday, a Wednesday, a Thursday or a Friday on which
banking or trust institutions in the State of New York are not authorized or obligated by law or
executive order to close. If the Common Stock is not publicly held or not listed or traded,
“current market price” shall mean the fair value per share as

17

 

determined in good faith by the Board, whose determination shall be described in a statement filed
with the Rights Agent and shall be conclusive for all purposes.

                   (ii) For the purpose of any computation under this Agreement, the “current per share
market price” of the Preferred Stock shall be determined in the same manner as set forth above
for the Common Stock in clause (i) of this Section 11(d) (other than the last sentence
thereof). If the current per share market price of the Preferred Stock cannot be determined in the
manner provided above or if the Preferred Stock is not publicly held or listed or traded in a
manner described in clause (i) of this Section 11(d), the “current per share market price”
of the Preferred Stock shall be conclusively deemed to be an amount equal to 1,000 (as such number
may be appropriately adjusted for such events as stock splits, stock dividends and
recapitalizations with respect to the Common Stock occurring after the date of this Agreement)
multiplied by the current per share market price of the Common Stock. If neither the Common Stock
nor the Preferred Stock is publicly held or so listed or traded, the “current per share market
price” of the Preferred Stock shall mean the fair value per share as determined in good faith by
the Board, whose determination shall be described in a statement filed with the Rights Agent and
shall be conclusive for all purposes. For all purposes of this Agreement, the “current market
price” of one one-thousandth of a share of Preferred Stock shall be equal to the “current per share
market price” of one share of Preferred Stock divided by 1,000.

          (e) Anything herein to the contrary notwithstanding, no adjustment in the Purchase Price
shall be required unless such adjustment would require an increase or decrease of at least one
percent (1%) in such price; provided, however, that any adjustments which by
reason of this Section 11(e) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this Section 11
shall be made to the nearest cent or to the nearest ten-thousandth of a share of Common Stock or
other security or one-millionth of a share of Preferred Stock, as the case may be.
Notwithstanding the first sentence of this Section 11(e), an adjustment required by this
Section 11 shall be made no later than the earlier of (i) three years from the date of the
transaction which requires such adjustment or (ii) the Expiration Date.

          (f) If as a result of an adjustment made pursuant to Section 11(a)(ii) or Section
13(a) hereof, the holder of any Right thereafter exercised shall become entitled to receive
any shares of capital stock of the Company other than Preferred Stock, thereafter the number of
such other shares so receivable upon exercise of any Right and the Purchase Price thereof shall be
subject to adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Preferred Stock contained in Sections
11(a), (b), (c), (e), (g), (h), (i),
(j), (k), (l) and (m) hereof, and the provisions of Sections
7, 9, 10, 13 and 14 hereof with respect to the Preferred Stock
shall apply on like terms to any such other shares.

          (g) All Rights originally issued by the Company subsequent to any adjustment made to the
Purchase Price hereunder shall evidence the right to purchase, at the adjusted Purchase Price, the
number of one one-thousandths of a share of Preferred Stock purchasable from time to time
hereunder upon exercise of the Rights, all subject to further adjustment as provided herein.

18

 

          (h) Unless the Company shall have exercised its election as provided in Section
11(i), upon each adjustment of the Purchase Price as a result of the calculations made in
Sections 11(b) and (c) hereof, each Right outstanding immediately prior to the
making of such adjustment shall thereafter evidence the right to purchase, at the adjusted
Purchase Price, that number of one one-thousandths of a share of Preferred Stock (calculated to
the nearest one-ten millionth of a share) obtained by (i) multiplying (x) the number of one
one-thousandths of a share covered by a Right immediately prior to this adjustment by (y) the
Purchase Price in effect immediately prior to such adjustment of the Purchase Price and (ii)
dividing the product so obtained by the Purchase Price in effect immediately after such adjustment
of the Purchase Price.

          (i) The Company may elect on or after the date of any adjustment of the Purchase Price to
adjust the number of Rights, in lieu of any adjustment in the number of one one-thousandths of a
share of Preferred Stock issuable upon the exercise of a Right. Each of the Rights outstanding
after such adjustment of the number of Rights shall be exercisable for the number of one
one-thousandths of a share of Preferred Stock for which a Right was exercisable immediately prior
to such adjustment. Each Right held of record prior to such adjustment of the number of Rights
shall become that number of Rights (calculated to the nearest ten-thousandth) obtained by dividing
the Purchase Price in effect immediately prior to adjustment of the Purchase Price by the Purchase
Price in effect immediately after adjustment of the Purchase Price. The Company shall make a
public announcement of its election to adjust the number of Rights, indicating the record date for
the adjustment, and, if known at the time, the amount of the adjustment to be made. This record
date may be the date on which the Purchase Price is adjusted or any day thereafter, but, if the
Rights Certificates have been issued, shall be at least ten days later than the date of the public
announcement. If Rights Certificates have been issued, upon each adjustment of the number of
Rights pursuant to this Section 11(i), the Company shall, as promptly as practicable,
cause to be distributed to holders of record of Rights Certificates on such record date Rights
Certificates evidencing, subject to Section 14 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment, or, at the option of the Company, shall
cause to be distributed to such holders of record in substitution and replacement for the Rights
Certificates held by such holders prior to the date of adjustment, and upon surrender thereof, if
required by the Company, new Rights Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Rights Certificates so to be distributed shall be
issued, executed and countersigned in the manner provided for herein (and may bear, at the option
of the Company, the adjusted Purchase Price) and shall be registered in the names of the holders
of record of Rights Certificates on the record date specified in the public announcement.

          (j) Irrespective of any adjustment or change in the Purchase Price or the number of one
one-thousandths of a share of Preferred Stock issuable upon the exercise of the Rights, the Rights
Certificates theretofore and thereafter issued may continue to express the Purchase Price per one
one-thousandth of a share and the number of one one-thousandths of a share which were expressed in
the initial Rights Certificates issued hereunder.

          (k) Before taking any action that would cause an adjustment reducing the Purchase Price below
the then-par value, if any, of the number of one one-thousandths of a share of Preferred Stock
issuable upon exercise of the Rights, the Company shall take any

19

 

corporate action which may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue, as fully paid and non-assessable, such number of one
one-thousandths of a share of Preferred Stock at such adjusted Purchase Price.

          (l) In any case in which this Section 11 shall require that an adjustment in the
Purchase Price be made effective as of a record date for a specified event, the Company may elect
to defer until the occurrence of such event the issuance to the holder of any Right exercised
after such record date the number of one one-thousandths of a share of Preferred Stock and other
capital stock or securities of the Company, if any, issuable upon such exercise over and above the
number of one one-thousandths of a share of Preferred Stock and other capital stock or securities
of the Company, if any, issuable upon such exercise on the basis of the Purchase Price in effect
prior to such adjustment; provided, however, that the Company shall deliver to
such holder a due bill or other appropriate instrument evidencing such holder’s right to receive
such additional shares upon the occurrence of the event requiring such adjustment.

          (m) Anything in this Section 11 to the contrary notwithstanding, the Company shall be
entitled to make such reductions in the Purchase Price, in addition to those adjustments expressly
required by this Section 11, as and to the extent that the Board in its sole discretion
shall determine to be advisable in order that any (i) consolidation or subdivision of the
Preferred Stock, (ii) issuance wholly for cash of any shares of Preferred Stock at less than the
current market price, (iii) issuance wholly for cash of shares of Preferred Stock or securities
which by their terms are convertible into or exchangeable for Preferred Stock, (iv) stock
dividends or (v) issuance of rights, options or warrants referred to hereinabove in this
Section 11, hereafter made by the Company to holders of its Preferred Stock shall not be
taxable to such stockholders.

          (n) The Company shall not, at any time after the Distribution Date, (i) consolidate with any
other Person (other than a Subsidiary of the Company in a transaction which complies with
Section 11(o) hereof), (ii) merge with or into any other Person (other than a Subsidiary
of the Company in a transaction which complies with Section 11(o) hereof) or (iii) sell or
transfer (or permit any Subsidiary to sell or transfer), in one transaction, or a series of
related transactions, assets or earning power aggregating more than 50% of the assets or earning
power of the Company and its Subsidiaries (taken as a whole) to any other Person or Persons (other
than the Company and/or any of its Subsidiaries in one or more transactions each of which complies
with Section 11(o) hereof), if (x) at the time of or immediately after such consolidation,
merger or sale there are any rights, warrants or other instruments or securities outstanding or
agreements in effect which would substantially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights or (y) prior to, simultaneously with or immediately after
such consolidation, merger or sale, the stockholders of the Person who constitutes, or would
constitute, the “Principal Party” for purposes of Section 13(a) hereof shall have received
a distribution of Rights previously owned by such Person or any of its Affiliates and Associates.

          (o) Except as permitted by Section 23, Section 24 or Section 27
hereof, the Company shall not take (or permit any Subsidiary to take) after the Distribution Date
any action

20

 

if at the time such action is taken it is reasonably foreseeable that such action will
diminish substantially or otherwise eliminate the benefits intended to be afforded by the Rights.

          (p) Anything in this Agreement to the contrary notwithstanding, in the event that the
Company, prior to the Distribution Date, shall (i) declare a dividend on the outstanding shares of
Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding shares of Common
Stock or (iii) combine the outstanding shares of Common Stock into a smaller number of shares, the
number of Rights associated with each share of Common Stock then outstanding, or issued or
delivered thereafter but prior to the Distribution Date, shall be proportionately adjusted so that
the number of Rights thereafter associated with each share of Common Stock following any such
event shall equal the result obtained by multiplying the number of Rights associated with each
share of Common Stock immediately prior to such event by a fraction the numerator of which shall
be the total number of shares of Common Stock outstanding immediately prior to the occurrence of
the event and the denominator of which shall be the total number of shares of Common Stock
outstanding immediately following the occurrence of such event.

          Section 12. Certificate of Adjusted Purchase Price or Number of Shares.

          Whenever an adjustment is made as provided in Section 11 or Section 13 hereof,
the Company shall (a) promptly prepare a certificate setting forth such adjustment, and a brief
statement of the facts and computations accounting for such adjustment, (b) promptly file with the
Rights Agent and with each transfer agent for the Preferred Stock and the Common Stock a copy of
such certificate and (c) mail or deliver a brief summary thereof to each holder of a Rights
Certificate (or, if prior to the Distribution Date, to each holder of a certificate representing
shares of Common Stock) in accordance with Section 25 hereof. The Rights Agent shall be
fully protected in relying on any such certificate and on any adjustment therein contained and
shall not be deemed to have knowledge of any adjustment unless and until it shall have received
such certificate.

          Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power.

          (a) Subject to Section 23 hereof, in the event that, following the Stock Acquisition
Date, directly or indirectly,

               (x) the Company shall consolidate with, or merge with and into, any other Person (other
than a Subsidiary of the Company in a transaction which complies with Section 11(o)
hereof),

               (y) any Person (other than a Subsidiary of the Company in a transaction which complies with
Section 11(o) hereof) shall consolidate with, or merge with or into, the Company, and
the Company shall be the continuing or surviving corporation of such consolidation or merger
and, in connection with such consolidation or merger, all or part of the outstanding shares of
Common Stock shall be changed into or exchanged for stock or other securities of any other
Person (or of the Company) or cash or any other property, or

21

 

               (z) the Company shall sell or otherwise transfer (or one or more of its Subsidiaries shall
sell or otherwise transfer), in one transaction or a series of related transactions, assets or
earning power aggregating more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any Person or Persons (other than the Company and/or any of
its Subsidiaries in one or more transactions each of which complies with Section 11(o)
hereof),

then, and in each such case, proper provision shall be made so that:

               (i) each holder of a Right, except as provided in Section 7(e) hereof, shall, upon
the expiration of the Redemption Period (as defined in Section 23(a) hereof), thereafter
have the right to receive, upon the exercise thereof at the then current Purchase Price in
accordance with the terms of this Agreement, such number of validly authorized and issued, fully
paid, non-assessable and freely tradable shares of Common Stock of the Principal Party (as
hereinafter defined), not subject to any liens, encumbrances, rights of first refusal or other
adverse claims, as shall be equal to the result obtained by

	 	(1)	 	multiplying the then current Purchase Price by the
number of one one-thousandths of a share of Preferred Stock for which a
Right was exercisable immediately prior to the first occurrence of a
Section 13 Event (or, if a Section 11(a)(ii) Event has occurred prior to
the first occurrence of a Section 13 Event, multiplying the number of one
one-thousandths of a share of Preferred Stock for which a Right was
exercisable immediately prior to the first occurrence of a Section
11(a)(ii) Event by the Purchase Price in effect immediately prior to such
first occurrence), and
	 
	 	(2)	 	dividing that product (which product, following the
first occurrence of a Section 13 Event, shall be referred to as the
“Purchase Price” for each Right and for all purposes of this
Agreement) by 50% of the current per share market price of the shares of
Common Stock of such Principal Party on the date of consummation of such
Section 13 Event (or the fair market value on such date of other
securities or property of the Principal Party, as provided for herein);

               (ii) such Principal Party shall thereafter be liable for, and shall assume, by virtue of
such Section 13 Event, all the obligations and duties of the Company pursuant to this Agreement;

               (iii) the term “Company” shall thereafter be deemed to refer to such Principal Party, it
being specifically intended that the provisions of Section 11 hereof shall apply only to such
Principal Party following the first occurrence of a Section 13 Event;

               (iv) such Principal Party shall take such steps (including, but not limited to, the
reservation of a sufficient number of shares of its Common Stock) in connection with the
consummation of any such transaction as may be necessary to assure that the provisions hereof
shall thereafter be applicable, as nearly as reasonably may be, in

22

 

relation to its shares of Common Stock thereafter deliverable upon the exercise of the Rights;
and

               (v) the provisions of Section 11(a)(ii) hereof shall be of no effect following the
first occurrence of any Section 13 Event.

          (b) “Principal Party” shall mean

               (i) in the case of any transaction described in clause (x) or (y) of the first sentence of
Section 13(a) hereof, (A) the Person (including the Company as successor thereto or as the
surviving corporation) that is the issuer of any securities into which shares of Common Stock of
the Company are converted in the merger or consolidation so described, or, if there is more than
one such issuer, the issuer of Common Stock that has the highest aggregate current market price (as
determined pursuant to Section 11(d) hereof) and (B) if no securities or other equity
interests are so issued, the Person (including the Company as successor thereto or as the surviving
corporation) that is the other constituent party to such merger or consolidation, or, if there is
more than one such Person, the Person that is a constituent party to such merger or consolidation,
the Common Stock of which has the highest aggregate current market price (as determined pursuant to
Section 11(d) hereof); and

               (ii) in the case of any transaction described in clause (z) of the first sentence of
Section 13(a) hereof, the Person that is the party receiving the greatest portion of the
assets or earning power transferred pursuant to such transaction or transactions, or, if each
Person that is a party to such transaction or transactions receives the same portion of the assets
or earning power transferred pursuant to such transaction or transactions or if the Person
receiving the greatest portion of the assets or earning power cannot be determined, whichever of
such Persons is the issuer of Common Stock having the highest aggregate current market price (as
determined pursuant to Section 11(d) hereof);

provided, however, that in any such case: (1) if the Common Stock of such Person is
not at such time and has not been continuously over the preceding twelve (12) month period
registered under Section 12 of the Exchange Act, and such Person is a direct or indirect
Subsidiary of another Person the Common Stock of which is and has been so registered, “Principal
Party” shall refer to such other Person; (2) if the Common Stock of such Person is not and has not
been so registered and such Person is a Subsidiary, directly or indirectly, of more than one
Person, the Common Stocks of two or more of which are and have been so registered, “Principal
Party” shall refer to whichever of such Persons is the issuer of the Common Stock having the
greatest aggregate market value; and (3) if the Common Stock of such Person is not and has not been
so registered and such Person is owned, directly or indirectly, by a joint venture formed by two or
more Persons that are not owned, directly or indirectly, by the same Person, the rules set forth in
(1) and (2) above shall apply to each of the chains of ownership having an interest in such joint
venture as if such party were a Subsidiary of both or all of such joint venturers, and the
Principal Parties in each such chain shall bear the obligations set forth in this Section
13 in the same ratio as their direct or indirect interests in such Person bear to the total of
such interests.

          (c) The Company shall not consummate any Section 13 Event unless the Principal Party shall
have a sufficient number of authorized shares of its Common Stock which

23

 

have not been issued or reserved for issuance to permit the exercise in full of the Rights in
accordance with this Section 13 and unless prior thereto the Company and such Principal
Party shall have executed and delivered to the Rights Agent a supplemental agreement providing for
the terms set forth in paragraphs (a) and (b) of this Section 13 and further providing
that, as soon as practicable after the date of any such Section 13 Event, the Principal Party
shall:

               (i) prepare and file a registration statement under the Securities Act, with respect to the
Rights and the securities purchasable upon exercise of the Rights on an appropriate form, and use
its best efforts to cause such registration statement to (A) become effective as soon as
practicable after such filing and (B) remain effective (with a prospectus at all times meeting the
requirements of the Securities Act) until the Expiration Date;

               (ii) deliver to holders of the Rights historical financial statements for the Principal Party
and each of its Affiliates that comply in all respects with the requirements for registration on
Form 10 under the Exchange Act;

               (iii) use its best efforts to obtain any necessary regulatory approvals in respect of the
securities purchasable upon exercise of outstanding Rights; and

               (iv) use its best efforts, if such Common Stock of the Principal Party shall be listed or
admitted to trading on the New York Stock Exchange or on another national securities exchange or
(for so long as it is not a national securities exchange) on the NASDAQ Global Select Market, to
list or admit to trading (or continue the listing of) the Rights and the securities purchasable
upon exercise of the Rights on the New York Stock Exchange or on such securities exchange or (for
so long as it is not a national securities exchange) on the NASDAQ Global Select Market, or if the
securities of the Principal Party purchasable upon exercise of the Rights shall not be listed or
admitted to trading on the New York Stock Exchange or a national securities exchange or (for so
long as it is not a national securities exchange) on the NASDAQ Global Select Market, to cause the
Rights and the securities purchasable upon exercise of the Rights to be reported by such other
system then in use.

          (d) In case the Principal Party that is to be a party to a transaction referred to in this
Section 13 has at the time of such transaction, or immediately following such transaction
shall have, a provision in any of its authorized securities or in its certificate or articles of
incorporation or by-laws or other instrument governing its affairs, or any other agreements or
arrangements, which provision would have the effect of (i) causing such Principal Party to issue,
in connection with, or as a consequence of, the consummation of a transaction referred to in this
Section 13, shares of Common Stock of such Principal Party at less than the then current
per share market price (as determined pursuant to Section 11(d) hereof) or securities
exercisable for, or convertible into, Common Stock of such Principal Party at less than such then
current market price (other than to holders of Rights pursuant to this Section 13), (ii)
providing for any special payment, tax or similar provisions in connection with the issuance of
the Common Stock of such Principal Party pursuant to the provisions of this Section 13 or
(iii) otherwise eliminating or substantially diminishing the benefits intended to be afforded by
the Rights in connection with, or as a consequence of, the consummation of a transaction referred
to in this Section 13, then, in such event, the Company shall not consummate any such
transaction unless prior thereto the Company and such Principal Party shall have executed and
delivered to the Rights

24

 

Agent a supplemental agreement providing that the provision in question of such Principal
Party shall have been cancelled, waived or amended, or that the authorized securities shall be
redeemed, so that the applicable provision shall have no effect in connection with, or as a
consequence of, the consummation of such transaction.

          (e) The provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers. In the event that a Section 13 Event shall occur at
any time after the occurrence of a Section 11(a)(ii) Event, the Rights which have not theretofore
been exercised shall thereafter become exercisable in the manner described in Section
13(a) hereof.

          Section 14. Fractional Rights and Fractional Shares.

          (a) The Company shall not be required to issue fractions of Rights except prior to the
Distribution Date as provided in Section 11(p) hereof, or to distribute Rights
Certificates which evidence fractional Rights. In lieu of such fractional Rights, there shall be
paid to the registered holders of the Rights Certificates with regard to which such fractional
Rights would otherwise be issuable, an amount in cash equal to the same fraction of the current
market value of the whole Right. For the purposes of this Section 14(a), the current
market value of a whole Right shall be the closing price of the Rights for the Trading Day
immediately prior to the date on which such fractional Rights would have been otherwise issuable.
The closing price for any day shall be the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked prices, regular way, in either
case as reported in the principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on the NASDAQ Global Select Market or, if the Rights are
not listed or admitted to trading on the NASDAQ Global Select Market, as reported in the principal
consolidated transaction reporting system with respect to securities listed on the principal
national securities exchange on which the Rights are listed or admitted to trading or, if the
rights are not listed or admitted to trading on any national securities exchange, the last quoted
price or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by NASDAQ or such other system then in use or, if on any such
date the Rights are not quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the Rights selected by the
Board. If on any such date no such market maker is making a market in the Rights, the fair value
of the Rights on such date as determined in good faith by the Board shall be used. In the event
the Rights are listed or admitted to trading on a national securities exchange, the closing price
for any day shall be the last sale price, regular way, or, in case no such sale takes place on
such day, the average of the high bid and low asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect to the national
securities exchange on which the Rights are listed or admitted to trading.

          (b) The Company shall not be required to issue fractions of shares of Preferred Stock (other
than fractions which are integral multiples of one one-thousandth of a share of Preferred Stock)
upon exercise of the Rights or to distribute certificates which evidence fractional shares of
Preferred Stock (other than fractions which are integral multiples of one one-thousandth of a
share of Preferred Stock). In lieu of fractional shares of Preferred Stock that are not integral
multiples of one one-thousandth of a share of Preferred Stock, the

25

 

Company may pay to the registered holders of Rights Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction of the current market
value of one one-thousandth of a share of Preferred Stock. For purposes of this Section
14(b), the current market value of one one-thousandth of a share of Preferred Stock shall be
one one-thousandth of the closing price of a share of Preferred Stock (as determined pursuant to
Section 11(d)(ii) hereof) for the Trading Day immediately prior to the date of such
exercise.

          (c) Following the occurrence of one of the events specified in Section 11 hereof
giving rise to the right to receive Common Stock, common stock equivalents or other securities
upon the exercise of a Right, the Company shall not be required to issue fractions of shares of
Common Stock, common stock equivalents or other securities upon exercise of the Rights or to
distribute certificates which evidence fractional shares of Common Stock, common stock equivalents
or other securities. In lieu of fractional shares of Common Stock, common stock equivalents or
other securities, the Company may pay to the registered holders of Rights Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the same fraction of the
current market value of one share of Common Stock, common stock equivalents or other securities.
For purposes of this Section 14(c), the current market value of one share of Common Stock
shall be the closing price of one share of Common Stock (as determined pursuant to Section
11(d)(i) hereof) for the Trading Day immediately prior to the date of such exercise.

          (d) The holder of a Right by the acceptance of the Rights expressly waives such holder’s
right to receive any fractional Rights or any fractional shares upon exercise of a Right, except
as permitted by this Section 14.

          Section 15. Rights of Action.

          All rights of action in respect of this Agreement, except the rights of action vested in the
Rights Agent pursuant to Section 18 and Section 19 hereof, are vested in the
respective registered holders of the Rights Certificates (and, prior to the Distribution Date, the
registered holders of the Common Stock); and any registered holder of any Rights Certificate (or,
prior to the Distribution Date, of the Common Stock), without the consent of the Rights Agent or of
the holder of any other Rights Certificate (or, prior to the Distribution Date, of the Common
Stock), may, in his own behalf and for his own benefit, enforce, and may institute and maintain any
suit, action or proceeding against the Company to enforce, or otherwise act in respect of, his
right to exercise the Rights evidenced by such Rights Certificate in the manner provided in such
Rights Certificate and in this Agreement. Without limiting the foregoing or any remedies available
to the holders of Rights, it is specifically acknowledged that the holders of Rights would not have
an adequate remedy at law for any breach of this Agreement and shall be entitled to specific
performance of the obligations under, and injunctive relief against actual or threatened violations
of, the obligations hereunder of any Person subject to this Agreement.

          Section 16. Agreement of Rights Holders.

          Every holder of a Right by accepting such Right consents and agrees with the Company and the
Rights Agent and with every other holder of a Right that:

26

 

          (a) prior to the Distribution Date, the Rights shall be transferable only in connection with
the transfer of the Common Stock;

          (b) after the Distribution Date, the Rights Certificates shall be transferable only on the
registry books of the Rights Agent if surrendered at the office of the Rights Agent designated for
such purposes, duly endorsed or accompanied by a proper instrument of transfer and with the
appropriate form of assignment and the certificate contained therein duly completed and executed;

          (c) subject to Section 6(a) and Section 7(f) hereof, the Company and the
Rights Agent may deem and treat the Person in whose name the Rights Certificate (or, prior to the
Distribution Date, the associated Common Stock certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of ownership or writing
on the Rights Certificates or the associated Common Stock certificate made by anyone other than
the Company or the Rights Agent) for all purposes whatsoever, and neither the Company nor the
Rights Agent, subject to the last sentence of Section 7(e) hereof, shall be affected by
any notice to the contrary; and

          (d) notwithstanding anything in this Agreement to the contrary, neither the Company nor the
Rights Agent shall have any liability to any holder of a Right or other Person as a result of its
inability to perform any of its obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, decree, judgment or ruling (whether interlocutory or final)
issued by a court of competent jurisdiction or by a governmental, regulatory or administrative
agency or commission, or any statute, rule, regulation or executive order promulgated or enacted
by any governmental authority, prohibiting or otherwise restraining performance of such
obligation; provided, however, the Company shall use its best efforts to have any
such order, decree or ruling lifted or otherwise overturned as soon as practicable.

          Section 17. Rights Certificate Holder Not Deemed a Stockholder.

          No holder, as such, of any Rights Certificate shall be entitled to vote, to receive dividends
or to be deemed for any purpose the holder of the Preferred Stock or any other securities of the
Company which may at any time be issuable on the exercise of the Rights represented thereby, nor
shall anything contained herein or in any Rights Certificate be construed to confer upon the holder
of any Rights Certificate, as such, any of the rights of a stockholder of the Company or any right
to vote for the election of directors or upon any matter submitted to stockholders at any meeting
thereof, or to give or withhold consent to any corporate action, or to receive notice of meetings
or other actions affecting stockholders (except as provided in Section 25 hereof), or to
receive dividends or subscription rights, or otherwise, until the Right or Rights evidenced by such
Rights Certificate shall have been exercised in accordance with the provisions hereof.

          Section 18. Compensation and Indemnification of the Rights Agent.

          (a) The Company agrees to pay to the Rights Agent such compensation as shall be agreed in
writing between the Company and the Rights Agent for all services rendered

27

 

by it hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and expenses and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties hereunder. The Company
also agrees to indemnify the Rights Agent, its officers, employees, agents and directors for, and
to hold each of them harmless against, any loss, liability or expense, incurred without gross
negligence, bad faith or willful misconduct on the part of the Rights Agent, for any action taken,
suffered or omitted by the Rights Agent or such other indemnified party in connection with the
acceptance and administration of this Agreement and the exercise of its duties hereunder,
including, but not limited to, the costs and expenses of defending against any claim (whether
asserted by the Company, a holder of Rights, or any other Person) of liability in the premises.
The indemnity provided for hereunder shall survive the expiration of the Rights and the
termination of this Agreement.

          (b) The Rights Agent shall be authorized and protected and shall incur no liability for or in
respect of any action taken, suffered or omitted by it in connection with its administration of
this Agreement or the exercise of its duties hereunder in reliance upon any Rights Certificate or
certificate for Common Stock or for other securities of the Company, instrument of assignment or
transfer, power of attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement or other paper or document believed by it to be genuine and to be signed
and executed by the proper person or persons.

          Section 19. Merger or Consolidation or Change of Name of Rights Agent.

          (a) Any Person into which the Rights Agent or any successor Rights Agent may be merged or
with which it may be consolidated, or any Person resulting from any merger or consolidation to
which the Rights Agent or any successor Rights Agent shall be a party, or any Person succeeding to
all or substantially all the stock transfer business of the Rights Agent or any successor Rights
Agent, shall be the successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties hereto; provided,
however, that such Person would be eligible for appointment as a successor Rights Agent
under the provisions of Section 21 hereof. In case at the time such successor Rights
Agent shall succeed to the agency created by this Agreement, any of the Rights Certificates shall
have been countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Rights Certificates so
countersigned; and in case at that time any of the Rights Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Rights Certificates either in the
name of the predecessor Rights Agent or in the name of the successor Rights Agent; and in all such
cases such Rights Certificates shall have the full force provided in the Rights Certificates and
in this Agreement.

          (b) In case at any time the name of the Rights Agent shall be changed and at any such time
any of the Rights Certificates shall have been countersigned but not delivered, the Rights Agent
may adopt the countersignature under its prior name and deliver Rights Certificates so
countersigned; and in case at that time any of the Rights Certificates shall not have been
countersigned, the Rights Agent may countersign such Rights Certificates either in its prior name
or in its changed name; and in all such cases such Rights Certificates shall have the full force
provided in the Rights Certificates and in this Agreement.

28

 

          Section 20. Duties of Rights Agent.

          The Rights Agent undertakes only the duties and obligations expressly imposed by this
Agreement upon the following terms and conditions, by all of which the Company and the holders of
Rights Certificates, by their acceptance thereof, shall be bound:

          (a) The Rights Agent may consult with legal counsel of its selection (who may be legal
counsel for the Company), and the advice or opinion of such counsel shall be full and complete
authorization and protection to the Rights Agent, and the Rights Agent shall incur no liability,
for or in respect of any action taken or omitted by it in good faith and in accordance with such
advice or opinion.

          (b) Whenever in the performance of its duties under this Agreement the Rights Agent shall
deem it necessary or desirable that any fact or matter (including, without limitation, the
identity of any Acquiring Person and the determination of “current market price”) be proved or
established by the Company prior to taking or suffering or omitting to take any action hereunder,
such fact or matter (unless other evidence in respect thereof be herein specifically prescribed)
may be deemed to be conclusively proved and established by a certificate signed by any person
believed by the Rights Agent to be any one of the Chief Executive Officer, President, Chief
Financial Officer, Vice President, Secretary or General Counsel of the Company and delivered to
the Rights Agent; and such certificate shall be full authorization to the Rights Agent, and the
Rights Agent shall incur no liability, for or in respect of any action taken, omitted or suffered
in good faith by it under the provisions of this Agreement in reliance upon such certificate.

          (c) The Rights Agent shall be liable hereunder only for its own gross negligence, bad faith
or willful misconduct.

          (d) The Rights Agent shall not be liable for or by reason of any of the statements of fact or
recitals contained in this Agreement or in the Rights Certificates (except as to its
countersignature thereof) or be required to verify the same, but all such statements and recitals
are and shall be deemed to have been made by the Company only.

          (e) The Rights Agent is serving as an administrative agent and shall not be under any
responsibility in respect of the validity of any provision of this Agreement or the execution and
delivery of this Agreement (except the due execution hereof by the Rights Agent) or in respect of
the validity or execution of any Rights Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or condition contained in
this Agreement or in any Rights Certificate; nor shall it be responsible for any change in the
exercisability of the Rights (including the Rights becoming null and void pursuant to Section
7(e) hereof) or any adjustment required under any of the provisions hereof or responsible for
the manner, method, or amount of any such adjustment or the ascertaining of the existence of facts
that would require any such adjustment (except with respect to the exercise of Rights evidenced by
Rights Certificates after the Rights Agent’s actual receipt of notice of any such adjustment); nor
shall it by any act hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any shares of Common Stock or shares of Preferred Stock to be
issued pursuant to this Agreement or any Rights

29

 

Certificate or as to whether any shares of Common Stock or shares of Preferred Stock will,
when so issued, be validly authorized and issued, fully paid and non-assessable, nor shall the
Rights Agent be responsible for the legality of the terms hereof in its capacity as an
administrative agent.

          (f) The Company shall perform, execute, acknowledge and deliver or cause to be performed,
executed, acknowledged and delivered all such further and other acts, instruments and assurances
as may reasonably be required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.

          (g) The Rights Agent is hereby authorized and directed to accept instructions with respect to
the performance of its duties hereunder from any person believed by the Rights Agent to be any one
of the Chief Executive Officer, President, Chief Financial Officer, Vice President, Secretary or
General Counsel of the Company, and to apply to such officers for advice or instructions in
connection with its duties, and it shall not be liable for any action taken, omitted to be taken
or suffered to be taken by it in good faith in accordance with instructions of any such officer or
for any delay in acting while waiting for those instructions. Any application by the Rights Agent
for written instructions from the Company may, at the option of the Rights Agent, set forth in
writing any action proposed to be taken, suffered or omitted by the Rights Agent under this
Agreement and the date on or after which such action shall be taken or suffered or such omission
shall be effective. The Rights Agent shall not be liable for any action taken or suffered by, or
omission of, the Rights Agent in accordance with a proposal included in any such application on or
after the date specified in such application (which date shall not be less than five Business Days
after the date any officer of the Company actually receives such application, unless any such
officer shall have consented in writing to an earlier date) unless, prior to taking any such
action (or the effective date in the case of an omission), the Rights Agent shall have received
written instruction in response to such application specifying the action to be taken, suffered or
omitted.

          (h) The Rights Agent and any stockholder, affiliate, director, officer or employee of the
Rights Agent may buy, sell or deal in any of the Rights or other securities of the Company or
become pecuniarily interested in any transaction in which the Company may be interested, or
contract with or lend money to the Company or otherwise act as fully and freely as though it were
not the Rights Agent under this Agreement. Nothing herein shall preclude the Rights Agent from
acting in any other capacity for the Company or for any other Person or legal entity.

          (i) The Rights Agent may execute and exercise any of the rights or powers hereby vested in it
or perform any duty hereunder either itself or by or through its attorneys or agents, and the
Rights Agent shall not be answerable or accountable for any act, default, neglect or misconduct of
any such attorneys or agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct; provided, however, that the Rights Agent exercised
reasonable care in the selection and continued employment thereof.

          (j) If, with respect to any Rights Certificate surrendered to the Rights Agent for exercise
or transfer, the certificate attached to the form of assignment or form of election to purchase,
as the case may be, has either not been properly completed or indicates an affirmative

30

 

response to clause 1 and/or 2 thereof, the Rights Agent shall not take any further action
with respect to such requested exercise of transfer without first consulting with the Company.

          Section 21. Change of Rights Agent.

          The Rights Agent or any successor Rights Agent may resign and be discharged from its duties
under this Agreement upon thirty (30) days’ notice in writing mailed to the Company. The Company
may remove the Rights Agent or any successor Rights Agent upon thirty (30) days’ notice in writing,
mailed to the Rights Agent or successor Rights Agent, as the case may be, and to each transfer
agent of the Common Stock and the Preferred Stock by registered or certified mail, and to the
holders of the Rights Certificates by first-class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall appoint a successor to the
Rights Agent. If the Company shall fail to make such appointment within a period of thirty (30)
days after giving notice of such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Rights Certificate (who shall, with such notice, submit his Rights Certificate for inspection by
the Company), then the Rights Agent or the registered holder of any Rights Certificate may, at the
expense of the Company, apply to any court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed by the Company or by such a court,
shall be (i) a Person organized and doing business under the laws of the United States or the State
of Delaware or New York (or of any other state of the United States so long as such Person is
authorized to do business in the State of Delaware or New York), in good standing, having an office
in the State of Delaware or New York which is authorized under such laws to exercise corporate
trust power and is subject to supervision or examination by federal or state authority and which
has at the time of its appointment as Rights Agent a combined capital and surplus of at least $50
million or (ii) an affiliate of such a Person. After appointment, the successor Rights Agent shall
be vested with the same powers, rights, duties and responsibilities as if it had been originally
named as Rights Agent without further act or deed; but the predecessor Rights Agent shall deliver
and transfer to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for the purpose. Not
later than the effective date of any such appointment, the Company shall file notice thereof in
writing with the predecessor Rights Agent and each transfer agent of the Common Stock and the
Preferred Stock, and mail a notice thereof in writing to the registered holders of the Rights
Certificates. Failure to give any notice provided for in this Section 21, however, or any
defect therein, shall not affect the legality or validity of the resignation or removal of the
Rights Agent or the appointment of the successor Rights Agent, as the case may be.

          Section 22. Issuance of New Rights Certificates.

          Notwithstanding any of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Rights Certificates evidencing Rights in such form as may be
approved by the Board to reflect any adjustment or change in the Purchase Price per share and the
number or kind of class of shares or other securities or property purchasable under the Rights
Certificates made in accordance with the provisions of this Agreement. In addition, in connection
with the issuance or sale of shares of Common Stock following the Distribution Date (other than
upon exercise of a Right) and prior to the redemption

31

 

or expiration of the Rights, the Company (a) shall, with respect to shares of Common Stock so
issued or sold pursuant to the exercise of stock options or under any employee plan or arrangement,
or upon the exercise, conversion or exchange of securities hereinafter issued by the Company, and
(b) may, in any other case, if deemed necessary or appropriate by the Board, issue Rights
Certificates representing the appropriate number of Rights in connection with such issuance or
sale; provided, however, that (i) no such Rights Certificate shall be issued if,
and to the extent that, the Company shall be advised by counsel that such issuance would create a
significant risk of material adverse tax consequences to the Company or the Person to whom such
Rights Certificates would be issued, and (ii) no such Rights Certificates shall be issued if, and
to the extent that, appropriate adjustment shall otherwise have been made in lieu of the issuance
thereof.

          Section 23. Redemption.

          (a) The Board may, at its option, at any time during the period commencing on the date first
set forth above and ending on the earlier of (i) the Close of Business on the tenth day following
the Stock Acquisition Date (or, if the Stock Acquisition Date shall have occurred prior to the
Record Date, the Close of Business on the tenth day following the Record Date), or (ii) the Close
of Business on the Final Expiration Date (the “Redemption Period”), cause the Company to
redeem all but not less than all the then outstanding Rights at a redemption price of $.001 per
Right, as such amount may be appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such redemption price being hereinafter
referred to as the “Redemption Price”); provided, however, that, if the
Board authorizes redemption of the Rights on or after the time a Person becomes an Acquiring
Person, then such authorization shall require the concurrence of two-thirds of the authorized
number of members of the Board. Notwithstanding anything contained in this Agreement to the
contrary, the Rights shall not be exercisable after the first occurrence of a Section 11(a)(ii)
Event or a Section 13 Event until such time as the Company’s right of redemption hereunder has
expired. The redemption of the Rights by the Board pursuant to this paragraph (a) may be made
effective at such time, on such basis and with such conditions as the Board in its sole discretion
may establish. The Company may, at its option, pay the Redemption Price in cash, shares of Common
Stock (based on the current market price of the Common Stock at the time of redemption) or any
other form of consideration deemed appropriate by the Board.

          (b) Immediately upon the action of the Board ordering the redemption of the Rights, evidence
of which shall have been filed with the Rights Agent, and without any further action and without
any notice, the right to exercise the Rights shall terminate and the only right thereafter of the
holders of Rights shall be to receive the Redemption Price. Promptly after the action of the
Board ordering the redemption of the Rights, the Company shall give notice of such redemption to
the Rights Agent and the holders of the then outstanding Rights by mailing such notice to all such
holders at their last addresses as they appear upon the registry books of the Rights Agent or,
prior to the Distribution Date, on the registry books of the transfer agent for the Common Stock;
provided, however, that the failure to give, or any defect in, any such notice
shall not affect the validity of such redemption. Any notice which is mailed in the manner herein
provided shall be deemed given, whether or not the holder receives the notice.

32

 

Each such notice of redemption shall state the method by which the payment of the Redemption
Price will be made.

          Section 24. Exchange.

          (a) The Board may, at its option, at any time after any Person becomes an Acquiring Person,
exchange all or part of the then outstanding and exercisable Rights (which shall not include
Rights that have become null and void pursuant to the provisions of Section 7(e) hereof)
for shares of Common Stock at an exchange ratio of one share of Common Stock per each outstanding
Right, as appropriately adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such exchange ratio being hereinafter referred to as the
“Exchange Ratio”). Notwithstanding the foregoing, the Board shall not be empowered to
effect such exchange at any time after any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or any such Subsidiary, or any entity holding
Common Stock for or pursuant to the terms of any such plan), together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of 50% or more of the Common Stock then
outstanding. The exchange of the Rights by the Board may be made effective at such time, on such
basis and with such conditions as the Board in its sole discretion may establish.

          (b) Immediately upon the action of the Board ordering the exchange of any Rights pursuant to
paragraph (a) of this Section 24 and without any further action and without any notice,
the right to exercise such Rights shall terminate and the only right thereafter of a holder of
such Rights shall be to receive that number of shares of Common Stock equal to the number of such
Rights held by such holder multiplied by the Exchange Ratio. The Company shall promptly give
public notice of any such exchange; provided, however, that the failure to give,
or any defect in, such notice shall not affect the validity of such exchange. The Company
promptly shall mail a notice of any such exchange to all of the holders of such Rights at their
last addresses as they appear upon the registry books of the Rights Agent. Any notice which is
mailed in the manner herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of exchange shall state the method by which the exchange of Common Stock
for Rights will be effected and, in the event of any partial exchange, the number of Rights that
will be exchanged. Any partial exchange shall be effected pro rata based on the number of Rights
(other than Rights which have become void pursuant to the provisions of Section 7(e)
hereof) held by each holder of Rights.

          (c) In any exchange pursuant to this Section 24, the Company, at its option, may
substitute common stock equivalents (as defined in Section 11(a)(iii) hereof) for shares
of Common Stock exchangeable for Rights, at the initial rate of one common stock equivalent for
each share of Common Stock, as appropriately adjusted to reflect adjustments in dividend,
liquidation and voting rights of common stock equivalents pursuant to the terms thereof, so that
each common stock equivalent delivered in lieu of each share of Common Stock shall have
essentially the same dividend, liquidation and voting rights as one share of Common Stock.

          (d) In the event that there shall not be sufficient shares of Common Stock issued but not
outstanding or authorized but unissued to permit any exchange of Rights as contemplated in
accordance with this Section 24, the Company shall take all such action as may

33

 

be necessary to authorize additional shares of Common Stock for issuance upon exchange of the
Rights.

          (e) The Company shall not be required to issue fractions of shares of Common Stock or to
distribute certificates which evidence fractional shares of Common Stock. In lieu of such
fractional shares, the Company shall pay to the registered holders of the Rights Certificates with
regard to which such fractional shares would otherwise be issuable an amount in cash equal to the
same fraction of the current market value of a whole share of Common Stock. For the purposes of
this paragraph (e), the current market value of a whole share of Common Stock shall be the closing
price of a share of Common Stock (as determined pursuant to the second and the following sentences
of Section 11(d) hereof) for the Trading Day immediately prior to the date of exchange
pursuant to this Section 24.

          Section 25. Notice of Certain Events.

          (a) In case the Company shall propose, at any time after the Distribution Date, (i) to pay
any dividend payable in capital stock of any class to the holders of Preferred Stock or to make
any other distribution to the holders of Preferred Stock (other than a regular quarterly cash
dividend out of earnings or retained earnings) or (ii) to offer to the holders of Preferred Stock
rights or warrants to subscribe for or to purchase any additional shares of Preferred Stock or
 shares of capital stock of any class or any other securities, rights or options, or (iii) to
effect any reclassification of its Preferred Stock (other than a reclassification involving only
the subdivision of outstanding Preferred Stock), or (iv) to effect any consolidation or merger
into or with, or to effect any sale or other transfer (or to permit one or more of its
Subsidiaries to effect any sale or other transfer), in one or more transactions, of more than 50%
of the assets or earning power of the Company and its Subsidiaries (taken as a whole) to, any
other Person, or (v) to effect the liquidation, dissolution or winding up of the Company, then, in
each such case, the Company shall give to each holder of a Rights Certificate, to the extent
feasible and in accordance with Section 26 hereof, a notice of such proposed action, which
shall specify the record date for the purposes of such stock dividend, distribution of rights or
warrants, or the date on which such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution or winding up is to take place and the date of participation therein by
the holders of the shares of Preferred Stock, if any such date is to be fixed, and such notice
shall be so given in the case of any action covered by clause (i) or (ii) above at least 10 days
prior to the record date for determining holders of the shares of Preferred Stock for purposes of
such action and, in the case of any such other action, at least 10 days prior to the date of the
taking of such proposed action or the date of participation therein by the holders of the shares
of Preferred Stock, whichever shall be the earlier.

          (b) In case any Section 11(a)(ii) Event shall occur, then, in any such case, (i) the Company
shall as soon as practicable thereafter give to each holder of a Rights Certificate and to the
Rights Agent, to the extent feasible and in accordance with Section 26 hereof, a notice of
the occurrence of such event, which shall specify the event and the consequences of the event to
holders of Rights under Section 11(a)(ii) hereof, and (ii) all references in the paragraph
(a) of this Section 25 to Preferred Stock shall be deemed thereafter to refer to Common
Stock and/or, if appropriate, other securities.

34

 

          Section 26. Notices.

          Notices or demands authorized by this Agreement to be given or made by the Rights Agent or by
the holder of any Rights Certificate to or on the Company shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is filed in writing
with the Rights Agent) as follows:

Royal Gold, Inc.

1660 Wynkoop Street, Suite 1000

Denver, Colorado 80202

Attention: Secretary

Subject to the provisions of Section 21 hereof, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Rights Certificate to or on
the Rights Agent shall be sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Company) as follows:

Computershare Trust Company, N.A.

350 Indiana Street, Suite 800

Golden, CO 80401

Attn: Corporate Actions

Notices or demands authorized by this Agreement to be given or made by the Company or the Rights
Agent to the holder of any Rights Certificate shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to any such holder at the address of such holder as
shown on the registry books of the Company.

          Section 27. Supplements and Amendments.

          Except as provided in the penultimate sentence of this Section 27, for so long as the
Rights are then redeemable, the Company may in its sole and absolute discretion, and the Rights
Agent shall if the Company so directs, supplement or amend any provision of this Agreement in any
respect without the approval of any holders of the Rights. At any time when the Rights are no
longer redeemable, except as provided in the penultimate sentence of this Section 27, the
Company may, and the Rights Agent shall, if the Company so directs, supplement or amend this
Agreement without the approval of any holders of Rights Certificates in order to (i) cure any
ambiguity, (ii) correct or supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, (iii) shorten or lengthen any time period hereunder,
or (iv) change or supplement the provisions hereunder in any manner which the Company may deem
necessary or desirable; provided that no such supplement or amendment shall adversely affect the
interests of the holders of Rights as such (other than an Acquiring Person or an Affiliate or
Associate of an Acquiring Person), and no such amendment may cause the Rights again to become
redeemable or cause the Agreement again to become amendable other than in accordance with this
sentence. Notwithstanding anything contained in this Agreement to the contrary, no supplement or
amendment shall be made which changes the Redemption Price. Upon the delivery of a certificate
from inappropriate officer of the Company

35

 

which states that the proposed supplement or amendment is in compliance with the terms of this
Section 27, the Rights Agent shall execute such supplement or amendment.

          Section 28. Successors.

          All the covenants and provisions of this Agreement by or for the benefit of the Company or the
Rights Agent shall bind and inure to the benefit of their respective successors and assigns
hereunder.

          Section 29. Benefits of this Agreement.

          Nothing in this Agreement shall be construed to give to any Person other than the Company, the
Rights Agent and the registered holders of the Rights Certificates (and, prior to the Distribution
Date, the registered holders of the Common Stock) any legal or equitable right, remedy or claim
under this Agreement; but this Agreement shall be for the sole and exclusive benefit of the
Company, the Rights Agent and the registered holders of the Rights Certificates (and, prior to the
Distribution Date, the registered holders of Common Stock). Prior to the Distribution Date, the
interests of the holders of Rights shall be deemed coincident with the interests of the holders of
shares of Common Stock.

          Section 30. Severability.

          If any term, provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.

          Section 31. Governing Law.

          This Agreement, each Right and each Rights Certificate issued hereunder shall be deemed to be
a contract made under the internal laws of the State of Delaware and for all purposes shall be
governed by and construed in accordance with the laws of such State applicable to contracts to be
made and performed entirely within such State.

          Section 32. Counterparts.

          This Agreement may be executed in any number of counterparts. It shall not be necessary that
the signature of or on behalf of each party appears on each counterpart, but it shall be sufficient
that the signature of or on behalf of each party appears on one or more of the counterparts. All
counterparts shall collectively constitute a single agreement. It shall not be necessary in any
proof of this Agreement to produce or account for more than a number of counterparts containing the
respective signatures of or on behalf of all of the parties.

36

 

          Section 33. Descriptive Headings.

          Descriptive headings of the several Sections of this Agreement are inserted for convenience
only and shall not control or affect the meaning or construction of any of the provisions hereof.

          Section 34. Determinations and Actions by the Board, Etc.

          For all purposes of this Agreement, any calculation of the number of shares of Common Stock
outstanding at any particular time, including for purposes of determining the particular percentage
of such outstanding shares of Common Stock of which any Person is the Beneficial Owner, shall be
made in accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and
Regulations under the Exchange Act. The Board (with, where specifically provided for herein, the
concurrence of two-thirds of the authorized number of members of the Board) shall have the
exclusive power and authority to administer this Agreement and to exercise all rights and powers
specifically granted to the Board (with, where specifically provided for herein, the concurrence of
two-thirds of the authorized number of members of the Board) or to the Company, or as may be
necessary or advisable in the administration of this Agreement, including, without limitation, the
right and power to (i) interpret the provisions of this Agreement, and (ii) make all determinations
deemed necessary or advisable for the administration of this Agreement (including without
limitation a determination to redeem or not redeem the Rights or to amend the Agreement). All such
actions, calculations, interpretations and determinations which are done or made by the Board
(with, where specifically provided for herein, the concurrence of two-thirds of the authorized
number of members of the Board) in good faith, shall be final, conclusive and binding on the
Company, the Rights Agent, the holders of the Rights and all other Persons.

[Remainder of Page Intentionally Left Blank]

37

 

     IN WITNESS WHEREOF, the parties hereto have caused this First Amended and Restated Rights
Agreement to be duly executed, as of the day and year first above written.

	 	 	 	 	 
	 	ROYAL GOLD, INC.

 	 
	 	By:  	/s/ Bruce C. Kirchhoff	 
	 	 	Name:  	Bruce C. Kirchhoff 	 
	 	 	Title:  	Vice
President and General Counsel 	 
	 

	 	 	 	 	 
	 	COMPUTERSHARE TRUST COMPANY, N.A.,

as Rights Agent

 	 
	 	By:  	/s/ Kellie Gwinn	 
	 	 	Name:  	Kellie Gwinn 	 
	 	 	Title:  	Vice
President	 

 

	 	 	 	 	 

EXHIBIT A

FORM

OF

ROYAL GOLD, INC.

AMENDED AND RESTATED

CERTIFICATE OF DESIGNATIONS

OF

SERIES A JUNIOR PARTICIPATING PREFERRED STOCK

(Pursuant to Section 151 of the

Delaware General Corporation Law)

     Royal Gold, Inc., a corporation organized and existing under the General Corporation Law of
the State of Delaware (hereinafter called the “Company”),
hereby certifies that (i) no shares of the class or series
described in this Amended and Restated Certificate of Designations of
Series A Junior Participating Preferred Stock have been issued
and (ii) the following
resolution was adopted by the Board of Directors of the Company as required by Section 151 of the
General Corporation Law at a meeting duly called and held on August 23, 2007:

     RESOLVED, that pursuant to the authority granted to and vested in the Board of Directors of
the Company (hereinafter called the “Board of Directors” or the “Board”) in accordance with the
provisions of the Certificate of Incorporation, as amended to date (hereinafter called the
“Certificate of Incorporation”), the Board of Directors, on August 10, 1997, created a series of
preferred stock, par value $.01 per share, of the Company and the Company thereafter filed a
Certificate of Designations with the Secretary of State of the State of Delaware to state the
designation and number of shares, and fix the relative rights, preferences, and limitations
thereof.

     RESOLVED, that pursuant to the authority granted to and vested in the Board in accordance with
the provisions of the Certificate of Incorporation, the Board hereby amends and restates the
designation and number of shares, and fixes the relative rights, preferences, and limitations
thereof as follows:

     Section 1. Designation and Amount. The shares of such series shall be designated as
“Series A Junior Participating Preferred Stock” (the “Series A Preferred Stock”) and the number of
shares constituting the Series A Preferred Stock shall be 500,000. Such number of shares may be
increased or decreased by resolution of the Board of Directors; provided, however, that no decrease
shall reduce the number of shares of Series A Preferred Stock to a number less than the number of
shares then outstanding plus the number of shares reserved for issuance upon the

 

 

exercise of outstanding options, rights or warrants or upon the conversion of any outstanding
securities issued by the Company convertible into or exchangeable for Series A Preferred Stock.

     Section 2. Dividends and Distributions.

          (A) Subject to the rights of the holders of any shares of any series of preferred stock of the
Company (the “Preferred Stock”) (or any similar stock) ranking prior and superior to the Series A
Preferred Stock with respect to dividends, the holders of shares of Series A Preferred Stock, in
preference to the holders of Common Stock, par value $.01 per share of the Company (the “Common
Stock”), and of any other stock of the Company ranking junior to the Series A Preferred Stock,
shall be entitled to receive, when, as and if declared by the Board of Directors out of funds
legally available for the purpose, semi-annual dividends payable in cash on the first day of June
and December in each year (each such date being referred to herein as a “Dividend Payment Date”),
commencing on the first Dividend Payment Date after the first issuance of a share or fraction of a
share of Series A Preferred Stock, in an amount per share (rounded to the nearest cent) equal to
the greater of (a) $1 or (b) subject to the provision for adjustment hereinafter set forth, 1,000
times the aggregate per share amount of all cash dividends, and 1,000 times the aggregate per share
amount (payable in kind) of all non-cash dividends or other distributions other than a dividend
payable in shares of Common Stock, declared on the Common Stock since the immediately preceding
Dividend Payment Date or, with respect to the first Dividend Payment Date, since the first issuance
of any share or fraction of a share of Series A Preferred Stock. In the event the Company shall at
any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by
the classification or otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the amount to which
holders of shares of Series A Preferred Stock were entitled immediately prior to such event under
clause (b) of the preceding sentence shall be adjusted by multiplying such amount by a fraction,
the numerator of which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that were outstanding
immediately prior to such event.

          (B) The Company shall declare a dividend or distribution on the Series A Preferred Stock as
provided in paragraph (A) of this Section immediately after it declares a dividend or distribution
on the Common Stock (other than a dividend payable in shares of Common Stock); provided that, in
the event no dividend or distribution shall have been declared on the Common Stock during the
period between any Dividend Payment Date and the next subsequent Dividend Payment Date, a dividend
of $1 per share on the Series A Preferred Stock shall nevertheless be payable on such subsequent
Dividend Payment Date.

          (C) Dividends shall begin to accrue and be cumulative on outstanding shares of Series A
Preferred Stock from the Dividend Payment Date next preceding the date of issue of such shares,
unless the date of issue of such shares is prior to the record date for the first Dividend Payment
Date, in which case dividends on such shares shall begin to accrue from the date of issue of such
shares, or unless the date of issue is a Dividend Payment Date or is a date after the record date
for the determination of holders of shares of Series A Preferred Stock entitled to receive a
semi-annual dividend and before such Dividend Payment Date, in either of

 

 

which events such dividends shall begin to accrue and be cumulative from such Dividend Payment
Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on the shares of
Series A Preferred Stock in an amount less than the total amount of such dividends at the time
accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all
such shares at the time outstanding. The Board of Directors may fix a record date for the
determination of holders of shares of Series A Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record date shall be not more than 60 days prior
to the date fixed for the payment thereof.

     Section 3. Voting Rights. The holders of shares of Series A Preferred Stock shall
have the following voting rights:

          (A) Subject to the provision for adjustment hereinafter set forth and except as otherwise
provided in the Certificate of Incorporation or required by law, each share of Series A Preferred
Stock shall entitle the holder thereof to 1,000 votes on all matters upon which the holders of the
Company are entitled to vote. In the event the Company shall at any time declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the number of votes per share to which holders of
shares of Series A Preferred Stock were entitled immediately prior to such event shall be adjusted
by multiplying such number by a fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is the number of shares
of Common Stock that were outstanding immediately prior to such event.

          (B) Except as otherwise provided herein, in the Certificate of Incorporation or in any other
Certificate of Designations creating a series of Preferred Stock or any similar stock, and except
as otherwise required by law, the holders of shares of Series A Preferred Stock and the holders of
shares of Common Stock and any other capital stock of the Company having general voting rights
shall vote together as one class on all matters submitted to a vote of stockholders of the Company.

          (C) Except as set forth herein, or as otherwise provided by law, holders of Series A Preferred
Stock shall have no special voting rights and their consent shall not be required (except to the
extent they are entitled to vote with holders of Common Stock as set forth herein) for taking any
corporate action.

     Section 4. Certain Restrictions.

          (A) Whenever semi-annual dividends or other dividends or distributions payable on the Series A
Preferred Stock as provided in Section 2 are in arrears, thereafter and until all accrued and
unpaid dividends and distributions, whether or not declared, on shares of Series A Preferred Stock
outstanding shall have been paid in full, the Company shall not:

               (i) declare or pay dividends, or make any other distributions, on any shares of stock ranking
junior (as to dividends) to the Series A Preferred Stock;

 

 

               (ii) declare or pay dividends, or make any other distributions, on any shares of stock ranking
on a parity (as to dividends) with the Series A Preferred Stock, except dividends paid ratably on
the Series A Preferred Stock and all such parity stock on which dividends are payable or in
arrears in proportion to the total amounts to which the holders of all such shares are then
entitled;

               (iii) redeem or purchase or otherwise acquire for consideration shares of any stock ranking
junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock, provided that the Company may at any time redeem, purchase or otherwise acquire
shares of any such junior stock in exchange for shares of any stock of the Company ranking junior
(as to dividends and upon dissolution, liquidation or winding up) to the Series A Preferred Stock;

               (iv) redeem or purchase or otherwise acquire for consideration any shares of Series A
Preferred Stock, or any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock, except in accordance
with a purchase offer made in writing or by publication (as determined by the Board of Directors)
to all holders of such shares upon such terms as the Board of Directors, after consideration of the
respective annual dividend rates and other relative rights and preferences of the respective series
and classes, shall determine in good faith will result in fair and equitable treatment among the
respective series or classes.

          (B) The Company shall not permit any subsidiary of the Company to purchase or otherwise
acquire for consideration any shares of stock of the Company unless the Company could, under
paragraph (A) of this Section 4, purchase or otherwise acquire such shares at such time and in such
manner.

     Section 5. Reacquired Shares. Any shares of Series A Preferred Stock purchased or
otherwise acquired by the Company in any manner whatsoever shall be retired and canceled promptly
after the acquisition thereof.

     Section 6. Liquidation, Dissolution or Winding Up. Upon any liquidation, dissolution
or winding up of the Company, no distribution shall be made (A) to the holders of the Common Stock
or of shares of any other stock of the Company ranking junior upon liquidation, dissolution or
winding up to the Series A Preferred Stock unless, prior thereto, the holders of shares of Series A
Preferred Stock shall have received the greater of (x) $1,000 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of
such payment, or (y) an aggregate amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 1,000 times the aggregate amount to be distributed per share to
holders of shares of Common Stock, or (B) to the holders of shares of stock ranking on a parity
upon liquidation, dissolution or winding up with the Series A Preferred Stock, except distributions
made ratably on the Series A Preferred Stock and all such parity stock in proportion to the total
amounts to which the holders of all such shares are entitled upon such liquidation, dissolution or
winding up. In the event the Company shall at any time declare or pay any dividend on the Common
Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock)
into a greater or lesser number of shares of Common Stock, then in each such case the aggregate
amount to which holders of shares of Series A Preferred Stock were

 

 

entitled immediately prior to such event under the proviso in clause (A) of the preceding
sentence shall be adjusted by multiplying such amount by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately prior to such
event.

     Section 7. Consolidation, Merger, etc. In case the Company shall enter into any
consolidation, merger, combination or other transaction in which the shares of Common Stock are
exchanged for or changed into other stock or securities, cash and/or any other property, then in
any such case each share of Series A Preferred Stock shall at the same time be similarly exchanged
for or changed into such other stock or securities, cash and/or any other property in an amount per
share (subject to the provision for adjustment hereinafter set forth) equal to 1,000 times the
aggregate amount of stock, securities, cash and /or any other property payable in kind), as the
case may be, into which or for which each share of Common Stock is changed or exchanged. In the
event the Company shall at any time declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of
Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the
amount set forth in the preceding sentence with respect to the exchange or change of shares of
Series A Preferred Stock shall be adjusted by multiplying such amount by a fraction, the numerator
of which is the number of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were outstanding immediately
prior to such event.

     Section 8. No Redemption. The shares of Series A Preferred Stock shall not be
redeemable from any holder.

     Section 9. Rank. The Series A Preferred Stock shall rank, with respect to the payment
of dividends and the distribution of assets upon liquidation, dissolution or winding up of the
Company, junior to all other series of Preferred Stock and senior to the Common Stock.

     Section 10. Amendment. If any proposed amendment to the Certificate of Incorporation
(including this Certificate of Designations) would alter, change or repeal any of the preferences,
powers or special rights given to the Series A Preferred Stock so as to affect the Series A
Preferred Stock adversely, then the holders of the Series A Preferred Stock shall be entitled to
vote separately as a class upon such amendment, and the affirmative vote of two-thirds of the
outstanding shares of the Series A Preferred Stock, voting separately as a class, shall be
necessary for the adoption thereof, in addition to such other vote as may be required by the
General Corporation Law of the State of Delaware.

* * * * * *

 

 

     IN WITNESS WHEREOF, this Amended and Restated Certificate of Designations is executed on
behalf of the Company by its Vice President and General Counsel on this 10th day of September,
2007.

	 	 	 	 	 
	 

	 		 	 
	 

	 	 

	 	 
	 

	 	Bruce C. Kirchhoff	 	 
	 

	 	Vice President and General Counsel	 	 

 

 

EXHIBIT B

FORM OF RIGHTS CERTIFICATE

			
	Certificate No. R                    
	 	                     Rights

     NOT EXERCISABLE AFTER SEPTEMBER 10, 2017 OR EARLIER IF REDEMPTION OR EXCHANGE OCCURS. THE
RIGHTS ARE SUBJECT TO REDEMPTION AT $.001 PER RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE
RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS OWNED
BY OR TRANSFERRED TO ANY PERSON WHO BECOMES AN ACQUIRING PERSON (AS DEFINED IN THE RIGHTS
AGREEMENT) AND CERTAIN TRANSFEREES THEREOF WILL BECOME NULL AND VOID AND WILL NO LONGER BE
TRANSFERABLE.

Rights Certificate

ROYAL GOLD, INC.

     This Rights Certificate certifies that                                                              or
 registered assigns, is
the registered owner of the number of Rights set forth above, each of which entitles the owner
thereof, subject to the terms, provisions and conditions of that certain First Amended and Restated
Rights Agreement, dated as of September 10, 2007 (the “Rights Agreement”), between Royal Gold,
Inc., a Delaware corporation (the “Company”), and Computershare Trust Company, N.A. (the “Rights
Agent”), to purchase from the Company at any time after the Distribution Date (as such term is
defined in the Rights Agreement) and prior to 5:00 p.m., Denver time, on September 10, 2017 at the
office or agency of the Rights Agent designated for such purpose, or of its successor as Rights
Agent, one one-thousandth of a fully paid and non-assessable share of Series A Junior Participating
Preferred Stock, par value $0.01 per share (the “Preferred Shares”), of the Company, at a purchase
price of $175.00 per one one-thousandth of a Preferred Share (the “Purchase Price”), upon
presentation and surrender of this Rights Certificate with the Form of Election to Purchase duly
executed. The number of Rights evidenced by this Rights Certificate (and the number of one
one-thousandths of a Preferred Share which may be purchased upon exercise hereof) set forth above,
and the Purchase Price set forth above, are the number and Purchase Price as of September 10, 2007,
based on the Preferred Shares as constituted at such date. As provided in the Rights Agreement,
the Purchase Price, the number of one one-thousandths of a Preferred Share which may be purchased
upon the exercise of the Rights and the number of Rights evidenced by this Rights Certificate are
subject to modification and adjustment upon the happening of certain events.

     This Rights Certificate is subject to all of the terms, provisions and conditions of the
Rights Agreement, as the same may be amended from time to time, which terms, provisions and
conditions are hereby incorporated herein by reference and made a part hereof and to which Rights
Agreement reference is hereby made for a full description of the rights, limitations of rights,
obligations, duties and immunities hereunder of the Rights Agent, the Company and the holders of
the Rights Certificates. Copies of the Rights Agreement are on file at the principal executive
offices of the Company and the designated office or agency of the Rights Agent. The

 

 

Company will mail to the holder of this Rights Certificate a copy of the Rights Agreement
without charge after receipt of a written request therefor.

     This Rights Certificate, with or without other Rights Certificates, upon surrender at the
office or agency of the Rights Agent designated for such purpose, may be exchanged for another
Rights Certificate or Rights Certificates of like tenor and date evidencing Rights entitling the
holder to purchase a like aggregate number of Preferred Shares as the Rights evidenced by the
Rights Certificate or Rights Certificates surrendered shall have entitled such holder to purchase.
If this Rights Certificate shall be exercised in part, the holder shall be entitled to receive upon
surrender hereof another Rights Certificate or Rights Certificates for the number of whole Rights
not exercised.

     Subject to the provisions of the Rights Agreement, the Rights evidenced by this Certificate
(i) may be redeemed by the Company at a redemption price of $.001 per Right or (ii) may be
exchanged in whole or in part for Preferred Shares or shares of the Company’s Common Stock, par
value $.01 per share.

     No fractional Preferred Shares will be issued upon the exercise of any Right or Rights
evidenced hereby (other than fractions which are integral multiples of one one-thousandth of a
Preferred Share, which may, at the election of the Company, be evidenced by depositary receipts),
but in lieu thereof a cash payment will be made, as provided in the Rights Agreement.

     No holder of this Rights Certificate, as such, shall be entitled to vote or receive dividends
or be deemed for any purpose the holder of the Preferred Shares or of any other securities of the
Company which may at any time be issuable on the exercise hereof, nor shall anything contained in
the Rights Agreement or herein be construed to confer upon the holder hereof, as such, any of the
rights of a stockholder of the Company or any right to vote for the election of directors or upon
any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting stockholders (except
as provided in the Rights Agreement) or to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by this Rights Certificate shall have been exercised as
provided in the Rights Agreement. This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.

 

 

     WITNESS the facsimile signature of the proper officers of the Company and its corporate seal.

     Dated as of September 10, 2007.

	 	 	 	 	 	 	 	 	 	 	 
	ATTEST:	 	ROYAL GOLD, INC.
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	By:	 	 	 	 	 	 
	 

	 	 

	 	 	 	 

	 	 	 	 
	Karen P. Gross,	 	 	 	Tony Jensen	 	 	 	 
	Vice President and Secretary	 	 	 	President & Chief Executive Officer	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	COUNTERSIGNED:	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	COMPUTERSHARE TRUST COMPANY, N.A.,

as Rights Agent	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 

 

 

FORM OF REVERSE SIDE OF RIGHTS CERTIFICATE

FORM OF ASSIGNMENT

(To be executed by the registered holder if such

holder desires to transfer the Rights Certificate)

     FOR VALUE RECEIVED                                                              hereby sells, assigns
and transfer unto

(Please print name, address

and social security number of transferee)

this Rights Certificate, together with all right, title and interest therein, and does hereby
irrevocably constitute and appoint                                                              Attorney, to transfer the within
Rights Certificate on the books of the within-named Company, with full power of substitution.

Dated:                                         

 

Signature

     Signature Guaranteed: Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers, Inc., or a
commercial bank or trust company having an office or correspondent in the United States.

(To be completed)

     The undersigned hereby certifies that the Rights evidenced by this Rights Certificate are not
beneficially owned by, and were not acquired by the undersigned from, an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).

 

Signature

FORM OF ELECTION TO PURCHASE

(To be executed if holder desires to exercise

Rights represented by the Rights Certificate)

     ROYAL GOLD, INC.: This undersigned hereby irrevocably elects to exercise                      Rights
represented by this Rights Certificate to purchase the Preferred Shares issuable upon the exercise
of such Rights and requests that certificates for such Preferred Shares be issued in the name of:

(Please print name, address and social security number)

 

 

     If such number of Rights shall not be all the Rights evidenced by this Rights Certificate, a
new Rights Certificate for the balance remaining of such Rights shall be registered in the name of
and delivered to:

     (Please print name, address and social security number)

Dated:                                         

 

Signature

(Signature must conform to holder specified on Rights Certificate)

     Signature Guaranteed: Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers, Inc., or a
commercial bank or trust company having an office or correspondent in the United States.

(To be completed)

     The undersigned certifies that the Rights evidenced by this Rights Certificate are not
beneficially owned by, and were not acquired by the undersigned from, an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement)

 

Signature

NOTICE

     The signature in the Form of Assignment or Form of Election to Purchase, as the case may be,
must conform to the name as written upon the face of this Rights Certificate in every particular,
without alteration or enlargement or any change whatsoever. In the event the certification set
forth above in the Form of Assignment or the Form of Election to Purchase, as the case may be, is
not completed, the Company and the Rights Agent will deem the beneficial owner of the Rights
evidenced by this Rights Certificate to be an Acquiring Person or an Affiliate or Associate thereof
(as defined in the Rights Agreement) and such Assignment or Election to Purchase will not be
honored.QuickLinks
 -- Click here to rapidly navigate through this document
  

 
 

Exhibit 10.2    
    

GENOPTIX, INC.

2001 EQUITY INCENTIVE PLAN

Adopted May 16, 2001

Approved By Stockholders July 31, 2001

Termination Date: May 15, 2011  

        1.    PURPOSES.    

         (a)    Amendment and Restatement.    The Plan amends and restates the Genoptix, Inc. 1999 Stock Incentive Plan
adopted March 21,
1999 (the "Prior Plan"). A Participant's outstanding options granted under the Prior Plan shall be governed by such Prior Plan, unless otherwise agreed to in writing by such Participant (in which
case, such options will be governed by the terms of this Plan). 

         (b)    Available Stock Awards.    The purpose of the Plan is to provide a means by which eligible recipients of Stock
Awards may be given an
opportunity to benefit from increases in value of the Common Stock through the granting of the following Stock Awards: (i) Incentive Stock Options, (ii) Nonstatutory Stock Options,
(iii) stock bonuses and (iv) rights to acquire restricted stock. 

        (c)    General Purpose.    The Company, by means of the Plan, seeks to retain the services of the group of persons
eligible to receive Stock
Awards, to secure and retain the services of new members of this
group and to provide incentives for such persons to exert maximum efforts for the success of the Company and its Affiliates. 

        2.    DEFINITIONS.    

        (a)   "Affiliate" means any parent corporation or subsidiary corporation of the Company, whether now or
hereafter existing, as those terms are defined in Sections 424(e) and (f), respectively, of the Code. 

        (b)   "Board" means the Board of Directors of the Company. 

        (c)   "Cause" means, with respect to a particular Participant, the occurrence of any of the following:
(i) such Participant's conviction of any felony or any crime involving fraud or dishonesty; (ii) such Participant's participation (whether by affirmative act or omission) in a fraud, act
of dishonesty or other act of misconduct against the Company and/or its Affiliates and which has a material adverse effect on the Company and/or its Affiliates; (iii) conduct by such
Participant which, based upon a good faith and reasonable factual investigation by the Company (or, if such Participant is an Officer, by the Board), demonstrates such Participant's unfitness to
serve; (iv) such Participant's material violation of any fiduciary duty, or duty of loyalty owed to the Company and/or its Affiliates; (v) such Participant's violation of state or
federal law in connection with such Participant's performance of his/her job which has a material adverse effect on the Company and/or its Affiliates; (vi) such Participant's breach of any
material term of any contract between such Participant and the Company and/or its Affiliates; and (vii) such Participant's violation of Company policy which has a material adverse effect on the
Company and/or its Affiliates. Notwithstanding the foregoing, such Participant's Disability shall not constitute Cause as set forth herein. The determination that a termination is for Cause shall be
made by the Board or the Committee in its sole and exclusive judgment and discretion. 

        (d)   "Change in Control" means: (i) a sale of all or substantially all of the assets of the
Company; (ii) a merger or consolidation in which the Company is not the surviving entity and in 

1

 

which
the holders of the Company's outstanding voting stock immediately prior to such transaction own, immediately after such transaction, securities representing less than fifty percent (50%) of the
voting power of the entity surviving such transaction or, where the surviving entity is a wholly-owned subsidiary of another entity, the surviving entity's parent; (iii) a reverse merger in
which the Company is the surviving entity but the shares of Common Stock outstanding immediately preceding the merger are converted by virtue of the merger into other property, whether in the form of
securities of the surviving entity's parent, cash or otherwise, and in which the holders of the Company's outstanding voting stock immediately prior to such transaction own, immediately after such
transaction, securities representing less than fifty percent (50%) of the voting power of the Company or, where the Company is a wholly-owned subsidiary of another entity, the Company's parent; or
(iv) after the Listing Date, an acquisition by any person, entity or group within the meaning of Section 13(d) or 14(d) of the Exchange Act, or any comparable successor provisions
(excluding any employee benefit plan, or related trust, sponsored or maintained by the Company or subsidiary of the Company or other entity controlled by the Company) of the beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act, or comparable successor rule) of securities of the Company representing at least fifty percent (50%) of the
combined voting power entitled to vote in the election of Directors; provided, however, that nothing in this subsection 2(d) shall apply to a sale of assets, merger or other transaction effected
exclusively for the purpose of changing the domicile of the Company. 

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

        (f)    "Committee" means a committee of one or more members of the Board appointed by the Board in
accordance with subsection 3(c). 

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

        (h)   "Company" means Genoptix, Inc., a Delaware corporation. 

        (i)    "Consultant" means any person, including an advisor, (i) engaged by the Company or an
Affiliate to render consulting or advisory services and who is compensated for such services or (ii) who is a member of the Board of Directors of an Affiliate. However, the term "Consultant"
shall not include either Directors who are not compensated by the Company for their services as Directors or Directors who are merely paid a director's fee by the Company for their services as
Directors. 

        (j)    "Continuous Service" means that the Participant's service with the Company or an Affiliate,
whether as an Employee, Director or Consultant, is not interrupted or terminated. The Participant's Continuous Service shall not be deemed to have terminated merely because of a change in the capacity
in which the Participant renders service to the Company or an Affiliate as an Employee, Consultant or Director or a change in the entity for which the Participant renders such service, provided that
there is no interruption or termination of the Participant's Continuous Service. For example, a change in status from an Employee of the Company to a Consultant of an Affiliate or a Director will not
constitute an interruption of Continuous Service. The Board or the chief executive officer of the Company, in that party's sole discretion, may determine whether Continuous Service shall be considered
interrupted in the case of any leave of absence approved by that party, including sick leave, military leave or any other personal leave. 

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

        (l)    "Director" means a member of the Board of Directors of the Company. 

2

 

        (m)  "Disability" means (i) before the Listing Date, the inability of a person, in the opinion
of a qualified physician acceptable to the Company, to perform the major duties of that person's position with the Company or an Affiliate of the Company because of the sickness or injury of the
person and (ii) after the Listing Date, the permanent and total disability of a person within the meaning of Section 22(e)(3) of the Code. 

        (n)   "Employee" means any person employed by the Company or an Affiliate. Mere service as a Director
or payment of a director's fee by the Company or an Affiliate shall not be sufficient to constitute "employment" by the Company or an Affiliate. 

        (o)   "Exchange Act" means the Securities Exchange Act of 1934, as amended. 

        (p)   "Fair Market Value" means, as of any date, the value of the Common Stock determined as follows: 

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

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

       (iii)  Prior to the Listing Date, the value of the Common Stock shall be determined in a manner consistent with
Section 260.140.50 of Title 10 of the California Code of Regulations. 

        (q)   "Good Reason" means, with respect to a particular Participant, the occurrence of any of the
following events, conditions or actions taken by the Company without Cause and without such Participant's consent: (i) if such Participant is an Officer, a reduction in such Participant's
title, (ii) a change in such Participant's employment responsibilities with the Company which represents a material reduction in such Participant's level of responsibility, (iii) a
reduction in such Participant's level of base salary, or (iv) a relocation of such Participant's place of employment by more than fifty (50) miles. 

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

        (s)   "Listing Date" means the first date upon which any security of the Company is listed (or approved
for listing) upon notice of issuance on any securities exchange or designated (or approved for designation) upon notice of issuance as a national market security on an interdealer quotation system if
such securities exchange or interdealer quotation system has been certified in accordance with the provisions of Section 25100(o) of the California Corporate Securities Law of 1968. 

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

3

 

        (u)   "Nonstatutory Stock Option" means an Option not intended to qualify as an Incentive Stock Option. 

        (v)   "Officer" means (i) before the Listing Date, any person designated by the Board as an
executive officer and (ii) on and after the Listing Date, a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder. 

        (w)  "Option" means an Incentive Stock Option or a Nonstatutory Stock Option granted pursuant to the
Plan. 

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

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

        (z)   "Outside Director" means a Director who either (i) is not a current employee of the
Company or an "affiliated corporation" (within the meaning of Treasury Regulations promulgated under Section 162(m) of the Code), is not a former employee of the Company or an "affiliated
corporation" receiving compensation for prior services (other than benefits under a tax-qualified pension plan), was not an officer of the Company or an "affiliated corporation" at any
time and is not currently receiving direct or indirect remuneration from the Company or an "affiliated corporation" for services in any capacity other than as a Director or (ii) is otherwise
considered an "outside director" for purposes of Section 162(m) of the Code. 

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

        (bb) "Plan" means this Genoptix, Inc. 2001 Equity Incentive Plan. 

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

        (dd) "Securities Act" means the Securities Act of 1933, as amended. 

        (ee) "Stock Award" means any right granted under the Plan, including an Option, a stock bonus and a
right to acquire restricted stock. 

        (ff)  "Stock Award Agreement" means a written agreement between the Company and a holder of a Stock
Award evidencing the terms and conditions of an individual Stock Award grant. Each Stock Award Agreement shall be subject to the terms and conditions of the Plan. 

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

        3.    ADMINISTRATION.    

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

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

          (i)  To determine from time to time which of the persons eligible under the Plan shall be granted Stock Awards; when and how
each Stock Award shall be granted; what type or combination of types of Stock Award shall be granted; the provisions of each Stock Award 

4

 

granted
(which need not be identical), including the time or times when a person shall be permitted to receive Common Stock pursuant to a Stock Award; and the number of shares of Common Stock with
respect to which a Stock Award shall be granted to each such person. 

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

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

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

         (c)    Delegation to Committee.    

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

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

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

        4.    SHARES SUBJECT TO THE PLAN.    

        (a)    Share Reserve.    Subject to the provisions of Section 11 relating to adjustments upon changes in Common
Stock, the Common Stock
that may be issued pursuant to Stock Awards shall not exceed in the aggregate nine million three hundred sixty-three thousand six hundred sixty-seven (9,363,667) shares of Common Stock. 

         (b)    Reversion of Shares to the Share Reserve.    If any Stock Award shall for any reason expire or otherwise
terminate, in whole or in
part, without having been exercised in full, the shares 

5

 

of
Common Stock not acquired under such Stock Award shall revert to and again become available for issuance under the Plan. 

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

        (d)    Share Reserve Limitation.    Prior to the Listing Date and to the extent then required by
Section 260.140.45 of Title 10 of the
California Code of Regulations, the total number of shares of Common Stock issuable upon exercise of all outstanding Options and the total number of shares of Common Stock provided for under any stock
bonus or similar plan of the Company shall not exceed the applicable percentage as calculated in accordance with the conditions and exclusions of Section 260.140.45 of Title 10 of the
California Code of Regulations, based on the shares of Common Stock of the Company that are outstanding at the time the calculation is made.(1) 

	(1)
	Section 260.140.45
generally provides that the total number of shares issuable upon exercise of all outstanding options (exclusive of certain rights) and the total number of
shares called for under any stock bonus or similar plan shall not exceed a number of shares which is equal to 30% of the then outstanding shares of the issuer (convertible preferred or convertible
senior common shares counted on an as if converted basis), exclusive of shares subject to promotional waivers under Section 260.141, unless a percentage higher than 30% is approved by at least
two-thirds of the outstanding shares entitled to vote. 

        5.    ELIGIBILITY.    

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

         (b)    Ten Percent Stockholders.    

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

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

       (iii)  Prior to the Listing Date, a Ten Percent Stockholder shall not be granted a restricted stock award unless the purchase
price of the restricted stock is at least (i) one hundred percent (100%) of the Fair Market Value of the Common Stock at the date of grant or (ii) such lower percentage of the Fair
Market Value of the Common Stock at the date of grant as is permitted by Section 260.140.42 of Title 10 of the California Code of Regulations at the time of the grant of the restricted stock
award. 

        (c)    Section 162(m) Limitation.    Subject to the provisions of Section 11 relating to adjustments upon
changes in the shares
of Common Stock, no Employee shall be eligible to be granted Options covering more than two million (2,000,000) shares of Common Stock during any calendar year. This subsection 5(c) shall not apply
prior to the Listing Date and, following the Listing Date, this subsection 5(c) shall not apply until (i) the earliest of: (1) the first material modification of the Plan (including any
increase in the number of shares of Common Stock reserved for issuance under the Plan in accordance with Section 4); (2) the issuance of all of the 

6

 

shares
of Common Stock reserved for issuance under the Plan; (3) the expiration of the Plan; or (4) the first meeting of stockholders at which Directors are to be elected that occurs
after the close of the third calendar year following the calendar year in which occurred the first registration of an equity security under Section 12 of the Exchange Act; or (ii) such
other date required by Section 162(m) of the Code and the rules and regulations promulgated thereunder. 

         (d)    Consultants.    

          (i)  Prior to the Listing Date, a Consultant shall not be eligible for the grant of a Stock Award if, at the time of grant,
either the offer or the sale of the Company's securities to such Consultant is not exempt under Rule 701 of the Securities Act ("Rule 701") because of the nature of the services that the
Consultant is providing to the Company, or because the Consultant is not a natural person, or as otherwise provided by Rule 701, unless the Company determines that such grant need not comply
with the requirements of Rule 701 and will satisfy another exemption under the Securities Act as well as comply with the securities laws of all other relevant jurisdictions. 

         (ii)  From and after the Listing Date, a Consultant shall not be eligible for the grant of a Stock Award if, at the time of
grant, a Form S-8 Registration Statement under the Securities Act ("Form S-8") is not available to register either the offer or the sale of the Company's
securities to such Consultant because of the nature of the services that the Consultant is providing to the Company, or because the Consultant is not a natural person, or as otherwise provided by the
rules governing the use of Form S-8, unless the Company determines both (i) that such grant (A) shall be registered in another manner under the Securities Act
(e.g., on a Form S-3 Registration Statement) or (B) does not require registration under the Securities Act in order to comply
with the requirements of the Securities Act, if applicable, and (ii) that such grant complies with the securities laws of all other relevant jurisdictions. 

       (iii)  Rule 701 and Form S-8 generally are available to consultants and advisors only if
(i) they are natural persons; (ii) they provide bona fide services to the issuer, its parents, its majority-owned subsidiaries or majority-owned subsidiaries of the issuer's parent; and
(iii) the services are not in connection with the offer or sale of securities in a capital-raising transaction, and do not directly or indirectly promote or maintain a market for the issuer's
securities. 

        6.    OPTION PROVISIONS.    

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

        (a)    Term.    Subject to the provisions of subsection 5(b) regarding Ten Percent Stockholders, no Option granted
prior to the Listing Date
shall be exercisable after the expiration of ten (10) years from the date it was granted, and no Incentive Stock Option granted on or after the Listing Date shall be exercisable after the
expiration of ten (10) years from the date it was granted. 

         (b)    Exercise Price of an Incentive Stock Option.    Subject to the provisions of subsection 5(b) regarding Ten
Percent Stockholders, the
exercise price of each Incentive Stock Option shall be not less than one hundred percent (100%) of the Fair Market Value of the Common Stock subject to the Option on the date the Option is granted.
Notwithstanding the foregoing, an Incentive 

7

 

Stock
Option may be granted with an exercise price lower than that set forth in the preceding sentence if such Option is granted pursuant to an assumption or substitution for another option in a
manner satisfying the provisions of Section 424(a) of the Code. 

        (c)    Exercise Price of a Nonstatutory Stock Option.    Subject to the provisions of subsection 5(b) regarding Ten
Percent Stockholders, the
exercise price of each Nonstatutory Stock Option granted prior to the Listing Date shall be not less than eighty-five percent (85%) of the Fair Market Value of the Common Stock subject to
the Option on the date the Option is granted. The exercise price of each Nonstatutory Stock Option granted on or after the Listing Date shall be not less than eighty-five percent (85%) of
the Fair Market Value of the Common Stock subject to the Option on the date the Option is granted. Notwithstanding the foregoing, a Nonstatutory Stock Option may be granted with an exercise price
lower than that set forth in the preceding sentence if such Option is granted pursuant to an assumption or substitution for another option in a manner satisfying the provisions of
Section 424(a) of the Code. 

         (d)    Consideration.    The purchase price of Common Stock acquired pursuant to an Option shall be paid, to the
extent permitted by
applicable statutes and regulations, either (i) in cash at the time the Option is exercised or (ii) at the discretion of the Board at the time of the grant of the Option (or subsequently
in the case of a Nonstatutory Stock Option) (1) by delivery to the Company of other Common Stock, (2) according to a deferred payment or other similar arrangement with the Optionholder
or (3) in any other form of legal consideration that may be acceptable to the Board. Unless otherwise specifically provided in the Option, the purchase price of Common Stock acquired pursuant
to an Option that is paid by delivery to the Company of other Common Stock acquired, directly or indirectly from the Company, shall be paid only by shares of the Common Stock of the Company that have
been held for more than six (6) months (or such longer or shorter period of time required to avoid a charge to earnings for financial accounting purposes). At any time that the Company is
incorporated in Delaware, payment of the Common Stock's "par value," as defined in the Delaware General Corporation Law, shall not be made by deferred payment. 

        In
the case of any deferred payment arrangement, interest shall be compounded at least annually and shall be charged at the market rate of interest necessary to avoid a charge to
earnings for financial accounting purposes. 

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

         (f)    Transferability of a Nonstatutory Stock Option.    A Nonstatutory Stock Option granted prior to the Listing
Date shall not be
transferable except by will or by the laws of descent and distribution and, to the extent provided in the Option Agreement, to such further extent as permitted by Section 260.140.41(d) of Title
10 of the California Code of Regulations at the time of the grant of the Option, and shall be exercisable during the lifetime of the Optionholder only by the Optionholder. A Nonstatutory Stock Option
granted on or after the Listing Date shall be transferable to the extent provided in the Option Agreement. If the Nonstatutory Stock Option does not provide for transferability, then the Nonstatutory
Stock Option shall not be transferable except by will or by the laws of descent and distribution and shall be exercisable during the lifetime of the Optionholder only by the Optionholder.
Notwithstanding the foregoing, the Optionholder may, by delivering written notice to the Company, in a form satisfactory to the 

8

 

Company,
designate a third party who, in the event of the death of the Optionholder, shall thereafter be entitled to exercise the Option. 

        (g)    Vesting Generally.    The total number of shares of Common Stock subject to an Option may, but need not, vest
and therefore become
exercisable in periodic installments that may, but need not, be equal. The Option may be subject to such other terms and conditions on the time or times when it may be exercised (which may be based on
performance or other criteria) as the Board may deem appropriate. The vesting provisions of individual Options may vary. The provisions of this subsection 6(g) are subject to any Option provisions
governing the minimum number of shares of Common Stock as to which an Option may be exercised. 

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

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

         (ii)  Options granted prior to the Listing Date to Officers, Directors or Consultants may provide for vesting at any time or
during any period established by the Company, subject to reasonable conditions such as continued employment. 

         (i)    Termination of Continuous Service.    In the event an Optionholder's Continuous Service terminates (other than
upon the Optionholder's
death or Disability), the Optionholder may exercise his or her Option (to the extent that the Optionholder was entitled to exercise such Option as of the date of termination) but only within such
period of time ending on the earlier of (i) the date three (3) months following the termination of the Optionholder's Continuous Service (or such longer or shorter period specified in
the Option Agreement, which period shall not be less than thirty (30) days for Options granted prior to the Listing Date unless such termination is for Cause), or (ii) the expiration of
the term of the Option as set forth in the Option Agreement. If, after termination, the Optionholder does not exercise his or her Option within the time specified in the Option Agreement, the Option
shall terminate. 

        (j)    Extension of Termination Date.    An Optionholder's Option Agreement may also provide that if the exercise of
the Option following the
termination of the Optionholder's Continuous Service (other than upon the Optionholder's death or Disability) would be prohibited at any time solely because the issuance of shares of Common Stock
would violate the registration requirements under the Securities Act, then the Option shall terminate on the earlier of (i) the expiration of the term of the Option set forth in subsection 6(a)
or (ii) the expiration of a period of three (3) months after the termination of the Optionholder's Continuous Service during which the exercise of the Option would not be in violation of
such registration requirements. 

        (k)    Disability of Optionholder.    In the event that an Optionholder's Continuous Service terminates as a result of
the Optionholder's
Disability, the Optionholder may exercise his or her Option (to the extent that the Optionholder was entitled to exercise such Option as of the date of termination), but only within such period of
time ending on the earlier of (i) the date twelve (12) months following such termination (or such longer or shorter period specified in the Option Agreement, which period shall not be
less than six (6) months for Options granted prior to the Listing Date) or (ii) the expiration of the term of the Option as set forth in the Option Agreement. If, after termination, the
Optionholder does not exercise his or her Option within the time specified herein, the Option shall terminate. 

9

 

         (l)    Death of Optionholder.    In the event (i) an Optionholder's Continuous Service terminates as a result of
the Optionholder's
death or (ii) the Optionholder dies within the period (if any) specified in the Option Agreement after the termination of the Optionholder's Continuous Service for a reason other than death,
then the Option may be exercised (to the extent the Optionholder was entitled to exercise such Option as of the date of death) by the Optionholder's estate, by a person who acquired the right to
exercise the Option by bequest or inheritance or by a person designated to exercise the option upon the Optionholder's death pursuant to subsection 6(e) or 6(f), but only within the period ending on
the earlier of (1) the date eighteen (18) months following the date of death (or such longer or shorter period specified in the Option Agreement, which period shall not be less than six
(6) months for Options granted prior to the Listing Date) or (2) the expiration of the term of such Option as set forth in the Option Agreement. If, after death, the Option is not
exercised within the time specified herein, the Option shall terminate. 

         (m)    Early Exercise.    The Option may, but need not, include a provision whereby the Optionholder may elect at any
time before the
Optionholder's Continuous Service terminates to exercise the Option as to any part or all of the shares of Common Stock subject to the Option prior to the full vesting of the Option. Subject to the
"Repurchase Limitation" in subsection 10(h), any unvested shares of Common Stock so purchased may be subject to a repurchase option in favor of the Company or to any other restriction the Board
determines to be appropriate. 

         (n)    Right of Repurchase.    Subject to the "Repurchase Limitation" in subsection 10(h), the Option may, but need
not, include a provision
whereby the Company may elect, prior to the Listing Date, to repurchase all or any part of the vested shares of Common Stock acquired by the Optionholder pursuant to the exercise of the Option. 

        (o)    Right of First Refusal.    The Option may, but need not, include a provision whereby the Company may elect,
prior to the Listing Date,
to exercise a right of first refusal following receipt of notice from the Optionholder of the intent to transfer all or any part of the shares of Common Stock received upon the exercise of the Option.
Except as expressly provided in this subsection [6(o)], such right of first refusal shall otherwise comply with any applicable
provisions of the Bylaws of the Company. 

        7.    PROVISIONS OF STOCK AWARDS OTHER THAN OPTIONS.    

         (a)    Stock Bonus Awards.    Each stock bonus agreement shall be in such form and shall contain such terms and
conditions as the Board shall
deem appropriate. The terms and conditions of stock bonus agreements may change from time to time, and the terms and conditions of separate stock bonus agreements need not be identical, but each stock
bonus agreement shall include (through incorporation of provisions hereof by reference in the agreement or otherwise) the substance of each of the following provisions: 

          (i)  Consideration. A stock bonus may be awarded in consideration for past services actually rendered to the Company or an
Affiliate for its benefit. 

         (ii)  Vesting. Subject to the "Repurchase Limitation" in subsection 10(h), shares of Common Stock awarded under the stock
bonus agreement may, but need not, be subject to a share repurchase option in favor of the Company in accordance with a vesting schedule to be determined by the Board. 

       (iii)  Termination of Participant's Continuous Service. Subject to the "Repurchase Limitation" in subsection 10(h), in the
event a Participant's Continuous Service terminates, the Company may reacquire any or all of the shares of Common Stock held by the Participant which have not vested as of the date of termination
under the terms of the stock bonus agreement. 

10

 

        (iv)  Transferability. For a stock bonus award made before the Listing Date, rights to acquire shares of Common Stock under
the stock bonus agreement shall not be transferable except by will or by the laws of descent and distribution and shall be exercisable during the lifetime of the Participant only by the Participant.
For a stock bonus award made on or after the Listing Date, rights to acquire shares of Common Stock under the stock bonus agreement shall be transferable by the Participant only upon such terms and
conditions as are set forth in the stock bonus agreement, as the Board shall determine in its discretion, so long as Common Stock awarded under the stock bonus agreement remains subject to the terms
of the stock bonus agreement. 

         (b)    Restricted Stock Awards.    Each restricted stock purchase agreement shall be in such form and shall contain
such terms and conditions
as the Board shall deem appropriate. The terms and conditions of the restricted stock purchase agreements may change from time to time, and the terms and conditions of separate restricted stock
purchase agreements need not be identical, but each restricted stock purchase agreement shall include (through incorporation of provisions hereof by reference in the agreement or otherwise) the
substance of each of the following provisions: 

          (i)  Purchase Price. Subject to the provisions of subsection 5(b) regarding Ten Percent Stockholders, the purchase price
under each restricted stock purchase agreement shall be such amount as the Board shall determine and designate in such restricted stock purchase agreement. For restricted stock awards made prior to
the Listing Date, the purchase price shall not be less than eighty-five percent (85%) of the Common Stock's Fair Market Value on the date such award is made or at the time the purchase is
consummated. For restricted stock awards made on or after the Listing Date, the purchase price shall not be less than eighty-five percent (85%) of the Common Stock's Fair Market Value on
the date such award is made or at the time the purchase is consummated. 

         (ii)  Consideration. The purchase price of Common Stock acquired pursuant to the restricted stock purchase agreement shall be
paid either: (i) in cash at the time of purchase; (ii) at the discretion of the Board, according to a deferred payment or other similar arrangement with the Participant; or
(iii) in any other form of legal consideration that may be acceptable to the Board in its discretion; provided, however, that at any time that the Company is incorporated in Delaware, then
payment of the Common Stock's "par value," as defined in the Delaware General Corporation Law, shall not be made by deferred payment. 

       (iii)  Vesting. Subject to the "Repurchase Limitation" in subsection 10(h), shares of Common Stock acquired under the
restricted stock purchase agreement may, but need not, be subject to a share repurchase option in favor of the Company in accordance with a vesting schedule to be determined by the Board. 

        (iv)  Termination of Participant's Continuous Service. Subject to the "Repurchase Limitation" in subsection 10(h), in the
event a Participant's Continuous Service terminates, the Company may repurchase or otherwise reacquire any or all of the shares of Common Stock held by the Participant which have not vested as of the
date of termination under the terms of the restricted stock purchase agreement. 

         (v)  Transferability. For a restricted stock award made before the Listing Date, rights to acquire shares of Common Stock
under the restricted stock purchase agreement shall not be transferable except by will or by the laws of descent and distribution and shall be exercisable during the lifetime of the Participant only
by the Participant. For a restricted stock award made on or after the Listing Date, rights to acquire shares of Common Stock under the restricted stock purchase agreement shall be transferable by the
Participant only upon such terms and conditions as are set forth in the restricted stock purchase agreement, as the Board 

11

 

shall
determine in its discretion, so long as Common Stock awarded under the restricted stock purchase agreement remains subject to the terms of the restricted stock purchase agreement. 

        8.    COVENANTS OF THE COMPANY.    

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

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

        9.    USE OF PROCEEDS FROM STOCK.    

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

        10.    MISCELLANEOUS.    

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

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

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

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

12

 

         (e)    Investment Assurances.    The Company may require a Participant, as a condition of exercising or acquiring
Common Stock under any Stock
Award, (i) to give written assurances satisfactory to the Company as to the Participant's knowledge and experience in financial and business matters and/or to employ a purchaser representative
reasonably satisfactory to the Company who is knowledgeable and experienced in financial and business matters and that he or she is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the Stock Award; and (ii) to give written assurances satisfactory to the Company stating that the Participant is acquiring Common Stock
subject to the Stock Award for the Participant's own account and not with any present intention of selling or otherwise distributing the Common Stock. The foregoing requirements, and any assurances
given pursuant to such requirements, shall be inoperative if (1) the issuance of the shares of Common Stock upon the exercise or acquisition of Common Stock under the Stock Award has been
registered under a then currently effective registration statement under the Securities Act or (2) as to
any particular requirement, a determination is made by counsel for the Company that such requirement need not be met in the circumstances under the then applicable securities laws. The Company may,
upon advice of counsel to the Company, place legends on stock certificates issued under the Plan as such counsel deems necessary or appropriate in order to comply with applicable securities laws,
including, but not limited to, legends restricting the transfer of the Common Stock. 

         (f)    Withholding Obligations.    To the extent provided by the terms of a Stock Award Agreement, the Participant may
satisfy any federal,
state or local tax withholding obligation relating to the exercise or acquisition of Common Stock under a Stock Award by any of the following means (in addition to the Company's right to withhold from
any compensation paid to the Participant by the Company) or by a combination of such means: (i) tendering a cash payment; (ii) authorizing the Company to withhold shares of Common Stock
from the shares of Common Stock otherwise issuable to the Participant as a result of the exercise or acquisition of Common Stock under the Stock Award, provided, however, that no shares of Common
Stock are withheld with a value exceeding the minimum amount of tax required to be withheld by law; or (iii) delivering to the Company owned and unencumbered shares of Common Stock. 

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

         (h)    Repurchase Limitation.    The terms of any repurchase option shall be specified in the Stock Award and may be
either at Fair Market
Value at the time of repurchase or at not less than the original purchase price. To the extent required by Section 260.140.41 and Section 260.140.42 of Title 10 of the California Code of
Regulations at the time a Stock Award is made, any repurchase option contained in a Stock Award granted prior to the Listing Date to a person who is not an Officer, Director or Consultant shall be
upon the terms described below: 

          (i)  Fair Market Value. If the repurchase option gives the Company the right to repurchase the shares of Common Stock upon
termination of employment at not less than the Fair Market Value of the shares of Common Stock to be purchased on the date of termination of Continuous Service, then (i) the right to repurchase
shall be exercised for cash or cancellation of purchase money indebtedness for the shares of Common Stock within ninety (90) days of termination of Continuous Service (or in the case of shares
of Common Stock issued upon exercise of Stock Awards after such date of termination, within ninety (90) days after the date of the exercise) or such longer period as may be agreed to by the
Company and the Participant (for example, for purposes of satisfying the requirements of Section 1202(c)(3) 

13

 

of
the Code regarding "qualified small business stock") and (ii) the right terminates when the shares of Common Stock become publicly traded. 

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

        11.    ADJUSTMENTS UPON CHANGES IN STOCK.    

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

         (b)    Dissolution or Liquidation.    In the event of a dissolution or liquidation of the Company, then all
outstanding Stock Awards shall
terminate immediately prior to such event. 

        (c)    Asset Sale, Merger, Consolidation or Reverse Merger.    In the event of (i) a sale, lease or other
disposition of all or
substantially all of the assets of the Company, (ii) a merger or consolidation in which the Company is not the surviving corporation or (iii) a reverse merger in which the Company is the
surviving corporation but the shares of Common Stock outstanding immediately preceding the merger are converted by virtue of the merger into other property, whether in the form of securities, cash or
otherwise (individually, a "Corporate Transaction"), then any surviving corporation or acquiring corporation shall assume any Stock Awards outstanding under the Plan or shall substitute similar stock
awards (including an award to acquire the same consideration paid to the stockholders in the Corporate Transaction for those outstanding under the Plan). In the event any surviving corporation or
acquiring corporation refuses to assume such Stock Awards or to substitute similar stock awards for those outstanding under the Plan, then with respect to Stock Awards held by Participants whose
Continuous Service has not terminated, the vesting of such Stock Awards (and, if applicable, the time during which such Stock Awards may be exercised) shall be accelerated in full, and the Stock
Awards shall terminate if not exercised (if applicable) at or prior to the Corporate Transaction. With respect to any other Stock Awards outstanding under the Plan, such Stock Awards shall terminate
if not exercised (if applicable) prior to the Corporate Transaction. In addition to the foregoing, a Stock Award held by any Participant whose Continuous Service has not terminated as of the effective
date of a Change in Control may 

14

 

be
subject to additional acceleration of vesting and exercisability as set forth in such Stock Award or as set forth in any other applicable written agreement between the Participant and the Company
or any Affiliate. 

        (d)    Change in Control.    Notwithstanding any other provisions of the Plan to the contrary, if (i) a Change in
Control occurs and
(ii) within the period beginning as of the effective date of such Change in Control and ending thirteen (13) months after the effective date of such Change in Control the Participant's
Continuous Service terminates due to an involuntary termination (not including death or Disability) without Cause or due to a voluntary termination with Good Reason, then, as of the date of
termination of the Participant's Continuous Service, the vesting and exercisability of the Participant's Stock Awards shall be accelerated in full (and any reacquisition or repurchase rights held by
the Company with respect to the shares of Common Stock subject to such Stock Awards shall lapse in full, as appropriate); provided, however, that if
such potential acceleration of the vesting and exercisability of the Participant's Stock Awards (or lapse of reacquisition or repurchase rights held by the Company with respect to the shares of Common
Stock subject to such Stock Awards) would cause a contemplated Change in Control transaction that is intended to be accounted for as a "pooling-of-interests" transaction to
become ineligible for such accounting treatment under generally accepted accounting principles as determined by the Company's independent certified public accountants prior to the Change in Control,
such acceleration shall not occur. 

        (e)    Parachute Payments.    If any payment or benefit the Participant would receive pursuant to a Change in Control
from the Company or
otherwise ("Payment") would (i) constitute a "parachute payment" within the meaning of Section 280G of the Code, and (ii) but for this sentence, be subject to the excise tax
imposed by Section 4999 of the Code (the "Excise Tax"), then such Payment shall be reduced to the Reduced Amount. The "Reduced Amount" shall be either (x) the largest portion of the
Payment that would result in no portion of the Payment being subject to the Excise Tax or (y) the largest portion, up to and including the total, of the Payment, whichever amount, after taking
into account all applicable federal, state and local employment taxes, income taxes, and the Excise Tax (all computed at the highest applicable marginal rate), results in such Participant's receipt,
on an after-tax basis, of the greater amount of the Payment notwithstanding that all or some portion of the Payment may be subject to the Excise Tax. If a reduction in payments or benefits
constituting "parachute payments" is necessary so that the Payment equals the Reduced Amount, reduction shall occur in the following order unless the Participant elects in writing a different order
(provided, however, that such election shall be subject to Company approval if made on or after the effective date of the event that triggers the
Payment): reduction of cash payments; cancellation of accelerated vesting of Stock Awards; reduction of employee benefits. In the event that acceleration of vesting of Stock Award compensation is to
be reduced, such acceleration of vesting shall be cancelled in the reverse order of the date of grant of the Participant's Stock Awards unless the Participant elects in writing a different order for
cancellation. 

        The
accounting firm engaged by the Company for general audit purposes as of the day prior to the effective date of the Change in Control shall perform the foregoing calculations. If the
accounting firm so engaged by the Company is serving as accountant or auditor for the individual, entity or group effecting the Change in Control, the Company shall appoint a nationally recognized
accounting firm to make the determinations required hereunder. The Company shall bear all expenses with respect to the determinations by such accounting firm required to be made hereunder. 

        The
accounting firm engaged to make the determinations hereunder shall provide its calculations, together with detailed supporting documentation, to the Company and the Participant
within fifteen (15) calendar days after the date on which the Participant's right to a Payment is triggered (if requested at that time by the Company or the Participant) or such other time as
requested by the Company or 

15

 

the
Participant. If the accounting firm determines that no Excise Tax is payable with respect to a Payment, either before or after the application of the Reduced Amount, it shall furnish the Company
and the Participant with an opinion reasonably acceptable to the Participant that no Excise Tax will be imposed with respect to such Payment. Any good faith determinations of the accounting firm made
hereunder shall be final, binding and conclusive upon the Company and the Participant. 

        12.    AMENDMENT OF THE PLAN AND STOCK AWARDS.    

         (a)    Amendment of Plan.    The Board at any time, and from time to time, may amend the Plan. However, except as
provided in
Section 11 relating to adjustments upon changes in Common Stock, no amendment shall be effective unless approved by the stockholders of the Company to the extent stockholder approval is
necessary to satisfy the requirements of Section 422 of the Code, Rule 16b-3 or any Nasdaq or securities exchange listing requirements. 

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

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

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

         (e)    Amendment of Stock Awards.    The Board at any time, and from time to time, may amend the terms of any one or
more Stock Awards;
provided, however, that the rights under any Stock Award shall not be impaired by any such amendment unless (i) the Company requests the consent of the Participant and (ii) the
Participant consents in writing. 

        13.    TERMINATION OR SUSPENSION OF THE PLAN.    

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

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

        14.    EFFECTIVE DATE OF PLAN.    

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

        15.    CHOICE OF LAW.    

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

16

  

GENOPTIX, INC.

2001 EQUITY INCENTIVE PLAN

STOCK OPTION AGREEMENT

(INCENTIVE STOCK OPTION OR NONSTATUTORY STOCK OPTION)  

        Pursuant to your Stock Option Grant Notice ("Grant Notice") and this Stock Option Agreement, Genoptix, Inc. (the "Company") has granted you an option under
its 2001 Equity Incentive Plan (the "Plan") to purchase the number of shares of the Company's Common Stock indicated in your Grant Notice at the exercise price indicated in your Grant Notice. Defined
terms not explicitly defined in this Stock Option Agreement but defined in the Plan shall have the same definitions as in the Plan. 

        The
details of your option are as follows: 

        1.    VESTING.    Subject to the limitations contained herein, your option will vest as provided in your Grant Notice,
provided that vesting will cease upon the termination of your Continuous Service. 

        2.    NUMBER OF SHARES AND EXERCISE PRICE.    The number of shares of Common Stock subject to your option and your
exercise price per share referenced in your Grant Notice may be adjusted from time to time for Capitalization Adjustments, as provided in the Plan. 

        3.    EXERCISE PRIOR TO VESTING ("EARLY EXERCISE").    If permitted in your Grant Notice (i.e., the "Exercise
Schedule" indicates that "Early Exercise" of your option is permitted) and subject to the provisions of your option, you may elect at any time that is both (i) during the period of your
Continuous Service and (ii) during the term of your option, to exercise all or part of your option, including the nonvested portion of your option; provided, however, that: 

        (a)   a partial exercise of your option shall be deemed to cover first vested shares of Common Stock and then the earliest
vesting installment of unvested shares of Common Stock; 

        (b)   any shares of Common Stock so purchased from installments that have not vested as of the date of exercise shall be
subject to the purchase option in favor of the Company as described in the Company's form of Early Exercise Stock Purchase Agreement; 

        (c)   you shall enter into the Company's form of Early Exercise Stock Purchase Agreement with a vesting schedule that will
result in the same vesting as if no early exercise had occurred; and 

        (d)   if your option is an incentive stock option, then, as provided in the Plan, to the extent that the aggregate Fair Market
Value (determined at the time of grant) of the shares of Common Stock with respect to which your option plus all other incentive stock options you hold are exercisable for the first time by you during
any calendar year (under all plans of the Company and its Affiliates) exceeds one hundred thousand dollars ($100,000), your option(s) or portions thereof that exceed such limit (according to the order
in which they were granted) shall be treated as nonstatutory stock options. 

        4.    METHOD OF PAYMENT.    Payment of the exercise price is due in full upon exercise of all or any part of your
option. You may elect to make payment of the exercise price in cash or by check or in any other manner permitted by your Grant Notice, which may include
one or more of the following: 

        (a)   In the Company's sole discretion at the time your option is exercised and provided that at the time of exercise the
Common Stock is publicly traded and quoted regularly in The Wall Street Journal, pursuant to a program developed under Regulation T as
promulgated by the Federal Reserve Board that, prior to the issuance of Common Stock, results in either the receipt of cash (or check) by the Company or the receipt of irrevocable instructions to pay
the aggregate exercise price to the Company from the sales proceeds. 

        (b)   Provided that at the time of exercise the Common Stock is publicly traded and quoted regularly in  The Wall Street Journal, by delivery of
already-owned shares of Common Stock either that you have held for the period required to avoid a charge to the
Company's reported earnings 

1

 

(generally
six months) or that you did not acquire, directly or indirectly from the Company, that are owned free and clear of any liens, claims, encumbrances or security interests, and that are valued
at Fair Market Value on the date of exercise. "Delivery" for these purposes, in the sole discretion of the Company at the time you exercise your option, shall include delivery to the Company of your
attestation of ownership of such shares of Common Stock in a form approved by the Company. Notwithstanding the foregoing, you may not exercise your option by tender to the Company of Common Stock to
the extent such tender would violate the provisions of any law, regulation or agreement restricting the redemption of the Company's stock. 

        5.    WHOLE SHARES.    You may exercise your option only for whole shares of Common Stock. 

        6.    SECURITIES LAW COMPLIANCE.    Notwithstanding anything to the contrary contained herein, you may not exercise
your option unless the shares of Common Stock issuable upon such exercise are then registered under the Securities Act or, if such shares of Common Stock are not then so registered, the Company has
determined that such exercise and issuance would be exempt from the registration requirements of the Securities Act. The exercise of your option must also comply with other applicable laws and
regulations governing your option, and you may not exercise your option if the Company determines that such exercise would not be in material compliance with such laws and regulations. 

        7.    TERM.    You may not exercise your option before the commencement of its term or after its term expires. The
term of your option commences on the Date of Grant and expires upon the earliest of the following: 

        (a)   three (3) months after the termination of your Continuous Service for any reason other than your Disability or
death, provided that if during any part of such three- (3-) month period your option is not exercisable solely because of the condition set forth in the preceding paragraph relating to
"Securities Law Compliance," your option shall not expire until the earlier of the Expiration Date or until it shall have been exercisable for an aggregate period of three (3) months after the
termination of your Continuous Service; 

        (b)   twelve (12) months after the termination of your Continuous Service due to your Disability; 

        (c)   eighteen (18) months after your death if you die either during your Continuous Service or within three
(3) months after your Continuous Service terminates; 

        (d)   the Expiration Date indicated in your Grant Notice; or 

        (e)   the day before the tenth (10th) anniversary of the Date of Grant. 

        If
your option is an incentive stock option, note that, to obtain the federal income tax advantages associated with an "incentive stock option," the Code requires that at all times
beginning on the date of grant of your option and ending on the day three (3) months before the date of your option's exercise, you must be an employee of the Company or an Affiliate, except in
the event of your death or Disability. The Company has provided for extended exercisability of your option under certain circumstances for your benefit but cannot guarantee that your option will
necessarily be treated as an "incentive stock option" if you continue to provide services to the Company or an Affiliate as a
Consultant or Director after your employment terminates or if you otherwise exercise your option more than three (3) months after the date your employment terminates. 

        8.    EXERCISE.    

        (a)   You may exercise the vested portion of your option (and the unvested portion of your option if your Grant Notice so
permits) during its term by delivering a Notice of Exercise (in a form designated by the Company) together with the exercise price to the Secretary of the 

2

 

Company,
or to such other person as the Company may designate, during regular business hours, together with such additional documents as the Company may then require. 

        (b)   By exercising your option you agree that, as a condition to any exercise of your option, the Company may require you to
enter into an arrangement providing for the payment by you to the Company of any tax withholding obligation of the Company arising by reason of (1) the exercise of your option, (2) the
lapse of any substantial risk of forfeiture to which the shares of Common Stock are subject at the time of exercise, or (3) the disposition of shares of Common Stock acquired upon such
exercise. 

        (c)   If your option is an incentive stock option, by exercising your option you agree that you will notify the Company in
writing within fifteen (15) days after the date of any disposition of any of the shares of the Common Stock issued upon exercise of your option that occurs within two (2) years after the
date of your option grant or within one (1) year after such shares of Common Stock are transferred upon exercise of your option. 

        (d)   By exercising your option you agree that the Company (or a representative of the underwriter(s)) may, in connection with
the first underwritten registration of the offering of any securities of the Company under the Securities Act, require that you not sell, dispose of, transfer, make any short sale of, grant any option
for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale with respect to, any shares of Common Stock or other securities of the Company held by
you, for a period of time specified by the underwriter(s) (not to exceed one hundred eighty (180) days) following the effective date of the registration statement of the Company filed under the
Securities Act. You further agree to execute and deliver such other agreements as may be reasonably requested by the Company and/or the underwriter(s) that are consistent with the foregoing or that
are necessary to give further effect thereto. In order to enforce the foregoing covenant, the Company may impose stop-transfer instructions with respect to your shares of Common Stock
until the end of such period. The underwriters of the Company's stock are intended third party beneficiaries of this Section 8(d) and shall have the right, power and authority to enforce the
provisions hereof as though they were a party hereto. 

        9.    TRANSFERABILITY.    Your option is not transferable, except by will or by the laws of descent and distribution,
and is exercisable during your life only by you. Notwithstanding the foregoing, by delivering written notice to the Company, in a form satisfactory to the Company, you may designate a third party who,
in the event of your death, shall thereafter be entitled to exercise your option. 

        10.    RIGHT OF FIRST REFUSAL.    

        (a)   Shares of Common Stock that you acquire upon exercise of your option are subject to any right of first refusal that may
be described in the Company's bylaws in effect at such time the Company elects to exercise its right. 

        (b)   If there is no right of first refusal described in the Company's bylaws in effect at such time the Company elects to
exercise its right, then you may not validly transfer (as hereinafter defined) any of the shares of Common Stock that you acquire upon exercise of your option, or any interest in such shares, unless
such transfer is solely for cash consideration and is made in compliance with the following provisions (the Company's "Right of First Refusal"): 

          (i)  Before there can be a valid transfer of any shares or any interest therein, the record holder of the shares to be
transferred (the "Offered Shares") shall give written notice (by registered or certified mail) to the Company. Such notice shall specify the identity of the proposed transferee, the cash price offered
for the Offered Shares by the proposed transferee and the other terms and conditions of the proposed transfer. The date such notice is mailed shall be hereinafter referred to as the "notice date," and
the record holder of the Offered Shares shall be hereinafter referred to as the "Offeror." 

3

 

         (ii)  For a period of thirty (30) calendar days after the notice date, the Company shall have the option, but not the
obligation, to purchase all (or any part) of the Offered Shares at the purchase price and on the terms set forth in subsection 10(b)(iii). The Company may exercise its Right of First Refusal by
mailing (by registered or certified mail) written notice of exercise of its Right of First Refusal to the Offeror prior to the end of said thirty (30) days. 

       (iii)  The price at which the Company may purchase the Offered Shares pursuant to the exercise of its Right of First Refusal
shall be the cash price offered for the Offered Shares by the proposed transferee (as set forth in the notice required under subsection 10(b)(i)). The Company's notice of exercise of its Right of
First Refusal shall be accompanied by full payment for the Offered Shares and, upon such payment by the Company, the Company shall acquire full right, title and interest to all of the Offered Shares. 

        (iv)  If, and only if, the option given pursuant to subsection 10(b)(ii) is not exercised, the transfer proposed in the
notice given pursuant to subsection 10(b)(i) may take place; provided, however, that such transfer must, in all respects, be exactly as proposed in said notice except that such transfer may not
take place either before the tenth (10th) calendar day after the expiration of said 30-day option exercise period or after the ninetieth (90th) calendar day after the expiration of said
30-day option exercise period, and if such transfer has not taken place prior to said ninetieth (90th) day, such transfer may not take place without once again complying with this
subsection 10(b). 

         (v)  As used in this subsection 10(b), the term "transfer" means any sale, encumbrance, pledge, gift or other form of
disposition or transfer of shares of the Company's stock or any legal or equitable interest therein; provided, however, that the term "transfer" does not include a transfer of such shares or interests
by will or by the applicable laws of descent and distribution or a bona fide gift of such shares if the donee agrees to be bound by the provisions of this Stock Option Agreement. 

        (vi)  None of the shares of the Company's stock purchased upon exercise of your option shall be transferred on the Company's
books nor shall the Company recognize any such transfer of any such shares or any interest therein unless and until all applicable provisions of this subsection 10(b) have been complied with in all
respects. The certificates of stock evidencing shares of stock purchased upon exercise of your option shall bear an appropriate legend referring to the transfer restrictions imposed by this subsection
10(b). 

       (vii)  If, from time to time, there is any stock dividend, stock split or other change in the character or amount of any of
the outstanding stock of the corporation the stock of which is subject to the provisions of your option, then in such event any and all new, substituted or additional securities to which you are
entitled by reason of your ownership of the shares acquired under your option shall be immediately subject to the Company's Right of First Refusal with the same force and effect as the shares you
acquired pursuant to the exercise of your option. 

      (viii)  To ensure that shares subject to the Company's Right of First Refusal will be available for repurchase by the Company,
the Company may require you to deposit the certificate(s) evidencing the shares that you purchase upon exercise of your option with an escrow agent designated by the Company under the terms and
conditions of an escrow agreement approved by the Company. If the Company does not require such deposit as a condition of exercise of your option, the Company reserves the right at any time to require
you to so deposit the certificate(s) in escrow. As soon as practicable after the expiration of the Company's Right of First Refusal, the agent shall deliver to you the shares and any other property no
longer subject to such restriction. In the event the shares and any other property held in escrow are subject to the Company's exercise of its Right of First Refusal, the notices 

4

 

required
to be given to you shall be given to the escrow agent, and any payment required to be given to you shall be given to the escrow agent. Within thirty (30) days after payment by the
Company for the Offered Shares, the escrow agent shall deliver the Offered Shares that the Company has repurchased to the Company and shall deliver the payment received from the Company to you. 

        (c)   The Company's Right of First Refusal shall expire on the Listing Date. 

        11.    OPTION NOT A SERVICE CONTRACT.    Your option is not an employment or service contract, and nothing in your
option shall be deemed to create in any way whatsoever any obligation on your part to continue in the employ of the Company or an Affiliate, or of the Company or an Affiliate to continue your
employment. In addition, nothing in your option shall obligate the Company or an Affiliate, their respective stockholders, Boards of Directors, Officers or Employees to continue any relationship that
you might have as a Director or Consultant for the Company or an Affiliate. 

        12.    WITHHOLDING OBLIGATIONS.    

        (a)   At the time you exercise your option, in whole or in part, or at any time thereafter as requested by the Company, you
hereby authorize withholding from payroll and any other amounts payable to you, and otherwise agree to make adequate provision for (including by means of a "cashless exercise" pursuant to a program
developed under Regulation T as promulgated by the Federal Reserve Board to the extent permitted by the Company), any sums required to satisfy the federal, state, local and foreign tax
withholding obligations of the Company or an Affiliate, if any, which arise in connection with your option. 

        (b)   Upon your request and subject to approval by the Company, in its sole discretion, and compliance with any applicable
conditions or restrictions of law, the Company may withhold from fully vested shares of Common Stock otherwise issuable to you upon the exercise of your option a number of whole shares of Common Stock
having a Fair Market Value, determined by the Company as of the date of exercise, not in excess of the minimum amount of tax required to be withheld by law. If the date of
determination of any tax withholding obligation is deferred to a date later than the date of exercise of your option, share withholding pursuant to the preceding sentence shall not be permitted unless
you make a proper and timely election under Section 83(b) of the Code, covering the aggregate number of shares of Common Stock acquired upon such exercise with respect to which such
determination is otherwise deferred, to accelerate the determination of such tax withholding obligation to the date of exercise of your option. Notwithstanding the filing of such election, shares of
Common Stock shall be withheld solely from fully vested shares of Common Stock determined as of the date of exercise of your option that are otherwise issuable to you upon such exercise. Any adverse
consequences to you arising in connection with such share withholding procedure shall be your sole responsibility. 

        (c)   You may not exercise your option unless the tax withholding obligations of the Company and/or any Affiliate are
satisfied. Accordingly, you may not be able to exercise your option when desired even though your option is vested, and the Company shall have no obligation to issue a certificate for such shares of
Common Stock or release such shares of Common Stock from any escrow provided for herein. 

        13.    NOTICES.    Any notices provided for in your option or the Plan shall be given in writing and shall be deemed
effectively given upon receipt or, in the case of notices delivered by mail by the Company to you, five (5) days after deposit in the United States mail, postage prepaid, addressed to you at
the last address you provided to the Company. 

        14.    GOVERNING PLAN DOCUMENT.    Your option is subject to all the provisions of the Plan, the provisions of which
are hereby made a part of your option, and is further subject to all interpretations, amendments, rules and regulations which may from time to time be promulgated and adopted pursuant to the Plan. In
the event of any conflict between the provisions of your option and those of the Plan, the provisions of the Plan shall control. 

5

 
 
 

GENOPTIX, INC.
  2001 EQUITY INCENTIVE PLAN    
    

 
 

STOCK OPTION AGREEMENT
  (INCENTIVE STOCK OPTION OR NONSTATUTORY STOCK OPTION)    
    

        Pursuant to your Stock Option Grant Notice ("Grant Notice") and this Stock Option Agreement, Genoptix, Inc. (the "Company") has granted you an option under
its 2001 Equity Incentive Plan (the "Plan") to purchase the number of shares of the Company's Common Stock indicated in your Grant Notice at the exercise price indicated in your Grant Notice. Defined
terms not explicitly defined in this Stock Option Agreement but defined in the Plan shall have the same definitions as in the Plan. 

        The
details of your option are as follows: 

        1.     VESTING.    Subject to the limitations contained herein, your option will vest as provided in your Grant Notice,
provided that vesting will cease upon the termination of your Continuous Service. Notwithstanding any other provisions of the Plan to the contrary, if a Change in Control occurs, then the vesting of
fifty percent (50%) of the then unvested shares of Common Stock subject to your option (and last scheduled to vest thereunder) shall be accelerated in full (and any reacquisition or repurchase rights
held by the Company with respect to the shares of Common Stock subject to such acceleration shall lapse in full, as appropriate) thereby shortening the remaining vesting period by one half. Any
unvested shares of Common Stock subject to your option after such acceleration shall continue to vest at the same rate (and in the same amounts) as prior to such acceleration. For example, assume at
the time immediately prior to a Change in Control (i) the number of unvested shares of Common Stock subject to your option is thirty-six (36) shares and (ii) such
shares are vesting monthly such that one (1) share is vesting each month. In such event, following both a Change in Control and the related 50% acceleration described herein, the remaining
unvested shares of Common Stock subject to your option (i.e., eighteen) shall continue to vest at the same rate (and in the same amounts) as prior to such acceleration (i.e., one share per month) over
the remaining vesting period thereby shortening the vesting period provided in this example by eighteen months). Notwithstanding the foregoing, if the potential acceleration of the vesting and
exercisability of your option (or lapse of reacquisition or repurchase rights held by the Company with respect to such option, as appropriate) as provided in this Section 1 would cause a
contemplated Change in Control transaction that is intended to be accounted for as a "pooling-of-interests" transaction to become ineligible for such accounting treatment under
generally accepted accounting principles as determined by the Company's independent certified public accountants prior to the Change in Control, such acceleration shall not occur. 

        2.     NUMBER OF SHARES AND EXERCISE PRICE.    The number of shares of Common Stock subject to your option and your
exercise price per share referenced in your Grant Notice may be adjusted from time to time for Capitalization Adjustments, as provided in the Plan. 

        3.     EXERCISE PRIOR TO VESTING ("EARLY EXERCISE").    If permitted in your Grant Notice (i.e., the "Exercise
Schedule" indicates that "Early Exercise" of your option is permitted) and subject to the provisions of your option, you may elect at any time that is both (i) during the period of your
Continuous Service and (ii) during the term of your option, to exercise all or part of your option, including the nonvested portion of your option; provided, however, that: 

        (a)   a partial exercise of your option shall be deemed to cover first vested shares of Common Stock and then the earliest
vesting installment of unvested shares of Common Stock; 

        (b)   any shares of Common Stock so purchased from installments that have not vested as of the date of exercise shall be
subject to the purchase option in favor of the Company as described in the Company's form of Early Exercise Stock Purchase Agreement; 

6

 

        (c)   you shall enter into the Company's form of Early Exercise Stock Purchase Agreement with a vesting schedule that will
result in the same vesting as if no early exercise had occurred; and 

        (d)   if your option is an incentive stock option, then, as provided in the Plan, to the extent that the aggregate Fair Market
Value (determined at the time of grant) of the shares of Common Stock with respect to which your option plus all other incentive stock options you hold are exercisable for the first time by you during
any calendar year (under all plans of the Company and its Affiliates) exceeds one hundred thousand dollars ($100,000), your option(s) or portions thereof that exceed such limit (according to the order
in which they were granted) shall be treated as nonstatutory stock options. 

        4.     METHOD OF PAYMENT.    Payment of the exercise price is due in full upon exercise of all or any part of your
option. You may elect to make payment of the exercise price in cash or by check or in any other manner permitted by your Grant Notice, which may include
one or more of the following: 

        (a)   In the Company's sole discretion at the time your option is exercised and provided that at the time of exercise the
Common Stock is publicly traded and quoted regularly in The Wall Street Journal, pursuant to a program developed under Regulation T as
promulgated by the Federal Reserve Board that, prior to the issuance of Common Stock, results in either the receipt of cash (or check) by the Company or the receipt of irrevocable instructions to pay
the aggregate exercise price to the Company from the sales proceeds. 

        (b)   Provided that at the time of exercise the Common Stock is publicly traded and quoted regularly in  The Wall Street Journal, by delivery of
already-owned shares of Common Stock either that you have held for the period required to avoid a charge to the
Company's reported earnings (generally six months) or that you did not acquire, directly or indirectly from the Company, that are owned free and clear of any liens, claims, encumbrances or security
interests, and that are valued at Fair Market Value on the date of exercise. "Delivery" for these purposes, in the sole discretion of the Company at the time you exercise your option, shall include
delivery to the Company of your attestation of ownership of such shares of Common Stock in a form approved by the Company. Notwithstanding the foregoing, you may not exercise your option by tender to
the Company of Common Stock to the extent such tender would violate the provisions of any law, regulation or agreement restricting the redemption of the Company's stock. 

        (c)   Pursuant to the following deferred payment alternative: 

          (i)  Not less than one hundred percent (100%) of the aggregate exercise price, plus accrued interest, shall be due four
(4) years from date of exercise or, at the Company's election, upon termination of your Continuous Service. 

         (ii)  Interest shall be compounded at least annually and shall be charged at the market rate of interest necessary to avoid a
charge to earnings for financial accounting purposes. 

       (iii)  At any time that the Company is incorporated in Delaware, payment of the Common Stock's "par value," as defined in the
Delaware General Corporation Law, shall be made in cash and not by deferred payment. 

        (iv)  In order to elect the deferred payment alternative, you must, as a part of your written notice of exercise, give notice
of the election of this payment alternative and, in order to secure the payment of the deferred exercise price to the Company hereunder, if the Company so requests, you must tender to the Company a
promissory note and a security agreement covering the purchased shares of Common Stock, both in form and substance satisfactory to the Company, or such other or additional documentation as the Company
may request. 

        5.     WHOLE SHARES.    You may exercise your option only for whole shares of Common Stock. 

7

 

        6.     SECURITIES LAW COMPLIANCE.    Notwithstanding anything to the contrary contained herein, you may not exercise
your option unless the shares of Common Stock issuable upon such exercise are then registered under the Securities Act or, if such shares of Common Stock are not then so registered, the Company has
determined that such exercise and issuance would be exempt from the registration requirements of the Securities Act. The exercise of your option must also comply with other applicable laws and
regulations governing your option, and you may not exercise your option if the Company determines that such exercise would not be in material compliance with such laws and regulations. 

        7.     TERM.    You may not exercise your option before the commencement of its term or after its term expires. The
term of your option commences on the Date of Grant and expires upon the earliest of the following: 

        (a)   three (3) months after the termination of your Continuous Service for any reason other than your Disability or
death, provided that if during any part of such three- (3-) month period your option is not exercisable solely because of the condition set forth in the preceding paragraph relating to
"Securities Law Compliance," your option shall not expire until the earlier of the Expiration Date or until it shall have been exercisable for an aggregate period of three (3) months after the
termination of your Continuous Service; 

        (b)   twelve (12) months after the termination of your Continuous Service due to your Disability; 

        (c)   eighteen (18) months after your death if you die either during your Continuous Service or within three
(3) months after your Continuous Service terminates; 

        (d)   the Expiration Date indicated in your Grant Notice; or 

        (e)   the day before the tenth (10th) anniversary of the Date of Grant. 

        If
your option is an incentive stock option, note that, to obtain the federal income tax advantages associated with an "incentive stock option," the Code requires that at all times
beginning on the date of grant of your option and ending on the day three (3) months before the date of your option's exercise, you must be an employee of the Company or an Affiliate, except in
the event of your death or Disability. The Company has provided for extended exercisability of your option under certain circumstances for your benefit but cannot guarantee that your option will
necessarily be treated as an "incentive stock option" if you continue to provide services to the Company or an Affiliate as a Consultant or Director after your employment terminates or if you
otherwise exercise your option more than three (3) months after the date your employment terminates. 

        8.     EXERCISE.

        (a)   You may exercise the vested portion of your option (and the unvested portion of your option if your Grant Notice so
permits) during its term by delivering a Notice of Exercise (in a form designated by the Company) together with the exercise price to the Secretary of the Company, or to such other person as the
Company may designate, during regular business hours, together with such additional documents as the Company may then require. 

        (b)   By exercising your option you agree that, as a condition to any exercise of your option, the Company may require you to
enter into an arrangement providing for the payment by you to the Company of any tax withholding obligation of the Company arising by reason of (1) the exercise of your option, (2) the
lapse of any substantial risk of forfeiture to which the shares of Common Stock are subject at the time of exercise, or (3) the disposition of shares of Common Stock acquired upon such
exercise. 

8

 

        (c)   If your option is an incentive stock option, by exercising your option you agree that you will notify the Company in
writing within fifteen (15) days after the date of any disposition of any of the shares of the Common Stock issued upon exercise of your option that occurs within two (2) years after the
date of your option grant or within one (1) year after such shares of Common Stock are transferred upon exercise of your option. 

        (d)   By exercising your option you agree that the Company (or a representative of the underwriter(s)) may, in connection with
the first underwritten registration of the offering of any securities of the Company under the Securities Act, require that you not sell, dispose of, transfer, make any short sale of, grant any option
for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale with respect to, any shares of Common Stock or other securities of the Company held by
you, for a period of time specified by the underwriter(s) (not to exceed one hundred eighty (180) days) following the effective date of the registration statement of the Company filed under the
Securities Act. You further agree to execute and deliver such other agreements as may be reasonably requested by the Company and/or the underwriter(s) that are consistent with the foregoing or that
are necessary to give further effect thereto. In order to enforce the foregoing covenant, the Company may impose stop-transfer instructions with respect to your shares of Common Stock
until the end of such period. The underwriters of the Company's stock are intended third party beneficiaries of this Section 8(d) and shall have the right, power and authority to enforce the
provisions hereof as though they were a party hereto. 

        9.     TRANSFERABILITY.    Your option is not transferable, except by
will or by the laws of descent and distribution, and is exercisable during your life only by you. Notwithstanding the foregoing, by delivering written notice to the Company, in a form satisfactory to
the Company, you may designate a third party who, in the event of your death, shall thereafter be entitled to exercise your option. 

        10.   RIGHT OF FIRST REFUSAL.

        (a)   Shares of Common Stock that you acquire upon exercise of your option are subject to any right of first refusal that may
be described in the Company's bylaws in effect at such time the Company elects to exercise its right. 

        (b)   If there is no right of first refusal described in the Company's bylaws in effect at such time the Company elects to
exercise its right, then you may not validly transfer (as hereinafter defined) any of the shares of Common Stock that you acquire upon exercise of your option, or any interest in such shares, unless
such transfer is solely for cash consideration and is made in compliance with the following provisions (the Company's "Right of First Refusal"): 

          (i)  Before there can be a valid transfer of any shares or any interest therein, the record holder of the shares to be
transferred (the "Offered Shares") shall give written notice (by registered or certified mail) to the Company. Such notice shall specify the identity of the proposed transferee, the cash price offered
for the Offered Shares by the proposed transferee and the other terms and conditions of the proposed transfer. The date such notice is mailed shall be hereinafter referred to as the "notice date," and
the record holder of the Offered Shares shall be hereinafter referred to as the "Offeror." 

         (ii)  For a period of thirty (30) calendar days after the notice date, the Company shall have the option, but not the
obligation, to purchase all (or any part) of the Offered Shares at the purchase price and on the terms set forth in subsection 10(b)(iii). The Company may exercise its Right of First Refusal by
mailing (by registered or certified mail) written notice of exercise of its Right of First Refusal to the Offeror prior to the end of said thirty (30) days. 

       (iii)  The price at which the Company may purchase the Offered Shares pursuant to the exercise of its Right of First Refusal
shall be the cash price offered for the Offered Shares by 

9

 

the
proposed transferee (as set forth in the notice required under subsection 10(b)(i)). The Company's notice of exercise of its Right of First Refusal shall be accompanied by full payment for the
Offered Shares and, upon such payment by the Company, the Company shall acquire full right, title and interest to all of the Offered Shares. 

        (iv)  If, and only if, the option given pursuant to subsection 10(b)(ii) is not exercised, the transfer proposed in the
notice given pursuant to subsection 10(b)(i) may take place; provided, however, that such transfer must, in all respects, be exactly as proposed in said notice except that such transfer may not
take place either before the tenth (10th) calendar day after the expiration of said 30-day option exercise period or after the ninetieth (90th) calendar day after the expiration of said
30-day option exercise period, and if such transfer has not taken place prior to said ninetieth (90th) day, such transfer may not take place without once again complying with this
subsection 10(b). 

         (v)  As used in this subsection 10(b), the term "transfer" means any sale, encumbrance, pledge, gift or other form of
disposition or transfer of shares of the Company's stock or any legal or equitable interest therein; provided, however, that the term "transfer" does not include a transfer of such shares or interests
by will or by the applicable laws of descent and distribution or a bona fide gift of such shares if the donee agrees to be bound by the provisions of this Stock Option Agreement. 

        (vi)  None of the shares of the Company's stock purchased upon exercise of your option shall be transferred on the Company's
books nor shall the Company recognize any such transfer of any such shares or any interest therein unless and until all applicable provisions of this subsection 10(b) have been complied with in all
respects. The certificates of stock evidencing shares of stock purchased upon exercise of your option shall bear an appropriate legend referring to the transfer restrictions imposed by this subsection
10(b). 

       (vii)  If, from time to time, there is any stock dividend, stock split or other change in the character or amount of any of
the outstanding stock of the corporation the stock of which is subject to the provisions of your option, then in such event any and all new, substituted or additional securities to which you are
entitled by reason of your ownership of the shares acquired under your option shall be immediately subject to the Company's Right of First Refusal with the same force and effect as the shares you
acquired pursuant to the exercise of your option. 

      (viii)  To ensure that shares subject to the Company's Right of First Refusal will be available for repurchase by the Company,
the Company may require you to deposit the certificate(s) evidencing the shares that you purchase upon exercise of your option with an escrow agent designated by the Company under the terms and
conditions of an escrow agreement approved by the Company. If the Company does not require such deposit as a condition of exercise of your option, the Company reserves the right at any time to require
you to so deposit the certificate(s) in escrow. As soon as practicable after the expiration of the Company's Right of First Refusal, the agent shall deliver to you the shares and any other property no
longer subject to such restriction. In the event the shares and any other property held in escrow are subject to the Company's exercise of its Right of First Refusal, the notices required to be given
to you shall be given to the escrow agent, and any payment required to be given to you shall be given to the escrow agent. Within thirty (30) days after payment by the Company for the Offered
Shares, the escrow agent shall deliver the Offered Shares that the Company has repurchased to the Company and shall deliver the payment received from the Company to you. 

        (c)   The Company's Right of First Refusal shall expire on the Listing Date. 

10

 

        11.   OPTION NOT A SERVICE CONTRACT.    Your option is not an employment or service contract, and nothing in your
option shall be deemed to create in any way whatsoever any obligation on your part to continue in the employ of the Company or an Affiliate, or of the Company or an Affiliate to continue your
employment. In addition, nothing in your option shall obligate the Company or an Affiliate, their respective stockholders, Boards of Directors, Officers or Employees to continue any relationship that
you might have as a Director or Consultant for the Company or an Affiliate. 

        12.   WITHHOLDING OBLIGATIONS.

        (a)   At the time you exercise your option, in whole or in part, or at any time thereafter as requested by the Company, you
hereby authorize withholding from payroll and any other amounts payable to you, and otherwise agree to make adequate provision for (including by means of a "cashless exercise" pursuant to a program
developed under Regulation T as promulgated by the Federal Reserve Board to the extent permitted by the Company), any sums required to satisfy the federal, state, local and foreign tax
withholding obligations of the Company or an Affiliate, if any, which arise in connection with your option. 

        (b)   Upon your request and subject to approval by the Company, in its sole discretion, and compliance with any applicable
conditions or restrictions of law, the Company may withhold from fully vested shares of Common Stock otherwise issuable to you upon the exercise of your option a number of whole shares of Common Stock
having a Fair Market Value, determined by the Company as of the date of exercise, not in excess of the minimum amount of tax required to be withheld by law. If the date of determination of any tax
withholding obligation is deferred to a date later than the date of exercise of your option, share withholding pursuant to the preceding sentence shall not be permitted unless you make a proper and
timely election under Section 83(b) of the Code, covering the aggregate number of shares of Common Stock acquired upon such exercise with respect to which such determination is otherwise
deferred, to accelerate the determination of such tax withholding obligation to the date of exercise of your option. Notwithstanding the filing of such election, shares of Common Stock shall be
withheld solely from fully vested shares of Common Stock determined as of the date of exercise of your option that are otherwise issuable to you upon such exercise. Any adverse consequences to you
arising in connection with such share withholding procedure shall be your sole responsibility. 

        (c)   You may not exercise your option unless the tax withholding obligations of the Company and/or any Affiliate are
satisfied. Accordingly, you may not be able to exercise your option when desired even though your option is vested, and the Company shall have no obligation to issue a certificate for such shares of
Common Stock or release such shares of Common Stock from any escrow provided for herein. 

        13.   NOTICES.    Any notices provided for in your option or the Plan shall be given in writing and shall be deemed
effectively given upon receipt or, in the case of notices delivered by mail by the Company to you, five (5) days after deposit in the United States mail, postage prepaid, addressed to you at
the last address you provided to the Company. 

        14.   GOVERNING PLAN DOCUMENT.    Your option is subject to all the provisions of the Plan, the provisions of which
are hereby made a part of your option, and is further subject to all interpretations, amendments, rules and regulations which may from time to time be promulgated and adopted pursuant to the Plan. In
the event of any conflict between the provisions of your option and those of the Plan, the provisions of the Plan shall control. 

11

GENOPTIX, INC.

STOCK OPTION GRANT NOTICE

(2001 EQUITY INCENTIVE PLAN)

GENOPTIX, INC. (the "Company"), pursuant to its 2001 Equity Incentive Plan (the "Plan"), hereby grants to Optionholder an option to purchase the
number of shares of the Company's Common Stock set forth below. This option is subject to all of the terms and conditions as set forth herein and in the Stock Option Agreement, the Plan and the Notice
of Exercise, all of which are attached hereto and incorporated herein in their entirety. 

	Optionholder:	 	

	Date of Grant:	 	

	Vesting Commencement Date:	 	

	Number of Shares Subject to Option:	 	

	Exercise Price (Per Share):	 	

	Total Exercise Price:	 	

	Expiration Date:	 	

	Type of Grant:	 	o  Incentive Stock Option(1)	 	o  Nonstatutory Stock Option
	
Exercise Schedule:	
 	

[Same as Vesting Schedule]  [Early Exercise Permitted]
	
Vesting Schedule:	
 	

[1/4th of the shares vest one year after the Vesting Commencement Date.
	 	 	1/48th of the shares vest monthly thereafter over the next three years.]
	
Payment:	
 	

By one or a combination of the following items (described in the Stock Option Agreement):
	

 	
 	

               By cash or check

               Pursuant to a Regulation T Program if the Shares are publicly

               traded

               By delivery of already-owned shares if the Shares are publicly

               traded

               [By deferred payment]

Additional Terms/Acknowledgements: The undersigned Optionholder acknowledges receipt of, and understands and agrees to, this Grant Notice, the Stock
Option Agreement and the Plan. Optionholder further acknowledges that as of the Date of Grant, this Grant Notice, the Stock Option Agreement and the Plan set forth the entire understanding between
Optionholder and the Company regarding the acquisition of stock in the Company and supersede all prior oral and written agreements on that subject with the exception of (i) options previously
granted and delivered to Optionholder under the Plan, and (ii) the following agreements only: 

	          OTHER AGREEMENTS:	 	

	

 	
 	

	GENOPTIX, INC.	 	OPTIONHOLDER:
	

By:	
 	

 Signature	
 	

 Signature
	

Title:	
 	

	
 	

Date:	
 	

	

Date:	
 	

	
 	

 	
 	

 

ATTACHMENTS: (I) Stock Option Agreement, (II) 2001 Equity Incentive Plan and (III) Notice of Exercise 

	(1)
	If
this is an incentive stock option, it (plus your other outstanding incentive stock options) cannot be first  exercisable for more than $100,000 in any calendar year. Any excess over $100,000 is a
nonstatutory option. 

   NOTICE OF EXERCISE  

	Genoptix, Inc.

3398 Carmel Mountain Road

San Diego, CA 92121	 	Date of Exercise:	 	

Ladies
and Gentlemen: 

        This
constitutes notice under my stock option that I elect to purchase the number of shares for the price set forth below. 

	Type of option (check one):	 	Incentive  o	 	 	Nonstatutory  o
	

Stock option dated:	
 	

	

 	
 	

 
	

Number of shares as

to which option is

exercised:	
 	

	

 	
 	

 
	

Certificates to be

issued in name of:	
 	

	

 	
 	

 
	

Total exercise price:	
 	

$
	

 	
 	

 
	

Cash payment delivered

herewith:	
 	

$
	

 	
 	

 
	

[Promissory note delivered

herewith:	
 	

$
	

]	
 	

 
	

Value of            shares of

Genoptix, Inc. common

stock delivered herewith(1):	
 	

$
	

 	
 	

 

	(1)
	Shares
must meet the public trading requirements set forth in the option. Shares must be valued in accordance with the terms of the option being exercised, must have been owned for
the minimum period required in the option, and must be owned free and clear of any liens, claims, encumbrances or security interests. Certificates must be endorsed or accompanied by an executed
assignment separate from certificate. 

        By
this exercise, I agree (i) to provide such additional documents as you may require pursuant to the terms of the 2001 Equity Incentive Plan, (ii) to provide for the
payment by me to you (in the manner designated by you) of your withholding obligation, if any, relating to the exercise of this option, and (iii) if this exercise relates to an incentive stock
option, to notify you in writing within fifteen (15) days after the date of any disposition of any of the shares of Common Stock issued upon exercise of this option that occurs within two
(2) years after the date of grant of this option or within one (1) year after such shares of Common Stock are issued upon exercise of this option. 

1

 

        I
hereby make the following certifications and representations with respect to the number of shares of Common Stock of the Company listed above (the "Shares"), which are being acquired
by me for my own account upon exercise of the Option as set forth above: 

        I
acknowledge that the Shares have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), and are deemed to constitute "restricted securities" under
Rule 701 and "control securities" under Rule 144 promulgated under the Securities Act. I warrant and represent to the Company that I have no present intention of distributing or selling
said Shares, except as permitted under the Securities Act and any applicable state securities laws. 

        I
further acknowledge that I will not be able to resell the Shares for at least ninety (90) days after the stock of the Company becomes publicly traded
(i.e., subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934) under Rule 701 and that more
restrictive conditions apply to affiliates of the Company under Rule 144. 

        I
further acknowledge that all certificates representing any of the Shares subject to the provisions of the Option shall have endorsed thereon appropriate legends reflecting the
foregoing limitations, as well as any legends reflecting restrictions pursuant to the Company's Certificate of Incorporation, Bylaws and/or applicable securities laws. 

        I
further agree that, if required by the Company (or a representative of the underwriters) in connection with the first underwritten registration of the offering of any securities of the
Company under the Securities Act, I will not sell, dispose of, transfer, make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same
economic effect as a sale with respect to, any Shares or other securities of the Company held by me, for a period of time specified by the underwriter(s) (not to exceed one hundred eighty
(180) days) following the effective date of the registration statement of the Company filed under the Securities Act. I further agree to execute and deliver such other agreements as may be
reasonably requested by the Company and/or the underwriter(s) that are consistent with the foregoing or that are necessary to give further effect thereto.
In order to enforce the foregoing covenant, the Company may impose stop-transfer instructions with respect to my Shares until the end of such period. 

	 	 	Very truly yours,
	

 	
 	

2

GENOPTIX, INC.  

EARLY EXERCISE STOCK PURCHASE AGREEMENT

UNDER THE 2001 EQUITY INCENTIVE PLAN  

        THIS AGREEMENT is made by and between GENOPTIX, INC., a
Delaware corporation (the "Company"), and                        ("Purchaser"). 

WITNESSETH:  

        WHEREAS, Purchaser holds a stock option
dated                        to purchase shares of common stock ("Common Stock")
of the Company (the "Option") pursuant to the Company's 2001 Equity Incentive Plan (the "Plan"); and 

        WHEREAS, the Option consists of a Stock Option Grant Notice and a Stock Option Agreement; and 

        WHEREAS, Purchaser desires to exercise the Option on the terms and conditions contained herein; and 

        WHEREAS, Purchaser wishes to take advantage of the early exercise provision of the Purchaser's Option and therefore to enter into this
Agreement; 

        NOW, THEREFORE, IT IS AGREED between the parties as follows: 

        1.    INCORPORATION OF PLAN AND OPTION BY REFERENCE.    This Agreement is subject to all of the terms and conditions
as set forth in the Plan and the Option. If there is a conflict between the terms of this Agreement and/or the Option and the terms of the Plan, the terms of the Plan shall control. If there is a
conflict between the terms of this Agreement and the terms of the Option, the terms of the Option shall control. Defined terms not explicitly defined in this Agreement but defined in
the Plan shall have the same definitions as in the Plan. Defined terms not explicitly defined in this Agreement or the Plan but defined in the Option shall have the same definitions as in the Option. 

        2.    PURCHASE AND SALE OF COMMON STOCK.    

         (a)    Agreement to Purchase and Sell Common Stock.    Purchaser hereby agrees to purchase from the Company, and the
Company hereby agrees to
sell to Purchaser, shares of the Common Stock of the Company in accordance with the Notice of Exercise duly executed by Purchaser and attached hereto as Exhibit A. 

         (b)    Closing.    The closing hereunder, including payment for and delivery of the Common Stock, shall occur at the
offices of the Company
immediately following the execution of this Agreement, or at such other time and place as the parties may mutually agree; provided, however, that if
stockholder approval of the Plan is required before the Option may be exercised, then the Option may not be exercised, and the closing shall be delayed, until such stockholder approval is obtained. If
such stockholder approval is not obtained within the time limit specified in the Plan, then this Agreement shall be null and void. 

        3.    UNVESTED SHARE REPURCHASE OPTION.    

         (a)    Repurchase Option.    In the event Purchaser's Continuous Service terminates, then the Company shall have an
irrevocable option (the
"Repurchase Option") for a period of ninety (90) days after said termination (or in the case of shares issued upon exercise of the Option after such date of termination, within ninety
(90) days after the date of the exercise), or such longer period as may be agreed to by the Company and the Purchaser, to repurchase from Purchaser or Purchaser's personal representative, as
the case may be, those shares that Purchaser received pursuant to the exercise of the Option that have not as yet vested as of such termination date in accordance with the Vesting Schedule indicated
on Purchaser's Stock Option Grant Notice (the "Unvested Shares"). 

 

         (b)    Shares Repurchasable at Purchaser's Original Exercise Price.    The Company may repurchase all or any of the
Unvested Shares at a price
("Option Price") equal to the Purchaser's Exercise Price for such shares as indicated on Purchaser's Stock Option Grant Notice. 

        4.    EXERCISE OF REPURCHASE OPTION.    The Repurchase Option shall be exercised by written notice signed by an
officer of the Company and delivered or mailed as provided herein. Such notice shall identify the number of shares of Common Stock to be purchased and shall notify Purchaser of the time, place and
date for settlement of such purchase, which shall be scheduled by the Company within the term of the Repurchase Option set forth above. The Company shall be entitled to pay for any shares of Common
Stock purchased pursuant to its Repurchase Option at the Company's option in cash or by offset against any indebtedness owing to the Company by Purchaser (including without limitation any Note given
in payment for the Common Stock), or by a combination of both. Upon delivery of such notice and payment of the purchase price in any of the ways described above, the Company shall become the legal and
beneficial owner of the Common Stock being repurchased and all rights and interest therein or related thereto, and the Company shall have the right to transfer to its own name the Common Stock being
repurchased by the Company, without further action by Purchaser. 

        5.    CAPITALIZATION ADJUSTMENTS TO COMMON STOCK.    In the event of a "Capitalization Adjustment" affecting the
Company's outstanding Common Stock as a class as designated in the Plan, then any and all new, substituted or additional securities or other property to which Purchaser is entitled by reason of
Purchaser's ownership of Common Stock shall be immediately subject to the Repurchase Option and be included in the word "Common Stock" for all purposes of the Repurchase Option with the same force and
effect as the shares of the Common Stock presently subject to the Repurchase Option, but only to the extent the Common Stock is, at the time, covered by such Repurchase Option. While the total Option
Price shall remain the same after each such event, the Option Price per share of Common Stock upon exercise of the Repurchase Option shall be appropriately adjusted. 

        6.    CORPORATE TRANSACTIONS.    In the event of a Corporate Transaction described in subsection 11(c) of the Plan,
then the Repurchase Option may be assigned by the Company to the successor of the Company (or such successor's parent company), if any, in connection with such Corporate Transaction. To the extent the
Repurchase Option remains in effect following such Corporate Transaction, it shall apply to the new capital stock or other property received in exchange for the Common Stock in consummation of the
Corporate Transaction, but only to the extent the Common Stock was at the time covered by such right. Appropriate adjustments shall be made to the price per share payable upon exercise of the
Repurchase Option to reflect the Corporate Transaction upon the Company's capital structure; provided, however, that the aggregate Option Price shall remain the same. 

        7.    ESCROW OF UNVESTED COMMON STOCK.    As security for Purchaser's faithful performance of the terms of this
Agreement and to insure the availability for delivery of Purchaser's Common Stock upon exercise of the Repurchase Option herein provided for, Purchaser agrees, at the closing hereunder, to deliver to
and deposit with the Secretary of the Company or the Secretary's designee ("Escrow Agent"), as Escrow Agent in this transaction, three (3) stock assignments duly endorsed (with date and number
of shares blank) in the form attached hereto as Exhibit B, together with a certificate or certificates evidencing all of the Common Stock subject to the Repurchase Option; said documents are to
be held by the Escrow Agent and delivered by said Escrow Agent pursuant to the Joint Escrow
Instructions of the Company and Purchaser set forth in Exhibit C, attached hereto and incorporated by this reference, which instructions shall also be delivered to the Escrow Agent at the
closing hereunder. 

        8.    RIGHTS OF PURCHASER.    Subject to the provisions of the Option, Purchaser shall exercise all rights and
privileges of a stockholder of the Company with respect to the shares deposited in escrow. Purchaser shall be deemed to be the holder of the shares for purposes of receiving any 

2

 

dividends
that may be paid with respect to such shares and for purposes of exercising any voting rights relating to such shares, even if some or all of such shares have not yet vested and been
released from the Company's Repurchase Option. 

        9.    LIMITATIONS ON TRANSFER.    In addition to any other limitation on transfer created by applicable securities
laws, Purchaser shall not sell, assign, hypothecate, donate, encumber or otherwise dispose of any interest in the Common Stock while the Common Stock is subject to the Repurchase Option. After any
Common Stock has been released from the Repurchase Option, Purchaser shall not sell, assign, hypothecate, donate, encumber or otherwise dispose of any interest in the Common Stock except in compliance
with the provisions herein and applicable securities laws. Furthermore, the Common Stock shall be subject to any right of first refusal in favor of the Company or its assignees that may be contained
in the Company's Bylaws. 

        10.    RESTRICTIVE LEGENDS.    All certificates representing the Common Stock shall have endorsed thereon legends in
substantially the following forms (in addition to any other legend which may be required by other agreements between the parties hereto): 

        (a)   "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AN OPTION SET FORTH IN AN AGREEMENT BETWEEN THE COMPANY AND
THE REGISTERED HOLDER, OR SUCH HOLDER'S PREDECESSOR IN INTEREST, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THIS COMPANY. ANY TRANSFER OR ATTEMPTED TRANSFER OF ANY SHARES SUBJECT TO SUCH
OPTION IS VOID WITHOUT THE PRIOR EXPRESS WRITTEN CONSENT OF THE COMPANY." 

        (b)   "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AS AMENDED. THEY
MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED." 

        (c)   "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A RIGHT OF FIRST REFUSAL OPTION IN FAVOR OF THE COMPANY AND/OR
ITS ASSIGNEE(S) AS PROVIDED IN THE COMPANY'S STOCK OPTION AGREEMENT." 

        (d)   Any legend required by appropriate blue sky officials. 

        11.    INVESTMENT REPRESENTATIONS.    In connection with the purchase of the Common Stock, Purchaser represents to the
Company the following: 

        (a)   Purchaser is aware of the Company's business affairs and financial condition and has acquired sufficient information
about the Company to reach an informed and knowledgeable decision to acquire the Common Stock. Purchaser is acquiring the Common Stock for investment for Purchaser's own account only and not with a
view to, or for resale in connection with, any "distribution" thereof within the meaning of the Securities Act. 

        (b)   Purchaser understands that the Common Stock has not been registered under the Securities Act by reason of a specific
exemption therefrom, which exemption depends upon, among other things, the bona fide nature of Purchaser's investment intent as expressed herein. 

        (c)   Purchaser further acknowledges and understands that the Common Stock must be held indefinitely unless the Common Stock is
subsequently registered under the Securities Act or an exemption from such registration is available. Purchaser further acknowledges and understands that the Company is under no obligation to register
the Common Stock. Purchaser understands that the certificate evidencing the Common Stock will be imprinted with a legend that prohibits the transfer 

3

 

of
the Common Stock unless the Common Stock is registered or such registration is not required in the opinion of counsel for the Company. 

        (d)   Purchaser is familiar with the provisions of Rules 144 and 701, under the Securities Act, as in effect from time
to time, which, in substance, permit limited public resale of "restricted securities" acquired, directly or indirectly, from the issuer thereof (or from an affiliate of such issuer), in a
non-public offering subject to the satisfaction of certain conditions. Rule 701 provides that if the issuer qualifies under Rule 701 at the time of issuance of the
securities, such issuance will be exempt from registration under the Securities Act. In the event the Company becomes subject to the reporting requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the securities exempt under Rule 701 may be sold by Purchaser ninety (90) days thereafter, subject to the satisfaction of certain of the conditions
specified by Rule 144 and the market stand-off provision described in Purchaser's Stock Option Agreement. 

        (e)   In the event that the sale of the Common Stock does not qualify under Rule 701 at the time of purchase, then the
Common Stock may be resold by Purchaser in certain limited circumstances subject to the provisions of Rule 144, which requires, among other things: (i) the availability of certain public
information about the Company and (ii) the resale occurring following the required holding period under Rule 144 after the Purchaser has purchased, and made full payment of (within the
meaning of Rule 144), the securities to be sold. 

        (f)    Purchaser further understands that at the time Purchaser wishes to sell the Common Stock there may be no public market
upon which to make such a sale, and that, even if such a public market then exists, the Company may not be satisfying the current public current information requirements of Rule 144 or 701, and
that, in such event, Purchaser would be precluded from selling the Common Stock under Rule 144 or 701 even if the minimum holding period requirement had been satisfied. 

        (g)   Purchaser further warrants and represents that Purchaser has either (i) preexisting personal or business
relationships, with the Company or any of its officers, directors or controlling persons, or (ii) the capacity to protect his own interests in connection with the purchase of the Common Stock
by virtue of the business or financial expertise of the Purchaser or of professional advisors to Purchaser who are unaffiliated with and who are not compensated by the Company or any of its
affiliates, directly or indirectly. 

        12.    MARKET STAND-OFF AGREEMENT.    By exercising the Option Purchaser agrees that the Company (or a
representative of the underwriters) may, in connection with any underwritten registration of the offering of any securities of the Company under the Securities Act, require that the Purchaser not
sell, dispose of, transfer, make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale with respect to, any
shares of Common Stock or other securities of the Company held by Purchaser, for a period of time specified by the underwriter(s) (not to exceed one hundred eighty (180) days) following the
effective date of the registration statement of the Company filed under the Securities Act. Purchaser further agrees to execute and deliver such other agreements as may be reasonably requested by the
Company and/or the underwriter(s) that are consistent with the foregoing or that are necessary to give further effect thereto. In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to Purchaser's Common Stock until the end of such period. The underwriters of the Company's stock are intended third party beneficiaries of this
Section 12 and shall have the right, power and authority to enforce the provisions hereof as though they were a party hereto. 

        13.    SECTION 83(b) ELECTION.    Purchaser understands that Section 83(a) of the Code, taxes as
ordinary income the difference between the amount paid for the Common Stock and the fair market value of the Common Stock as of the date any restrictions on the Common Stock lapse. In this context, 

4

 

"restriction"
includes the right of the Company to buy back the Common Stock pursuant to the Repurchase Option set forth above. Purchaser understands that Purchaser may elect to be taxed at the time
the Common Stock is purchased, rather than when and as the Repurchase Option expires, by filing an election under Section 83(b) (an "83(b) Election") of the Code with the Internal Revenue
Service within thirty (30) days from the date of purchase. Even if the fair market value of the Common Stock at the time of the execution of this Agreement equals the amount paid for the Common
Stock, the 83(b) Election must be made to avoid income under Section 83(a) in the future. Purchaser understands that failure to file such an 83(b) Election in a timely manner may result in
adverse tax consequences for Purchaser. Purchaser further understands that Purchaser must file an additional copy of such 83(b) Election with his or her federal income tax return for the calendar year
in which the date of this Agreement falls. Purchaser acknowledges that the foregoing is only a summary of the effect of United States federal income taxation with respect to purchase of the Common
Stock hereunder, and does not purport to be complete. Purchaser further acknowledges that the Company has directed Purchaser to seek independent advice regarding the applicable provisions of the Code,
the income tax laws of any municipality, state or foreign country in which Purchaser may reside, and the tax consequences of Purchaser's death. Purchaser assumes all responsibility for filing an 83(b)
Election and paying all taxes resulting from such election or the lapse of the restrictions on the Common Stock. 

        14.    REFUSAL TO TRANSFER.    The Company shall not be required (a) to transfer on its books any shares of
Common Stock of the Company which shall have been transferred in violation of any of the provisions set forth in this Agreement or (b) to treat as owner of such shares or to accord the right to
vote as such owner or to pay dividends to any transferee to whom such shares shall have been so transferred. 

        15.    NO EMPLOYMENT RIGHTS.    This Agreement is not an employment contract and nothing in this Agreement shall
affect in any manner whatsoever the right or power of the Company (or a parent or subsidiary of the Company) to terminate Purchaser's employment for any reason at any time, with or without cause and
with or without notice. 

        16.    MISCELLANEOUS.    

         (a)    Notices.    Any notice required or permitted hereunder shall be given in writing and shall be deemed
effectively given upon personal
delivery or sent by telegram or fax or upon deposit in the United States Post Office, by registered or certified mail with postage and fees prepaid, addressed to the other party hereto at such party's
address hereinafter shown below its signature or at such other address as such party may designate by ten (10) days' advance written notice to the other party hereto. 

        (b)    Successors and Assigns.    This Agreement shall inure to the benefit of the successors and assigns of the
Company and, subject to the
restrictions on transfer herein set forth, be binding upon Purchaser, Purchaser's successors, and assigns. The Company may assign the Repurchase Option hereunder at any time or from time to time, in
whole or in part. 

         (c)    Attorneys' Fees; Specific Performance.    Purchaser shall reimburse the Company for all costs incurred by the
Company in enforcing the
performance of, or protecting its rights under, any part of this Agreement, including reasonable costs of investigation and attorneys' fees. It is the intention of the parties that the Company, upon
exercise of the Repurchase Option and payment of the Option Price, pursuant to the terms of this Agreement, shall be entitled to receive the Common Stock, in specie, in order to have such Common Stock
available for future issuance without dilution of the holdings of other stockholders. Furthermore, it is expressly agreed between the parties that money damages are inadequate to compensate the
Company for the Common Stock and that the Company shall, upon proper exercise of the Repurchase Option, be entitled to specific enforcement of its rights to purchase and receive said Common Stock. 

5

 

        (d)    Governing Law; Venue.    This Agreement shall be governed by and construed in accordance with the laws of the
State of California. The
parties agree that any action brought by either party to interpret or enforce any provision of this Agreement shall be brought in, and each party agrees to, and does hereby, submit to the jurisdiction
and venue of, the appropriate state or federal court for the district encompassing the Company's principal place of business. 

         (e)    Further Execution.    The parties agree to take all such further action(s) as may reasonably be necessary to
carry out and consummate
this Agreement as soon as practicable, and to take whatever steps may be necessary to obtain any governmental approval in connection with or otherwise qualify the issuance of the securities that are
the subject of this Agreement. 

         (f)    Independent Counsel.    Purchaser acknowledges that this Agreement has been prepared on behalf of the Company
by Cooley Godward llp,
counsel to the Company and that Cooley Godward llp does not represent, and is not acting on behalf of, Purchaser. Purchaser has been provided with an opportunity to consult with Purchaser's own
counsel with respect to this Agreement. 

        (g)    Entire Agreement; Amendment.    This Agreement constitutes the entire agreement between the parties with respect
to the subject matter
hereof and supersedes and merges all prior agreements or understandings, whether written or oral. This Agreement may not be amended, modified or revoked, in whole or in part, except by an agreement in
writing signed by each of the parties hereto. 

         (h)    Severability.    If one or more provisions of this Agreement are held to be unenforceable under applicable law,
the parties agree to
renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i) such provision shall be
excluded from this Agreement, (ii) the balance of the Agreement shall be interpreted as if such provision were so excluded and (iii) the balance of the Agreement shall be enforceable in
accordance with its terms. 

         (i)    Counterparts.    This Agreement may be executed in two or more counterparts, each of which shall be deemed an
original and all of which
together shall constitute one instrument. 

                IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of                        , 2001. 

	 	 	GENOPTIX, INC.
	

 	
 	

By	

 
	 	 	 	

	

 	
 	

Title	

 
	 	 	 	

	

 	
 	

Address:	

3398 Carmel Mountain Road

San Diego, CA 92121
	

 	
 	

 Purchaser
	

Address:	
 	

	

 	
 	

ATTACHMENTS:  

	Exhibit A	 	Notice of Exercise
	Exhibit B	 	Assignment Separate from Certificate
	Exhibit C	 	Joint Escrow Instructions

6

STOCK ASSIGNMENT SEPARATE FROM CERTIFICATE  

        FOR VALUE RECEIVED,                        hereby sells, assigns and transfers unto Genoptix, Inc., a Delaware
corporation (the "Company"), pursuant to the Repurchase Option under that certain Early Exercise Stock Purchase Agreement,
dated                        by and between the undersigned and the Company (the
"Agreement"),                        
(                        ) shares of Common Stock of the Company standing in the undersigned's name on the books of the Company
represented by Certificate No(s).                        
and does hereby irrevocably constitute and appoint the Company's Secretary as attorney to transfer said Common Stock on the books of the Company with full power of substitution in the premises. This
Assignment may be used only in accordance with and subject to the terms and conditions of the Agreement, in connection with the repurchase of shares of Common Stock issued to the undersigned pursuant
to the Agreement, and only to the extent that such shares remain subject to the Company's Repurchase Option under the Agreement. 

	Dated:	 	
	 	 
	

 	
 	

 	
 	

 (Signature)
	

 	
 	

 	
 	

 (Print Name)

(INSTRUCTION:    Please do not fill in any blanks other than the "Signature" line and the "Print Name"
line.)

   JOINT ESCROW INSTRUCTIONS  

Secretary

Genoptix, Inc.

3398 Carmel Mountain Road

San Diego, CA 92121 

Dear
Sir or Madam: 

        As
Escrow Agent for both GENOPTIX, INC., a Delaware corporation ("Company"), and the undersigned purchaser of Common Stock of the
Company ("Purchaser"), you are hereby authorized and directed to hold the documents delivered to you pursuant to the terms of that certain Early Exercise Stock Purchase Agreement ("Agreement"), dated
                        to which a copy of these Joint Escrow Instructions is attached as Exhibit C, in accordance with the
following instructions: 

        1.     In the event the Company or an assignee shall elect to exercise the Repurchase Option set forth in the Agreement, the
Company or its assignee will give to Purchaser and you a written notice specifying the number of shares of Common Stock to be purchased, the purchase price, and the time for a closing hereunder at the
principal office of the Company. Purchaser and the Company hereby irrevocably authorize and direct you to close the transaction contemplated by such notice in accordance with the terms of said notice. 

        2.     At the closing you are directed (a) to date any stock assignments necessary for the transfer in question,
(b) to fill in the number of shares being transferred, and (c) to deliver same, together with the certificate evidencing the shares of Common Stock to be transferred, to the Company
against the simultaneous delivery to you of the purchase price (which may include suitable acknowledgment of cancellation of indebtedness) of the number of shares of Common Stock being purchased
pursuant to the exercise of the Repurchase Option. 

        3.     Purchaser irrevocably authorizes the Company to deposit with you any certificates evidencing shares of Common Stock to be
held by you hereunder and any additions and substitutions to said shares as specified in the Agreement. Purchaser does hereby irrevocably constitute and appoint you as the Purchaser's
attorney-in-fact and agent for the term of this escrow to execute with respect to such securities and other property all documents of assignment and/or transfer and all stock
certificates necessary or appropriate to make all securities negotiable and complete any transaction herein contemplated. 

        4.     This escrow shall terminate upon expiration or exercise in full of the Repurchase Option, whichever occurs first. 

        5.     If at the time of termination of this escrow you should have in your possession any documents, securities, or other
property belonging to Purchaser, you shall deliver all of same to Purchaser and shall be discharged of all further obligations hereunder; provided,
however, that if at the time of termination of this escrow you are advised by the Company that the property subject to this escrow is the subject of a pledge or other security
agreement, you shall deliver all such property to the pledgeholder or other person designated by the Company. 

        6.     Except as otherwise provided in these Joint Escrow Instructions, your duties hereunder may be altered, amended, modified
or revoked only by a writing signed by all of the parties hereto. 

        7.     You shall be obligated only for the performance of such duties as are specifically set forth herein and may rely and shall
be protected in relying or refraining from acting on any instrument reasonably believed by you to be genuine and to have been signed or presented by the proper party or parties or their assignees. You
shall not be personally liable for any act you may do or omit to do hereunder as Escrow Agent or as attorney-in-fact for Purchaser while acting in good faith and any act 

1

 

done
or omitted by you pursuant to the advice of your own attorneys shall be conclusive evidence of such good faith. 

        8.     You are hereby expressly authorized to disregard any and all warnings given by any of the parties hereto or by any other
person or corporation, excepting only orders or process of courts of law, and are hereby expressly authorized to comply with and obey orders, judgments or decrees of any court. In case you obey or
comply with any such order, judgment or decree of any court, you shall not be liable to any of the parties hereto or to any other person, firm or corporation by reason of such compliance,
notwithstanding any such order, judgment or decree being subsequently reversed, modified, annulled, set aside, vacated or found to have been entered without jurisdiction. 

        9.     You shall not be liable in any respect on account of the identity, authority or rights of the parties executing or
delivering or purporting to execute or deliver the Agreement or any documents or papers deposited or called for hereunder. 

        10.   You shall not be liable for the outlawing of any rights under any statute of limitations with respect to these Joint
Escrow Instructions or any documents deposited with you. 

        11.   Your responsibilities as Escrow Agent hereunder shall terminate if you shall cease to be Secretary of the Company or if
you shall resign by written notice to each party. In the event of any such termination, the Company may appoint any officer or assistant officer of the Company as successor Escrow Agent and Purchaser
hereby confirms the appointment of such successor or successors as the Purchaser's attorney-in-fact and agent to the full extent of your appointment. 

        12.   If you reasonably require other or further instruments in connection with these Joint Escrow Instructions or obligations
in respect hereto, the necessary parties hereto shall join in furnishing such instruments. 

        13.   It is understood and agreed that should any dispute arise with respect to the delivery and/or ownership or right of
possession of the securities, you are authorized and directed to retain in your possession without liability to anyone all or any part of said securities until such dispute shall have been settled
either by mutual written agreement of the parties concerned or by a final order, decree or judgment of a court of competent jurisdiction after the time for appeal has expired and no appeal has been
perfected, but you shall be under no duty whatsoever to institute or defend any such proceedings. 

        14.   Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given upon personal
delivery, including delivery by express courier or five days after deposit in the United States Post Office, by registered or certified mail with postage and fees prepaid, addressed to each of the
other parties hereunto entitled at the following addresses, or at such other addresses as a party may designate by ten days' advance written notice to each of the other parties hereto: 

	COMPANY:	 	Genoptix, Inc.

3398 Carmel Mountain Road

San Diego, CA 92121
	
PURCHASER:	
 	

	

 	
 	

	

 	
 	

	
ESCROW AGENT:	
 	

Secretary

Genoptix, Inc.

3398 Carmel Mountain Road

San Diego, CA 92121

2

 

        15.   By signing these Joint Escrow Instructions you become a party hereto only for the purpose of said Joint Escrow
Instructions; you do not become a party to the Agreement. 

        16.   You shall be entitled to employ such legal counsel and other experts (including without limitation the firm of Cooley
Godward llp) as you may deem necessary properly to advise you in connection with your obligations hereunder. You may rely upon the advice of such counsel, and may pay such counsel reasonable
compensation therefor. The Company shall be responsible for all fees generated by such legal counsel in connection with your obligations hereunder. 

        17.   This instrument shall be binding upon and inure to the benefit of the parties hereto and their respective successors and
permitted assigns. It is understood and agreed that references to "you" or "your" herein refer to the original Escrow Agent and to any and all successor Escrow Agents. It is understood and agreed that
the Company may at any time or from time to time assign its rights under the Agreement and these Joint Escrow Instructions in whole or in part. 

        18.   This Agreement shall be governed by and interpreted and determined in accordance with the laws of the State of
California, as such laws are applied by California courts to contracts made and to be performed entirely in California by residents of that state. 

	 	 	Very truly yours,
	

 	
 	
GENOPTIX, INC.
	

 	
 	

By	

 
	 	 	 	

	

 	
 	

Title	

 
	 	 	 	

	

 	
 	
PURCHASER:
	

 	
 	

	
ESCROW AGENT:	
 	

 	

 
	

	
 	

 	

 

3

   NOTICE OF EXERCISE  

	Genoptix, Inc.

3398 Carmel Mountain Road

San Diego, CA 92121	 	

Date of Exercise:	 
	 	 	 	

Ladies
and Gentlemen: 

        This
constitutes notice under my stock option that I elect to purchase the number of shares for the price set forth below. 

	Type of option (check one):	 	 	Incentive o	 	Nonstatutory o
	

Stock option dated:	
 	
 	

 	
 	

 
	

Number of shares as to which option is exercised:	
 	
 	

 	
 	

 
	

Certificates to be issued in name of:	
 	
 	

 	
 	

 
	

Total exercise price:	
 	
$	

 	
 	

 
	

Cash payment delivered herewith:	
 	
$	

 	
 	

 
	

[Promissory note delivered herewith:	
 	
$	

 	
]	

 
	

Value of                shares of Genoptix, Inc. common stock delivered herewith(1)	
 	
$	

 	
 	

 

	(1)
	Shares
must meet the public trading requirements set forth in the option. Shares must be valued in accordance with the terms of the option being exercised, must have been owned for
the minimum period required in the option, and must be owned free and clear of any liens, claims, encumbrances or security interests. Certificates must be endorsed or accompanied by an executed
assignment separate from certificate. 

        By
this exercise, I agree (i) to provide such additional documents as you may require pursuant to the terms of the 2001 Equity Incentive Plan, (ii) to provide for the
payment by me to you (in the manner designated by you) of your withholding obligation, if any, relating to the exercise of this option, and (iii) if this exercise relates to an incentive stock
option, to notify you in writing within fifteen (15) days after the date of any disposition of any of the shares of Common Stock issued upon exercise of this option that occurs within
two (2) years after the date of grant of this option or within one (1) year after such shares of Common Stock are issued upon exercise of this option. 

        I
hereby make the following certifications and representations with respect to the number of shares of Common Stock of the Company listed above (the "Shares"), which are being acquired
by me for my own account upon exercise of the Option as set forth above: 

        I
acknowledge that the Shares have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), and are deemed to constitute "restricted securities" under
Rule 701 and "control securities" under Rule 144 promulgated under the Securities Act. I warrant and represent to the Company that I have no present intention of distributing or selling
said Shares, except as permitted under the Securities Act and any applicable state securities laws. 

        I
further acknowledge that I will not be able to resell the Shares for at least ninety (90) days after the stock of the Company becomes publicly traded
(i.e., subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934) under Rule 701 and that more
restrictive conditions apply to affiliates of the Company under Rule 144. 

1

 

        I
further acknowledge that all certificates representing any of the Shares subject to the provisions of the Option shall have endorsed thereon appropriate legends reflecting the
foregoing limitations, as well as any legends reflecting restrictions pursuant to the Company's Certificate of Incorporation, Bylaws and/or applicable securities laws. 

        I
further agree that, if required by the Company (or a representative of the underwriters) in connection with the first underwritten registration of the offering of any securities of the
Company under the Securities Act, I will not sell, dispose of, transfer, make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same
economic effect as a sale with respect to, any Shares or other securities of the Company held by me, for a period of time specified by the underwriter(s) (not to exceed one hundred eighty
(180) days) following the effective date of the registration statement of the Company filed under the Securities Act. I further agree to execute and deliver such other agreements as may be
reasonably requested by the Company and/or the underwriter(s) that are consistent with the foregoing or that are necessary to give further effect thereto. In order to enforce the foregoing covenant,
the Company may impose stop-transfer instructions with respect to my Shares until the end of such period. 

	

 	

Very truly yours,
	

 	

 
	

 	

2

QuickLinks

Exhibit 10.2

GENOPTIX, INC. 2001 EQUITY INCENTIVE PLAN

STOCK OPTION AGREEMENT (INCENTIVE STOCK OPTION OR NONSTATUTORY STOCK OPTION)

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00129-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00129-of-00352.parquet"}]]