Document:

exv10w5

 

Exhibit 10.5

GOMEZ, INC.

STOCK PLAN

1. DEFINITIONS.

Unless otherwise specified or unless the context otherwise requires, the following terms, as
used in this Stock Plan, have the following meanings:

Administrator means the Board of Directors, unless it has delegated power to
act on its behalf to the Committee, in which case the Administrator means the
Committee.

Affiliate means a corporation which, for purposes of Section 424 of the
Code, is a parent or subsidiary of the Company, direct or indirect.

Board of Directors means the Board of Directors of the Company.

Change in Control means any of the following transactions:

          (i) a stockholder-approved Reorganization in which securities
possessing more than fifty percent (50%) of the total combined voting power
of the Company’s outstanding securities are transferred to a person or
persons different from the persons holding those securities immediately
prior to such transactions, or

          (ii) a sale, transfer or other disposition of all or substantially all
of the assets of the Company or a division or business unit of the Company
and in the case of a division or business unit in which the consideration
for the transaction has a value (net of taxes and expenses directly
associated with the transaction) in excess of the principal and interest
then due in respect of the Company’s obligations for funded indebtedness and
the liabilities of the Company and its subsidiaries other than then current
liabilities incurred in the ordinary course of business and consistent with
past custom and practice, or

          (iii) the acquisition, directly or indirectly, by any person or related
group of persons (other than the Company or a person that directly or
indirectly controls, is controlled by, or is under common control with, the
Company), of beneficial ownership (within the meaning of Rule 13-d(3) of the
1934 Act) of securities possessing more than fifty percent (50%) of the
total combined voting power of the Company’s outstanding securities other
than by a stockholder that, together with its Affiliates, owned more than
50% of the total combined voting power of the Company’s outstanding securities immediately prior to such
acquisition; or

 

 

          (iv) any similar transaction (including, but not limited to, any
financing or other transaction in which less than fifty percent (50%) of the
total combined voting power of the Company’s outstanding securities are
transferred to a person or persons different from the persons holding those
securities immediately prior to such transaction) involving the Company
which the Board deems to be a Change in Control.

In no event shall any public offering of the Company’s securities be deemed
to constitute a Change in Control.

For purposes of the foregoing, “Reorganization” shall mean any
reorganization, merger, consolidation, or other similar transaction
involving the Company.

Code means the United States Internal Revenue Code of 1986, as amended.

Committee means the committee of the Board of Directors to which the Board of
Directors has delegated power to act under or pursuant to the provisions of the Plan.

Common Stock means shares of the Company’s Class A common stock, $.0001 par value
per share.

Company means Gomez, Inc., a Delaware corporation.

Designated Period means a period of ten years or such shorter period as may be
determined by the Administrator. The Designated Period may vary as among Participants and
as among SAR Awards to Participants.

Disability or Disabled means permanent and total disability as defined in
Section 22(e)(3) of the Code.

Fair Market Value of a Share of Common Stock means:

(1) If the Common Stock is listed on a national securities exchange or traded in the
over-the-counter market and sales prices are regularly reported for the Common Stock, the
closing or last price of the Common Stock on the Composite Tape or other comparable
reporting system for the applicable trading day;

(2) If the Common Stock is not traded on a national securities exchange but is traded on the
over-the-counter market, if sales prices are not regularly reported for the Common Stock for
the trading day referred to in clause (1), and if bid and asked prices for the Common Stock
are regularly reported, the mean between the bid and the asked price for the Common Stock at
the close of trading in the over-the-counter market for the applicable trading day on which
Common Stock was traded; and

(3) If the Common Stock is neither listed on a national securities exchange nor traded in
the over-the-counter market, such value as the Administrator, in good faith, shall
determine.

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ISO means an option meant to qualify as an incentive stock option under Section 422
of the Code or such other applicable successor statute.

Key Employee means an employee of the Company or of an Affiliate (including, without
limitation, an employee who is also serving as an officer or director of the Company or of
an Affiliate), designated by the Administrator to be eligible to be granted one or more
Stock Rights under the Plan.

Non-Qualified Option means an option which is not intended to qualify as an ISO.

Option means an ISO or Non-Qualified Option granted under the Plan.

Option Agreement means an agreement between the Company and a Participant delivered
pursuant to the Plan, in such form as the Administrator shall approve.

Participant means a Key Employee, director or consultant to whom one or more Stock
Rights are granted under the Plan. As used herein, “Participant” shall include
“Participant’s Survivors” where the context requires.

Plan means this Stock Plan.

Shares means shares of the Common Stock as to which Stock Rights have been or may be
granted under the Plan or any shares of capital stock into which the Shares are changed or
for which they are exchanged within the provisions of Paragraph 3 of the Plan. The Shares
issued under the Plan may be authorized and unissued shares or shares held by the Company in
its treasury, or both.

Stock Appreciation Rights or SARs means an award in the form of a right to
receive, upon exercise of the Stock Appreciation Right during the Designated Period, but
without other payment, an amount based on appreciation in the value of Common Stock over a
base price established in the SAR Agreement.

SAR Agreement means an agreement between the Company and a Participant delivered
pursuant to the Plan, in such form as the Administrator shall approve.

Stock Grant means a grant by the Company of shares of Common Stock under the Plan.

Stock Grant Agreement means an agreement between the Company and a Participant
delivered pursuant to the Plan, in such form as the Administrator shall approve.

Stock Right means a right to Shares of the Company granted pursuant to the Plan
(e.g. an ISO, a Non-Qualified Option, SARs or a restricted stock grant).

Stock Value means, with respect to SARs, the underlying value of the Common Stock.

Survivors means a deceased Participant’s legal representatives and/or any person or
persons who acquired the Participant’s rights to a Stock Right by will or by the laws of
descent and distribution.

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2. PURPOSES OF THE PLAN.

     The Plan is intended to encourage ownership of Shares by Key Employees and directors of and
certain consultants to the Company in order to attract such people, to induce them to work for the
benefit of the Company or of an Affiliate and to provide additional incentive for them to promote
the success of the Company or of an Affiliate. The Plan provides for the granting of ISOs,
Non-Qualified Options, Stock Grants and SARs.

3. SHARES SUBJECT TO THE PLAN.

     The number of Shares which may be issued from time to time pursuant to this Plan shall be
2,657,121 or the equivalent of such number of Shares after the Administrator, in its sole
discretion, has interpreted the effect of any stock split, stock dividend, combination,
recapitalization or similar transaction in accordance with Paragraph 23 of the Plan.

     If an Option or SAR ceases to be “outstanding”, in whole or in part, or if the Company shall
reacquire any Shares issued pursuant to a Stock Grant, the Shares which were subject to such Option
and any Shares so reacquired by the Company shall be available for the granting of other Stock
Rights under the Plan. Any Option shall be treated as “outstanding” until such Option is exercised
in full, or terminates or expires under the provisions of the Plan, or by agreement of the parties
to the pertinent Option Agreement.

4. ADMINISTRATION OF THE PLAN.

     The Administrator of the Plan will be the Board of Directors, except to the extent the Board
of Directors delegates its authority to the Committee, in which case the Committee shall be the
Administrator. Subject to the provisions of the Plan, the Administrator is authorized to:

	 	a.	 	Interpret the provisions of the Plan or of any Option, Stock
Grant or SAR and to make all rules and determinations which it deems necessary
or advisable for the administration of the Plan;
	 
	 	b.	 	Determine which employees of the Company or of an Affiliate
shall be designated as Key Employees and which of the Key Employees, directors
and consultants shall be granted Stock Rights;
	 
	 	c.	 	Determine the number of Shares for which a Stock Right or Stock
Rights shall be granted, provided, however, that in no event shall Stock Rights
with respect to more than 2,000,000 shares be granted to any Participant in any
fiscal year; and
	 
	 	d.	 	Specify the terms and conditions upon which a Stock Right or
Stock Rights may be granted;

provided, however, that all such interpretations, rules, determinations, terms and conditions shall
be made and prescribed in the context of preserving the tax status under Section 422 of the Code of
those Options which are designated as ISOs. Subject to the foregoing, the interpretation and
construction by the Administrator of any provisions of the Plan or of any Stock Right granted

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under
it shall be final, unless otherwise determined by the Board of Directors, if the Administrator is
the Committee.

5. ELIGIBILITY FOR PARTICIPATION.

     The Administrator will, in its sole discretion, name the Participants in the Plan, provided,
however, that each Participant must be a Key Employee, director or consultant of the Company or of
an Affiliate at the time a Stock Right is granted. Notwithstanding the foregoing, the
Administrator may authorize the grant of a Stock Right to a person not then an employee, director
or consultant of the Company or of an Affiliate; provided, however, that the actual grant of such
Stock Right shall be conditioned upon such person becoming eligible to become a Participant at or
prior to the time of the delivery of the Agreement evidencing such Stock Right. ISOs may be
granted only to Key Employees. Non-Qualified Options and Stock Grants may be granted to any Key
Employee, director or consultant of the Company or an Affiliate. The granting of any Stock Right
to any individual shall neither entitle that individual to, nor disqualify him or her from,
participation in any other grant of Stock Rights.

6. TERMS AND CONDITIONS OF OPTIONS.

     Each Option shall be set forth in writing in an Option Agreement, duly executed by the Company
and, to the extent required by law or requested by the Company, by the Participant. The
Administrator may provide that Options be granted subject to such terms and conditions, consistent
with the terms and conditions specifically required under this Plan, as the Administrator may deem
appropriate including, without limitation, subsequent approval by the shareholders of the Company
of this Plan or any amendments thereto.

	 	A.	 	Non-Qualified Options: Each Option intended to be a Non-Qualified
Option shall be subject to the terms and conditions which the Administrator determines
to be appropriate and in the best interest of the Company, subject to the following
minimum standards for any such Non-Qualified Option:

	 	a.	 	Option Price: Each Option Agreement shall state the option
price (per share) of the Shares covered by each Option, which option price
shall be determined by the Administrator but shall not be less than the par
value per share of Common Stock.
	 
	 	b.	 	Each Option Agreement shall state the number of Shares to which
it pertains;
	 
	 	c.	 	Each Option Agreement shall state the date or dates on which it
first is exercisable and the date after which it may no longer be exercised,
and may provide that the Option rights accrue or become exercisable in
installments over a period of months or years, or upon the occurrence of
certain conditions or the attainment of stated goals or events; and
	 
	 	d.	 	Exercise of any Option may be conditioned upon the
Participant’s execution of a Share purchase agreement in form satisfactory to
the

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	 	 	 	Administrator providing for certain protections for the Company and its
other shareholders, including requirements that:

	 	i.	 	The Participant’s or the Participant’s
Survivors’ right to sell or transfer the Shares may be restricted; and
	 
	 	ii.	 	The Participant or the Participant’s Survivors
may be required to execute letters of investment intent and must also
acknowledge that the Shares will bear legends noting any applicable
restrictions.

	 	B.	 	ISOs: Each Option intended to be an ISO shall be issued only to a Key
Employee and be subject to the following terms and conditions, with such additional
restrictions or changes as the Administrator determines are appropriate but not in
conflict with Section 422 of the Code and relevant regulations and rulings of the
Internal Revenue Service:

	 	a.	 	Minimum standards: The ISO shall meet the minimum standards
required of Non-Qualified Options, as described in Paragraph 6(A) above, except
clause (a) thereunder.
	 
	 	b.	 	Option Price: Immediately before the Option is granted, if the
Participant owns, directly or by reason of the applicable attribution rules in
Section 424(d) of the Code:

	 	i.	 	Ten percent (10%) or less of the total
combined voting power of all classes of stock of the Company or an
Affiliate, the Option price per share of the Shares covered by each
Option shall not be less than one hundred percent (100%) of the Fair
Market Value per share of the Shares on the date of the grant of the
Option.
	 
	 	ii.	 	More than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or an
Affiliate, the Option price per share of the Shares covered by each
Option shall not be less than one hundred ten percent (110%) of the
said Fair Market Value on the date of grant.

	 	c.	 	Term of Option: For Participants who own

	 	i.	 	Ten percent (10%) or less of the total
combined voting power of all classes of stock of the Company or an
Affiliate, each Option shall terminate not more than ten (10) years
from the date of the grant or at such earlier time as the Option
Agreement may provide.
	 
	 	ii.	 	More than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or an
Affiliate, each Option shall terminate not more than five (5) years from the date of the
grant or at such earlier time as the Option Agreement may provide.

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	 	d.	 	Limitation on Yearly Exercise: The Option Agreements shall
restrict the amount of Options which may be exercisable in any calendar year
(under this or any other ISO plan of the Company or an Affiliate) so that the
aggregate Fair Market Value (determined at the time each ISO is granted) of the
stock with respect to which ISOs are exercisable for the first time by the
Participant in any calendar year does not exceed one hundred thousand dollars
($100,000), provided that this subparagraph (d) shall have no force or effect
if its inclusion in the Plan is not necessary for Options issued as ISOs to
qualify as ISOs pursuant to Section 422(d) of the Code.

7. TERMS AND CONDITIONS OF STOCK GRANTS.

     Each offer of a Stock Grant to a Participant shall state the date prior to which the Stock
Grant must be accepted by the Participant, and the principal terms of each Stock Grant shall be set
forth in a Stock Grant Agreement, duly executed by the Company and, to the extent required by law
or requested by the Company, by the Participant. The Stock Grant Agreement shall be in a form
approved by the Administrator and shall contain terms and conditions which the Administrator
determines to be appropriate and in the best interest of the Company, subject to the following
minimum standards:

	 	(a)	 	Each Stock Grant Agreement shall state the purchase price (per share), if any,
of the Shares covered by each Stock Grant, which purchase price shall be determined by
the Administrator but shall not be less than the minimum consideration required by the
Delaware General Corporation Law on the date of the grant of the Stock Grant;
	 
	 	(b)	 	Each Stock Grant Agreement shall state the number of Shares to which the Stock
Grant pertains; and
	 
	 	(c)	 	Each Stock Grant Agreement shall include the terms of any right of the Company
to reacquire the Shares subject to the Stock Grant, including the time and events upon
which such rights shall accrue and the purchase price therefor, if any.

In addition, the Company shall take such action so as to provide that from any amount(s) to be
distributed to stockholders of the Company (whether as dividends, redemptions or otherwise) there
shall be set aside such amount (the “Escrow Amount”) as would have been payable in respect of
common stock held by Participants had options granted hereunder been fully vested and exercised
immediately prior to the record date for such distribution or immediately prior to such
distribution, if there shall be no such record date. The Escrow Amount shall be held in escrow by
an independent escrow agent and shall be distributed to Participants as their respective options
vest (including without limitation on accelerated vesting in connection with a change on control of
the Company as provided herein and pursuant to Option Agreements) in proportion to the number of
Options that vest. Interest on the Escrow Amount shall be used first to pay the fees and expenses
of the escrow agent and then returned to or retained in the Escrow Amount.

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8. TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS

     Each award of a SAR under this Plan shall be evidenced by a SAR Agreement in a form approved
by the Administrator setting forth the number of SARs, vesting schedule, if any, the Stock Value of
Common Stock upon which the SAR is based and the term of the SAR. The SAR Agreement shall also set
forth (or incorporate by reference) other material terms and conditions applicable to the SAR as
determined by the Administrator consistent with the limitations of this Plan.

     Each award of a SAR shall be subject to the following conditions:

	 	(a)	 	Unless the Administrator provides otherwise, and such provision is reflected in
the SAR Agreement, the minimum base price of a SAR granted under this Plan shall be not
less than the Fair Market Value of the underlying Common Stock on the date the SAR is
granted;
	 
	 	(b)	 	The Administrator may, in its sole discretion (but is not obligated to) provide
for the acceleration of vesting of SARs upon the occurrence of certain enumerated
events, including, but not limited to, the death, disability or retirement of the
Participant or a change in control of the Company; and
	 
	 	(c)	 	The SARs shall be used solely as a device for the measurement and determination
of the amount to be paid to Participants as provided in the Plan. The SARs shall not
constitute or be treated as property or as a trust fund of any kind. All amounts at
any time attributable to the SARs shall be and remain the sole property of the Company
and all Participants’ rights hereunder are limited to the rights to receive cash or shares of Common Stock as provided in this Plan.

9. EXERCISE OF OPTIONS AND ISSUE OF SHARES.

     (a) An Option (or any part or installment thereof) shall be exercised by giving written notice
to the Company at its principal executive office address, together with provision for payment of
the full purchase price in accordance with this Paragraph for the Shares as to which the Option is
being exercised, and upon compliance with any other condition(s) set forth in the Option Agreement.
Such written notice shall be signed by the person exercising the Option, shall state the number of
Shares with respect to which the Option is being exercised and shall contain any representation
required by the Plan or the Option Agreement. Payment of the purchase price for the Shares as to
which such Option is being exercised shall be made (a) in United States dollars in cash or by
check, or (b) at the discretion of the Administrator, through delivery of shares of Common Stock
having a Fair Market Value equal as of the date of the exercise to the cash exercise price of the
Option, or (c) at the discretion of the Administrator, by having the Company retain from the shares
otherwise issuable upon exercise of the Option, a number of shares having a Fair Market Value equal
as of the date of exercise to the exercise price of the Option, or (d) at the discretion of the
Administrator, by delivery of the grantee’s personal recourse note bearing interest payable not
less than annually at no less than 100% of the applicable Federal rate, as defined in Section
1274(d) of the Code, or (e) at the discretion of the Administrator, in accordance with a cashless
exercise program established with a securities

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brokerage firm, and approved by the Administrator, or (f) at the discretion of the
Administrator, by any combination of (a), (b), (c), (d) and (e) above. Notwithstanding the
foregoing, the Administrator shall accept only such payment on exercise of an ISO as is permitted
by Section 422 of the Code.

     (b) Subject to Section 9(c) below, the Company shall then reasonably promptly deliver the
Shares as to which such Option was exercised to the Participant (or to the Participant’s Survivors,
as the case may be). In determining what constitutes “reasonably promptly,” it is expressly
understood that the issuance and delivery of the Shares may be delayed by the Company in order to
comply with any law or regulation (including, without limitation, state securities or “blue sky”
laws) which requires the Company to take any action with respect to the Shares prior to their
issuance. The Shares shall, upon delivery, be evidenced by an appropriate certificate or
certificates for fully paid, non-assessable Shares.

     (c) Upon demand by the Company, the Participant shall execute and deliver to the Company a
joinder to the Fourth Amended and Restated Investor Rights Agreement (“Investor Rights
Agreement”), dated as of September 30, 2003, by and among the Company and stockholders
signatory thereto, other than Article 2 (Preemptive Rights) as such agreement may be amended,
restated or modified from time to time, or any other stockholders agreement as may be in effect
from time to time, in form satisfactory to the Administrator or in such form as the Company may
provide at the time of exercise of any Option or acceptance of any Stock Grant. Such other
stockholders agreement may contain, without limitation, restrictions upon the Participant’s right
to transfer shares, including the creation of an irrevocable right of first refusal in the Company
and its designees, and provisions requiring the Participant to transfer the shares to the Company
or the Company’s designees upon voluntary or involuntary termination of employment. Upon execution
of the joinder to the Investor Rights Agreement, the Participant shall become a party to the
Investor Rights Agreement and shall be fully bound by, and subject to and entitled to the benefits
of, all of the covenants, terms and conditions of the Investor Rights Agreement as though an
original party thereto and shall be deemed an Existing Stockholder for all purposes thereof, and
shall be subject to all the rights and obligations of an Existing Stockholder thereunder. Upon
such demand by the Company, execution of the Investor Rights Agreement or other similar Agreement
by the Participant prior to transfer or delivery of any shares and prior to the expiration of the
option or stock grant period shall be a condition precedent to the right to purchase such shares,
unless such condition is expressly waived in writing by the Company.

     (d) The Administrator shall have the right to accelerate the date of exercise of any
installment of any Option; provided that the Administrator shall not accelerate the exercise date
of any installment of any Option granted to any Key Employee as an ISO (and not previously
converted into a Non-Qualified Option pursuant to Paragraph 26) if such acceleration would violate
the annual vesting limitation contained in Section 422(d) of the Code or such applicable successor
statute, as described in Paragraph 6.B.d herein.

     (e) The Administrator may, in its discretion, amend any term or condition of an outstanding
Option provided (i) such term or condition as amended is permitted by the Plan, (ii) any such
amendment shall be made only with the consent of the Participant to whom the Option was granted, or
in the event of the death of the Participant, the Participant’s Survivors, if the

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amendment is adverse to the Participant, and (iii) any such amendment of any ISO shall be made
only after the Administrator, after consulting the counsel for the Company, determines whether such
amendment would constitute a “modification” of any Option which is an ISO (as that term is defined
in Section 424(h) of the Code) or would cause any adverse tax consequences for the holder of such
ISO.

10. ACCEPTANCE OF STOCK GRANT AND ISSUE OF SHARES.

     A Stock Grant (or any part or installment thereof) shall be accepted by executing the Stock
Grant Agreement and delivering it to the Company at its principal office address, together with
provision for payment of the full purchase price, if any, in accordance with this Paragraph for the
Shares as to which such Stock Grant is being accepted, and upon compliance with any other
conditions set forth in the Stock Grant Agreement. Payment of the purchase price for the Shares as
to which such Stock Grant is being accepted shall be made (a) in United States dollars in cash or
by check, or (b) at the discretion of the Administrator, through delivery of shares of Common Stock
having a fair market value equal as of the date of acceptance of the Stock Grant to the purchase
price of the Stock Grant determined in good faith by the Administrator, or (c) at the discretion of
the Administrator, by delivery of the grantee’s personal recourse note bearing interest payable not
less than annually at no less than 100% of the applicable Federal rate, as defined in Section
1274(d) of the Code, or (d) at the discretion of the Administrator, by any combination of (a), (b)
and (c) above.

     The Company shall then reasonably promptly deliver the Shares as to which such Stock Grant was
accepted to the Participant (or to the Participant’s Survivors, as the case may be), subject to any
escrow provision set forth in the Stock Grant Agreement. In determining what constitutes
“reasonably promptly,” it is expressly understood that the issuance and delivery of the Shares may
be delayed by the Company in order to comply with any law or regulation (including, without
limitation, state securities or “blue sky” laws) which requires the Company to take any action with
respect to the Shares prior to their issuance.

     The Administrator may, in its discretion, amend any term or condition of an outstanding Stock
Grant or Stock Grant Agreement provided (i) such term or condition as amended is permitted by the
Plan, and (ii) any such amendment shall be made only with the consent of the Participant to whom
the Stock Grant was made, if the amendment is adverse to the Participant.

11. EXERCISE OF STOCK APPRECIATION RIGHTS AND ISSUE OF SHARES

     On the date on which the SAR is exercised, the Participant shall receive an amount equal to
the appreciation in market value of his or her SARs as determined in this Section 11 of the Plan.
That amount shall be payable in cash, shares of Common Stock, or some combination of both, as set
forth in the SAR Agreement. No fractional shares shall be issued but a Participant shall be
entitled to a cash adjustment for a fractional share that would otherwise be issued. SARs will be
canceled upon the Participant’s exercise of such SARs, and no further payment shall be made as to
SARs exercised by a Participant.

     The Stock Value on both the date the SAR is awarded and the date the SAR is exercised shall be
stated in each SAR Agreement and shall be determined by either (i) the Administrator in

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its sole discretion, or (ii) a formula based on the Fair Market Value of the Common Stock on a
particular day or the average of the Fair Market Values of the Common Stock over a series of days.
The appreciation in the Stock Value of SARs for purposes of determining payments to be made to a
Participant shall be measured by determining the Stock Value of SARs held by that Participant on
the date the SAR is exercised and subtracting from that the Stock Value of the same SARs on the
date such SARs were awarded. The measurement of appreciation shall be made separately with respect
to each separate award of SARs.

12. RIGHTS AS A SHAREHOLDER.

     No Participant to whom a Stock Right has been granted shall have rights as a shareholder with
respect to any Shares covered by such Stock Right, except after due exercise of the Option or
acceptance of the Stock Grant and tender of the full purchase price, if any, for the Shares being
purchased pursuant to such exercise or acceptance and registration of the Shares in the Company’s
share register in the name of the Participant.

13. ASSIGNABILITY AND TRANSFERABILITY OF STOCK RIGHTS.

     By its terms, a Stock Right granted to a Participant shall not be transferable by the
Participant other than (i) by will or by the laws of descent and distribution, or (ii) as otherwise
determined by the Administrator and set forth in the applicable Option Agreement, Stock Grant
Agreement or SAR Agreement. The designation of a beneficiary of a Stock Right by a Participant
shall not be deemed a transfer prohibited by this Paragraph. Except as provided above, a Stock
Right shall only be exercisable or may only be accepted, during the Participant’s lifetime, by such
Participant (or by his or her legal representative) and shall not be assigned, pledged or
hypothecated in any way (whether by operation of law or otherwise) and shall not be subject to
execution, attachment or similar process. Any attempted transfer, assignment, pledge,
hypothecation or other disposition of any Stock Right or of any rights granted thereunder contrary
to the provisions of this Plan, or the levy of any attachment or similar process upon a Stock
Right, shall be null and void.

14. EFFECT ON OPTIONS OF TERMINATION OF SERVICE OTHER THAN “FOR CAUSE” OR DEATH OR
DISABILITY.

     Except as otherwise provided in the pertinent Option Agreement in the event of a termination
of service (whether as an employee, director or consultant) with the Company or an Affiliate before
the Participant has exercised an Option, the following rules apply:

	 	a.	 	A Participant who ceases to be an employee, director or
consultant of the Company or of an Affiliate (for any reason other than
termination “for cause”, Disability, or death for which events there are
special rules in Paragraphs 13, 14, and 15, respectively), may exercise any
Option granted to him or her to the extent that the Option is exercisable on
the date of such termination of service, but only within such term as the
Administrator has designated in the pertinent Option Agreement.
	 
	 	b.	 	Except as provided in Subparagraph (c) below, or Paragraph 14
or 15, in no event may an Option Agreement provide, if an Option is intended to
be

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	 	 	 	an ISO, that the time for exercise be later than three (3) months after the
Participant’s termination of employment.
	 
	 	c.	 	The provisions of this Paragraph, and not the provisions of
Paragraph 14 or 15, shall apply to a Participant who subsequently becomes
Disabled or dies after the termination of employment, director status or
consultancy, provided, however, in the case of a Participant’s Disability or
death within three (3) months after the termination of employment, director
status or consultancy, the Participant or the Participant’s Survivors may
exercise the Option within one (1) year after the date of the Participant’s
termination of employment, but in no event after the date of expiration of the
term of the Option.
	 
	 	d.	 	Notwithstanding anything herein to the contrary, if subsequent
to a Participant’s termination of employment, termination of director status or
termination of consultancy, but prior to the exercise of an Option, the Board
of Directors determines that, either prior or subsequent to the Participant’s
termination, the Participant engaged in conduct which would constitute “cause”,
then such Participant shall forthwith cease to have any right to exercise any
Option.
	 
	 	e.	 	A Participant to whom an Option has been granted under the Plan
who is absent from work with the Company or with an Affiliate because of
temporary disability (any disability other than a permanent and total
Disability as defined in Paragraph 1 hereof), or who is on a bona fide leave of
absence (as approved by the Administrator) provided that the period of such
leave of absence does not exceed 90 days or, if longer, any period during which
such Participant’s right to reemployment is guaranteed by statute, shall not,
during the period of any such absence, be deemed, by virtue of such absence
alone, to have terminated such Participant’s employment, director status or
consultancy with the Company or with an Affiliate, except as the Administrator
may otherwise expressly provide.
	 
	 	f.	 	Except as required by law or as set forth in the pertinent
Option Agreement, Options granted under the Plan shall not be affected by any
change of a Participant’s status within or among the Company and any
Affiliates, so long as the Participant continues to be an employee, director or
consultant of the Company or any Affiliate.

15. EFFECT ON OPTIONS OF TERMINATION OF SERVICE “FOR CAUSE”.

     Except as otherwise provided in the pertinent Option Agreement, at the discretion of the
Administrator the following rules apply if the Participant’s service (whether as an employee,
director or consultant) with the Company or an Affiliate is terminated “for cause” prior to the
time that all his or her outstanding Options have been exercised:

12

 

	 	a.	 	All outstanding and unexercised Options as of the time the
Participant’s service is terminated “for cause” will immediately be forfeited.
	 
	 	b.	 	For purposes of this Plan, “cause” shall include (and is not
limited to) dishonesty with respect to the Company or any Affiliate,
insubordination, substantial malfeasance or non-feasance of duty, unauthorized
disclosure of confidential information, and conduct substantially prejudicial
to the business of the Company or any Affiliate. The determination of the
Administrator as to the existence of “cause” will be conclusive on the
Participant and the Company.
	 
	 	c.	 	“Cause” is not limited to events which have occurred prior to a
Participant’s termination of service, nor is it necessary that the
Administrator’s finding of “cause” occur prior to termination. If the
Administrator determines, subsequent to a Participant’s termination of service
but prior to the exercise of an Option, that either prior or subsequent to the
Participant’s termination the Participant engaged in conduct which would
constitute “cause”, then the right to exercise any Option is forfeited.
	 
	 	d.	 	Any definition in an agreement between the Participant and the
Company or an Affiliate, which contains a conflicting definition of “cause” for
termination and which is in effect at the time of such termination, shall
supersede the definition in this Plan with respect to such Participant.

16. EFFECT ON OPTIONS OF TERMINATION OF SERVICE FOR DISABILITY.

     Except as otherwise provided in the pertinent Option Agreement, a Participant who ceases to be
an employee, director or consultant of the Company or of an Affiliate by reason of Disability may
exercise any Option granted to such Participant:

	 	a.	 	To the extent exercisable but not exercised on the date of Disability; and
	 
	 	b.	 	In the event rights to exercise the Option accrue periodically, to the extent
of a pro rata portion of any additional rights as would have accrued had the
Participant not become Disabled prior to the end of the accrual period which next ends
following the date of Disability. The proration shall be based upon the number of days
of such accrual period prior to the date of Disability.

     A Disabled Participant may exercise such rights only within the period ending one (1) year
after the date of the Participant’s termination of employment, directorship or consultancy, as the
case may be, notwithstanding that the Participant might have been able to exercise the Option as to
some or all of the Shares on a later date if the Participant had not become disabled and had
continued to be an employee, director or consultant or, if earlier, within the originally
prescribed term of the Option.

     The Administrator shall make the determination both of whether Disability has occurred and the
date of its occurrence (unless a procedure for such determination is set forth in another

13

 

agreement between the Company and such Participant, in which case such procedure shall be used
for such determination). If requested, the Participant shall be examined by a physician selected
or approved by the Administrator, the cost of which examination shall be paid for by the Company.

17. EFFECT ON OPTIONS OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT.

     Except as otherwise provided in the pertinent Option Agreement, in the event of the death of a
Participant while the Participant is an employee, director or consultant of the Company or of an
Affiliate, such Option may be exercised by the Participant’s Survivors:

	 	a.	 	To the extent exercisable but not exercised on the date of
death; and
	 
	 	b.	 	In the event rights to exercise the Option accrue periodically,
to the extent of a pro rata portion of any additional rights which would have
accrued had the Participant not died prior to the end of the accrual period
which next ends following the date of death. The proration shall be based upon
the number of days of such accrual period prior to the Participant’s death.

     If the Participant’s Survivors wish to exercise the Option, they must take all necessary steps
to exercise the Option within one (1) year after the date of death of such Participant,
notwithstanding that the decedent might have been able to exercise the Option as to some or all of
the Shares on a later date if he or she had not died and had continued to be an employee, director
or consultant or, if earlier, within the originally prescribed term of the Option.

     18. EFFECT OF TERMINATION OF SERVICE ON STOCK GRANTS.

     In the event of a termination of service (whether as an employee, director or consultant) with
the Company or an Affiliate for any reason before the Participant has accepted a Stock Grant, such
offer shall terminate.

     For purposes of this Paragraph 16 and Paragraph 17 below, a Participant to whom a Stock Grant
has been offered under the Plan who is absent from work with the Company or with an Affiliate
because of temporary disability (any disability other than a permanent and total Disability as
defined in Paragraph 1 hereof), or who is on leave of absence for any purpose, shall not, during
the period of any such absence, be deemed, by virtue of such absence alone, to have terminated such
Participant’s employment, director status or consultancy with the Company or with an Affiliate,
except as the Administrator may otherwise expressly provide.

     In addition, for purposes of this Paragraph 16 and Paragraph 17 below, any change of
employment or other service within or among the Company and any Affiliates shall not be treated as
a termination of employment, director status or consultancy so long as the Participant continues to
be an employee, director or consultant of the Company or any Affiliate.

14

 

			
	19.	 	EFFECT ON STOCK GRANTS OF TERMINATION OF SERVICE OTHER THAN “FOR CAUSE” OR DEATH OR
DISABILITY.

     Except as otherwise provided in the pertinent Stock Grant Agreement, in the event of a
termination of service (whether as an employee, director or consultant), other than termination
“for cause,” Disability, or death for which events there are special rules in Paragraphs 18, 19,
and 20,respectively, before all Company rights of repurchase shall have lapsed, then the Company
shall have the right to repurchase, at the purchase price, that number of Shares subject to a Stock
Grant as to which the Company’s repurchase rights have not lapsed.

20. EFFECT ON STOCK GRANTS OF TERMINATION OF SERVICE “FOR CAUSE”.

     Except as otherwise provided in the pertinent Stock Grant Agreement, at the discretion of the
Administrator the following rules apply if the Participant’s service (whether as an employee,
director or consultant) with the Company or an Affiliate is terminated “for cause”:

	 	a.	 	All Shares subject to any Stock Grant shall be immediately subject to
repurchase by the Company at the purchase price, if any, thereof.
	 
	 	b.	 	For purposes of this Plan, “cause” shall include (and is not limited to)
dishonesty with respect to the employer, insubordination, substantial malfeasance or
non-feasance of duty, unauthorized disclosure of confidential information, and conduct
substantially prejudicial to the business of the Company or any Affiliate. The
determination of the Administrator as to the existence of “cause” will be conclusive on
the Participant and the Company.
	 
	 	c.	 	“Cause” is not limited to events which have occurred prior to a Participant’s
termination of service, nor is it necessary that the Administrator’s finding of “cause”
occur prior to termination. If the Administrator determines, subsequent to a
Participant’s termination of service, that either prior or subsequent to the
Participant’s termination the Participant engaged in conduct which would constitute
“cause,” then the Company’s right to repurchase all of such Participant’s Shares shall
apply.
	 
	 	d.	 	Any definition in an agreement between the Participant and the Company or an
Affiliate, which contains a conflicting definition of “cause” for termination and which
is in effect at the time of such termination, shall supersede the definition in this
Plan with respect to such Participant.

21. EFFECT ON STOCK GRANTS OF TERMINATION OF SERVICE FOR DISABILITY.

     Except as otherwise provided in the pertinent Stock Grant Agreement, the following rules apply
if a Participant ceases to be an employee, director or consultant of the Company or of an Affiliate
by reason of Disability: to the extent the Company’s rights of repurchase have not lapsed on the
date of Disability, they shall be exercisable; provided, however, that in the event such rights of
repurchase lapse periodically, such rights shall lapse to the extent of a pro rata portion of the
Shares subject to such Stock Grant as would have lapsed had the Participant not

15

 

become Disabled prior to the end of the vesting period which next ends following the date of
Disability. The proration shall be based upon the number of days of such vesting period prior to
the date of Disability.

     The Administrator shall make the determination both of whether Disability has occurred and the
date of its occurrence (unless a procedure for such determination is set forth in another agreement
between the Company and such Participant, in which case such procedure shall be used for such
determination). If requested, the Participant shall be examined by a physician selected or
approved by the Administrator, the cost of which examination shall be paid for by the Company.

22. EFFECT ON STOCK GRANTS OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT.

     Except as otherwise provided in the pertinent Stock Grant Agreement, the following rules apply
in the event of the death of a Participant while the Participant is an employee, director or
consultant of the Company or of an Affiliate: to the extent the Company’s rights of repurchase
have not lapsed on the date of death, they shall be exercisable; provided, however, that in the
event such rights of repurchase lapse periodically, such rights shall lapse to the extent of a pro
rata portion of the Shares subject to such Stock Grant as would have lapsed had the Participant not
died prior to the end of the vesting period which next ends following the date of death. The
proration shall be based upon the number of days of such vesting period prior to the Participant’s
death.

23. EFFECT ON STOCK APPRECIATION RIGHTS OF TERMINATION OF SERVICE OTHER THAN FOR CAUSE

     Except as otherwise provided in the pertinent SAR Agreement, if the Participant is no longer
an employee, a Director or consultant for any reason (including death or Disability) other than
termination “for cause”, the Participant shall have, or the Participant’s beneficiaries shall have
three months from such termination date to exercise any exercisable unexercised SAR in accordance
with the terms of the applicable SAR Agreement and the Plan. Immediately after the expiration of
such three-month period, all SARs which have not been exercised shall be forfeited, and the
Participant (and his beneficiaries, if applicable) shall thereafter have no rights or entitlement
with respect to such forfeited SARs.

24. EFFECT ON STOCK APPRECIATION RIGHTS OF TERMINATION OF SERVICE FOR CAUSE

     Except as otherwise provided in the pertinent SAR Agreement, if the Participant is terminated
for cause, then the following rules will apply:

	 	a.	 	Any SAR that has not been exercised shall be immediately
forfeited, and the Participant shall thereafter have no rights or entitlement
with respect to such forfeited SARs.
	 
	 	b.	 	For purposes of this Plan, “cause” shall include (and is not
limited to) dishonesty with respect to the employer, insubordination,
substantial

16

 

	 	 	 	malfeasance or non-feasance of duty, unauthorized disclosure of confidential
information, and conduct substantially prejudicial to the business of the
Company or any Affiliate. The determination of the Administrator as to the
existence of “cause” will be conclusive on the Participant and the Company.
	 
	 	c.	 	“Cause” is not limited to events which have occurred prior to a
Participant’s termination of service, nor is it necessary that the
Administrator’s finding of “cause” occur prior to termination. If the
Administrator determines, subsequent to a Participant’s termination of service,
that either prior or subsequent to the Participant’s termination the
Participant engaged in conduct which would constitute “cause,” then the
Company’s right to repurchase all of such Participant’s Shares shall apply.
	 
	 	d.	 	Any definition in an agreement between the Participant and the
Company or an Affiliate, which contains a conflicting definition of “cause” for
termination and which is in effect at the time of such termination, shall
supersede the definition in this Plan with respect to such Participant.

25. PURCHASE FOR INVESTMENT.

     Unless the offering and sale of the Shares to be issued upon the particular exercise or
acceptance of a Stock Right shall have been effectively registered under the Securities Act of
1933, as now in force or hereafter amended (the “1933 Act”), the Company shall be under no
obligation to issue the Shares covered by such exercise unless and until the following conditions
have been fulfilled:

	 	a.	 	The person(s) who exercise(s) or accept(s) such Stock Right
shall warrant to the Company, prior to the receipt of such Shares, that such
person(s) are acquiring such Shares for their own respective accounts, for
investment, and not with a view to, or for sale in connection with, the
distribution of any such Shares, in which event the person(s) acquiring such
Shares shall be bound by the provisions of the following legend which shall be
endorsed upon the certificate(s) evidencing their Shares issued pursuant to
such exercise or such grant, together with any other appropriate legend as the
Company may designate from time to time:

“The shares represented by this certificate have been taken for
investment and they may not be sold or otherwise transferred by any
person, including a pledgee, unless (1) either (a) a Registration
Statement with respect to such shares shall be effective under the
Securities Act of 1933, as amended, or (b) the Company shall have
received an opinion of counsel satisfactory to it that an exemption
from registration under such Act is then available, and (2) there
shall have been compliance with all applicable state securities
laws.”

17

 

	 	b.	 	At the discretion of the Administrator, the Company shall have
received an opinion of its counsel that the Shares may be issued upon such
particular exercise or acceptance in compliance with the 1933 Act without
registration thereunder.

26. DISSOLUTION OR LIQUIDATION OF THE COMPANY.

     Upon the dissolution or liquidation of the Company, all Options granted and SARs awarded under
this Plan which as of such date shall not have been exercised and all Stock Grants which have not
been accepted will terminate and become null and void; provided, however, that if the rights of a
Participant or a Participant’s Survivors have not otherwise terminated and expired, the Participant
or the Participant’s Survivors will have the right immediately prior to such dissolution or
liquidation to exercise or accept any Stock Right to the extent that the Stock Right is exercisable
or subject to acceptance as of the date immediately prior to such dissolution or liquidation.

27. ADJUSTMENTS.

     Upon the occurrence of any of the following events, a Participant’s rights with respect to any
Stock Right granted to him or her hereunder shall be adjusted as hereinafter provided, unless
otherwise specifically provided in the pertinent Option Agreement, Stock Grant Agreement or SAR
Agreement:

     A. Stock Dividends and Stock Splits. In the event of a reorganization,
recapitalization, stock split, stock dividend, combination of shares, merger, consolidation,
distribution of assets, or any other change in the corporate structure or shares of the Company, or
if additional shares or new or different shares or other securities of the Company or other
non-cash assets are distributed with respect to such shares of Common Stock, the number of shares
of Common Stock deliverable upon the exercise or acceptance of such Stock Right may be
appropriately increased or decreased proportionately, and appropriate adjustments may be made in
the purchase price per share to reflect such events. The number of Shares subject to options to be
granted to directors and the number of Shares subject to the limitation in Paragraph 4(c) shall
also be proportionately adjusted upon the occurrence of such events.

     B. Consolidations or Mergers. Upon the occurrence of a Change in Control, the
Administrator or the board of directors of any entity assuming the obligations of the Company
hereunder (the “Successor Board”), shall, as to outstanding Options, either (i) make appropriate
provision for the continuation of such Options by substituting on an equitable basis for the Shares
then subject to such Options either the consideration payable with respect to the outstanding
shares of Common Stock in connection with the Change in Control or securities of any successor or
acquiring entity; or (ii) upon written notice to the Participants, provide that all Options must be
exercised (either to the extent then exercisable or, at the discretion of the Administrator, all
Options being made fully exercisable for purposes of this Subparagraph) at the end of which period
the Options shall terminate; or (iii) terminate all Options in exchange for a cash payment equal to
the excess of the Fair Market Value of the Shares subject to such Options (either to the extent
then exercisable or, at the discretion of the Administrator, all Options being made fully
exercisable for purposes of this Subparagraph) over the exercise price thereof.

18

 

     With respect to outstanding Stock Grants, the Administrator or the Successor Board, shall
either (i) make appropriate provisions for the continuation of such Stock Grants by substituting on
an equitable basis for the Shares then subject to such Stock Grants either the consideration
payable with respect to the outstanding Shares of Common Stock in connection with the Change in
Control or securities of any successor or acquiring entity; or (ii) upon written notice to the
Participants, provide that all Stock Grants must be accepted (to the extent then subject to
acceptance) within a specified number of days of the date of such notice, at the end of which
period the offer of the Stock Grants shall terminate; or (iii) terminate all Stock Grants in
exchange for a cash payment equal to the excess of the Fair Market Value of the Shares subject to
such Stock Grants over the purchase price thereof, if any. In addition, in the event of an Change
in Control, the Administrator may waive any or all Company repurchase rights with respect to
outstanding Stock Grants.

     With respect to outstanding SARs, the Administrator or Successor Board, shall either (i) make
appropriate provision for the continuation of such SARs by substituting on an equitable basis for
the Shares then subject to such SARs either the consideration payable with respect to the
outstanding Shares of Common Stock in connection with the Change in Control or securities of any
successor or acquiring entity; or (ii) upon written notice to the Participant, provide that all
SARs must be exercised (either to the extent then exercisable or, at the discretion of the
Administrator, all SARs being made fully exercisable for purposes of this Subsection), within a
specified number of days of the date of such notice, at the end of which period the SARs shall
terminate; or (iii) terminate all SARs in exchange for a cash payment equal to the excess of the
Fair Market Value of the Shares subject to such SARs, as determined in good faith by the
Administrator or the Successor Board (either to the extent then exercisable or, at the discretion
of the Administrator, all SARs being made fully exercisable for purposes of this Subparagraph),
over the Stock Value of the stock at the close of business on the business day preceding the date
such SARs were awarded.

     C. Recapitalization or Reorganization. In the event of a recapitalization or
reorganization of the Company (other than a transaction described in Subparagraph B above) pursuant
to which securities of the Company or of another corporation are issued with respect to the
outstanding shares of Common Stock, a Participant upon exercising or accepting a Stock Right shall
be entitled to receive for the purchase price, if any, paid upon such exercise or acceptance the
securities which would have been received if such Stock Right had been exercised or accepted prior
to such recapitalization or reorganization.

     D. Modification of ISOs. Notwithstanding the foregoing, any adjustments made pursuant
to Subparagraph A, B or C with respect to ISOs shall be made only after the Administrator, after
consulting with counsel for the Company, determines whether such adjustments would constitute a
“modification” of such ISOs (as that term is defined in Section 424(h) of the Code) or would cause
any adverse tax consequences for the holders of such ISOs. If the Administrator determines that
such adjustments made with respect to ISOs would constitute a modification of such ISOs, it may
refrain from making such adjustments, unless the holder of an ISO specifically requests in writing
that such adjustment be made and such writing indicates that the holder has full knowledge of the
consequences of such “modification” on his or her income tax treatment with respect to the ISO.

19

 

28. ISSUANCES OF SECURITIES.

     Except as expressly provided herein, no issuance by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of shares subject to Stock
Rights. Except as expressly provided herein, no adjustments shall be made for dividends paid in
cash or in property (including without limitation, securities) of the Company prior to any issuance
of Shares pursuant to a Stock Right.

29. FRACTIONAL SHARES.

     No fractional shares shall be issued under the Plan and the person exercising a Stock Right
shall receive from the Company cash in lieu of such fractional shares equal to the Fair Market
Value thereof.

30. CONVERSION OF ISOs INTO NON-QUALIFIED OPTIONS; TERMINATION OF ISOs.

     The Administrator, at the written request of any Participant, may in its discretion take such
actions as may be necessary to convert such Participant’s ISOs (or any portions thereof) that have
not been exercised on the date of conversion into Non-Qualified Options at any time prior to the
expiration of such ISOs, regardless of whether the Participant is an employee of the Company or an
Affiliate at the time of such conversion. Such actions may include, but not be limited to,
extending the exercise period or reducing the exercise price of the appropriate installments of
such Options. At the time of such conversion, the Administrator (with the consent of the
Participant) may impose such conditions on the exercise of the resulting Non-Qualified Options as
the Administrator in its discretion may determine, provided that such conditions shall not be
inconsistent with this Plan. Nothing in the Plan shall be deemed to give any Participant the right
to have such Participant’s ISOs converted into Non-Qualified Options, and no such conversion shall
occur until and unless the Administrator takes appropriate action. The Administrator, with the
consent of the Participant, may also terminate any portion of any ISO that has not been exercised
at the time of such conversion.

31. WITHHOLDING.

     In the event that any federal, state, or local income taxes, employment taxes, Federal
Insurance Contributions Act (“F.I.C.A.”) withholdings or other amounts are required by applicable
law or governmental regulation to be withheld from the Participant’s salary, wages or other
remuneration in connection with the exercise or acceptance of a Stock Right or in connection with a
Disqualifying Disposition (as defined in Paragraph 28) or upon the lapsing of any right of
repurchase, the Company may withhold from the Participant’s compensation, if any, or may require
that the Participant advance in cash to the Company, or to any Affiliate of the Company which
employs or employed the Participant, the amount of such withholdings unless a different withholding
arrangement, including the use of shares of the Company’s Common Stock or a promissory note, is
authorized by the Administrator (and permitted by law). For purposes hereof, the fair market value
of the shares withheld for purposes of payroll withholding shall be determined in the manner
provided in Paragraph 1 above, as of the most recent practicable date

20

 

prior to the date of exercise. If the fair market value of the shares withheld is less than
the amount of payroll withholdings required, the Participant may be required to advance the
difference in cash to the Company or the Affiliate employer. The Administrator in its discretion
may condition the exercise of an Option for less than the then Fair Market Value on the
Participant’s payment of such additional withholding.

32. NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION.

     Each Key Employee who receives an ISO must agree to notify the Company in writing immediately
after the Key Employee makes a Disqualifying Disposition of any shares acquired pursuant to the
exercise of an ISO. A Disqualifying Disposition is any disposition (including any sale) of such
shares before the later of (a) two years after the date the Key Employee was granted the ISO, or
(b) one year after the date the Key Employee acquired Shares by exercising the ISO. If the Key
Employee has died before such stock is sold, these holding period requirements do not apply and no
Disqualifying Disposition can occur thereafter.

33. TERMINATION OF THE PLAN.

     The Plan will terminate on the date which is ten (10) years from the earlier of the
date of its adoption and the date of its approval by the shareholders of the Company. The Plan may
be terminated at an earlier date by vote of the shareholders of the Company; provided, however,
that any such earlier termination shall not affect any Option Agreements, Stock Grant Agreements or
SAR Agreements executed prior to the effective date of such termination.

34. AMENDMENT OF THE PLAN AND AGREEMENTS.

     The Plan may be amended by the shareholders of the Company. The Plan may also be amended by
the Administrator, including, without limitation, to the extent necessary to qualify any or all
outstanding Stock Rights granted under the Plan or Stock Rights to be granted under the Plan for
favorable federal income tax treatment (including deferral of taxation upon exercise) as may be
afforded incentive stock options under Section 422 of the Code, and to the extent necessary to
qualify the shares issuable upon exercise or acceptance of any outstanding Stock Rights granted, or
Stock Rights to be granted, under the Plan for listing on any national securities exchange or
quotation in any national automated quotation system of securities dealers. Any amendment approved
by the Administrator which the Administrator determines is of a scope that requires shareholder
approval shall be subject to obtaining such shareholder approval. Any modification or amendment of
the Plan shall not, without the consent of a Participant, adversely affect his or her rights under
a Stock Right previously granted to him or her. With the consent of the Participant affected, the
Administrator may amend outstanding Option Agreements, Stock Grant Agreements or SAR Agreements in
a manner which may be adverse to the Participant but which is not inconsistent with the Plan. In
the discretion of the Administrator, outstanding Option Agreements, Stock Grant Agreements or SAR
Agreements may be amended by the Administrator in a manner which is not adverse to the Participant.

35. EMPLOYMENT OR OTHER RELATIONSHIP.

     Nothing in this Plan or any Option Agreement, Stock Grant Agreement or SAR Agreements shall be
deemed to prevent the Company or an Affiliate from terminating the

21

 

employment, consultancy or director status of a Participant, nor to prevent a Participant from
terminating his or her own employment, consultancy or director status or to give any Participant a
right to be retained in employment or other service by the Company or any Affiliate for any period
of time.

36. GOVERNING LAW.

     This Plan shall be construed and enforced in accordance with the law of the State of Delaware.

22exv10w6

 

Exhibit 10.6

INCENTIVE STOCK OPTION AGREEMENT

TERMS AND CONDITIONS (v. MAY 1, 2001)

GOMEZ, INC. (THE “COMPANY”)

     1. GRANT OF OPTION.

     The Company hereby grants to the optionee (the “Employee”) referred to in the Notice of Grant
of Stock Option (the “Notice”) to which these terms and conditions are attached the right and
option to purchase all or any part of an aggregate of the number of shares of common stock of the
Company set forth in the Notice (“Shares”), on the terms and conditions and subject to all the
limitations set forth herein and in the stock option plan referred to in the Notice (the “Plan”),
which is incorporated herein by reference. The Employee acknowledges receipt of a copy of the
Plan.

     2. PURCHASE PRICE.

     The purchase price of the Shares covered by the Option shall be as set forth in the Notice,
subject to adjustment, as provided in the Plan, in the event of a stock split, reverse stock split
or other events affecting the holders of Shares. Payment shall be made in accordance with
Paragraph 9 of the Plan.

     3. EXERCISABILITY OF OPTION.

     Subject to the terms and conditions set forth in this Agreement and the Plan, the Option
granted hereby shall become exercisable as set forth in the Notice. The right to exercise shall be
cumulative so that if the Option is not exercised to the maximum extent possible during any
exercise period, it shall be exercisable, in whole or in part, with respect to all shares not so
purchased at any time prior to the expiration of the Option or the earlier termination of the
Option.

     The foregoing to the contrary notwithstanding, if there is a Change in Control (as defined
below) of the Company, and if the Employee is employed by the Company on the date of consummation
thereof, then as of the effectiveness of the Change in Control the Option granted hereby shall
become immediately exercisable in full with respect to 50% of the then-remaining Shares covered
hereby.

     For purposes of this Section, “Change in Control” means:

     (a) Any person (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934 (the “Exchange Act”)) shall have acquired (by any means) the right (a)
through the Beneficial Ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of any voting securities of the Company or (2) by contract, agreement or
similar understanding or (3) any combination of (1) and (2), to elect a majority of the
Board; or

1

 

     (b) The approval by the stockholders of the Company of a reorganization, merger or
consolidation or sale or other disposition of all or substantially all of the assets of the
Company (“Corporate Transaction”); excluding, however, such a Corporate Transaction pursuant
to which (1) all or substantially all of the individuals and entities who are the Beneficial
Owners, respectively, of the then outstanding common stock (“Outstanding Corporation Common
Stock”) and of the then outstanding common stock entitled to vote generally in the election
of Directors (“Outstanding Corporation Voting Securities”) immediately prior to such
Corporate Transaction will beneficially own, directly or indirectly, more than 50% of,
respectively, the outstanding common stock, and the combined voting power of the then
outstanding common stock entitled to vote generally in the election of Directors, as the
case may be, of the company resulting from such Corporate Transaction (including, without
limitation, a corporation which as a result of such transaction owns the Company or all or
substantially all of the Company’s assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership, immediately prior to
such Corporate Transaction, of the Outstanding Corporation Common Stock and Outstanding
Corporation Voting Securities, as the case may be, and (2) individuals who were immediately
prior to the effective date of the Corporate Transaction members of the Board will
constitute at least a majority of the board of directors of the corporation resulting from
such Corporate Transaction; or

     (c) The approval by the stockholders of the Company of a complete liquidation or
dissolution of the Company.

     The foregoing rights are cumulative and are subject to the other terms and conditions of this
Agreement.

     4. TERM OF OPTION.

     The Option shall expire ten (10) years from the date of this Agreement or, if the Employee
owns as of the date hereof more than ten percent (10%) of the total combined voting power of all
classes of capital stock of the Company or an Affiliate, five (5) years from the date of this
Agreement, but shall be subject to earlier termination as provided herein or in the Plan.

     If the Employee ceases to be an employee of the Company or of an Affiliate (for any reason
other than the death or Disability of the Employee or termination of the Employee’s employment for
“cause” (as defined in the Plan)), the Option may be exercised, if it has not previously
terminated, within three (3) months after the date the Employee ceases to be an employee of the
Company or an Affiliate, or within the originally prescribed term of the Option, whichever is
earlier, but may not be exercised thereafter. In such event, the Option shall be exercisable only
to the extent that the Option has become exercisable and is in effect at the date of such cessation
of employment.

     Notwithstanding the foregoing, in the event of the Employee’s Disability or death within three
(3) months after the termination of employment, the Employee or the Employee’s Survivors may
exercise the Option within one (1) year after the date of the Employee’s termination of employment,
but in no event after the date of expiration of the term of the Option.

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     In the event the Employee’s employment is terminated by the Employee’s employer for “cause”
(as defined in the Plan), the Employee’s right to exercise any unexercised portion of this Option
shall cease as of such termination, and this Option shall thereupon terminate. Notwithstanding
anything herein to the contrary, if subsequent to the Employee’s termination as an employee, but
prior to the exercise of the Option, the Board of Directors of the Company determines that, either
prior or subsequent to the Employee’s termination, the Employee engaged in conduct which would
constitute “cause,” then the Employee shall immediately cease to have any right to exercise the
Option and this Option shall thereupon terminate.

     In the event of the Disability of the Employee, as determined in accordance with the Plan, the
Option shall be exercisable within one (1) year after the Employee’s termination of employment or,
if earlier, within the term originally prescribed by the Option. In such event, the Option shall
be exercisable:

	 	(a)	 	to the extent exercisable but not exercised as of the date of Disability; and

	 	(b)	 	in the event rights to exercise the Option accrue periodically, to the extent
of a pro rata portion of any additional rights to exercise the Option as would have
accrued had the Employee not become Disabled prior to the end of the accrual period
which next ends following the date of Disability. The proration shall be based upon
the number of days during the accrual period prior to the date of Disability.

     In the event of the death of the Employee while an employee of the Company or of an Affiliate,
the Option shall be exercisable by the Participant’s Survivors within one (1) year after the date
of death of the Employee or, if earlier, within the originally prescribed term of the Option. In
such event, the Option shall be exercisable:

	 	(x)	 	to the extent exercisable but not exercised as of the date of death; and

	 	(y)	 	in the event rights to exercise the Option accrue periodically, to the extent
of a pro rata portion of any additional rights to exercise the Option as would have
accrued had the Employee not died prior to the end of the accrual period which next
ends following the date of death. The proration shall be based upon the number of days
during the accrual period prior to the Employee’s death.

     5. METHOD OF EXERCISING OPTION.

     Subject to the terms and conditions of this Agreement, the Option may be exercised by written
notice to the Company at its principal executive office, in substantially the form of a written
notice reasonably required by the Company from time to time. Such notice shall state the number of
Shares with respect to which the Option is being exercised and shall be signed by the person
exercising the Option. Payment of the purchase price for such Shares shall be made in accordance
with Paragraph 9 of the Plan. The Company shall deliver a certificate or certificates representing
such Shares as soon as practicable after the notice shall be received, provided, however, that the
Company may delay issuance of such Shares until completion of any action or obtaining of any
consent, which the Company deems necessary under any applicable law (including, without limitation,
state securities or “blue sky” laws). The certificate or certificates for the Shares as to which
the Option shall have been so exercised shall be registered in the name

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of the person or persons so exercising the Option (or, if the Option shall be exercised by the
Employee and if the Employee shall so request in the notice exercising the Option, shall be
registered in the name of the Employee and another person jointly, with right of survivorship) and
shall be delivered as provided above to or upon the written order of the person or persons
exercising the Option. In the event the Option shall be exercised, pursuant to Section 4 hereof,
by any person or persons other than the Employee, such notice shall be accompanied by appropriate
proof of the right of such person or persons to exercise the Option. All Shares that shall be
purchased upon the exercise of the Option as provided herein shall be fully paid and nonassessable.

     6. PARTIAL EXERCISE.

     Exercise of this Option to the extent above stated may be made in part at any time and from
time to time within the above limits, except that no fractional share shall be issued pursuant to
this Option.

     7. NON-ASSIGNABILITY.

     The Option shall not be transferable by the Employee otherwise than by will or by the laws of
descent and distribution. The Option shall be exercisable, during the Employee’s lifetime, only by
the Employee (or, in the event of legal incapacity or incompetency, by the Employee’s guardian or
representative) and shall not be assigned, pledged or hypothecated in any way (whether by operation
of law or otherwise) and shall not be subject to execution, attachment or similar process. Any
attempted transfer, assignment, pledge, hypothecation or other disposition of the Option or of any
rights granted hereunder contrary to the provisions of this Section 7, or the levy of any
attachment or similar process upon the Option shall be null and void.

     8. NO RIGHTS AS STOCKHOLDER UNTIL EXERCISE.

     The Employee shall have no rights as a stockholder with respect to Shares subject to this
Agreement until registration of the Shares in the Company’s share register in the name of the
Employee. Except as is expressly provided in the Plan with respect to certain changes in the
capitalization of the Company, no adjustment shall be made for dividends or similar rights for
which the record date is prior to the date of such registration.

     9. CAPITAL CHANGES AND BUSINESS SUCCESSIONS.

     The Plan contains provisions covering the treatment of Options in a number of contingencies
such as stock splits and mergers. Provisions in the Plan for adjustment with respect to stock
subject to Options and the related provisions with respect to successors to the business of the
Company are hereby made applicable hereunder and are incorporated herein by reference.

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     10. TAXES.

     The Employee acknowledges that any income or other taxes due from him or her with respect to
this Option or the Shares issuable pursuant to this Option shall be the Employee’s responsibility.

     In the event of a Disqualifying Disposition (as defined in Section 15 below) or if the Option
is converted into a Non-Qualified Option and such Non-Qualified Option is exercised, the Company
may withhold from the Employee’s remuneration, if any, the appropriate amount of federal, state and
local withholding taxes attributable to such amount that is considered compensation includable in
such person’s gross income. At the Company’s discretion, the amount required to be withheld may be
withheld in cash from such remuneration, or in kind from the Shares otherwise deliverable to the
Employee on exercise of the Option. The Employee further agrees that, if the Company does not
withhold an amount from the Employee’s remuneration sufficient to satisfy the Company’s income tax
withholding obligation, the Employee will reimburse the Company on demand, in cash, for the amount
under-withheld.

     11. PURCHASE FOR INVESTMENT.

     Unless the offering and sale of the Shares to be issued upon the particular exercise of the
Option shall have been effectively registered under the Securities Act of 1933, as now in force or
hereafter amended (the “1933 Act”), the Company shall be under no obligation to issue the Shares
covered by such exercise unless and until the following conditions have been fulfilled:

	 	(a)	 	The person(s) who exercise the Option shall warrant to the Company, at the time
of such exercise, that such person(s) are acquiring such Shares for their own
respective accounts, for investment, and not with a view to, or for sale in connection
with, the distribution of any such Shares, in which event the person(s) acquiring such
Shares shall be bound by the provisions of the following legend which shall be endorsed
upon the certificate(s) evidencing the Shares issued pursuant to such exercise:

	 	 	 	“The shares represented by this certificate have been taken for investment
and they may not be sold or otherwise transferred by any person, including a
pledgee, unless (1) either (a) a Registration Statement with respect to such shares shall be effective under the Securities Act of 1933, as amended, or
(b) the Company shall have received an opinion of counsel satisfactory to it
that an exemption from registration under such Act is then available, and
(2) there shall have been compliance with all applicable state securities
laws;” and

	 	(b)	 	If the Company so requires, the Company shall have received an opinion of its
counsel that the Shares may be issued upon such particular exercise in compliance with
the 1933 Act without registration thereunder. Without limiting the generality of the
foregoing, the Company may delay issuance of the Shares until completion of any action
or obtaining of any consent, which the Company deems necessary

5

 

	 	 	 	under any applicable law (including without limitation state securities or “blue
sky” laws).

     12. RESTRICTIONS ON TRANSFER OF SHARES.

     12.1 The Shares acquired by the Employee pursuant to the exercise of the Option granted hereby
shall not be transferred by the Employee except as permitted herein. Notwithstanding the
foregoing, the provisions of this Section 12 shall not apply if the Shares are covered by a
separate Restricted Stock Agreement Terms and Conditions attached hereto (e.g. in connection with
grants of options at $.01 per share made to U.S. based employees in May 2001).

     12.2 In the event of the Employee’s termination of employment for any reason, the Company
shall have the option, but not the obligation, to repurchase all or any part of the Shares issued
pursuant to this Agreement (including, without limitation, Shares purchased after termination of
employment, Disability or death in accordance with Section 4 hereof). In the event the Company
does not, upon the termination of employment of the Employee (as described above), exercise its
option pursuant to this Section 12.2, the restrictions set forth in the balance of this Agreement
shall not thereby lapse, and the Employee for himself or herself, his or her heirs, legatees,
executors, administrators and other successors in interest, agrees that the Shares shall remain
subject to such restrictions. The following provisions shall apply to a repurchase under this
Section 12.2:

	 	(i)	 	The per share repurchase price of the Shares to be sold to the Company upon
exercise of its option under this Section 12.2 shall be equal to the Fair Market Value
of each such Share determined in accordance with the Plan as of the date of termination
of employment.

	 	(ii)	 	The Company’s option to repurchase the Employee’s Shares in the event of
termination of employment shall be valid for a period of eighteen (18) months
commencing with the date of such termination of employment.

	 	(iii)	 	In the event the Company shall be entitled to and shall elect to exercise its
option to repurchase the Employee’s Shares under this Section 12.2, the Company shall
notify the Employee, or in case of death, his or her representative, in writing of its
intent to repurchase the Shares. Such written notice may be mailed by the Company up
to and including the last day of the time period provided for in Section 12.2(ii) for
exercise of the Company’s option to repurchase.

	 	(iv)	 	The written notice to the Employee shall specify the address at, and the time
and date on, which payment of the repurchase price is to be made (the “Closing”). The
date specified shall not be less than ten (10) days nor more than sixty (60) days from
the date of the mailing of the notice, and the Employee or his or her successor in
interest with respect to the Shares shall have no further rights as the owner thereof
from and after the date specified in the notice. At the Closing, the repurchase price
shall be delivered to the Employee or his or her successor in interest and the Shares
being purchased, duly endorsed for transfer, shall, to the

6

 

	 	 	 	extent that they are not then in the possession of the Company, be delivered to the
Company by the Employee or his or her successor in interest.

     12.3 It shall be a condition precedent to the validity of any sale or other transfer of any
Shares by the Employee that the following restrictions be complied with (except as hereinafter
otherwise provided):

	 	(i)	 	No Shares owned by the Employee may be sold, pledged or otherwise transferred
(including by gift or devise) to any person or entity, voluntarily, or by operation of
law, except in accordance with the terms and conditions hereinafter set forth.

	 	(ii)	 	Before selling or otherwise transferring all or part of the Shares, the
Employee shall give written notice of such intention to the Company, which notice shall
include the name of the proposed transferee, the proposed purchase price per share, the
terms of payment of such purchase price and all other matters relating to such sale or
transfer and shall be accompanied by a copy of the binding written agreement of the
proposed transferee to purchase the Shares of the Employee. Such notice shall
constitute a binding offer by the Employee to sell to the Company such number of the
Shares then held by the Employee as are proposed to be sold in the notice at the
monetary price per share designated in such notice, payable on the terms offered to the
Employee by the proposed transferee (provided, however, that the Company shall not be
required to meet any non-monetary terms of the proposed transfer, including, without
limitation, delivery of other securities in exchange for the Shares proposed to be
sold). The Company shall give written notice to the Employee as to whether such offer
has been accepted in whole by the Company within sixty (60) days after its receipt of
written notice from the Employee. The Company may only accept such offer in whole and
may not accept such offer in part. Such acceptance notice shall fix a time, location
and date for the closing on such purchase (“Closing Date”) which shall not be less than
ten (10) nor more than sixty (60) days after the giving of the acceptance notice. The
place for such closing shall be at the Company’s principal office. At such closing,
the Employee shall accept payment as set forth herein and shall deliver to the Company
in exchange therefor certificates for the number of Shares stated in the notice
accompanied by duly executed instruments of transfer.

	 	(iii)	 	If the Company shall fail to accept any such offer, the Employee shall be free
to sell all, but not less than all, of the Shares set forth in his or her notice to the
designated transferee at the price and terms designated in the Employee’s notice,
provided that (i) such sale is consummated within six (6) months after the giving of
notice by the Employee to the Company as aforesaid, and (ii) the transferee first
agrees in writing to be bound by the provisions of this Section 12 so that such
transferee (and all subsequent transferees) shall thereafter only be permitted to sell
or transfer the Shares in accordance with the terms hereof. After the expiration of
such six (6) months, the provisions of this Section 12.3 shall again apply with respect
to any proposed voluntary transfer of the Employee’s Shares.

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	 	(iv)	 	The restrictions on transfer contained in this Section 12.3 shall not apply to
(a) transfers by the Employee to his or her spouse or children or to a trust for the
benefit of his or her spouse or children, (b) transfers by the Employee to his or her
guardian or conservator, and (c) or transfers by the Employee, in the event of his or
her death, to his or her executor(s) or administrator(s) or to trustee(s) under his or
her will (collectively, “Permitted Transferees”); provided however, that in any such
event the Shares so transferred in the hands of each such Permitted Transferee shall
remain subject to this Agreement, and each such Permitted Transferee shall so
acknowledge in writing as a condition precedent to the effectiveness of such transfer.

	 	(v)	 	The provisions of this Section 12.3 may be waived by the Company. Any such
waiver may be unconditional or based upon such conditions as the Company may impose.

     12.4 In the event that the Employee or his or her successor in interest fails to deliver the
Shares to be repurchased by the Company under this Agreement, the Company may elect (a) to
establish a segregated account in the amount of the repurchase price, such account to be turned
over to the Employee or his or her successor in interest upon delivery of such Shares, and
(b) immediately to take such action as is appropriate to transfer record title of such Shares from
the Employee to the Company and to treat the Employee and such Shares in all respects as if
delivery of such Shares had been made as required by this Agreement. The Employee hereby
irrevocably grants the Company a power of attorney which shall be coupled with an interest for the
purpose of effectuating the preceding sentence.

     12.5 If the Company shall pay a stock dividend or declare a stock split on or with respect to
any of its Common Stock, or otherwise distribute securities of the Company to the holders of its
Common Stock, the number of shares of stock or other securities of Company issued with respect to
the shares then subject to the restrictions contained in this Agreement shall be added to the
Shares subject to the Company’s rights to repurchase pursuant to this Agreement. If the Company
shall distribute to its stockholders shares of stock of another corporation, the shares of stock of
such other corporation, distributed with respect to the Shares then subject to the restrictions
contained in this Agreement, shall be added to the Shares subject to the Company’s rights to
repurchase pursuant to this Agreement.

     12.6 If the outstanding shares of Common Stock of the Company shall be subdivided into a
greater number of shares or combined into a smaller number of shares, or in the event of a
reclassification of the outstanding shares of Common Stock of the Company, or if the Company shall
be a party to a merger, consolidation or capital reorganization, there shall be substituted for the
Shares then subject to the restrictions contained in this Agreement such amount and kind of
securities as are issued in such subdivision, combination, reclassification, merger, consolidation
or capital reorganization in respect of the Shares subject immediately prior thereto to the
Company’s rights to repurchase pursuant to this Agreement.

     12.7 The Company shall not be required to transfer any Shares on its books which shall have
been sold, assigned or otherwise transferred in violation of this Agreement, or to treat as owner
of such Shares, or to accord the right to vote as such owner or to pay dividends to, any

8

 

person or organization to which any such Shares shall have been so sold, assigned or otherwise
transferred, in violation of this Agreement.

     12.8 The provisions of Sections 12.1, 12.2 and 12.3 shall terminate upon the consummation of a
public offering of any of the Company’s securities pursuant to a registration statement filed with
the Securities and Exchange Commission pursuant to the Securities Act, in which offering the
aggregate gross proceeds to the Company exceed $10,000,000 and in which the price per share of such
securities equals or exceeds $5.00 (such price subject to equitable adjustment in the event of any
stock split, stock dividend, combination, reorganization, reclassification or other similar event).

     12.9 If, in connection with a registration statement filed by the Company pursuant to the
Securities Act, the Company or its underwriter so requests, the Employee will agree not to sell any
Shares for a period not to exceed 180 days following the effectiveness of such registration.

     12.10 The Employee acknowledges and agrees that neither the Company, its shareholders nor its
directors and officers, has any duty or obligation to disclose to the Employee any material
information regarding the business of the Company or affecting the value of the Shares before, at
the time of, or following a termination of the employment of the Employee by the Company,
including, without limitation, any information concerning plans for the Company to make a public
offering of its securities or to be acquired by or merged with or into another firm or entity.

     12.11 All certificates representing the Shares to be issued to the Employee pursuant to this
Agreement shall have endorsed thereon a legend substantially as follows: “The shares represented
by this certificate are subject to restrictions set forth in an Incentive Stock Option Agreement
with the Company, a copy of which Agreement is available for inspection at the offices of the
Company or will be made available upon request.”

     13. NO OBLIGATION TO EMPLOY.

     The Company is not by the Plan or this Option obligated to continue the Employee as an
employee of the Company.

     14. OPTION IS INTENDED TO BE AN ISO.

     The parties each intend that the Option be an ISO so that the Employee (or the Employee’s
Survivors) may qualify for the favorable tax treatment provided to holders of Options that meet the
standards of Section 422 of the Code. Any provision of this Agreement or the Plan which conflicts
with the Code so that this Option would not be deemed an ISO is null and void and any ambiguities
shall be resolved so that the Option qualifies as an ISO. Nonetheless, if the Option is determined
not to be an ISO, the Employee understands that neither the Company nor any Affiliate is
responsible to compensate him or her or otherwise make up for the treatment of the Option as a
Non-qualified Option and not as an ISO. The Employee should consult with the Employee’s own tax
advisors regarding the tax effects of the Option and the requirements necessary to obtain favorable
tax treatment under Section 422 of the Code, including, but not limited to, holding period
requirements.

9

 

     15. NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION.

     The Employee agrees to notify the Company in writing immediately after the Employee makes a
Disqualifying Disposition of any of the Shares acquired pursuant to the exercise of the Option. A
Disqualifying Disposition is defined in Section 424(c) of the Code and includes any disposition
(including any sale) of such Shares before the later of (a) two years after the date the Employee
was granted the Option or (b) one year after the date the Employee acquired Shares by exercising
the Option, except as otherwise provided in Section 424(c) of the Code. If the Employee has died
before the Shares are sold, these holding period requirements do not apply and no Disqualifying
Disposition can occur thereafter.

     16. NOTICES.

     Any notices required or permitted by the terms of this Agreement or the Plan shall be deemed
to have been given upon the earlier of receipt, one business day following delivery to a recognized
courier service or three business days following mailing by registered or certified mail.

     17. GOVERNING LAW.

     This Agreement shall be construed and enforced in accordance with the law of the State of
Delaware, without giving effect to the conflict of law principles thereof.

     18. BENEFIT OF AGREEMENT.

     Subject to the provisions of the Plan and the other provisions hereof, this Agreement shall be
for the benefit of and shall be binding upon the heirs, executors, administrators, successors and
assigns of the parties hereto.

     19. ENTIRE AGREEMENT.

     This Agreement, together with the Plan, embodies the entire agreement and understanding
between the parties hereto with respect to the subject matter hereof and supersedes all prior oral
or written agreements and understandings relating to the subject matter hereof. No statement,
representation, warranty, covenant or agreement not expressly set forth in this Agreement shall
affect or be used to interpret, change or restrict, the express terms and provisions of this
Agreement, provided, however, in any event, this Agreement shall be subject to and governed by the
Plan.

     20. MODIFICATIONS AND AMENDMENTS.

     The terms and provisions of this Agreement may be modified or amended as provided in the Plan.

     21. WAIVERS AND CONSENTS.

     Except as provided in the Plan, the terms and provisions of this Agreement may be waived, or
consent for the departure therefrom granted, only by written document executed by

10

 

the party entitled to the benefits of such terms or provisions. No such waiver or consent
shall be deemed to be or shall constitute a waiver or consent with respect to any other terms or
provisions of this Agreement, whether or not similar. Each such waiver or consent shall be
effective only in the specific instance and for the purpose for which it was given, and shall not
constitute a continuing waiver or consent.

11

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