Document:

exv10w21

 

Exhibit 10.21

PACKETEER, INC.

1999 EMPLOYEE STOCK PURCHASE PLAN

As Amended and Restated Effective as of December 12, 2007

     I. PURPOSE OF THE PLAN

          This Employee Stock Purchase Plan is intended to promote the interests of Packeteer, Inc., a
Delaware corporation, by providing eligible employees with the opportunity to acquire a proprietary
interest in the Corporation through participation in a payroll-deduction based employee stock
purchase plan designed to qualify under Section 423 of the Code.

          Capitalized terms herein shall have the meanings assigned to such terms in the attached
Appendix.

     II. ADMINISTRATION OF THE PLAN

          The Plan Administrator shall have full authority to interpret and construe any provision of
the Plan and to adopt such rules and regulations for administering the Plan as it may deem
necessary in order to comply with the requirements of Code Section 423. Decisions of the Plan
Administrator shall be final and binding on all parties having an interest in the Plan.

     III. STOCK SUBJECT TO PLAN

          A. The stock purchasable under the Plan shall be shares of authorized but unissued or
reacquired Common Stock, including shares of Common Stock purchased on the open market. The number
of shares of Common Stock initially reserved for issuance over the term of the Plan shall be
limited to 500,000 shares.

          B. The number of shares of Common Stock available for issuance under the Plan shall
automatically increase on the first trading day of January each calendar year during the term of
the Plan, beginning with calendar year 2000, by an amount equal to two percent (2%) of the total
number of shares of Common Stock outstanding on the last trading day in December of the immediately
preceding calendar year, but in no event shall any such annual increase exceed 1,000,000 shares.

          C. Should any change be made to the Common Stock by reason of any stock split, stock dividend,
recapitalization, combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Corporation’s receipt of consideration, appropriate
adjustments shall be made to (i) the maximum number and class of securities issuable under the
Plan, (ii) the maximum number and class of securities purchasable per Participant on any one
Purchase Date, (iii) the maximum number and class of securities purchasable by all Participants in
the aggregate on any one Purchase Date, (iv) the maximum number and/or class of securities by which
the share reserve is to increase automatically each calendar year pursuant to the provisions of
Section III.B of this Article One and (v) the number

 

 

and class of securities and the price per share in effect under each outstanding purchase
right in order to prevent the dilution or enlargement of benefits thereunder.

     IV. OFFERING PERIODS

          A. Shares of Common Stock shall be offered for purchase under the Plan through a series of
successive offering periods until such time as (i) the maximum number of shares of Common Stock
available for issuance under the Plan shall have been purchased or (ii) the Plan shall have been
sooner terminated.

          B. Each offering period shall be of such duration (not to exceed twenty-four (24) months) as
determined by the Plan Administrator prior to the start date of such offering period. However, the
initial offering period shall commence at the Effective Time and terminate on the last business day
in July 2001. The next offering period shall commence on the first business day in August 2001,
and subsequent offering periods shall commence as designated by the Plan Administrator.

          C. Each offering period shall be comprised of a series of one or more successive Purchase
Intervals. Unless otherwise determined by the Plan Administrator, Purchase Intervals shall run
from the first business day in February to the last business day in July each year and from the
first business day in August each year to the last business day in January in the following year.
However, the first Purchase Interval in effect under the initial offering period shall commence at
the Effective Time and terminate on the last business day in January 31, 2000. Subsequent Purchase
Intervals shall commence and be of such duration as designated by the Plan Administrator.

          D. Should the Fair Market Value per share of Common Stock on the next business day following
any Purchase Date (the “Subject Purchase Date”), other than the last Purchase Date within an
offering period, be less than the Fair Market Value per share of Common Stock on any Semi-Annual
Entry Date within that offering period (including the start date of the offering period), then each
Participant whose participation in that offering period commenced on such Semi-Annual Entry Date
(the “Subject Entry Date”) shall automatically be deemed to have (i) terminated in accordance with
Section VII.F(i) his or her outstanding purchase right immediately following the purchase of shares
of Common Stock on the Subject Purchase Date and (ii) enrolled and been granted a purchase right in
a new offering period commencing on such next business day following the Subject Purchase Date.
Unless a shorter duration is established by the Plan Administrator within five (5) business days
following the start date of the new offering period, the new offering period shall have a duration
equal to (i) twenty-four (24) months if the Subject Entry Date was the start date of the old
offering period or (ii) the number of Purchase Intervals that remained following the Subject
Purchase Date in the old offering period if the Subject Entry Date was other than the start date of
the old offering period. Any payroll deductions of a Participant enrolled in a new offering period
in accordance with this Section which were withheld on or before the Subject Purchase Date and not
applied to the purchase of shares of Common Stock on the Subject Purchase Date (unless such
unapplied amount was insufficient to purchase a whole share of Common Stock) shall be promptly

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refunded. This Section shall be effective for each offering period commencing on or after
July 16, 2003 and having a duration of twenty-four
(24) months.1

     V. ELIGIBILITY AND ENROLLMENT

          A. Each individual who is an Eligible Employee on the start date of any offering period under
the Plan may enter that offering period on such start date or on any subsequent Periodic Entry Date
within that offering period, provided he or she remains an Eligible Employee.

          B. Each individual who first becomes an Eligible Employee after the start date of an offering
period may enter that offering period on any subsequent Periodic Entry Date within that offering
period on which he or she is an Eligible Employee.

          C. The date an individual enters an offering period shall be designated his or her Entry Date
for purposes of that offering period.

          D. To participate in the Plan for a particular offering period, an Eligible Employee must
complete the enrollment forms prescribed by the Plan Administrator (including a stock purchase
agreement and a payroll deduction authorization) and file such forms with the Plan Administrator
(or its designee) on or before his or her scheduled Entry Date. Each Eligible Employee who has
become a Participant shall automatically participate in the next offering period commencing
immediately after the final Purchase Date of each offering period in which the Participant
participates, provided that the Participant remains an Eligible Employee on the start date of the
new offering period and has not terminated his or her purchase right as provided in Section VII.F.
A Participant who may automatically participate in a subsequent offering period as provided in this
Section is not required to deliver any additional enrollment form or stock purchase agreement for
the subsequent offering period in order to continue participation in the Plan. However, a
Participant may deliver a new enrollment form for a subsequent offering period in accordance with
the procedures set forth in Section VI if the Participant desires to change any of the elections
contained in the Participant’s then effective enrollment form.

     VI. PAYROLL DEDUCTIONS

          A. The payroll deduction authorized by the Participant for purposes of acquiring shares of
Common Stock during an offering period may be any multiple of one percent (1%) of the Cash
Compensation paid to the Participant during each Purchase Interval within that offering period, up
to a maximum not to exceed fifteen percent (15%). The Plan Administrator shall designate the
maximum payroll deduction in effect under the Plan prior to the start of any Purchase Interval; if
no designation is made, the maximum shall be fifteen percent (15%) of Cash Compensation. The
deduction rate so authorized by the Participant shall continue in effect throughout the offering
period, except to the extent such rate is changed in accordance with the following guidelines:

 

			
	1	 	Section IV.D of the Plan as in effect prior to July 16, 2003 shall
apply to each offering period having a start date prior to such date.

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               (i) The Participant may, at any time during the offering period, reduce his or
her rate of payroll deduction to become effective as soon as possible after filing
the appropriate form with the Plan Administrator. The Participant may not, however,
effect more than one (1) such reduction per Purchase Interval.

               (ii) The Participant may, prior to the commencement of any new Purchase
Interval within the offering period, increase the rate of his or her payroll
deduction by filing the appropriate form with the Plan Administrator. The new rate
(which may not exceed the fifteen percent (15%) maximum) shall become effective on
the start date of the first Purchase Interval following the filing of such form.

          B. Payroll deductions shall begin on the first pay day administratively feasible following the
Participant’s Entry Date into the offering period and shall (unless sooner terminated by the
Participant) continue through the pay day ending with or immediately prior to the last day of that
offering period. The amounts so collected shall be credited to the Participant’s book account
under the Plan, but no interest shall be paid on the balance from time to time outstanding in such
account. The amounts collected from the Participant shall not be required to be held in any
segregated account or trust fund and may be commingled with the general assets of the Corporation
and used for general corporate purposes.

          C. Payroll deductions shall automatically cease upon the termination of the Participant’s
purchase right in accordance with the provisions of the Plan.

          D. The Participant’s acquisition of Common Stock under the Plan on any Purchase Date shall
neither limit nor require the Participant’s acquisition of Common Stock on any subsequent Purchase
Date, whether within the same or a different offering period.

     VII. PURCHASE RIGHTS

          A. Grant of Purchase Right. A Participant shall be granted a separate purchase right
for each offering period in which he or she participates. The purchase right shall be granted on
the Participant’s Entry Date into the offering period and shall provide the Participant with the
right to purchase shares of Common Stock on each Purchase Date during the remainder of such
offering period, upon the terms set forth below. The Participant shall execute a stock purchase
agreement embodying such terms and such other provisions (not inconsistent with the Plan) as the
Plan Administrator may deem advisable.

          Under no circumstances shall purchase rights be granted under the Plan to any Eligible
Employee if such individual would, immediately after the grant, own (within the meaning of Code
Section 424(d)) or hold outstanding options or other rights to purchase, stock possessing five
percent (5%) or more of the total combined voting power or value of all classes of stock of the
Corporation or any Corporate Affiliate.

          B. Exercise of the Purchase Right. Each purchase right shall be automatically
exercised on each successive Purchase Date within the offering period, and shares of Common Stock
shall accordingly be purchased on behalf of each Participant on each such

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Purchase Date. The purchase shall be effected by applying the Participant’s payroll
deductions for the Purchase Interval ending on such Purchase Date to the purchase of whole shares
of Common Stock at the purchase price in effect for the Participant for that Purchase Date.

          C. Purchase Price. The purchase price per share at which Common Stock will be
purchased on the Participant’s behalf on each Purchase Date within any offering period shall be
established by the Plan Administrator; provided, however, the purchase price on each Purchase Date
shall not be less than eighty-five percent (85%) of the lower of (i) the Fair Market Value
per share of Common Stock on the Participant’s Entry Date into that offering period or (ii) the
Fair Market Value per share of Common Stock on that Purchase Date.

          D. Number of Purchasable Shares. The number of shares of Common Stock purchasable by
a Participant on each Purchase Date during the offering period shall be the number of whole shares
obtained by dividing the amount collected from the Participant through payroll deductions during
the Purchase Interval ending with that Purchase Date by the purchase price in effect for the
Participant for that Purchase Date. However, the maximum number of shares of Common Stock
purchasable per Participant on any one Purchase Date shall not exceed 1,000 shares, subject to
periodic adjustments in the event of certain changes in the Corporation’s capitalization. In
addition, the maximum aggregate number of shares of Common Stock purchasable by all Participants on
any one Purchase Date shall not exceed 250,000 shares, subject to periodic adjustments in the event
of certain changes in the Corporation’s capitalization. However, the Plan Administrator shall have
the discretionary authority, exercisable prior to the start of any offering period under the Plan,
to increase or decrease the limitations to be in effect for the number of shares purchasable per
Participant and in the aggregate by all Participants on each Purchase Date during that offering
period.

          E. Excess Payroll Deductions. Any payroll deductions not applied to the purchase of
shares of Common Stock on any Purchase Date because they are not sufficient to purchase a whole
share of Common Stock shall be held for the purchase of Common Stock on the next Purchase Date.
However, any payroll deductions not applied to the purchase of Common Stock by reason of the
limitation on the maximum number of shares purchasable per Participant or in the aggregate on the
Purchase Date shall be promptly refunded.

          F. Termination of Purchase Right. The following provisions shall govern the
termination of outstanding purchase rights:

               (i) A Participant may, at any time prior to the next scheduled Purchase Date in
the offering period, terminate his or her outstanding purchase right by filing the
appropriate form with the Plan Administrator (or its designate), and no further
payroll deductions shall be collected from the Participant with respect to the
terminated purchase right. Any payroll deductions collected during the Purchase
Interval in which such termination occurs shall, at the Participant’s election, be
immediately refunded or held for the purchase of shares on the next Purchase Date.
If no such election is made at the time such purchase right is terminated, then the
payroll deductions collected with respect to the terminated right shall be refunded
as soon as possible.

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               (ii) The termination of such purchase right shall be irrevocable, and the
Participant may not resume participation in the offering period for which the
terminated purchase right was granted unless he or she re-enrolls in the Plan (by
making a timely filing of the prescribed enrollment forms) on or before a
regularly-scheduled Periodic Entry Date into that offering period. In such event,
the Participant shall be granted a new purchase right with a new purchase price
based upon the Fair Market Value per share on Common Stock on his or her new Entry
Date, if applicable.

               (iii) Should the Participant cease to remain an Eligible Employee for any
reason (including death, disability or change in status) while his or her purchase
right remains outstanding, then that purchase right shall immediately terminate, and
all of the Participant’s payroll deductions for the Purchase Interval in which the
purchase right so terminates shall be immediately refunded. For purposes of the
Plan, a Participant shall be deemed to remain an Eligible Employee while on any
military leave, sick leave or other bona fide leave of absence approved by the
Company so long as the period of such leave does not exceed ninety (90) days or such
longer period during which the Participant’s right to reemployment with the
Corporation is guaranteed by statute or contract. However, should a Participant’s
approved leave of absence exceed ninety (90) days or such longer period during which
the Participant’s right to reemployment with the Corporation is guaranteed by
statute or contract, the Participant shall be deemed to have ceased to be an
Eligible Employee on the ninety-first (91st) day of such leave or the day
immediately following the end of the period during which the Participant’s right to
reemployment with the Corporation is guaranteed by statute or contract, whichever is
later. A Participant who has ceased to be in active service by reason of an
approved leave of absence shall, for so long as such Participant remains an
Eligible Employee, have the right, exercisable up until the last business day of the
Purchase Interval in which such leave commences, to (a) withdraw all the payroll
deductions collected to date on his or her behalf for that Purchase Interval or (b)
have such funds held for the purchase of shares on his or her behalf on the next
scheduled Purchase Date. In no event, however, shall any further payroll deductions
be collected on the Participant’s behalf during such leave other than from such
Participant’s Cash Earnings. Upon the Participant’s return to active service (x)
within ninety (90) days following the commencement of such approved leave of absence
or (y) prior to the expiration of any longer period for which such Participant’s
right to reemployment with the Corporation is guaranteed by statute or contract, his
or her payroll deductions under the Plan shall automatically resume at the rate in
effect at the time the leave began, unless the Participant withdraws from the Plan
prior to his or her return. An individual who returns to active employment
following a leave of absence which exceeds in duration the applicable (x) or (y)
time period will be treated as a new employee for purposes of subsequent
participation in the Plan and must accordingly qualify as an Eligible Employee and
re-enroll in the Plan (by making a timely filing of the prescribed enrollment forms)
on or before his or her scheduled Entry Date into the offering period.

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          G. Change in Control. Each outstanding purchase right shall automatically be
exercised, immediately prior to the effective date of any Change in Control and the date of such
exercise shall be treated as the Purchase Date for the purposes of this Section, by applying the
payroll deductions of each Participant for the Purchase Interval in which such Change in Control
occurs to the purchase of whole shares of Common Stock at a purchase price per share determined in
accordance with Section VII.C as of such Purchase Date. However, the applicable limitation on the
number of shares of Common Stock purchasable per Participant shall continue to apply to any such
purchase, but not the limitation applicable to the maximum number of shares of Common Stock
purchasable in the aggregate.

          The Corporation shall use its best efforts to provide at least ten (10)-days prior written
notice of the occurrence of any Change in Control, and Participants shall, following the receipt of
such notice, have the right to terminate their outstanding purchase rights prior to the Purchase
Date established for the purposes of this Section.

          H. Proration of Purchase Rights. Should the total number of shares of Common Stock to
be purchased pursuant to outstanding purchase rights on any particular date exceed the number of
shares then available for issuance under the Plan, the Plan Administrator shall make a pro-rata
allocation of the available shares on a uniform and nondiscriminatory basis, and the payroll
deductions of each Participant, to the extent in excess of the aggregate purchase price payable for
the Common Stock pro-rated to such individual, shall be refunded.

          I. Assignability. The purchase right shall be exercisable only by the Participant and
shall not be assignable or transferable by the Participant.

          J. Stockholder Rights. A Participant shall have no stockholder rights with respect to
the shares subject to his or her outstanding purchase right until the shares are purchased on the
Participant’s behalf in accordance with the provisions of the Plan and the Participant has become a
holder of record of the purchased shares.

     VIII. ACCRUAL LIMITATIONS

          A. No Participant shall be entitled to accrue rights to acquire Common Stock pursuant to any
purchase right outstanding under this Plan if and to the extent such accrual, when aggregated with
(i) rights to purchase Common Stock accrued under any other purchase right granted under this Plan
and (ii) similar rights accrued under other employee stock purchase plans (within the meaning of
Code Section 423) of the Corporation or any Corporate Affiliate, would otherwise permit such
Participant to purchase more than Twenty-Five Thousand Dollars ($25,000.00) worth of stock of the
Corporation or any Corporate Affiliate (determined on the basis of the Fair Market Value per share
on the date or dates such rights are granted) for each calendar year such rights are at any time
outstanding.

          B. For purposes of applying such accrual limitations to the purchase rights granted under the
Plan, the following provisions shall be in effect:

               (i) The right to acquire Common Stock under each outstanding purchase right
shall accrue in a series of installments on each

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successive Purchase Date during the offering period on which such right remains
outstanding.

               (ii) No right to acquire Common Stock under any outstanding purchase right
shall accrue to the extent the Participant has already accrued in the same calendar
year the right to acquire Common Stock under one or more other purchase rights at a
rate equal to Twenty-Five Thousand Dollars ($25,000.00) worth of Common Stock
(determined on the basis of the Fair Market Value per share on the date or dates of
grant) for each calendar year such rights were at any time outstanding.

          C. If by reason of such accrual limitations, any purchase right of a Participant does not
accrue for a particular Purchase Interval, then the payroll deductions which the Participant made
during that Purchase Interval with respect to such purchase right shall be promptly refunded.

          D. In the event there is any conflict between the provisions of this Article and one or more
provisions of the Plan or any instrument issued thereunder, the provisions of this Article shall be
controlling.

     IX. EFFECTIVE DATE AND TERM OF THE PLAN

          A. The Plan was adopted by the Board on May 19, 1999 and shall become effective at the
Effective Time, provided no purchase rights granted under the Plan shall be exercised, and
no shares of Common Stock shall be issued hereunder, until (i) the Plan shall have been approved by
the stockholders of the Corporation and (ii) the Corporation shall have complied with all
applicable requirements of the 1933 Act (including the registration of the shares of Common Stock
issuable under the Plan on a Form S-8 registration statement filed with the Securities and Exchange
Commission), all applicable listing requirements of any stock exchange (or the Nasdaq National
Market, if applicable) on which the Common Stock is listed for trading and all other applicable
requirements established by law or regulation. In the event such stockholder approval is not
obtained, or such compliance is not effected, within twelve (12) months after the date on which the
Plan is adopted by the Board, the Plan shall terminate and have no further force or effect, and all
sums collected from Participants during the initial offering period hereunder shall be refunded.

          B. Unless sooner terminated by the Board, the Plan shall terminate upon the earliest
of (i) the last business day in July 2009, (ii) the date on which all shares available for issuance
under the Plan shall have been sold pursuant to purchase rights exercised under the Plan or (iii)
the date on which all purchase rights are exercised in connection with a Change in Control. No
further purchase rights shall be granted or exercised, and no further payroll deductions shall be
collected, under the Plan following such termination.

     X. AMENDMENT OF THE PLAN

          A. The Board may alter, amend, suspend or terminate the Plan at any time to become effective
immediately following the close of any Purchase Interval. However, the Plan may be amended or
terminated immediately upon Board action, if and to the extent necessary to

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assure that the Corporation will not recognize, for financial reporting purposes, any
compensation expense in connection with the shares of Common Stock offered for purchase under the
Plan, should the financial accounting rules applicable to the Plan at the Effective Time be
subsequently revised so as to require the recognition of compensation expense in the absence of
such amendment or termination.

          B. In no event may the Board effect any of the following amendments or revisions to the Plan
without the approval of the Corporation’s stockholders: (i) increase the number of shares of Common
Stock issuable under the Plan, except for permissible adjustments in the event of certain changes
in the Corporation’s capitalization, (ii) alter the purchase price formula so as to reduce the
purchase price payable for the shares of Common Stock purchasable under the Plan or (iii) modify
the eligibility requirements for participation in the Plan.

     XI. GENERAL PROVISIONS

          A. All costs and expenses incurred in the administration of the Plan shall be paid by the
Corporation; however, each Plan Participant shall bear all costs and expenses incurred by such
individual in the sale or other disposition of any shares purchased under the Plan.

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

          C. The provisions of the Plan shall be governed by the laws of the State of California without
resort to that State’s conflict-of-laws rules.

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Schedule A

Corporations Participating in

Employee Stock Purchase Plan

As of the Effective Time

Packeteer, Inc.

Packeteer Europe, b.v.

Packeteer Asia Pacific Limited

Packeteer K.K. (Kabushiki Kaisha)

 

 

APPENDIX

          The following definitions shall be in effect under the Plan:

          A. Board shall mean the Corporation’s Board of Directors.

          B. Cash Earnings shall mean the (i) regular base salary paid to a Participant by one
or more Participating Companies during such individual’s period of participation in one or more
offering periods under the Plan plus (ii) all overtime payments, bonuses, commissions,
profit-sharing distributions and other incentive-type payments received during such period. Such
Cash Earnings shall be calculated before deduction of (A) any income or employment tax withholdings
or (B) any and all contributions made by the Participant to any Code Section 401(k) salary deferral
plan or Code Section 125 cafeteria benefit program now or hereafter established by the Corporation
or any Corporate Affiliate. However, Cash Earnings shall not include any contributions made on
the Participant’s behalf by the Corporation or any Corporate Affiliate to any employee benefit or
welfare plan now or hereafter established (other than Code Section 401(k) or Code Section 125
contributions deducted from such Cash Earnings).

          C. Change in Control shall mean a change in ownership of the Corporation pursuant to
any of the following transactions:

          (i) a merger or consolidation in which securities possessing more than fifty
percent (50%) of the total combined voting power of the Corporation’s outstanding
securities are transferred to a person or persons different from the persons holding
those securities immediately prior to such transaction, or

          (ii) the sale, transfer or other disposition of all or substantially all of the
assets of the Corporation in complete liquidation or dissolution of the Corporation,
or

          (iii) the acquisition, directly or indirectly by an person or related group of
persons (other than the Corporation or a person that directly or indirectly
controls, is controlled by or is under common control with the Corporation) of
beneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act) of
securities possessing more than fifty percent (50%) of the total combined voting
power of the Corporation’s outstanding securities pursuant to a tender or exchange
offer made directly to the Corporation’s stockholders.

          D. Code shall mean the Internal Revenue Code of 1986, as amended, and any applicable
regulations promulgated thereunder.

          E. Common Stock shall mean the Corporation’s common stock.

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          F. Corporate Affiliate shall mean any parent or subsidiary corporation of the
Corporation (as determined in accordance with Code Section 424), whether now existing or
subsequently established.

          G. Corporation shall mean Packeteer, Inc., a Delaware corporation, and any corporate
successor to all or substantially all of the assets or voting stock of Packeteer, Inc., which shall
by appropriate action adopt the Plan.

          H. Effective Time shall mean the time at which the Underwriting Agreement is executed
and the Common Stock priced for the initial public offering. Any Corporate Affiliate which becomes
a Participating Corporation after such Effective Time shall designate a subsequent Effective Time
with respect to its employee-Participants.

          I. Eligible Employee shall mean any person who is employed by a Participating
Corporation on a basis under which he or she is regularly expected to render more than twenty (20)
hours of service per week for more than five (5) months per calendar year for earnings considered
wages under Code Section 3401(a).

          J. Entry Date shall mean the Periodic Entry Date on which an Eligible Employee first
commences participation in the offering period in effect under the Plan. The earliest Entry Date
under the Plan shall be the Effective Time.

          K. Fair Market Value per share of Common Stock on any relevant date shall be
determined in accordance with the following provisions:

          (i) If the Common Stock is at the time traded on the Nasdaq National Market,
then the Fair Market Value shall be the closing selling price per share of Common
Stock on the date in question, as such price is reported by the National Association
of Securities Dealers on the Nasdaq National Market. If there is no closing selling
price for the Common Stock on the date in question, then the Fair Market Value shall
be the closing selling price on the last preceding date for which such quotation
exists.

          (ii) If the Common Stock is at the time listed on any Stock Exchange, then the
Fair Market Value shall be the closing selling price per share of Common Stock on
the date in question on the Stock Exchange determined by the Plan Administrator to
be the primary market for the Common Stock, as such price is officially quoted in
the composite tape of transactions on such exchange. If there is no closing selling
price for the Common Stock on the date in question, then the Fair Market Value shall
be the closing selling price on the last preceding date for which such quotation
exists.

          (iii) For purposes of the initial offering period which begins at the Effective
Time, the Fair Market Value shall be deemed to be equal to the price per share at
which the Common Stock is sold in the initial public offering pursuant to the
Underwriting Agreement.

          L. 1933 Act shall mean the Securities Act of 1933, as amended.

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          M. Participant shall mean any Eligible Employee of a Participating Corporation who is
actively participating in the Plan.

          N. Participating Corporation shall mean the Corporation and such Corporate Affiliate
or Affiliates as may be authorized from time to time by the Board to extend the benefits of the
Plan to their Eligible Employees. The Participating Corporations in the Plan are listed in
attached Schedule A.

          O. Periodic Entry Date shall mean the first business day of each Purchase Interval
contained in an offering period and which shall be a day on which an Eligible Employee may enter
such offering period.

          P. Plan shall mean the Corporation’s 1999 Employee Stock Purchase Plan, as set forth
in this document.

          Q. Plan Administrator shall mean the committee of two (2) or more Board members
appointed by the Board to administer the Plan.

          R. Purchase Date shall mean the last business day of each Purchase Interval. The
initial Purchase Date shall be January 31, 2000.

          S. Purchase Interval shall mean a period, as determined by the Plan Administrator, at
the end of which there shall be purchased shares of Common Stock on behalf of each Participant. An
offering period may contain one or more Purchase Intervals.

          T. Semi-Annul Entry Date shall mean a Periodic Entry Date commencing on the first
business day in February and August each year pursuant to an offering period of at least twelve
(12) months in duration.

          U. Stock Exchange shall mean either the American Stock Exchange or the New York Stock
Exchange.

          V. Underwriting Agreement shall mean the agreement between the Corporation and the
underwriter or underwriters managing the initial public offering of the Common Stock.

A-3exv10w22

 

Exhibit 10.22

PACKETEER, INC.

1999 STOCK INCENTIVE PLAN

Amended and Restated Effective as of December 12, 2007

ARTICLE ONE

GENERAL PROVISIONS

     I. PURPOSE OF THE PLAN

          This 1999 Stock Incentive Plan is intended to promote the interests of Packeteer, Inc., a
Delaware corporation, by providing eligible persons in the Corporation’s service with the
opportunity to acquire a proprietary interest, or otherwise increase their proprietary interest, in
the Corporation as an incentive for them to remain in such service.

          Capitalized terms shall have the meanings assigned to such terms in the attached Appendix.

     II. STRUCTURE OF THE PLAN

          A. The Plan shall be divided into four separate equity programs:

          - the Discretionary Option/SAR Program under which eligible persons may, at the
discretion of the Plan Administrator, be granted Options and/or Stock Appreciation Rights;

          - the Restricted Stock/Restricted Stock Unit Program under which eligible persons
may, at the discretion of the Plan Administrator, be granted Restricted Stock Purchase
Rights, Restricted Stock Bonuses and/or Restricted Stock Units;

          - the Performance Award Program under which eligible persons may, at the
discretion of the Plan Administrator, be granted Performance Shares and/or Performance
Units; and

          - the Automatic Non-Employee Director Grant Program under which eligible
non-employee Board members shall automatically receive grants of Restricted Stock Unit
Awards at designated intervals over their period of continued Board service.

          B. The provisions of Articles One and Six shall apply to all equity programs under the Plan
and shall govern the interests of all persons under the Plan.

	 	III.	 	ADMINISTRATION OF THE PLAN

 

 

          A. The Primary Committee shall have sole and exclusive authority to administer the
Discretionary Option/SAR Grant Program, Restricted Stock/Restricted Stock Unit Program and
Performance Award Program with respect to Section 16 Insiders and Covered Employees.
Administration of the Discretionary Option/SAR Grant Program, Restricted Stock/Restricted Stock
Unit Program and Performance Award Program with respect to all other persons eligible to
participate in those programs may, at the Board’s discretion, be vested in the Primary Committee or
a Secondary Committee, or the Board may retain the power to administer those programs with respect
to all such persons. However, any Awards granted to members of the Primary Committee under the
Discretionary Option/SAR Grant Program, Restricted Stock/Restricted Stock Unit Program or
Performance Award Program shall be made by a disinterested majority of the Board.

          B. The Board may, in its discretion by resolution adopted by the Board, authorize one or more
officers of the Corporation to grant one or more Awards of Options, SARs and/or Restricted Stock
Units under the Discretionary Option/SAR Grant Program and the Restricted Stock/Restricted Stock
Unit Program, without further approval of the Board or the Primary or Secondary Committee, to any
Employee, other than a person who, at the time of such grant, is a Section 16 Insider or a Covered
Employee, and to determine the number and vesting terms of the shares of Common Stock or Restricted
Stock Units to be subject to such Awards; provided, however, that (1) no Employee shall be granted
in any calendar year Option or SAR Awards for more than 50,000 shares of Common Stock or Restricted
Stock Unit Awards for more than 25,000 such units, (2) the number of shares of Common Stock or
Restricted Stock Units subject to each such Option, SAR or Restricted Stock Unit Award shall comply
with guidelines established from time to time by the Board or the Primary Committee, and (3) each
such Option, SAR and Restricted Stock Unit Award shall be subject to the terms and conditions of
the appropriate standard form of Award Agreement approved by the Board or the Primary Committee and
shall conform to the provisions of the Plan and such other guidelines as shall be established from
time to time by the Board or the Primary Committee. Any officer or officers so authorized by the
Board shall be deemed the Plan Administrator solely for the purpose of granting such Option, SAR
and Restricted Stock Unit Awards.

          C. Members of the Primary Committee or any Secondary Committee shall serve for such period of
time as the Board may determine and may be removed by the Board at any time. The Board may also at
any time terminate the functions of any Secondary Committee and any officer delegated authority
pursuant to Section III.B above and reassume all powers and authority previously delegated to such
committee or officer.

          D. Except for an officer delegated limited authority pursuant to Section III.B above, each
Plan Administrator shall, within the scope of its administrative functions under the Plan, have
full power and authority (subject to the provisions of the Plan) to establish such rules and
regulations as it may deem appropriate for proper administration of the Discretionary Option/SAR
Grant Program, Restricted Stock/Restricted Stock Unit Program and Performance Award Program and to
make such determinations under, and issue such interpretations of, the provisions of those programs
and any outstanding Awards thereunder as it may deem necessary or advisable. Decisions of the Plan
Administrator within the scope of its administrative functions under the Plan shall be final and
binding on all parties who have an interest in the

2.

 

Discretionary Option/SAR Grant Program, Restricted Stock/Restricted Stock Unit Program or
Performance Award Program under its jurisdiction or any Award thereunder.

          E. Service on the Primary Committee or the Secondary Committee shall constitute service as a
Board member, and members of each such committee shall accordingly be entitled to full
indemnification and reimbursement as Board members for their service on such committee. No member
of the Primary Committee or the Secondary Committee shall be liable for any act or omission made in
good faith with respect to the Plan or any Awards under the Plan.

          F. Administration of the Automatic Non-Employee Director Grant Program shall be self-executing
in accordance with the terms of that program, and no Plan Administrator shall exercise any
discretionary functions with respect to any Restricted Stock Unit Awards made under that program.

     IV. ELIGIBILITY

          A. The persons eligible to participate in the Discretionary Option/SAR Grant Program,
Restricted Stock/Restricted Stock Unit Program and Performance Award Program are as follows:

               (i) Employees,

               (ii) non-employee members of the Board or the board of directors of any Parent
or Subsidiary, and

               (iii) consultants and other independent advisors who provide services to the
Corporation (or any Parent or Subsidiary).

          B. Except for an officer delegated limited authority pursuant to Section III.B above, each
Plan Administrator shall, within the scope of its administrative jurisdiction under the Plan, have
full authority to determine with respect to Awards granted under the Discretionary Option/SAR Grant
Program, Restricted Stock/Restricted Stock Unit Program and Performance Award Program (i) the type
of Award to be granted, (ii) which eligible persons are to receive such Awards, (iii) the time or
times when those Awards are to be granted, (iv) the number of shares to be covered by each such
Award, (v) the exercise or purchase price, if any, under each such Award, (vi) the timing, terms
and conditions of the exercisability or vesting (if any) of each such Award or any shares acquired
pursuant thereto, (vii) the maximum term for which the Award is to remain outstanding, (viii) the
Performance Measures, Performance Period, Performance Award Formula and Performance Goals
applicable to any Award and the extent to which such Performance Goals have been attained, (ix) the
effect of the Participant’s termination of Service on any of the foregoing, and (x) all other
terms, conditions and restrictions applicable to any Award or Shares acquired pursuant thereto not
inconsistent with the terms of the Plan.

          C. The individuals who shall be eligible to participate in the Automatic Non-Employee Director
Grant Program shall be limited to (i) those individuals who first become non-employee Board members
on or after the Underwriting Date, whether through appointment by the Board or election by the
Corporation’s stockholders, and (ii) those individuals who continue

3.

 

to serve as non-employee Board members at one or more Annual Stockholders Meetings held after
the Underwriting Date. A non-employee Board member who has previously been an Employee shall not
be eligible to receive the initial automatic grant of a Restricted Stock Unit Award under the
Automatic Non-Employee Director Grant Program at the time he or she first becomes a non-employee
Board member, but shall be eligible to receive one or more annual automatic grants of a Restricted
Stock Unit Award under the Automatic Non-Employee Director Grant Program while he or she continues
to serve as a non-employee Board member.

     V. STOCK SUBJECT TO THE PLAN

          A. The stock issuable under the Plan shall be shares of authorized but unissued or reacquired
Common Stock, including shares repurchased by the Corporation on the open market. The number of
shares of Common Stock reserved for issuance over the term of the Plan shall not exceed the sum of
(i) 3,845,917 shares plus (ii) the additional shares of Common Stock automatically added to the
share reserve each year pursuant to the provisions of Section V.B. of this Article One.

          B. The number of shares of Common Stock available for issuance under the Plan shall
automatically increase on the first trading day of January each calendar year during the term of
the Plan, beginning with calendar year 2000, by an amount equal to five percent (5 %) of the total
number of shares of Common Stock outstanding on the last trading day in December of the immediately
preceding calendar year, but in no event shall any such annual increase exceed 3,000,000 shares.

          C. No Participant may be granted Options or Freestanding SARs for more than 1,000,000 shares
of Common Stock in the aggregate per calendar year. No Participant may be granted Restricted Stock
Awards or Awards of Restricted Stock Units intended, in either case, to result in the payment of
Performance-Based Compensation for more than 500,000 shares of Common Stock in the aggregate per
calendar year. No Participant may be granted Performance Shares intended to result in the payment
of Performance-Based Compensation for more than 150,000 shares of Common Stock in the aggregate for
each year contained in the Performance Period with respect to such Award. No Participant may be
granted Performance Units intended to result in the payment of Performance-Based Compensation for
more than $1,500,000 for each year contained in the Performance Period with respect to such Award.

          D. Shares of Common Stock subject to outstanding Options (including Options incorporated into
this Plan from the Predecessor Plan) or Freestanding SARs shall be available for subsequent
issuance under the Plan to the extent those Options or Freestanding SARs expire or terminate for
any reason prior to exercise in full. Unvested shares issued under the Plan and subsequently
forfeited, cancelled or repurchased by the Corporation at the original issue price paid per share
and unvested shares subject to Restricted Stock Unit Awards or Performance Share Awards cancelled
prior to settlement shall be added back to the number of shares of Common Stock reserved for
issuance under the Plan and shall accordingly be available for reissuance through one or more
subsequent Awards granted under the Plan. However, should the exercise price of an Option under
the Plan be paid with shares of Common Stock or should shares of Common Stock otherwise issuable
under the Plan be withheld by the Corporation in satisfaction of the withholding taxes incurred in
connection with the exercise, vesting or

4.

 

settlement of an Award under the Plan, then the number of shares of Common Stock available for
issuance under the Plan shall be reduced by the gross number of shares for which the Award is
exercised, becomes vested or is settled, and not by the net number of shares of Common Stock issued
to the holder of such Award. Shares of Common Stock underlying one or more SARs exercised under
the Plan shall not be available for subsequent issuance under the Plan.

          E. If any change is made to the Common Stock by reason of any stock split, stock dividend,
recapitalization, combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Corporation’s receipt of consideration, appropriate
adjustments shall be made by the Plan Administrator to (i) the maximum number and/or class of
securities issuable under the Plan, (ii) the maximum number and/or class of securities for which
any one person may be granted one or more Awards under the Plan within a specified period of time
as provided in Section V.C of this Article One, (iii) the number and/or class of securities for
which grants are subsequently to be made under the Automatic Non-Employee Director Grant Program to
new and continuing non-employee Board members, (iv) the number and/or class of securities and the
exercise price per share in effect under each outstanding Option and SAR under the Plan, (v) the
number and/or class of securities in effect under each outstanding Restricted Stock Award,
Restricted Stock Unit Award and Performance Share Award under the Plan, (vi) the number and/or
class of securities and price per share in effect under each outstanding Option incorporated into
this Plan from the Predecessor Plan and (vii) the maximum number and/or class of securities by
which the share reserve is to increase automatically each calendar year pursuant to the provisions
of Section V.B. of this Article One. Such adjustments to the outstanding Awards are to be effected
in a manner which shall preclude the enlargement or dilution of rights and benefits under such
Awards. The adjustments determined by the Plan Administrator shall be final, binding and
conclusive.

5.

 

ARTICLE TWO

DISCRETIONARY OPTION/SAR GRANT PROGRAM

     I. OPTION TERMS

          Each Option shall be evidenced by an Award Agreement in the form approved by the Plan
Administrator; provided, however, that the Award Agreement shall comply with the terms
specified below. Each Award Agreement evidencing an Incentive Option shall, in addition, be
subject to the provisions of the Plan applicable to such Options.

          A. Exercise Price.

               1. The exercise price per share shall be fixed by the Plan Administrator but shall not be less
than one hundred percent (100%) of the Fair Market Value per share of Common Stock on the Option
grant date.

               2. The exercise price shall become immediately due upon exercise of the Option and shall,
subject to the provisions of the Award Agreement evidencing the Option, be payable in one or more
of the forms specified below:

               (i) cash or check made payable to the Corporation,

               (ii) shares of Common Stock held for the requisite period (if any) necessary to
avoid a charge to the Corporation’s earnings for financial reporting purposes and
valued at Fair Market Value on the Exercise Date, or

               (iii) to the extent the Option is exercised for vested shares, through a
special sale and remittance procedure pursuant to which the Participant shall
concurrently provide irrevocable instructions to (a) a Corporation-designated
brokerage firm to effect the immediate sale of the purchased shares and remit to the
Corporation, out of the sale proceeds available on the settlement date, sufficient
funds to cover the aggregate exercise price payable for the purchased shares plus
all applicable Federal, state and local income and employment taxes required to be
withheld by the Corporation by reason of such exercise and (b) the Corporation to
deliver the certificates for the purchased shares directly to such brokerage firm in
order to complete the sale.

          Except to the extent such sale and remittance procedure is utilized, payment of the exercise
price for the purchased shares must be made on the Exercise Date.

          B. Exercise and Term of Options. Each Option shall be exercisable at such time or
times, during such period and for such number of shares as shall be determined by the Plan
Administrator and set forth in the Award Agreement evidencing the Option. However, no Option shall
have a term in excess of ten (10) years measured from the Option grant date.

6.

 

          C. Effect of Termination of Service.

               1. The following provisions shall govern the exercise of any Options held by the Participant
at the time of cessation of Service or death:

               (i) Any Option outstanding at the time of the Participant’s cessation of
Service for any reason shall remain exercisable for such period of time thereafter
as shall be determined by the Plan Administrator and set forth in the Award
Agreement evidencing the Option, but no such Option shall be exercisable after the
expiration of the Option term.

               (ii) Any Option held by the Participant at the time of death and exercisable in
whole or in part at that time may be subsequently exercised by the personal
representative of the Participant’s estate or by the person or persons to whom the
Option is transferred pursuant to the Participant’s will or in accordance with the
laws of descent and distribution or by the Participant’s designated beneficiary or
beneficiaries of that Option.

               (iii) Should the Participant’s Service be terminated for Misconduct, then all
outstanding Options held by the Participant shall terminate immediately and cease to
be outstanding.

               (iv) During the applicable post-Service exercise period, the Option may not be
exercised in the aggregate for more than the number of vested shares for which the
Option is exercisable on the date of the Participant’s cessation of Service. Upon
the expiration of the applicable exercise period or (if earlier) upon the expiration
of the Option term, the Option shall terminate and cease to be outstanding for any
vested shares for which the Option has not been exercised. However, the Option
shall, immediately upon the Participant’s cessation of Service, terminate and cease
to be outstanding to the extent the Option is not otherwise at that time exercisable
for vested shares.

               2. The Plan Administrator shall have complete discretion, exercisable either at the time an
Option is granted or at any time while the Option remains outstanding, to:

               (i) extend the period of time for which the Option is to remain exercisable
following the Participant’s cessation of Service from the limited exercise period
otherwise in effect for that Option to such greater period of time as the Plan
Administrator shall deem appropriate, but in no event beyond the expiration of the
Option term, and/or

               (ii) permit the Option to be exercised, during the applicable post-Service
exercise period, not only with respect to the number of vested shares of Common
Stock for which such Option is exercisable at the time of the Participant’s
cessation of Service but also with respect to one or more additional installments in
which the Participant would have vested had the Participant continued in Service.

7.

 

          D. Stockholder Rights. The holder of an Option shall have no stockholder rights with
respect to the shares subject to the Option until such person shall have exercised the Option, paid
the exercise price and become a holder of record of the purchased shares.

          E. Repurchase Rights. The Plan Administrator shall have the discretion to grant
Options which are exercisable for unvested shares of Common Stock. Should the Participant cease
Service while holding such unvested shares, the Corporation shall have the right to repurchase, at
the exercise price paid per share, any or all of those unvested shares. The terms upon which such
repurchase right shall be exercisable (including the period and procedure for exercise and the
appropriate vesting schedule for the purchased shares) shall be established by the Plan
Administrator and set forth in the document evidencing such repurchase right.

          F. Limited Transferability of Options. During the lifetime of the Participant,
Incentive Options shall be exercisable only by the Participant and shall not be assignable or
transferable other than by will or by the laws of descent and distribution following the
Participant’s death. However, a Non-Statutory Option may, in connection with the Participant’s
estate plan, be assigned in whole or in part during the Participant’s lifetime to one or more
members of the Participant’s immediate family or to a trust established exclusively for one or more
such family members. The assigned portion may only be exercised by the person or persons who
acquire a proprietary interest in the Option pursuant to the assignment. The terms applicable to
the assigned portion shall be the same as those in effect for the Option immediately prior to such
assignment and shall be set forth in such documents issued to the assignee as the Plan
Administrator may deem appropriate. Notwithstanding the foregoing, the Participant may also
designate one or more persons as the beneficiary or beneficiaries of his or her outstanding Options
under this Article Two, and those Options shall, in accordance with such designation, automatically
be transferred to such beneficiary or beneficiaries upon the Participant’s death while holding
those Options. Such beneficiary or beneficiaries shall take the transferred Options subject to all
the terms and conditions of the applicable agreement evidencing each such transferred Option,
including (without limitation) the limited time period during which the Option may be exercised
following the Participant’s death.

     II. INCENTIVE OPTIONS

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

          A. Eligibility. Incentive Options may only be granted to Employees.

          B. Dollar Limitation. The aggregate Fair Market Value of the shares of Common Stock
(determined as of the respective date or dates of grant) for which one or more Options granted to
any Employee under the Plan (or any other Option plan of the Corporation or any Parent or
Subsidiary) may for the first time become exercisable as Incentive Options during any one calendar
year shall not exceed the sum of One Hundred Thousand Dollars ($100,000).

8.

 

To the extent the Employee holds two (2) or more such Options which become exercisable for the
first time in the same calendar year, the foregoing limitation on the exercisability of such
Options as Incentive Options shall be applied on the basis of the order in which such Options are
granted.

          C. 10% Stockholder. If any Employee to whom an Incentive Option is granted is a 10%
Stockholder, then the exercise price per share shall not be less than one hundred ten percent
(110%) of the Fair Market Value per share of Common Stock on the Option grant date, and the Option
term shall not exceed five (5) years measured from the Option grant date.

     III. STOCK APPRECIATION RIGHTS

          Each SAR shall be evidenced by an Award Agreement in the form approved by the Plan
Administrator; provided, however, that the Award Agreement shall comply with the terms
specified below.

          A. Types of SARs Authorized. A SAR may be a Freestanding SAR granted independently of
any Option, a Tandem SAR granted in tandem with all or any portion of a related Option, or a
Limited SAR granted to a Section 16 Insider with respect to an outstanding Option. A Tandem SAR or
a Limited SAR may be granted either concurrently with the grant of the related Option or at any
time thereafter prior to the complete exercise, termination, expiration or cancellation of such
related Option.

          B. Terms and Conditions of Freestanding SARs.

               1. Exercise Price. The exercise price per share subject to a Freestanding SAR shall be fixed
by the Plan Administrator but shall not be less than one hundred percent (100%) of the Fair Market
Value per share of Common Stock on the grant date.

               2. Exercisability and Term of Freestanding SARs. Each Freestanding SAR shall be exercisable
at such time or times, during such period and for such number of shares as shall be determined by
the Plan Administrator and set forth in the Award Agreement evidencing such Award. However, no
Freestanding SAR shall have a term in excess of ten (10) years measured from the grant date.

               3. Exercise of Freestanding SARs and Settlement in Stock. Upon the exercise (or deemed
exercise pursuant to paragraph 5 below) of a Freestanding SAR authorizing settlement solely in
shares of stock, the Participant (or the Participant’s legal representative or other person who
acquired the right to exercise such SAR by reason of the Participant’s death) shall be entitled to
receive payment of an amount for each share with respect to which such SAR is exercised equal to
the excess, if any, of the Fair Market Value of a share of Common Stock on the Exercise Date of
such SAR over the exercise price. Payment of such amount shall be made in whole shares of Common
Stock as soon as practicable following the Exercise Date. The number of shares to be issued shall
be determined on the basis of the Fair Market Value of a share of Common Stock on the Exercise Date
of the Freestanding SAR.

               4. Exercise of Freestanding SARs and Settlement in Cash. Subject to the provisions of Section
I of Article Six with respect to Code Section 409A, the Plan

9.

 

Administrator may grant Freestanding SARs that provide for payment in cash. The Exercise
Date(s) applicable to any such SAR shall be established in compliance with the provisions of
Section I of Article Six with respect to Code Section 409A either by the Plan Administrator in
granting such SAR, or, if permitted by the Plan Administrator, by an advance election of the
Participant in a manner complying with the requirements of Code Section 409A. Upon the exercise
(or deemed exercise pursuant to paragraph 5 below) of any such Freestanding SAR, the Participant
(or the Participant’s legal representative or other person who acquired the right to exercise such
SAR by reason of the Participant’s death) shall be entitled to receive payment of an amount for
each share with respect to which such SAR is exercised equal to the excess, if any, of the Fair
Market Value of a share of Common Stock on the Exercise Date of such SAR over the exercise price.
Payment of such amount shall be made in cash as soon as practicable following the Exercise Date.

               5. Deemed Exercise of Freestanding SARs. If, on the date on which a Freestanding SAR would
otherwise terminate or expire, such SAR by its terms remains exercisable immediately prior to such
termination or expiration and, if so exercised, would result in a payment to the holder of such
SAR, then any portion of such SAR which has not previously been exercised shall automatically be
deemed to be exercised as of such date with respect to such portion.

               6. Effect of Termination of Service. Subject to earlier termination of a Freestanding SAR as
otherwise provided herein and unless otherwise provided by the Plan Administrator in the Award
Agreement evidencing such SAR, a Freestanding SAR shall be exercisable after a Participant’s
termination of Service only during the applicable time period determined in accordance with
Section I.C of this Article Two (treating the SAR as if it were an Option) and thereafter shall
terminate.

          C. Terms and Conditions of Tandem SARs.

               1. One or more Participants may be granted the right, exercisable upon such terms as the Plan
Administrator may establish, to elect between the exercise of the underlying Option for shares of
Common Stock and the surrender of that Option in exchange for a distribution from the Corporation
in an amount equal to the excess of (a) the Fair Market Value (on the Option surrender date) of the
number of shares in which the Participant is at the time vested under the surrendered Option (or
surrendered portion thereof) over (b) the aggregate exercise price payable for such shares.

               2. No such Option surrender shall be effective unless it is approved by the Plan
Administrator, either at the time of the actual Option surrender or at any earlier time. If the
surrender is so approved, then the distribution to which the Participant shall be entitled shall be
made solely in whole shares of Common Stock valued at Fair Market Value on the Option surrender
date.

               3. If the surrender of an Option is not approved by the Plan Administrator, then the
Participant shall retain whatever rights the Participant had under the surrendered Option (or
surrendered portion thereof) on the Option surrender date and may exercise such rights at any time
prior to the later of (a) five (5) business days after the receipt of

10.

 

the rejection notice or (b) the last day on which the Option is otherwise exercisable in
accordance with the terms of the Award Agreement evidencing such Option, but in no event may such
rights be exercised more than ten (10) years after the Option grant date.

          D. Terms and Conditions of Limited SARs.

               1. Subject to the provisions of Section I of Article Six with respect to Code Section 409A,
one or more Section 16 Insiders may be granted Limited SARs with respect to their outstanding
Options.

               2. Upon the occurrence of a Hostile Take-Over, each individual holding one or more Options
with such a Limited SAR shall have the unconditional right (exercisable for a thirty (30)-day
period following such Hostile Take-Over) to surrender each such Option to the Corporation. In
return for the surrendered Option, the Participant shall receive a cash distribution from the
Corporation in an amount equal to the excess of (A) the Take-Over Price of the shares of Common
Stock at the time subject to such Option (whether or not the Participant is otherwise vested in
those shares) over (B) the aggregate exercise price payable for those shares. Such cash
distribution shall be paid within five (5) days following the Option surrender date.

               3. At the time such Limited SAR is granted, the Plan Administrator shall pre-approve any
subsequent exercise of that right in accordance with the terms of this Paragraph D. Accordingly,
no further approval of the Plan Administrator or the Board shall be required at the time of the
actual Option surrender and cash distribution.

          E. Stockholder Rights. The holder of an SAR shall have no stockholder rights with
respect to the shares subject to the SAR until such person shall have exercised the SAR and become
a holder of record of the shares issued in payment of such SAR.

          F. Limited Transferability of SARs. During the lifetime of the Participant, an SAR
shall be exercisable only by the Participant and shall not be assignable or transferable other than
by will or by the laws of descent and distribution following the Participant’s death. However, a
Tandem SAR related to a Non-Statutory Option or a Freestanding SAR to be settled in shares of
Common Stock may, in connection with the Participant’s estate plan, be assigned in whole or in part
during the Participant’s lifetime to one or more members of the Participant’s immediate family or
to a trust established exclusively for one or more such family members. The assigned portion may
only be exercised by the person or persons who acquire a proprietary interest in the Freestanding
SAR or both the Tandem SAR and related Non-Statutory Option pursuant to the assignment. The terms
applicable to the assigned portion shall be the same as those in effect for the SAR immediately
prior to such assignment and shall be set forth in such documents issued to the assignee as the
Plan Administrator may deem appropriate. Notwithstanding the foregoing, the Participant may also
designate one or more persons as the beneficiary or beneficiaries of his or her outstanding SARs
under this Article Two, and those SARs shall, in accordance with such designation, automatically
be transferred to such beneficiary or beneficiaries upon the Participant’s death while holding
those SARs. Such beneficiary or beneficiaries shall take the transferred SARs subject to all the
terms and conditions of the applicable agreement evidencing each such transferred SAR, including
(without

11.

 

limitation) the limited time period during which the SAR may be exercised following the
Participant’s death.

     IV. CORPORATE TRANSACTION/CHANGE IN CONTROL

          A. In the event of any Corporate Transaction, each outstanding Option and SAR shall
automatically accelerate so that each such Award shall, immediately prior to the effective date of
the Corporate Transaction, become fully exercisable for the total number of shares of Common Stock
at the time subject to such Award and may be exercised for any or all of those shares as fully
vested shares of Common Stock. However, an outstanding Option or SAR shall not become exercisable
on such an accelerated basis if and to the extent: (i) such Award is, in connection with the
Corporate Transaction, to be assumed by the successor corporation (or parent thereof) or (ii)
subject to compliance with the provisions of Section I of Article Six with respect to Code Section
409A, such Award is to be replaced with a cash incentive program of the successor corporation which
preserves the spread existing at the time of the Corporate Transaction on any shares for which the
Award is not otherwise at that time exercisable and provides for subsequent payout in accordance
with the same exercise/vesting schedule applicable to those Award shares or (iii) the acceleration
of such Award is subject to other limitations imposed by the Plan Administrator at the time of the
Award grant.

          B. All outstanding repurchase rights shall automatically terminate, and the shares of Common
Stock subject to those terminated rights shall immediately vest in full, in the event of any
Corporate Transaction, except to the extent: (i) those repurchase rights are to be assigned to the
successor corporation (or parent thereof) in connection with such Corporate Transaction or (ii)
such accelerated vesting is precluded by other limitations imposed by the Plan Administrator at the
time the repurchase right is issued.

          C. Immediately following the consummation of the Corporate Transaction, all outstanding
Options and SARs (other than a Limited SAR to the extent provided by Section III.F of this Article
Two) shall terminate and cease to be outstanding, except to the extent assumed by the successor
corporation (or parent thereof).

          D. Each Option and SAR which is assumed in connection with a Corporate Transaction shall be
appropriately adjusted, immediately after such Corporate Transaction, to apply to the number and
class of securities which would have been issued to the Participant had such Award been exercised
immediately prior to such Corporate Transaction. If the holders of Common Stock receive cash
consideration in connection with the Corporate Transaction, the assumed Option or SAR may be
adjusted, at the option of the successor corporation, to apply to the number of shares of its
common stock with a fair market value equivalent to the cash consideration paid per share of Common
Stock in such Corporate Transaction. Appropriate adjustments to reflect such Corporate Transaction
shall also be made to (i) the exercise price per share under each outstanding Option and SAR,
provided the aggregate exercise price for such securities shall remain the same, (ii) the
maximum number and/or class of securities available for issuance over the remaining term of the
Plan and (iii) the maximum number and/or class of securities for which any one person may be
granted Awards under the Plan per calendar year and (iv) the maximum number and/or class of
securities by which the share reserve is to increase automatically each calendar year. All such
adjustments shall be made in compliance with the

12.

 

requirements of Code Sections 409A, 422 and 424 and any related guidance issued by the U.S.
Treasury Department, if applicable.

          E. The Plan Administrator shall have the discretionary authority to structure one or more
outstanding Options or SARs under the Discretionary Option/SAR Grant Program so that those Awards
shall, immediately prior to the effective date of such Corporate Transaction, become fully
exercisable for the total number of shares of Common Stock at the time subject to those Awards and
may be exercised for any or all of those shares as fully vested shares of Common Stock, whether or
not those Awards are to be assumed in the Corporate Transaction. In addition, the Plan
Administrator shall have the discretionary authority to structure one or more of the Corporation’s
repurchase rights under the Discretionary Option/SAR Grant Program so that those rights shall not
be assignable in connection with such Corporate Transaction and shall accordingly terminate upon
the consummation of such Corporate Transaction, and the shares subject to those terminated rights
shall thereupon vest in full.

          F. The Plan Administrator shall have full power and authority to structure one or more
outstanding Options or SARs under the Discretionary Option/SAR Grant Program so that those Awards
shall become fully exercisable for the total number of shares of Common Stock at the time subject
to those Awards in the event the Participant’s Service is subsequently terminated by reason of an
Involuntary Termination within a designated period (not to exceed eighteen (18) months) following
the effective date of any Corporate Transaction in which those Awards are assumed and do not
otherwise accelerate. Any Options or SARs so accelerated shall remain exercisable for fully vested
shares until the earlier of (i) the expiration of the Award term or (ii) the expiration of
the one (1) year period measured from the effective date of the Involuntary Termination. In
addition, the Plan Administrator may structure one or more of the Corporation’s repurchase rights
so that those rights shall immediately terminate with respect to any shares held by the Participant
at the time of his or her Involuntary Termination, and the shares subject to those terminated
repurchase rights shall accordingly vest in full at that time.

          G. The Plan Administrator shall have the discretionary authority to structure one or more
outstanding Options or SARs under the Discretionary Option/SAR Grant Program so that those Awards
shall, immediately prior to the effective date of a Change in Control, become fully exercisable for
the total number of shares of Common Stock at the time subject to those Awards and may be exercised
for any or all of those shares as fully vested shares of Common Stock. In addition, the Plan
Administrator shall have the discretionary authority to structure one or more of the Corporation’s
repurchase rights under the Discretionary Option/SAR Grant Program so that those rights shall
terminate automatically upon the consummation of such Change in Control, and the shares subject to
those terminated rights shall thereupon vest in full. Alternatively, the Plan Administrator may
condition the automatic acceleration of one or more outstanding Options or SARs under the
Discretionary Option/SAR Grant Program and the termination of one or more of the Corporation’s
outstanding repurchase rights under such program upon the subsequent termination of the
Participant’s Service by reason of an Involuntary Termination within a designated period (not to
exceed eighteen (18) months) following the effective date of such Change in Control. Each Option
or SAR so accelerated shall remain exercisable for fully vested shares until the earlier of
(i) the expiration of the Award term or (ii) the expiration of the one (1) year period measured
from the effective date of Participant’s cessation of Service.

13.

 

          H. The portion of any Incentive Option accelerated in connection with a Corporate Transaction
or Change in Control shall remain exercisable as an Incentive Option only to the extent the
applicable One Hundred Thousand Dollar ($100,000) limitation is not exceeded. To the extent such
dollar limitation is exceeded, the accelerated portion of such Option shall be exercisable as a
Nonstatutory Option under the Federal tax laws.

          I. The outstanding Options and SARs shall in no way affect the right of the Corporation to
adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.

     V. PROHIBITION OF OPTION OR SAR REPRICING WITHOUT STOCKHOLDER APPROVAL

          Without the affirmative vote of holders of a majority of the shares of Common Stock cast in
person or by proxy at a meeting of the stockholders of the Corporation at which a quorum
representing a majority of all outstanding shares of Common Stock is present or represented by
proxy, the Plan Administrator shall not approve a program providing for either (a) the cancellation
of outstanding Options or SARs and the grant in substitution therefore of new Options or SARs
having a lower exercise price or (b) the amendment of outstanding Options or SARs to reduce the
exercise price thereof. This paragraph shall not be construed to apply to “issuing or assuming a
stock option in a transaction to which section 424(a) applies,” within the meaning of Code Section
424.

14.

 

ARTICLE THREE

RESTRICTED STOCK/RESTRICTED STOCK UNIT PROGRAM

     I. RESTRICTED STOCK AWARDS

          Shares of Common Stock may be issued under the Restricted Stock/Restricted Stock Unit Program
through direct and immediate issuances without any intervening Option or SAR Award. Restricted
Stock Awards shall be evidenced by Award Agreements specifying whether the Award is a Restricted
Stock Bonus or a Restricted Stock Purchase Right and the number of shares of Common Stock subject
to the Award, in such form as the Plan Administrator shall from time to time establish. Award
Agreements evidencing Restricted Stock Awards may incorporate all or any of the terms of the Plan
by reference and shall comply with and be subject to the following terms and conditions:

          A. Types of Restricted Stock Awards Authorized. Restricted Stock Awards may be in the
form of either a Restricted Stock Bonus or a Restricted Stock Purchase Right. Restricted Stock
Awards may be granted upon such conditions as the Plan Administrator shall determine, including,
without limitation, upon the attainment of one or more Performance Goals described in Section I.D
of Article Four. If either the grant or vesting of a Restricted Stock Award is to be contingent
upon the attainment of one or more Performance Goals and is to result in the payment of
Performance-Based Compensation, the Plan Administrator shall follow procedures substantially
equivalent to those set forth in Sections I.C through I.E.1 of Article Four.

          B. Purchase Price. The purchase price for shares of Common Stock issuable under each
Restricted Stock Purchase Right shall be established by the Plan Administrator in its discretion.
No monetary payment (other than applicable tax withholding) shall be required as a condition of
receiving shares of Common Stock pursuant to a Restricted Stock Bonus, the consideration for which
shall be services actually rendered to the Corporation (or any Parent or Subsidiary) or for its
benefit. Notwithstanding the foregoing, if required by applicable state corporations law, the
Participant shall furnish consideration in the form of cash or past services rendered to the
Corporation (or any Parent or Subsidiary) or for its benefit having a value not less than the par
value of the shares of Common Stock subject to such Restricted Stock Award.

          C. Purchase Period. A Restricted Stock Purchase Right shall be exercisable within a
period established by the Plan Administrator, which shall in no event exceed thirty (30) days from
the effective date of the grant of the Restricted Stock Purchase Right.

          D. Payment of Purchase Price. Payment of the purchase price for the number of shares
of Common Stock being purchased pursuant to any Restricted Stock Purchase Right shall be made
(a) in cash or cash equivalent or by check made payable to the Corporation or (b) by past services
rendered to the Corporation (or any Parent or Subsidiary) or for its benefit.

15.

 

          E. Vesting Provisions.

               1. Shares of Common Stock issued pursuant to a Restricted Stock Award may, in the discretion
of the Plan Administrator, be fully and immediately vested upon issuance or may vest in one or more
installments over the Participant’s period of Service or upon attainment of specified performance
objectives, including, without limitation, Performance Goals described in Section I.D of Article
Four. The elements of the vesting schedule applicable to any unvested shares of Common Stock
issued pursuant to a Restricted Stock Award shall be determined by the Plan Administrator and
incorporated into the Award Agreement.

               2. Any new, substituted or additional securities or other property (including money paid other
than as a regular cash dividend) which the Participant may have the right to receive with respect
to the Participant’s unvested shares of Common Stock by reason of any stock dividend, stock split,
recapitalization, combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Corporation’s receipt of consideration shall be
issued subject to (i) the same vesting requirements applicable to the Participant’s unvested shares
of Common Stock and (ii) such escrow arrangements as the Plan Administrator shall deem appropriate.

               3. The Participant shall have full stockholder rights with respect to any shares of Common
Stock issued to the Participant pursuant to a Restricted Stock Award, whether or not the
Participant’s interest in those shares is vested. Accordingly, the Participant shall have the
right to vote such shares and to receive any regular cash dividends paid on such shares.

               4. Should the Participant cease to remain in Service while holding one or more unvested shares
of Common Stock issued pursuant to a Restricted Stock Award or should the performance objectives or
Performance Goals not be attained with respect to one or more such unvested shares of Common Stock,
then those shares shall be immediately surrendered to the Corporation for cancellation, and the
Participant shall have no further stockholder rights with respect to those shares. To the extent
the surrendered shares were previously issued to the Participant for consideration paid in cash or
cash equivalent, the Corporation shall repay to the Participant the cash consideration paid for the
surrendered shares.

               5. The Plan Administrator may in its discretion waive the surrender and cancellation of one or
more unvested shares of Common Stock which would otherwise occur upon the cessation of the
Participant’s Service or the non-attainment of the performance objectives or Performance Goals
applicable to those shares. Such waiver shall result in the immediate vesting of the Participant’s
interest in the shares of Common Stock as to which the waiver applies. Such waiver may be effected
at any time, whether before or after the Participant’s cessation of Service or the attainment or
non-attainment of the applicable performance objectives or Performance Goals.

     II. RESTRICTED STOCK UNIT AWARDS

          Subject to the provisions of Section I of Article Six with respect to Code Section 409A,
shares of Common Stock may be issued under the Restricted Stock/Restricted Stock Unit

16.

 

Program on a deferred basis through the grant of Restricted Stock Units. Restricted Stock
Unit Awards shall be evidenced by Award Agreements specifying the number of shares of Common Stock
subject to the Award, in such form as the Plan Administrator shall from time to time establish.
Award Agreements evidencing Restricted Stock Unit Awards may incorporate all or any of the terms of
the Plan by reference and shall comply with and be subject to the following terms and conditions:

          A. Grant of Restricted Stock Unit Awards. Restricted Stock Unit Awards may be granted
upon such conditions as the Plan Administrator shall determine, including, without limitation, upon
the attainment of one or more Performance Goals described in Section I.D of Article Four. If
either the grant or vesting of a Restricted Stock Unit Award is to be contingent upon the
attainment of one or more Performance Goals, the Plan Administrator shall follow procedures
substantially equivalent to those set forth in Sections I.C through I.E.1 of Article Four.

          B. Purchase Price. No monetary payment (other than applicable tax withholding, if
any) shall be required as a condition of receiving a Restricted Stock Unit Award, the consideration
for which shall be services actually rendered to the Corporation (or any Parent or Subsidiary) or
for its benefit. Notwithstanding the foregoing, if required by applicable state corporations law,
the Participant shall furnish consideration in the form of cash or past services rendered to the
Corporation (or any Parent or Subsidiary) or for its benefit having a value not less than the par
value of the shares of Common Stock issued upon settlement of the Restricted Stock Unit Award.

          C. Vesting Provisions. Restricted Stock Units may or may not be made subject to
vesting conditions based upon the satisfaction of such Service requirements, conditions,
restrictions or performance objectives , including, without limitation, Performance Goals as
described in Section I.D of Article Four, as shall be established by the Plan Administrator and set
forth in the Award Agreement evidencing such Award.

          D. Voting Rights, Dividend Equivalent Rights and Distributions. Participants shall
have no voting rights with respect to shares of Common Stock represented by Restricted Stock Units
until the date of the issuance of such shares (as evidenced by the appropriate entry on the books
of the Corporation or of a duly authorized transfer agent of the Corporation). However, the Plan
Administrator, in its discretion, may grant Dividend Equivalent Rights pursuant to the Award
Agreement evidencing any Restricted Stock Unit Award with respect to the payment of cash dividends
on Common Stock paid prior to the date on which Restricted Stock Units held by such Participant are
settled. A Participant granted Dividend Equivalent Rights shall be credited with additional whole
Restricted Stock Units as of the date of payment of such cash dividends on Common Stock. The
number of additional Restricted Stock Units (rounded to the nearest whole number) to be so credited
shall be determined by dividing (a) the amount of cash dividends paid on such date with respect to
the number of shares of Common Stock represented by the Restricted Stock Units previously credited
to the Participant by (b) the Fair Market Value per share of Common Stock on such date. Such
additional Restricted Stock Units shall be subject to the same terms and conditions and shall be
settled in the same manner and at the same time (or as soon thereafter as practicable) as the
Restricted Stock Units originally subject to the Restricted Stock Unit Award. In the event of a
dividend or

17.

 

distribution paid in shares of Common Stock or any other adjustment made upon a change to the
Common Stock as described in Section V.E of Article One, appropriate adjustments shall be made in
the Participant’s Restricted Stock Unit Award so that it represents the right to receive upon
settlement any and all new, substituted or additional securities or other property (other than
normal cash dividends) to which the Participant would entitled by reason of the shares of Common
Stock issuable upon settlement of the Award, and all such new, substituted or additional securities
or other property shall be immediately subject to the same vesting conditions as are applicable to
the Award.

          E. Effect of Termination of Service. Unless otherwise provided by the Plan
Administrator and set forth in the Award Agreement evidencing a Restricted Stock Unit Award, if a
Participant’s Service terminates for any reason, whether voluntary or involuntary (including the
Participant’s death or disability), then the Participant shall forfeit to the Corporation any
Restricted Stock Units pursuant to the Award which remain subject to vesting conditions as of the
date of the Participant’s termination of Service.

          F. Settlement of Restricted Stock Unit Awards. The Corporation shall issue to a
Participant on the date on which Restricted Stock Units subject to the Participant’s Restricted
Stock Unit Award vest or, subject to the provisions of Section I of Article Six with respect to
Code Section 409A, on such other date determined by the Plan Administrator, in its discretion, and
set forth in the Award Agreement one (1) share of Common Stock (and/or any other new, substituted
or additional securities or other property pursuant to an adjustment described in Section II.D
above) for each Restricted Stock Unit then becoming vested or otherwise to be settled on such date,
subject to the withholding of applicable taxes. If permitted by the Plan Administrator, and
subject to the provisions of Section I of Article Six with respect to Code Section 409A, the
Participant may elect to defer receipt of all or any portion of the shares of Common Stock or other
property otherwise issuable to the Participant pursuant to this Section, and such deferred issuance
date(s) elected by the Participant shall be set forth in the Award Agreement. Notwithstanding the
foregoing, the Plan Administrator, in its discretion, may provide for settlement of any Restricted
Stock Unit Award by payment to the Participant in cash of an amount equal to the Fair Market Value
on the payment date of the shares of Common Stock or other property otherwise issuable to the
Participant pursuant to this Section.

          G. Nontransferability of Restricted Stock Unit Awards. Prior to the settlement of a
Restricted Stock Unit Award, the Award shall not be subject in any manner to anticipation,
alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or garnishment by creditors
of the Participant or the Participant’s beneficiary, except transfer by will or by the laws of
descent and distribution. All rights with respect to a Restricted Stock Unit Award granted to a
Participant hereunder shall be exercisable during his or her lifetime only by such Participant or
the Participant’s guardian or legal representative.

     III. CORPORATE TRANSACTION/CHANGE IN CONTROL

          A. All of the Corporation’s outstanding repurchase rights under Restricted Stock Awards shall
terminate automatically, and all the shares of Common Stock subject to those terminated rights and
outstanding Restricted Stock Unit Awards shall immediately vest in full, in the event of any
Corporate Transaction, except to the extent (i) those repurchase rights are to be

18.

 

assigned to the successor corporation (or parent thereof) in connection with such Corporate
Transaction, (ii) substantially equivalent rights for stock of the successor corporation (or parent
thereof) are substituted for outstanding Restricted Stock Units in connection with such Corporate
Transaction or (iii) such accelerated vesting is precluded by other limitations imposed in the
Award Agreement.

          B. The Plan Administrator shall have the discretionary authority to structure one or more of
the Corporation’s repurchase rights under Restricted Stock Awards so that those rights shall
automatically terminate in whole or in part, and the shares of Common Stock subject to those
terminated rights or to Restricted Stock Unit Awards shall immediately vest, in the event the
Participant’s Service should subsequently terminate by reason of an Involuntary Termination within
a designated period (not to exceed eighteen (18) months) following the effective date of any
Corporate Transaction in which those repurchase rights are assigned to the successor corporation
(or parent thereof) or substantially equivalent rights for stock of the successor corporation (or
parent thereof) are substituted for outstanding Restricted Stock Units in connection with such
Corporate Transaction.

          C. The Plan Administrator shall also have the discretionary authority to structure one or more
of the Corporation’s repurchase rights under Restricted Stock Awards so that those rights shall
automatically terminate in whole or in part, and the shares of Common Stock subject to those
terminated rights or to Restricted Stock Unit Awards shall immediately vest, in the event the
Participant’s Service should subsequently terminate by reason of an Involuntary Termination within
a designated period (not to exceed eighteen (18) months) following the effective date of any Change
in Control.

     IV. SHARE ESCROW/LEGENDS

          Unvested shares may, in the Plan Administrator’s discretion, be held in escrow by the
Corporation until the Participant’s interest in such shares vests or may be issued directly to the
Participant with restrictive legends on the certificates evidencing those unvested shares.

19.

 

ARTICLE FOUR

PERFORMANCE AWARD PROGRAM

     I. TERMS OF PERFORMANCE AWARDS

          Subject to the provisions of Section I of Article Six with respect to Code Section 409A,
Performance Awards may be granted to Participants in such amount and upon such terms as shall be
determined by the Plan Administrator, in its sole discretion. Performance Awards shall be
evidenced by Award Agreements in such form as the Plan Administrator shall from time to time
establish. Award Agreements evidencing Performance Awards may incorporate all or any of the terms
of the Plan by reference and shall comply with and be subject to the following terms and
conditions:

          A. Types of Performance Awards Authorized. Performance Awards may be in the form of
either Performance Shares or Performance Units. Each Award Agreement evidencing a Performance
Award shall specify the number of Performance Shares or Performance Units subject thereto, the
Performance Award Formula, the Performance Goal(s) and Performance Period applicable to the Award,
and the other terms, conditions and restrictions of the Award.

          B. Initial Value of Performance Shares and Performance Units. Unless otherwise
provided by the Plan Administrator in granting a Performance Award, each Performance Share shall
have an initial value equal to the Fair Market Value of one (1) share of Stock, subject to
adjustment as provided in Section V.E of Article One, on the effective date of grant of the
Performance Share. Each Performance Unit shall have an initial monetary value determined by the
Plan Administrator at the time of grant. The final value payable to the Participant in settlement
of a Performance Award determined on the basis of the applicable Performance Award Formula will
depend on the extent to which Performance Goals established by the Plan Administrator are attained
within the applicable Performance Period established by the Plan Administrator.

          C. Establishment of Performance Period, Performance Goals and Performance Award
Formula. In granting each Performance Award, the Plan Administrator shall establish in writing
the applicable Performance Period, Performance Award Formula and one or more Performance Goals
which, when measured at the end of the Performance Period, shall determine on the basis of the
Performance Award Formula the final value of the Performance Award to be paid to the Participant.
Unless otherwise permitted in compliance with the requirements under Code Section 162(m), with
respect to each Performance Award intended to result in the payment of Performance-Based
Compensation, the Plan Administrator shall establish the Performance Goal(s) and the Performance
Award Formula applicable to the Performance Award no later than the earlier of (a) the date ninety
(90) days after the commencement of the applicable Performance Period or (b) the date on which 25%
of the Performance Period has elapsed, and, in any event, at a time when the outcome of the
Performance Goals remains substantially uncertain. Once established, the Performance Goals and
Performance Award Formula applicable to a Performance Award intended to result in the

20.

 

payment of
Performance-Based Compensation shall not be changed during the
Performance Period. The Corporation shall notify each Participant
granted a Performance Award of the terms of such Award, including the
Performance Period, Performance Goal(s) and Performance Award
Formula.

	payment of Performance-Based Compensation shall not be changed during the Performance Period.
The Corporation shall notify each Participant granted a Performance Award of the terms of such
Award, including the Performance Period, Performance Goal(s) and Performance Award Formula.

          D. Measurement of Performance Goals. Performance Goals shall be established by the
Plan Administrator on the basis of targets to be attained (“Performance Targets”) with respect to
one or more measures of business or financial performance (each, a “Performance Measure”), subject
to the following:

               1. Performance Measures. Performance Measures shall have the same meanings as used in the
Corporation’s financial statements, or, if such terms are not used in the Corporation’s financial
statements, they shall have the meaning applied pursuant to generally accepted accounting
principles, or as used generally in the Corporation’s industry. Performance Measures shall be
calculated with respect to the Corporation and each Subsidiary consolidated therewith for financial
reporting purposes or such division or other business unit as may be selected by the Plan
Administrator. For purposes of the Plan, the Performance Measures applicable to a Performance
Award shall be calculated in accordance with generally accepted accounting principles, but prior to
the accrual or payment of any Performance Award for the same Performance Period and excluding the
effect (whether positive or negative) of any change in accounting standards or any extraordinary,
unusual or nonrecurring item, as determined by the Plan Administrator, occurring after the
establishment of the Performance Goals applicable to the Performance Award. Each such adjustment,
if any, shall be made solely for the purpose of providing a consistent basis from period to period
for the calculation of Performance Measures in order to prevent the dilution or enlargement of the
Participant’s rights with respect to a Performance Award. Performance Measures may be one or more
of the following, as determined by the Plan Administrator:

               (i) revenue;

               (ii) sales;

               (iii) expenses;

               (iv) operating income;

               (v) gross margin;

               (vi) operating margin;

               (vii) earnings before any one or more of: stock-based compensation expense,
interest, taxes and depreciation, and amortization;

               (viii) pre-tax profit;

               (ix) net operating income;

               (x) net income;

21.

 

               (xi) economic value added;

               (xii) free cash flow;

               (xiii) operating cash flow;

               (xiv) the market price of the Common Stock;

               (xv) earnings per share;

               (xvi) return on stockholder equity;

               (xvii) return on capital;

               (xviii) return on assets;

               (xix) return on investment;

               (xx) balance of cash, cash equivalents and marketable securities;

               (xxi) market share;

               (xxii) number of customers;

               (xxiii) customer satisfaction;

               (xxiv) product development; and

               (xxv) completion of a joint venture or other corporate transaction.

               2. Performance Targets. Performance Targets may include a minimum, maximum, target level and
intermediate levels of performance, with the final value of a Performance Award determined under
the applicable Performance Award Formula by the level attained during the applicable Performance
Period. A Performance Target may be stated as an absolute value or as a value determined relative
to an index, budget or other standard selected by the Plan Administrator.

          E. Settlement of Performance Awards.

               1. Determination of Final Value. As soon as practicable following the completion of the
Performance Period applicable to a Performance Award, the Plan Administrator shall certify in
writing the extent to which the applicable Performance Goals have been attained and the resulting
final value of the Award earned by the Participant and to be paid upon its settlement in accordance
with the applicable Performance Award Formula.

               2. Discretionary Adjustment of Award Formula. In its discretion, the Plan Administrator may,
either at the time it grants a Performance Award or at any time

22.

 

thereafter, provide for the positive or negative adjustment of the Performance Award Formula
applicable to a Performance Award granted to any Participant who is not a Covered Employee to
reflect such Participant’s individual performance in his or her position with the Corporation or
such other factors as the Plan Administrator may determine. If permitted under a Covered
Employee’s Award Agreement, the Plan Administrator shall have the discretion, on the basis of such
criteria as may be established by the Plan Administrator, to reduce some or all of the value of the
Performance Award that would otherwise be paid to the Covered Employee upon its settlement
notwithstanding the attainment of any Performance Goal and the resulting value of the Performance
Award determined in accordance with the Performance Award Formula. No such reduction may result in
an increase in the amount payable upon settlement of another Participant’s Performance Award.

               3. Effect of Leaves of Absence. Unless otherwise required by law, payment of the final value,
if any, of a Performance Award held by a Participant who has taken in excess of thirty (30) days in
leaves of absence during a Performance Period shall be prorated on the basis of the number of days
of the Participant’s Service during the Performance Period during which the Participant was not on
a leave of absence.

               4. Notice to Participants. As soon as practicable following the Plan Administrator’s
determination and certification in accordance with paragraphs 1 and 2 above, the Corporation shall
notify each Participant of the determination of the Plan Administrator.

               5. Payment in Settlement of Performance Awards. Subject to the provisions of Section I of
Article Six with respect to Code Section 409A, as soon as practicable following the Plan
Administrator’s determination and certification in accordance with paragraphs 1 and 2 above or on
such other date(s) determined by the Plan Administrator, in its discretion, and set forth in the
Award Agreement, payment shall be made to each eligible Participant of the final value of the
Participant’s Performance Award. Payment of such amount shall be made in the form of cash, Shares,
or a combination thereof as determined by the Plan Administrator. Unless otherwise provided in the
Award Agreement evidencing a Performance Award, payment shall be made in a lump sum. If permitted
by the Plan Administrator, and subject to the provisions of Section I of Article Six with respect
to Code Section 409A, the Participant may elect to defer receipt of all or any portion of the
payment to be made to the Participant pursuant to this paragraph, and such deferred payment date(s)
elected by the Participant shall be set forth in the Award Agreement.

               6. Provisions Applicable to Payment in Shares. If payment is to be made in shares of Common
Stock, the number of such shares shall be determined by dividing the final value of the Performance
Award by the value of a share of Common Stock determined by the method specified in the Award
Agreement. Such methods may include, without limitation, the closing market price on a specified
date (such as the settlement date) or an average of market prices over a series of trading days.
Shares of Common Stock issued in payment of any Performance Award may be fully vested and freely
transferable shares or may be subject to vesting conditions as provided in Section I.E.1 of Article
Three.

          F. Voting Rights; Dividend Equivalent Rights and Distributions. Participants shall
have no voting rights with respect to shares of Common Stock represented by

23.

 

Performance Share Awards until the date of the issuance of such shares, if any (as evidenced
by the appropriate entry on the books of the Corporation or of a duly authorized transfer agent of
the Corporation). However, the Plan Administrator, in its discretion, may grant Dividend
Equivalent Rights pursuant to the Award Agreement evidencing any Performance Share Award with
respect to the payment of cash dividends on Common Stock paid prior to the date on which the
Performance Shares are settled or forfeited. A Participant granted Dividend Equivalent Rights
shall be credited with additional whole Performance Shares as of the date of payment of such cash
dividends on Common Stock. The number of additional Performance Shares (rounded to the nearest
whole number) to be so credited shall be determined by dividing (a) the amount of cash dividends
paid on such date with respect to the number of shares of Common Stock represented by the
Performance Shares previously credited to the Participant by (b) the Fair Market Value per share of
Common Stock on such date. Such additional Performance Shares shall be subject to the same terms,
conditions and restrictions and shall be settled in the same manner and at the same time (or as
soon thereafter as practicable) as the shares originally subject to the Award. Dividend Equivalent
Rights shall not be granted with respect to Performance Units. In the event of a dividend or
distribution paid in shares of Common Stock or any other adjustment made upon a change to the
Common Stock as described in Section V.E of Article One, appropriate adjustments shall be made in
the Participant’s Performance Share Award so that it represents the right to receive upon
settlement any and all new, substituted or additional securities or other property (other than
normal cash dividends) to which the Participant would entitled by reason of the shares of Common
Stock issuable upon settlement of the Performance Share Award, and all such new, substituted or
additional securities or other property shall be immediately subject to the same Performance Goals
as are applicable to the Award.

          G. Effect of Termination of Service. Unless otherwise provided by the Plan
Administrator and set forth in the Award Agreement evidencing a Performance Award, if a
Participant’s Service terminates for any reason, whether voluntary or involuntary (including the
Participant’s death or disability) before completion of the Performance Period applicable to the
Performance Award, then the Participant shall forfeit the Award in its entirety.

          H. Nontransferability of Performance Awards. Prior to settlement in accordance with
the provisions of the Plan, no Performance Award shall be subject in any manner to anticipation,
alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or garnishment by creditors
of the Participant or the Participant’s beneficiary, except transfer by will or by the laws of
descent and distribution. All rights with respect to a Performance Award granted to a Participant
hereunder shall be exercisable during his or her lifetime only by such Participant or the
Participant’s guardian or legal representative.

     II. CORPORATE TRANSACTION/CHANGE IN CONTROL

          The Plan Administrator may, in its discretion, provide in any Award Agreement evidencing a
Performance Award that, in the event of a Corporate Transaction or Change in Control, the
Performance Award held by a Participant whose Service has not terminated prior to the Change in
Control or whose Service terminated by reason of the Participant’s death or Permanent Disability
shall become vested and payable effective as of the date of the Corporate Transaction or Change in
Control to such extent as specified in such Award Agreement.

24.

 

ARTICLE FIVE

AUTOMATIC NON-EMPLOYEE DIRECTOR GRANT PROGRAM 

     I. RESTRICTED STOCK UNIT AWARD TERMS

          A. Award Dates. Restricted Stock Unit Awards shall be granted to those members of the
Board who are not Employees on the dates and in the amounts specified below:

               1. Each individual who is first elected or appointed as a non-employee Board member shall
automatically be granted, on the date of such initial election or appointment, a Restricted Stock
Unit Award for 16,500 shares of Common Stock, provided that the individual has not previously been
an Employee.

               2. On the date of each Annual Stockholders Meeting, beginning with the 2008 Annual
Stockholders Meeting, each individual who is to continue to serve as a non-employee Board member
following such meeting, whether or not that individual is standing for re-election to the Board at
that particular Annual Stockholders Meeting, shall automatically be granted a Restricted Stock Unit
Award for 8,300 shares of Common Stock. There shall be no limit on the number of such annual
automatic Restricted Stock Unit Awards any one non-employee Board member may receive over his or
her period of Board service, and a non-employee Board member who has previously been an Employee or
who has otherwise received one or more Options, Stock Appreciation Rights, Restricted Stock
Purchase Rights, Restricted Stock Bonuses, Restricted Stock Unit Awards, Performance Share or
Performance Unit Awards or other equity-based awards from the Corporation shall be eligible to
receive one or more such annual automatic Restricted Stock Unit Awards over his or her period of
continued Board service.

          B. Purchase Price. No monetary payment (other than applicable tax withholding, if
any) shall be required as a condition of receiving a Restricted Stock Unit Award, the consideration
for which shall be Board services actually rendered to the Corporation (or any Parent or
Subsidiary) or for its benefit. Notwithstanding the foregoing, if required by applicable state
corporations law, the Participant shall furnish consideration in the form of cash or past services
rendered to the Corporation (or any Parent or Subsidiary) or for its benefit having a value not
less than the par value of the shares of Common Stock issued upon settlement of the Restricted
Stock Unit Award.

          C. Vesting Provisions. Each initial automatic Restricted Stock Unit Award shall vest
in a series of three (3) successive equal annual installments upon the Participant’s completion of
each twelve (12)-month period of service as a Board member over the thirty-six (36)-month period
measured from the date of grant of the Restricted Stock Unit Award. Each annual automatic
Restricted Stock Unit Award shall vest upon the Participant’s completion of a period of service as
a Board member over the twelve (12)-month period measured from the date of grant of the Restricted
Stock Unit Award. Notwithstanding the foregoing, should the Participant cease to serve as a Board
member by reason of death or Permanent Disability, then

25.

 

each Restricted Stock Unit Award granted pursuant to this Article Five shall immediately vest
in full upon the date of such termination of service.

          D. Effect of Termination of Board Service. If a Participant’s service as a Board
member terminates for any reason, whether voluntary or involuntary (including the Participant’s
disability which is not a Permanent Disability), then the Participant shall forfeit to the
Corporation any Restricted Stock Units pursuant to the Award which remain subject to vesting
conditions as of the date of the Participant’s termination of service as a Board member.

     II. CORPORATE TRANSACTION/CHANGE IN CONTROL

          A. In the event of any Corporate Transaction or Change in Control while the Participant
remains in Service, each outstanding Restricted Stock Unit Award held by such Participant that was
granted pursuant to this Article Five shall vest in full immediately prior to the effective time,
but conditioned upon the consummation, of such Corporate Transaction or Change in Control and shall
be settled in accordance with its terms.

          B. The grant of Restricted Stock Unit Awards under the Automatic Non-Employee Director Grant
Program shall in no way affect the right of the Corporation to adjust, reclassify, reorganize or
otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or
sell or transfer all or any part of its business or assets.

     III. REMAINING TERMS

          Except as otherwise provided by this Article Five, Restricted Stock Unit Awards granted
pursuant to this Article Five shall be subject to the terms and conditions applicable to Restricted
Stock Unit Awards granted pursuant to Article Three; provided, however, that Dividend Equivalent
Rights shall not be granted in connection with Restricted Stock Unit Awards granted pursuant to
this Article Five.

26.

 

ARTICLE SIX

MISCELLANEOUS

     I. COMPLIANCE WITH CODE SECTION 409A

          A. Awards Subject to Code Section 409A. The provisions of this Section I shall apply
to any Award or portion thereof that is or becomes subject to Code Section 409A. Awards subject to
Code Section 409A include, without limitation:

               1. Any Non-Statutory Option or SAR that permits the deferral of compensation other than the
deferral of recognition of income until the exercise of the Award.

               2. Any Restricted Stock Unit Award or Performance Award that either (a) provides by its terms
for settlement of all or any portion of the Award on one or more dates following the Short-Term
Deferral Period (as defined below) or (b) permits or requires the Participant to elect one or more
dates on which the Award will be settled.

          Subject to any applicable U.S. Treasury Regulations promulgated pursuant to Code Section 409A
or other applicable guidance, the term “Short-Term Deferral Period” means the period ending on the
later of (i) the date that is two and one-half months from the end of the taxable year of the
Corporation in which the applicable portion of the Award is no longer subject to a substantial risk
of forfeiture or (ii) the date that is two and one-half months from the end of the Participant’s
taxable year in which the applicable portion of the Award is no longer subject to a substantial
risk of forfeiture. For this purpose, the term “substantial risk of forfeiture” shall have the
meaning set forth in any applicable U.S. Treasury Regulations promulgated pursuant to Code Section
409A or other applicable guidance.

          B. Deferral and/or Distribution Elections. Except as otherwise permitted or required
by Section 409A or any applicable U.S. Treasury Regulations promulgated pursuant to Code Section
409A or other applicable guidance, the following rules shall apply to any deferral and/or
distribution elections (each, an “Election”) that may be permitted or required by the Plan
Administrator pursuant to an Award subject to Code Section 409A:

               1. All Elections must be in writing and specify the amount of the distribution in settlement
of an Award being deferred, as well as the time and form of distribution as permitted by this Plan.

               2. All Elections shall be made by the end of the Participant’s taxable year prior to the year
in which services commence for which an Award may be granted to such Participant; provided,
however, that if the Award qualifies as “performance-based compensation” for purposes of Code
Section 409A and is based on services performed over a period of at least twelve (12) months, then
the Election may be made no later than six (6) months prior to the end of such period.

27.

 

               3. Elections shall continue in effect until a written election to revoke or change such
Election is received by the Corporation, except that a written election to revoke or change such
Election must be made prior to the last day for making an Election determined in accordance with
paragraph 2 above or as permitted by Section I.C below.

          C. Subsequent Elections. Any Award subject to Code Section 409A which permits a
subsequent Election to delay the distribution or change the form of distribution in settlement of
such Award shall comply with the following requirements:

               1. No subsequent Election may take effect until at least twelve (12) months after the date on
which the subsequent Election is made;

               2. Each subsequent Election related to a distribution in settlement of an Award not described
in Section I.D.2, I.D.3, or I.D.6 below must result in a delay of the distribution for a period of
not less than five (5) years from the date such distribution would otherwise have been made; and

               3. No subsequent Election related to a distribution pursuant to Section I.D.4 below shall be
made less than twelve (12) months prior to the date of the first scheduled payment under such
distribution.

          D. Distributions Pursuant to Deferral Elections. No distribution in settlement of an
Award subject to Code Section 409A may commence earlier than:

               1. Separation from service (as determined by the Secretary of the United States Treasury);

               2. The date the Participant becomes Disabled (as defined below);

               3. Death;

               4. A specified time (or pursuant to a fixed schedule) that is either (i) specified by the Plan
Administrator upon the grant of an Award and set forth in the Award Agreement evidencing such Award
or (ii) specified by the Participant in an Election complying with the requirements of Section I.B
and/or I.C above, as applicable;

               5. To the extent provided by the Secretary of the U.S. Treasury, a change in the ownership or
effective control or the Corporation or in the ownership of a substantial portion of the assets of
the Corporation; or

               6. The occurrence of an Unforeseeable Emergency (as defined below).

          Notwithstanding anything else herein to the contrary, to the extent that a Participant is a
“Specified Employee” (as defined in Code Section 409A(a)(2)(B)(i)) of the Corporation, no
distribution pursuant to Section I.D.1 above in settlement of an Award subject to Code Section 409A
may be made before the date which is six (6) months after such Participant’s date of separation
from service, or, if earlier, the date of the Participant’s death.

28.

 

          E. Unforeseeable Emergency. The Plan Administrator shall have the authority to provide
in any Award subject to Code Section 409A for distribution in settlement of all or a portion of
such Award in the event that a Participant establishes, to the satisfaction of the Plan
Administrator, the occurrence of an Unforeseeable Emergency. In such event, the amount(s)
distributed with respect to such Unforeseeable Emergency cannot exceed the amounts necessary to
satisfy such Unforeseeable Emergency plus amounts necessary to pay taxes reasonably anticipated as
a result of such distribution(s), after taking into account the extent to which such hardship is or
may be relieved through reimbursement or compensation by insurance or otherwise or by liquidation
of the Participant’s assets (to the extent the liquidation of such assets would not itself cause
severe financial hardship). All distributions with respect to an Unforeseeable Emergency shall be
made in a lump sum as soon as practicable following the Plan Administrator’s determination that an
Unforeseeable Emergency has occurred.

          The occurrence of an Unforeseeable Emergency shall be judged and determined by the Plan
Administrator. The Plan Administrator’s decision with respect to whether an Unforeseeable
Emergency has occurred and the manner in which, if at all, the distribution in settlement of an
Award shall be altered or modified, shall be final, conclusive, and not subject to approval or
appeal.

          F. Disabled. The Plan Administrator shall have the authority to provide in any Award
subject to Code Section 409A for distribution in settlement of such Award in the event that the
Participant becomes Disabled. A Participant shall be considered “Disabled” if either:

               1. the Participant is unable to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which can be expected to result in death or
can be expected to last for a continuous period of not less than twelve (12) months, or

               2. the Participant is, by reason of any medically determinable physical or mental impairment
which can be expected to result in death or can be expected to last for a continuous period of not
less than twelve (12) months, receiving income replacement benefits for a period of not less than
three (3) months under an accident and health plan covering employees of the Participant’s
employer.

          All distributions payable by reason of a Participant becoming Disabled shall be paid in a lump
sum or in periodic installments as established by the Participant’s Election, commencing as soon as
practicable following the date the Participant becomes Disabled. If the Participant has made no
Election with respect to distributions upon becoming Disabled, all such distributions shall be paid
in a lump sum as soon as practicable following the date the Participant becomes Disabled.

          G. Death. If a Participant dies before complete distribution of amounts payable upon
settlement of an Award subject to Code Section 409A, such undistributed amounts shall be
distributed to his or her beneficiary under the distribution method for death established by the
Participant’s Election as soon as administratively possible following receipt by the Plan
Administrator of satisfactory notice and confirmation of the Participant’s death. If the

29.

 

Participant has made no Election with respect to distributions upon death, all such
distributions shall be paid in a lump sum as soon as practicable following the date of the
Participant’s death.

          H. No Acceleration of Distributions. Notwithstanding anything to the contrary herein, this
Plan does not permit the acceleration of the time or schedule of any distribution under this Plan,
except as provided by Code Section 409A and/or the Secretary of the U.S. Treasury.

     II. TAX WITHHOLDING

          A. The Corporation’s obligation to deliver shares of Common Stock upon the exercise of Options
or the issuance or vesting of such shares under the Plan or payment of cash in settlement of any
Award shall be subject to the satisfaction of all applicable Federal, state and local income and
employment tax withholding requirements.

          B. The Plan Administrator may, in its discretion, provide any or all Participants holding
Awards under the Plan (other than the Restricted Stock Unit Awards granted or the shares issued
under the Automatic Non-Employee Director Grant Program) with the right to use shares of Common
Stock in satisfaction of all or part of the Withholding Taxes to which such Participants may become
subject in connection with the exercise, vesting, issuance of shares or other settlement of their
Awards. Such right may be provided to any such holder in either or both of the following formats:

               Stock Withholding: The election to have the Corporation withhold, from the shares of
Common Stock otherwise issuable upon the exercise or settlement of an Award, a portion of those
shares which are fully vested and which have an aggregate Fair Market Value equal to the percentage
of the Withholding Taxes (not to exceed one hundred percent (100%)) designated by the holder, but
not in any event in excess of the amount determined by the applicable minimum statutory withholding
rates.

               Stock Delivery: The election to deliver to the Corporation, at the time shares of
Common Stock previously issued vest, one or more such shares of Common Stock with an aggregate Fair
Market Value equal to the percentage of the Withholding Taxes (not to exceed one hundred percent
(100%)) designated by the holder, but not in any event in excess of the amount determined by the
applicable minimum statutory withholding rates.

     III. EFFECTIVE DATE AND TERM OF THE PLAN

          A. The Plan shall become effective immediately on the Plan Effective Date.

          B. The Plan shall serve as the successor to the Predecessor Plan, and no further Option grants
or direct stock issuances shall be made under the Predecessor Plan after the Plan Effective Date.
All Options outstanding under the Predecessor Plan on the Plan Effective Date shall be incorporated
into the Plan at that time and shall be treated as outstanding Options under the Plan. However,
each outstanding Option so incorporated shall continue to be governed solely by the terms of the
Award Agreement evidencing such Option, and no provision of the Plan shall be deemed to affect or
otherwise modify the rights or obligations of the holders of such incorporated Options with respect
to their acquisition of shares of Common Stock.

30.

 

          C. One or more provisions of the Plan, including (without limitation) the Option/vesting
acceleration provisions of Article Two relating to Corporate Transactions and Changes in Control,
may, in the Plan Administrator’s discretion, be extended to one or more Options incorporated from
the Predecessor Plan which do not otherwise contain such provisions.

          D. The Plan shall terminate upon the earliest to occur of (i) May 18, 2009, (ii) the
date on which all shares available for issuance under the Plan shall have been issued as
fully-vested shares or (iii) the termination of all outstanding Options in connection with a
Corporate Transaction. Should the Plan terminate on May 18, 2009, then all Option grants and
unvested stock issuances outstanding at that time shall continue to have force and effect in
accordance with the provisions of the Award Agreements evidencing such grants or issuances.

     IV. AMENDMENT OF THE PLAN

          A. The Board shall have complete and exclusive power and authority to amend or modify the Plan
or any Award Agreement in any or all respects. However, except as provided in Section V.B below,
no such amendment or modification shall adversely affect the rights and obligations with respect to
Awards at the time outstanding under the Plan unless the Participant consents to such amendment or
modification. In addition, certain amendments may require stockholder approval pursuant to
applicable laws or regulations.

          B. Notwithstanding any other provision of this Plan to the contrary, the Board may, in its
sole and absolute discretion and without the consent of any Participant, amend the Plan or any
Award Agreement, to take effect retroactively or otherwise, as it deems necessary or advisable for
the purpose of conforming the Plan or such Award Agreement to any present or future law relating to
plans of this or similar nature (including, but not limited to, Code Section 409A), and to the
administrative regulations and rulings promulgated thereunder.

          C. Options to purchase shares of Common Stock may be granted under the Discretionary
Option/SAR Grant and shares of Common Stock may be issued under the Restricted Stock Awards that
are in each instance in excess of the number of shares then available for issuance under the Plan,
provided any excess shares actually issued under those programs shall be held in escrow until there
is obtained stockholder approval of an amendment sufficiently increasing the number of shares of
Common Stock available for issuance under the Plan. If such stockholder approval is not obtained
within twelve (12) months after the date the first such excess issuances are made, then (i) any
unexercised Options granted on the basis of such excess shares shall terminate and cease to be
outstanding and (ii) the Corporation shall promptly refund to the Participants the exercise or
purchase price paid for any excess shares issued under the Plan and held in escrow, together with
interest (at the applicable Short Term Federal Rate) for the period the shares were held in escrow,
and such shares shall thereupon be automatically cancelled and cease to be outstanding.

     V. USE OF PROCEEDS

          Any cash proceeds received by the Corporation from the sale of shares of Common Stock under
the Plan shall be used for general corporate purposes.

31.

 

     VI. REGULATORY APPROVALS

          A. The implementation of the Plan, the granting of any stock Option under the Plan and the
issuance of any shares of Common Stock pursuant to any Award shall be subject to the Corporation’s
procurement of all approvals and permits required by regulatory authorities having jurisdiction
over the Plan.

          B. No shares of Common Stock or other assets shall be issued or delivered under the Plan
unless and until there shall have been compliance with all applicable requirements of Federal and
state securities laws, including the filing and effectiveness of the Form S-8 registration
statement for the shares of Common Stock issuable under the Plan, and all applicable listing
requirements of any stock exchange (or the Nasdaq National Market, if applicable) on which Common
Stock is then listed for trading.

     VII. NO EMPLOYMENT/SERVICE RIGHTS

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

32.

 

APPENDIX

          The following definitions shall be in effect under the Plan:

          A. Automatic Non-Employee Director Grant Program shall mean the automatic Restricted
Stock Unit Award grant program in effect under Article Five of the Plan.

          B. Award shall mean an Option, Stock Appreciation Right, Restricted Stock Purchase
Right, Restricted Stock Bonus, Restricted Stock Unit, Performance Share or Performance Unit granted
under the Plan.

          C. Award Agreement shall mean one or more written or electronic documents constituting
an agreement between the Corporation and a Participant and setting forth the terms, conditions and
restrictions of an Award granted to the Participant.

          D. Board shall mean the Corporation’s Board of Directors.

          E. Change in Control shall mean a change in ownership or control of the Corporation
effected through either of the following transactions:

               (i) the acquisition, directly or indirectly by any person or related group of
persons (other than the Corporation or a person that directly or indirectly
controls, is controlled by, or is under common control with, the Corporation), of
beneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act) of
securities possessing more than fifty percent (50%) of the total combined voting
power of the Corporation’s outstanding securities pursuant to a tender or exchange
offer made directly to the Corporation’s stockholders, or

               (ii) a change in the composition of the Board over a period of thirty-six (36)
consecutive months (twelve (12) months in the case of any Award subject to Code
Section 409A) or less such that a majority of the Board members ceases, by reason of
one or more contested elections for Board membership, to be comprised of individuals
who either (A) have been Board members continuously since the beginning of such
period or (B) have been elected or nominated for election as Board members during
such period by at least a majority of the Board members described in clause (A) who
were still in office at the time the Board approved such election or nomination.

          F. Code shall mean the Internal Revenue Code of 1986, as amended, and any applicable
regulations promulgated thereunder.

          G. Common Stock shall mean the Corporation’s common stock.

          H. Corporate Transaction shall mean any of the following transactions to which the
Corporation is a party:

 

 

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

               (ii) a merger or consolidation (whether or not stockholder-approved) following
a Change in Control in which voting securities of the Corporation are transferred to
the person or persons (or affiliates of such persons) who acquired ownership or
control of the Corporation pursuant to the Change in Control; or

               (iii) the sale, transfer or other disposition of all or substantially all of
the Corporation’s assets in complete liquidation or dissolution of the Corporation.

          I. Corporation shall mean Packeteer, Inc., a Delaware corporation, and any corporate
successor to all or substantially all of the assets or voting stock of Packeteer, Inc.. which shall
by appropriate action adopt the Plan.

          J. Covered Employee shall mean any Employee who is or may become a “covered employee,”
as defined in Code Section 162(m), or any successor statute, and who is designated, either as an
individual Employee or member of a class of Employees, by the Primary Committee no later than the
earlier of (i) the date ninety (90) days after the beginning of the Performance Period, or (ii) the
date on which twenty-five percent (25%) of the Performance Period has elapsed, as a “Covered
Employee” under the Plan for such applicable Performance Period.

          K. Discretionary Option/SAR Grant Program shall mean the discretionary Option and
Stock Appreciation Right grant program in effect under Article Two of the Plan.

          L. Dividend Equivalent Right shall mean the right of a Participant, granted at the
discretion of the Plan Administrator or as otherwise provided by the Plan, to receive a credit for
the account of such Participant in an amount equal to the cash dividends paid on one share of
Common Stock represented by an Award held by such Participant.

          M. Employee shall mean an individual who is in the employ of the Corporation (or any
Parent or Subsidiary), subject to the control and direction of the employer entity as to both the
work to be performed and the manner and method of performance.

          N. Exercise Date shall mean the date on which the Corporation shall have received
written notice of the Option or SAR exercise.

          O. Fair Market Value per share of Common Stock on any relevant date shall be
determined in accordance with the following provisions:

               (i) If the Common Stock is at the time traded on the Nasdaq National Market,
then the Fair Market Value shall be the closing selling

A-1.

 

price per share of Common Stock on the date in question, as such price is
reported by the National Association of Securities Dealers on the Nasdaq National
Market and published in The Wall Street Journal. If there is no closing
selling price for the Common Stock on the date in question, then the Fair Market
Value shall be the closing selling price on the last preceding date for which such
quotation exists.

               (ii) If the Common Stock is at the time listed on any Stock Exchange, then the
Fair Market Value shall be the closing selling price per share of Common Stock on
the date in question on the Stock Exchange determined by the Plan Administrator to
be the primary market for the Common Stock, as such price is officially quoted in
the composite tape of transactions on such exchange and published in The Wall
Street Journal. If there is no closing selling price for the Common Stock on
the date in question, then the Fair Market Value shall be the closing selling price
on the last preceding date for which such quotation exists.

               (iii) For purposes of any Option grants made on the Underwriting Date, the Fair
Market Value shall be deemed to be equal to the price per share at which the Common
Stock is to be sold in the initial public offering pursuant to the Underwriting
Agreement.

          P. Freestanding SAR shall mean an SAR that is granted independently of any Options, as
described in Article Two.

          Q. Hostile Take-Over shall mean the acquisition, directly or indirectly, by any person
or related group of persons (other than the Corporation or a person that directly or indirectly
controls, is controlled by, or is under common control with, the Corporation) of beneficial
ownership (within the meaning of Rule 13d-3 of the 1934 Act) of securities possessing more than
fifty percent (50%) of the total combined voting power of the Corporation’s outstanding securities
pursuant to a tender or exchange offer made directly to the Corporation’s stockholders which the
Board does not recommend such stockholders to accept.

          R. Incentive Option shall mean an Option which satisfies the requirements of Code
Section 422.

          S. Involuntary Termination shall mean the termination of the Service of any individual
which occurs by reason of:

               (i) such individual’s involuntary dismissal or discharge by the Corporation for
reasons other than Misconduct, or

               (ii) such individual’s voluntary resignation following (A) a change in his or
her position with the Corporation which materially reduces his or her duties and
responsibilities or the level of management to which he or she reports, (B) a
reduction in his or her level of compensation (including base salary, fringe
benefits and target bonus under any corporate-performance based bonus or incentive
programs) by more than fifteen percent (15%) or (C) a relocation of such
individual’s place of employment by more than fifty (50) miles,

A-2.

 

provided and only if such change, reduction or relocation is effected by the
Corporation without the individual’s consent.

          T. Misconduct shall mean the commission of any act of fraud, embezzlement or
dishonesty by the Participant, any unauthorized use or disclosure by such person of confidential
information or trade secrets of the Corporation (or any Parent or Subsidiary), or any other
intentional misconduct by such person adversely affecting the business or affairs of the
Corporation (or any Parent or Subsidiary) in a material manner. The foregoing definition shall not
be deemed to be inclusive of all the acts or omissions which the Corporation (or any Parent or
Subsidiary) may consider as grounds for the dismissal or discharge of any Participant or other
person in the Service of the Corporation (or any Parent or Subsidiary).

          U. 1934 Act shall mean the Securities Exchange Act of 1934, as amended.

          V. Non-Statutory Option shall mean an Option not intended to satisfy the requirements
of Code Section 422.

          W. Option shall mean an Option to purchase Common Stock granted under the Plan. An
Option may be either an Incentive Option or a Non-Statutory Option.

          X. Parent shall mean any corporation (other than the Corporation) in an unbroken chain
of corporations ending with the Corporation, provided each corporation in the unbroken chain (other
than the Corporation) owns, at the time of the determination, stock possessing fifty percent (50%)
or more of the total combined voting power of all classes of stock in one of the other corporations
in such chain.

          Y. Participant shall mean any person who has been granted an Award.

          Z. Performance Award shall mean and Award of Performance Shares or Performance Units.

          AA. Performance Award Formula shall mean, for any Performance Award, a formula or
table established by the Plan Administrator which provides the basis for computing the value of a
Performance Award at one or more threshold levels of attainment of the applicable Performance
Goal(s) measured as of the end of the applicable Performance Period.

          BB. Performance-Based Compensation shall mean compensation realized by a Participant
under an Award that constitutes performance-based compensation within the meaning of Code Section
162(m) and the applicable treasury regulations thereunder.

          CC. Performance Measures shall mean one or more measures of business or financial
performance described in Article Four which are approved by the Corporation’s stockholders pursuant
to this Plan in order to qualify compensation payable under Awards based upon the attainment of
Performance Goals established with respect to such Performance Measures as Performance-Based
Compensation.

A-3.

 

          DD. Performance Period shall mean the period of time at the end of which the
attainment of one or more Performance Goals is measured in order to determine the extent of the
vesting of an Award or the amount of the payment to be made upon the settlement of an Award.

          EE. Performance Share shall mean a bookkeeping unit granted to a Participant pursuant
to an Award described in Article Four, representing the right to receive a value denominated in
shares and in an amount, determined at the time such unit becomes payable, which is a function of
the extent to which one or more Performance Goals established with respect to the Award have been
achieved.

          FF. Performance Unit shall mean a bookkeeping unit granted to a Participant pursuant
to an Award described in Article Four, representing the right to receive a value denominated in
money and in an amount, determined at the time such unit becomes payable, which is a function of
the extent to which one or more Performance Goals established with respect to the Award have been
achieved.

          GG. Permanent Disability or Permanently Disabled shall mean the inability of the
Participant to engage in any substantial gainful activity by reason of any medically determinable
physical or mental impairment expected to result in death or to be of continuous duration of twelve
(12) months or more. However, solely for purposes of the Automatic Non-Employee Director Grant
Program, Permanent Disability or Permanently Disabled shall mean the inability of the non-employee
Board member to perform his or her usual duties as a Board member by reason of any medically
determinable physical or mental impairment expected to result in death or to be of continuous
duration of twelve (12) months or more.

          HH. Plan shall mean the Corporation’s 1999 Stock Incentive Plan, as set forth in this
document.

          II. Plan Administrator shall mean the particular entity, whether the Primary
Committee, the Board or the Secondary Committee, which is authorized to administer the Plan with
respect to one or more classes of eligible persons, to the extent such entity is carrying out its
administrative functions with respect to the persons under its jurisdiction. Plan Administrator
shall also mean any officer or officers to the extent authorized by the Board pursuant to Section
III.A of Article One to grant Options and SARs under the Discretionary Option/SAR Grant Program.

          JJ. Plan Effective Date shall mean the date the Plan shall become effective and shall
be coincident with the Underwriting Date.

          KK. Predecessor Plan shall mean the Corporation’s 1996 Equity Incentive Plan in effect
immediately prior to the Plan Effective Date hereunder.

          LL. Primary Committee shall mean the committee of two (2) or more non-employee Board
members appointed by the Board to administer the Discretionary Option/SAR Grant Program, Restricted
Stock/Restricted Stock Unit Program and Performance Award Program with respect to Section 16
Insiders and Covered Employees.

A-4.

 

          MM. Restricted Stock Award shall mean an Award of a Restricted Stock Bonus or a
Restricted Stock Purchase Right.

          NN. Restricted Stock Bonus shall mean shares of Common Stock granted to a Participant
pursuant to Article Three of the Plan.

          OO. Restricted Stock Purchase Right shall mean a right to purchase shares of Common
Stock granted to a Participant to Article Three of the Plan.

          PP. Restricted Stock/Restricted Stock Unit Program shall mean the Restricted Stock
Purchase Right, Restricted Stock Bonus and Restricted Stock Unit program in effect under Article
Four of the Plan.

          QQ. Restricted Stock Unit shall mean a bookkeeping unit granted to a Participant
pursuant to an Award described in Article Three, representing the right to receive one share of
Common Stock or its equivalent in cash at a date following the date of grant.

          RR. Secondary Committee shall mean a committee of one or more Board members appointed
by the Board to administer the Discretionary Option/SAR Grant Program, Restricted Stock/Restricted
Stock Unit Program and Performance Award Program with respect to eligible persons other than
Section 16 Insiders and Covered Employee.

          SS. Section 16 Insider shall mean an officer or director of the Corporation subject to
the short-swing profit liabilities of Section 16 of the 1934 Act.

          TT. Service shall mean the performance of services for the Corporation (or any Parent
or Subsidiary) by a person in the capacity of an Employee, a non-employee member of the board of
directors or a consultant or independent advisor, except to the extent otherwise specifically
provided in the Award Agreement evidencing an Award. A Participant’s Service shall not be deemed
to have terminated merely because of a change in the capacity in which the Participant renders such
Service, provided that such change is from Employee to non-employee member of the Board, from
non-employee member of the Board to Employee or from consultant or other independent advisor to
Employee or non-employee member of the Board, provided that there is no interruption or termination
of the Participant’s Service. However, a Participant’s Service shall be deemed terminated upon a
change from Employee to consultant or other independent advisor. A Participant’s Service shall not
be deemed to have terminated merely because of a change in the entity within the group consisting
of the Corporation, any Parent and all Subsidiaries for which the Participant renders Service,
provided that there is no interruption or termination of the Participant’s Service. Furthermore, a
Participant’s Service shall not be deemed to have terminated if the Participant takes any military
leave, sick leave, or other bona fide leave of absence approved by the Corporation. However, if
any such leave taken by a Participant exceeds ninety (90) days, then on the ninety-first (91st) day
following the commencement of such leave the Participant’s Service shall be deemed to have
terminated unless the Participant’s right to return to Service is guaranteed by statute or
contract. Notwithstanding the foregoing, unless otherwise designated by the Corporation or
required by law, a leave of absence shall not be treated as Service for purposes of determining
vesting under the Participant’s Award Agreement. A Participant’s Service shall be deemed to have
terminated

A-5.

 

either upon an actual termination of Service or upon the entity for which the Participant
performs Service ceasing to be the group consisting of the Corporation, any Parent and all
Subsidiaries. Subject to the foregoing, the Corporation, in its discretion, shall determine
whether the Participant’s Service has terminated and the effective date of such termination.

          UU. Stock Appreciation Right or SAR shall mean a bookkeeping entry
representing, for each share of Common Stock subject to such Award, a right to receive payment of
an amount equal to the excess, if any, of the Fair Market Value of such share on the date of
exercise of the Award over the exercise price for such share. A Stock Appreciation Rights may be a
Freestanding SAR, a Tandem SAR or a Limited SAR.

          VV. Stock Exchange shall mean either the American Stock Exchange or the New York Stock
Exchange.

          WW. Subsidiary shall mean any corporation (other than the Corporation) in an unbroken
chain of corporations beginning with the Corporation, provided each corporation (other than the
last corporation) in the unbroken chain owns, at the time of the determination, stock possessing
fifty percent (50%) or more of the total combined voting power of all classes of stock in one of
the other corporations in such chain.

          XX. Take-Over Price shall mean the greater of (i) the Fair Market Value per
share of Common Stock on the date the Option is surrendered to the Corporation in connection with a
Hostile Take-Over or (ii) the highest reported price per share of Common Stock paid by the tender
offeror in effecting such Hostile Take-Over. However, if the surrendered Option is an Incentive
Option, the Take-Over Price shall not exceed the clause (i) price per share.

          YY. Tandem SAR shall mean an SAR that is granted in connection with a related Option
pursuant to Article Two, the exercise of which shall require forfeiture of the right to purchase a
share under the related Option (and when a share is purchased under the Option, the Tandem SAR
shall similarly be canceled).

          ZZ. 10% Stockholder shall mean the owner of stock (as determined under Code Section
424(d)) possessing more than ten percent (10%) of the total combined voting power of all classes of
stock of the Corporation (or any Parent or Subsidiary).

          AAA. Underwriting Agreement shall mean the agreement between the Corporation and the
underwriter or underwriters managing the initial public offering of the Common Stock.

          BBB. Underwriting Date shall mean the date on which the Underwriting Agreement is
executed and priced in connection with an initial public offering of the Common Stock.

          CCC. Withholding Taxes shall mean the Federal, state and local income and employment
withholding taxes to which a Participant may become subject in connection with an Award.

A-6.

 

PLAN HISTORY

	 	 	 
	May 19, 1999

	 	Board adopts Plan, with an initial reserve of 3,845,917 shares.
	 
	 	 
	May 19, 1999

	 	Stockholders approve Plan, with an initial reserve of
3,845,917 shares.
	 
	 	 
	July 27, 1999

	 	Plan Effective Date.
	 
	 	 
	January 3, 2000

	 	Automatic increase in share reserve by 1,340,000 shares,
bringing the total cumulative reserve to 5,185,917 shares.
	 
	 	 
	January 2, 2001

	 	Automatic increase in share reserve by 1,473,311 shares,
bringing the total cumulative reserve to 6,659,228 shares.
	 
	 	 
	March 16, 2001

	 	Board adopts restatement of Plan (the “2001 Restatement”) to
(a) effect certain changes to the provisions of the plan
document in order to facilitate the administration of the Plan
and (b) make the following changes to the Automatic Option
Grant Program (the predecessor to the Automatic Non-Employee
Director Grant Program): (i) increase the number of shares of
Common Stock for which each new non-employee Board member is
to be granted a stock Option at the time of his or her initial
election or appointment to the Board from 12,000 shares to
20,000 shares, (ii) increase the number of shares of Common
Stock for which each continuing non-employee Board member is
to be granted stock Options at each Annual Stockholders
Meeting from 3,000 shares to 5,000 shares, beginning with the
2001 Annual Stockholders Meeting, and (iii) eliminate,
effective with the annual automatic Option grants to be made
to the continuing non-employee Board members at the 2001
Annual Stockholders Meeting, the requirement that a
non-employee Board member serve in that capacity for at least
six (6) months before that individual first becomes eligible
to receive his or her first annual automatic Option grant.
	 
	 	 
	May 23, 2001

	 	Stockholders approve the 2001 Restatement.
	 
	 	 
	January 2, 2002

	 	Automatic increase in share reserve by 1,497,551 shares,
bringing the total cumulative reserve to 8,156,779 shares.
	 
	 	 
	February 8, 2002

	 	Board adopts restatement of Plan (the “2002 Restatement”) to
make the following changes to the Automatic Option Grant
Program (the predecessor to the Automatic Non-Employee
Director Grant Program): (i) increase the number of shares of
Common Stock for which each new non-employee Board member is
to be granted a stock Option at the time of his or her initial
election or appointment to the Board from 20,000 shares to
30,000 shares, (ii) increase the

 

 

	 	 	 
	 

	 	number of shares of Common
Stock for which each continuing non-employee Board member is
to be granted stock Options at each Annual Stockholders
Meeting from 5,000 shares to 15,000 shares, beginning with the
2002 Annual Stockholders Meeting, and (iii) add, effective
with the annual automatic Option grants to be made to the
continuing non-employee Board members at the 2002 Annual
Stockholders Meeting, a twenty-four (24) month vesting period
to such annual Option grants whereby such Option would vest in
a series of two (2) successive equal annual installments upon
the Participant’s completion of each twelve (12)-month period
of service as a Board member over the twenty-four (24)-month
period measured from the Option grant date. All Option grants
made prior to the 2002 Restatement shall remain outstanding in
accordance with the terms and conditions of the respective
instruments evidencing those Options, and nothing in the 2002
Restatement shall be deemed to modify or in any way affect
those outstanding Options.
	 
	 	 
	May 22, 2002

	 	Stockholders approve the 2002 Restatement.
	 
	 	 
	January 2, 2003

	 	Automatic increase in share reserve by 1,529,941 shares,
bringing the total cumulative reserve to 9,686,720 shares.
	 
	 	 
	January 2, 2004

	 	Automatic increase in share reserve by 1,625,059 shares,
bringing the total cumulative reserve to 11,311,779 shares.
	 
	 	 
	January 3, 2005

	 	Automatic increase in share reserve by 1,670,918 shares,
bringing the total cumulative reserve to 12,982,697 shares.
	 
	 	 
	December 15, 2004

	 	Board adopts restatement of Plan (the “2005 Restatement”) to: (i) authorize freestanding SARs, (ii) authorize RSUs, (iii)
authorize performance shares and performance units, (iv)
establish a list of performance measures to be used establish
performance goals and to set maximum awards sizes to comply
with IRC 162(m), (v) eliminate requirement that company
receive consideration equal to 100% of FMV of shares issued
under restricted stock and RSU awards, (vi) revise corporate
transaction/change in control provisions to address additional
types of awards and consequence of 2nd step merger following a
tender offer, and (vii) amend definition of “Service” to
address leaves of absence
	 
	 	 
	May 24, 2005

	 	Stockholders approve the 2005 Restatement specifically as to
those amendments requiring stockholder approval: items (iii),
(iv) and (v) in the list above.
	 
	 	 
	January 1, 2006

	 	Automatic increase in share reserve by 1,709,848 shares,
bringing the total cumulative reserve to 14,692,545 shares.

A-1.

 

	 	 	 
	January 1, 2007

	 	Automatic increase in share reserve by 1,769,976 shares,
bringing the total cumulative reserve to 16,462,521 shares.
	 
	 	 
	February 5, 2007

	 	Board adopts resolutions to amend Section III.B. of the Plan
to establish that the Board may authorize one or more officers
of the Corporation to grant restricted stock unit awards to
Employees who are not Section 16 Insiders or Covered
Employees, provided that such authorized officers may not
grant to any Employee in any calendar year awards for more
than 25,000 restricted stock units.
	 
	 	 
	December 12, 2007

	 	Board adopts resolutions to amend the Plan to make the
following changes to the Automatic Option Grant Program (the
“Automatic Director Grant Amendment”): (i) change the form of
equity award from Options to Restricted Stock Unit Awards,
(ii) provide that upon a director’s initial election or
appointment to the Board, such director shall automatically be
granted a Restricted Stock Unit Award for 16,500 shares of
Common Stock, which will vest annually over a three (3) year
period, and (iii) provide that on the date of each Annual
Stockholders Meeting, each individual who will be a continuing
non-employee Board member thereafter shall automatically be
granted a Restricted Stock Unit Award for 8,300 shares of
Common Stock, which will vest annually over a one (1) year
period. All Option grants made prior to the Automatic
Director Grant Amendment shall remain outstanding in
accordance with the terms and conditions of the respective
instruments evidencing those Options, and nothing in the
Automatic Director Grant Amendment shall be deemed to modify
or in any way affect those outstanding Options.

A-2.

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