Document:

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                             CONSULTATION AGREEMENT

THIS AGREEMENT ("Agreement") is made and entered into this 5th day of September
2003, in Cook County, Illinois, by and between NATURAL GOLF CORPORATION ("NGC")
an Illinois corporation and ROBERT F. LUKASIEWICZ, "(RFL)", an individual
residing in Illinois.

WHEREAS, NGC desires to have RFL participate in design, engineering, sourcing
and production of NGC's products.

WHEREAS, RFL agrees to perform the services set forth herein for NGC under the
terms and conditions set forth in this Agreement.

IN CONSIDERATION of the parties' mutual undertakings set forth in this
Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are acknowledged by the parties, the following agreement
is made:

                       ARTICLE I - RELATIONSHIP OF PARTIES

     A.   The parties intend that an independent contractor relationship will
          be created by this Agreement. RFL is not to be considered an agent or
          employee of NGC for any purpose, and he is not entitled to any of the
          benefits that NGC provides for NGC's employees, including without
          limitation, workman's compensation insurance, and unemployment
          insurance.

     B.   RFL agrees to pay and be responsible for any and all income, payroll,
          social security, and self-employment taxes related to or associated
          with any and all compensation paid to RFL by NGC under this Agreement,
          and RFL agrees to release and hold NGC harmless from all claims,
          debts, and liabilities for any and all taxes and penalties regarding
          any and all compensation paid to RFL by NGC under this Agreement.

     C.   The term of this agreement is for the period beginning
          January 1, 2003 ending December 31, 2004 unless cancelled by either
          party in writing with at least sixty (60) days notice.

     D.   NGC agrees to directly pay for or reimburse RFL for all reasonable,
          approved travel expenses associated with NGC promotion within thirty
          (30) days of receipt by NGC.

                                       1
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                            ARTICLE II - DEFINITIONS

     For purposes of this Agreement, the following terms shall be defined as
follows:

     A.   NGC PRODUCTS. The term "NGC Products" herein means the golf clubs and
          related golf instructional devices and accessories used in learning
          and playing golf.

                         ARTICLE III - RFL'S CONVENANTS

     A.   RFL agrees that all information exchanged with NGC will be kept
          confidential and that any breach of this confidentiality would cause
          irreparable financial harm to NGC.

     B.   RFL grants to NGC a non-exclusive right to use RFL'S name, likeness
          and voice for the duration of this agreement, for the purpose of
          promoting and selling NGC Products, specifically the NGC golf
          clubs, and for the purpose of promoting and selling NGC's products
          and systems.

     C.   RFL agrees that all designs and products utilized by NGC are the
          exclusive property of NGC and that RFL will not assist other
          companies in the production of confusingly similar golf clubs.

     D.   RFL agrees to perform all services pursuant to this Agreement in a
          workmanlike, professional and commercially reasonable manner.

                          ARTICLE IV - NGC'S COVENANTS

     A.   In consideration of RFL fulfilling his obligations hereunder, NGC
          agrees to pay RFL the following:

          (i)   $3,000 per month during the term of this Agreement;

          (ii)  $100 per hour for requested club design work;

          (iii) RFL agrees and acknowledges that he will receive no other
                compensation or any other benefits from NGC except as set forth
                in this Agreement;

           (iv)  All payments pursuant to this Agreement shall be made payable
                 to and sent to RFL at the address described below.

                                       2
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                         ARTICLE V - GENERAL PROVISIONS

     A.   WAIVER. Waiver by NGC of any provision of this Agreement shall not
          constitute a waiver of NGC of the same or other provision of this
          Agreement on a subsequent occasion.

     B.   TERMINATION OF AGREEMENT FOR CAUSE. RFL shall at all times covered
          under the term of this Agreement conduct himself in a workmanlike,
          professional and commercially reasonable manner. RFL understands
          that engaging in illegal or immoral activities would cause
          irreparable damage to the business and reputation of NGC and that
          the Agreement would terminate immediately.

     C.   ASSIGNABILITY. RFL shall not assign or transfer any rights under this
          Agreement nor any sums due RFL hereunder, and any purported
          assignment shall be null and void. Rights, benefits and obligations
          of this Agreement shall inure to the benefit and be enforceable by
          NGC's successors and assigns.

     D.   ENTIRE AGREEMENT. This Agreement contains the entire agreement of the
          parties and supersedes any prior agreement between the parties
          related to the subject matter herein, and shall not be altered or
          amended except by an instrument in writing signed by both parties
          hereto.

     E.   JURISDICTION AND VENUE. This Agreement has been executed in Illinois
          and shall be governed and interpreted under the laws of the State
          of Illinois. Exclusive jurisdiction and venue for any litigation at
          all related to this Agreement, directly or indirectly, based upon
          contract, tort or other theory of law, shall lie in the Circuit
          Courts of Illinois or the United States Northern District Court of
          Illinois.

     F.   NOTICE. All notices and other communications herein provided for
          shall be sent and delivered by certified mail, with the proper
          postage prepaid, to the parties at the following addresses until
          such time as any party shall give the other party notice of a
          change of address:

                TO:  NATURAL GOLF CORPORATION
                     1200 East Business Center Drive, Suite 400
                     Mount Prospect, IL 60195

                TO:  ROBERT F. LUKASIEWICZ
                     11701 Orchard Road
                     Willow Springs, IL 60480

                Notice shall be deemed given three (3) business days after the
                date of the postmark if sent by certified mail, and one
                (1) business day after the date of delivery by overnight.

                                       3
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     B.   ATTORNEY'S FEES. The non-prevailing party shall be liable for and
          agrees to pay all reasonable costs and expenses which may be incurred
          by the prevailing party in enforcing this Agreement, including
          without limitation, reasonable attorney's fees.

     C.   ACKNOWLEDGEMENT. The parties executing this Agreement acknowledge
          that they have read this Agreement in detail and fully understand and
          accept every provision and covenant of same.

NATURAL GOLF CORPORATION                    ROBERT F. LUKASIEWICZ

BY: /s/   Frederic M. Schweiger             /s/ Robert F. Lukasiewicz
    ---------------------------             ---------------------------
      FREDERIC M. SCHWEIGER                 ROBERT F. LUKASIEWICZ
ITS:  EXECUTIVE VICE PRESIDENT

                                       4EXHIBIT 10.1

 

 

3COM
CORPORATION

 

2003 STOCK
PLAN

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
  Purposes
  of the Plan

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  Definitions

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  “Administrator”

  	
   

  
	
   

  	
  (b)

  	
  “Applicable
  Laws”

  	
  1

  
	
   

  	
  (c)

  	
  “Award”

  	
  1

  
	
   

  	
  (d)

  	
  “Award
  Agreement”

  	
  1

  
	
   

  	
  (e)

  	
  “Cause”

  	
  1

  
	
   

  	
  (f)

  	
  “Change in
  Control”

  	
  2

  
	
   

  	
  (g)

  	
  “Code”

  	
  2

  
	
   

  	
  (h)

  	
  “Committee”

  	
  2

  
	
   

  	
  (i)

  	
  “Common Stock”

  	
  2

  
	
   

  	
  (j)

  	
  “Company”

  	
  2

  
	
   

  	
  (k)

  	
  “Consultant”

  	
  2

  
	
   

  	
  (l)

  	
  “Director”

  	
  2

  
	
   

  	
  (m)

  	
  “Disability”

  	
  2

  
	
   

  	
  (n)

  	
  “Discretionary
  Options”

  	
  3

  
	
   

  	
  (o)

  	
  “Employee”

  	
  3

  
	
   

  	
  (p)

  	
  “Exchange Act”

  	
  3

  
	
   

  	
  (q)

  	
  “Fair Market
  Value”

  	
  3

  
	
   

  	
  (r)

  	
  “Incentive
  Stock Option”

  	
  3

  
	
   

  	
  (s)

  	
  “Independent
  Director”

  	
  4

  
	
   

  	
  (t)

  	
  “Inside
  Director”

  	
  4

  
	
   

  	
  (u)

  	
  “Nonstatutory Stock Option”

  	
  4

  
	
   

  	
  (v)

  	
  “Notice of
  Grant”

  	
  4

  
	
   

  	
  (w)

  	
  “Officer”

  	
  4

  
	
   

  	
  (x)

  	
  “Option”

  	
  4

  
	
   

  	
  (y)

  	
  “Optioned Stock”

  	
  4

  
	
   

  	
  (z)

  	
  “Parent”

  	
  4

  
	
   

  	
  (aa)

  	
  “Participant”

  	
  4

  
	
   

  	
  (bb)

  	
  “Plan”

  	
  4

  
	
   

  	
  (cc)

  	
  “Qualifying Board
  Retirement”

  	
  4

  
	
   

  	
  (dd)

  	
  “Restricted
  Stock”

  	
  4

  
	
   

  	
  (ee)

  	
  “Rule 16b-3”

  	
  4

  
	
   

  	
  (ff)

  	
  “Section 16(b)”

  	
  4

  
	
   

  	
  (gg)

  	
  “Service
  Provider”

  	
  4

  
	
   

  	
  (hh)

  	
  “Share”

  	
  4

  
	
   

  	
  (ii)

  	
  “Stock Appreciation Right”
  or “SAR”

  	
  4

  
	
   

  	
  (jj)

  	
  “Subsidiary”

  	
  5

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  Stock
  Subject to the Plan

  	
  5

  

 

 

TABLE OF CONTENTS

(Continued)

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  Administration of the Plan

  	
  5

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Procedure

  	
  5

  
	
   

  	
  (b)

  	
  Powers of the Administrator

  	
  6

  
	
   

  	
  (c)

  	
  Effect of
  Administrator’s Decision

  	
  7

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  Eligibility

  	
  7

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Awards and
  Discretionary Stock Options

  	
  7

  
	
   

  	
  (b)

  	
  Automatic
  Independent Director Option Grants

  	
  7

  
	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  Limitations

  	
  7

  
	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  Term of Plan

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  Stock Options

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Term of Option

  	
  8

  
	
   

  	
  (b)

  	
  Option
  Exercise Price, Waiting Period and Consideration

  	
  8

  
	
   

  	
  (c)

  	
  Termination
  of Relationship as a Service Provider

  	
  9

  
	
   

  	
  (d)

  	
  Disability
  of Optionee

  	
  10

  
	
   

  	
  (e)

  	
  Death of
  Optionee

  	
  10

  
	
   

  	
  (f)

  	
  Buyout
  Provisions

  	
  10

  
	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  Restricted
  Stock

  	
  11

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Grant
  of Restricted Stock

  	
  11

  
	
   

  	
  (b)

  	
  Exercise Price and other
  Terms

  	
  11

  
	
   

  	
  (c)

  	
  Restricted Stock Award
  Agreement

  	
  11

  
	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  Stock Appreciation Rights

  	
  11

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Grant of SARs

  	
  11

  
	
   

  	
  (b)

  	
  Exercise Price and other
  Terms

  	
  11

  
	
   

  	
  (c)

  	
  Payment
  of SAR Amount

  	
  11

  
	
   

  	
  (d)

  	
  Payment upon Exercise of
  SAR

  	
  12

  
	
   

  	
  (e)

  	
  Cash
  Settlements and Plan Share Allocation

  	
  12

  
	
   

  	
  (f)

  	
  SAR Agreement

  	
  12

  
	
   

  	
  (g)

  	
  Expiration
  of SARs

  	
  12

  
	
   

  	
  (h)

  	
  Termination
  of Relationship as a Service Provider

  	
  12

  
	
   

  	
  (i)

  	
  Disability of Participant

  	
  12

  
	
   

  	
  (j)

  	
  Death
  of Participant

  	
  13

  
	
   

  	
  (k)

  	
  Buyout
  Provisions

  	
  13

  
	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
  Option Grants to
  Independent Directors

  	
  13

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Nonstatutory Stock Options

  	
  13

  

-ii-

 

TABLE OF CONTENTS

(Continued)

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  Administration

  	
  13

  
	
   

  	
  (c)

  	
  Guidelines

  	
  13

  
	
   

  	
  (d)

  	
  Initial Grant

  	
  14

  
	
   

  	
  (e)

  	
  Pro-Rata Grant

  	
  14

  
	
   

  	
  (f)

  	
  Annual Grant

  	
  14

  
	
   

  	
  (g)

  	
  Other
  Option Terms:

  	
  15

  
	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
  Leaves of
  Absence

  	
  15

  
	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
  Non-Transferability of
  Awards

  	
  15

  
	
   

  	
   

  	
   

  	
   

  
	
  14.

  	
  Adjustments
  Upon Changes in Capitalization, Dissolution, Liquidation or Change of Control

  	
  16

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Changes in Capitalization

  	
  16

  
	
   

  	
  (b)

  	
  Dissolution or Liquidation

  	
  16

  
	
   

  	
  (c)

  	
  Change of
  Control

  	
  16

  
	
   

  	
   

  	
   

  	
   

  
	
  15.

  	
  Award Date
  of Grant

  	
  18

  
	
   

  	
   

  	
   

  	
   

  
	
  16.

  	
  Amendment and
  Termination of the Plan

  	
  18

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Amendment and
  Termination; No Repricing

  	
  18

  
	
   

  	
  (b)

  	
  Stockholder
  Approval

  	
  18

  
	
   

  	
  (c)

  	
  Effect of Amendment
  or Termination

  	
  18

  
	
   

  	
   

  	
   

  	
   

  
	
  17.

  	
  Conditions Upon
  Issuance of Shares

  	
  18

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Legal
  Compliance

  	
  18

  
	
   

  	
  (b)

  	
  Investment Representations

  	
  18

  
	
   

  	
   

  	
   

  	
   

  
	
  18.

  	
  Inability to Obtain
  Authority

  	
  18

  
	
   

  	
   

  	
   

  	
   

  
	
  19.

  	
  Reservation
  of Shares

  	
  18

  
	
   

  	
   

  	
   

  	
   

  
	
  20.

  	
  Stockholder
  Approval

  	
  19

  

-iii-

 

3COM CORPORATION

2003 STOCK PLAN

1.             Purposes of the Plan.  The purposes of
this 2003 Stock Plan are:

•                                            to attract
and retain the best available personnel for positions of substantial
responsibility,

•                                            to provide
additional incentive to Employees and Consultants, and

•                                            to promote
the success of the Company’s business.

The Plan permits the grant of Incentive Stock Options,
Nonstatutory Stock Options, Restricted Stock and Stock Appreciation
Rights.  In addition, the Plan provides
for automatic option grants to Independent Directors.

2.             Definitions  As used herein, the following
definitions shall apply:

(a)         “Administrator”  means the Board or any of
its Committees as shall be administering the Plan, in accordance with
Section 4 of the Plan.

(b)        “Applicable Laws”  means the requirements
relating to the administration of stock option plans under U.S. state corporate
laws, U.S. federal and state securities laws, the Code, any stock exchange or
quotation system on which the Common Stock is listed or quoted and the
applicable laws of any foreign country or jurisdiction where Awards are granted
under the Plan.

(c)         “Award”  means, individually or collectively, a
grant under the Plan of Options, SARs or Restricted Stock.

(d)        “Award Agreement” means the written
agreement setting forth the terms and provisions applicable to each Award
granted under the Plan.  The Award
Agreement is subject to the terms and conditions of the Plan.

(e)         “Cause”  means (i) an act of personal dishonesty
taken by the Participant in connection with his or her responsibilities as an
employee and intended to result in substantial personal enrichment of the
Participant, (ii) Participant being convicted of or pleading nolo  contendere
to a felony, (iii) a willful act by the Participant which constitutes gross
misconduct and which is injurious to the Company, (iv) following delivery to
the Participant of a written demand for performance from the Company which
describes the basis for the Company’s reasonable belief that the Participant
has not substantially performed his or her duties, continued violations by the
Participant of the Participant’s obligations to the Company which are
demonstrably willful and deliberate on the Participant’s part.

 

(f)         “Change in Control”  means the occurrence
of any of the following events:

(i)    Any Person
becomes the “beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company
representing fifty percent (50%) or more of the total voting power represented
by the Company’s then outstanding voting securities; or

(ii)   The
consummation of the sale or disposition by the Company of all or substantially
all the Company’s assets; or

(iii)  The
consummation of a merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) at least fifty percent (50%) of
the total voting power represented by the voting securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation; or

(iv)  A change in
the composition of the Board occurring within a two-year period, as a result of
which fewer than a majority of the directors are Incumbent Directors.  “Incumbent Directors” shall mean directors
who either (A) are directors of the Company as of the date upon which this
Agreement was entered into, or (B) are elected, or nominated for election,
to the Board with the affirmative votes of at least a majority of those
directors whose election or nomination was not in connection with any
transaction described in subsections (i), (ii), or (iii) above, or in
connection with an actual or threatened proxy contest relating to the election
of directors to the Company.

(g)        “Code”  means the U.S. Internal Revenue Code of 1986,
as amended.

(h)        “Committee”  means a committee, which may
consist of one or more persons whom may or may not be Board members, as is
consistent with Applicable Laws, appointed by the Board in accordance with
Section 4 of the Plan.

(i)          “Common Stock”  means the common stock of the
Company.

(j)          “Company”  means 3Com Corporation.

(k)         “Consultant”  means any person, including an
advisor, engaged by the Company or a Parent or Subsidiary to render services to
such entity.

(l)          “Director”  means a member 3Com’s Board of
Directors.

(m)        “Disability”  means total and permanent
disability as defined in Section 22(e)(3) of the Code, provided that in
the case of Awards other than Incentive Stock Options, the Administrator in its
discretion may determine whether a permanent and total disability 

 

-2-

 

exists in accordance with uniform and non-discriminatory standards
adopted by the Administrator from time to time.

(n)        “Discretionary Options”  means
Incentive Stock Options and Nonstatutory Stock Options that are not issued
pursuant to the Independent Director option grant provisions of
Section 11.

(o)        “Employee”  means any person, including Officers
and Directors, employed by the Company or any Parent or Subsidiary of the
Company.  A Service Provider shall not
cease to be an Employee in the case of (i) any leave of absence approved
by the Company or any leave for which a return to employment is guaranteed
under Applicable Laws, or (ii) transfers between locations of the Company
or between the Company, its Parent, any Subsidiary, or any successor.  For purposes of Incentive Stock Options, no
such leave may exceed ninety days, unless reemployment upon expiration of such
leave is guaranteed by statute or contract. 
If reemployment upon expiration of a leave of absence approved by the
Company is not so guaranteed, on the 181st day of such leave any Incentive Stock
Option held by the Optionee shall cease to be treated as an Incentive Stock
Option and shall be treated for tax purposes as a Nonstatutory Stock
Option.  Neither service as a Director
nor payment of a director’s fee by the Company shall be sufficient to
constitute “employment” by the Company.

(p)        “Exchange Act”  means the Securities Exchange
Act of 1934, as amended.

(q)        “Fair Market Value”  means, as of any
date, the value of Common Stock determined as follows:

(i)    If
the Common Stock is listed on any established stock exchange or a national market
system, including without limitation the Nasdaq National Market or The Nasdaq
SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall be the
closing sales price for such stock (or the closing bid, if no sales were
reported) as quoted on such exchange or system on the date of determination, as
reported in The
Wall Street Journal or such other source as the Administrator deems
reliable;

(ii)   If
the Common Stock is regularly quoted by a recognized securities dealer but
selling prices are not reported, the Fair Market Value of a Share of Common
Stock shall be the mean between the high bid and low asked prices for the
Common Stock on the date of determination, as reported in The Wall Street Journal or
such other source as the Administrator deems reliable; or

(iii)  in
the absence of an established market for the Common Stock, the Fair Market
Value shall be determined in good faith by the Administrator.

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

 

-3-

 

(s)         “Independent Director” means a
Director who is not an Employee.

(t)         “Inside Director”  means a Director who is
an Employee.

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

(v)        “Notice of Grant”  means a written or
electronic notice evidencing certain terms and conditions of an individual
Award.  The Notice of Grant is part of
the Award Agreement.

(w)        “Officer”  means a person who is an officer of the
Company within the meaning of Section 16 of the Exchange Act and the rules
and regulations promulgated thereunder.

(x)         “Option”  means a stock option granted pursuant to
the Plan.

(y)        “Optioned Stock”  means the Common Stock
subject to an Option or SAR.

(z)         “Parent”  means a “parent corporation,” whether now
or hereafter existing, as defined in Section 424(e) of the Code.

(aa)       “Participant”  means the holder of an
outstanding Award granted under the Plan.

(bb)      “Plan”  means this 2003 Stock Plan.

(cc)       “Qualifying Board Retirement” 
means an Independent Director’s termination from Board membership, including
pursuant to the Independent Director’s death or Disability, if such termination
follows ten full years of Board service or five full years of Board service and
attainment of age 62 or greater.

(dd)      “Restricted Stock”  means shares of Common
Stock or units/rights to acquire shares of Common Stock granted pursuant to
Section 9 of the Plan that are subject to vesting.

(ee)       “Rule 16b-3”  means Rule 16b-3 of the
Exchange Act or any successor to Rule 16b-3, as in effect when discretion
is being exercised with respect to the Plan.

(ff)        “Section 16(b)”  means Section 16(b) of
the Exchange Act.

(gg)      “Service Provider”  means an Employee,
Director or Consultant.

(hh)      “Share”  means a share of the Common Stock, as
adjusted in accordance with Section 14 of the Plan.

(ii)         “Stock Appreciation Right” or
“SAR”  means an Award, granted alone or in connection with a related
Option, that pursuant to Section 10 is designated as an SAR.

 

-4-

 

(jj)         “Subsidiary”  means a “subsidiary corporation”,
whether now or hereafter existing, as defined in Section 424(f) of the
Code and also include partnerships, limited liability companies and other
entities that are at least 30% owned by the Company.

3.             Stock Subject to the Plan.   Subject to the provisions of Section 14
of the Plan, the maximum aggregate number of Shares which may be issued under
the Plan is 20,000,000  Shares; provided, however, that in no
event shall more than 30% of the Shares issuable under the Plan be granted
pursuant to Awards with an exercise price or purchase price that is less than
100% of Fair Market Value on the date of grant.  The Shares may be authorized, but unissued, or reacquired Common
Stock.

If an Award expires or becomes unexercisable without
having been exercised in full, or, with respect to Restricted Stock, is forfeited
back to or repurchased by the Company, the unpurchased Shares (or for
Restricted Stock, the forfeited or repurchased shares) which were subject
thereto shall become available for future grant or sale under the Plan (unless
the Plan has terminated).  With respect
to SARs, only shares actually issued pursuant to an SAR (or in the event of a
cash payout, the share equivalent) shall cease to be available under the Plan;
all remaining shares under SARs, shall remain available for future grant or
sale under the Plan (unless the Plan has terminated).  However, Shares that have actually been issued under the Plan
under any Award shall not be returned to the Plan and shall not become
available for future distribution under the Plan, except that if Shares of Restricted
Stock are repurchased by the Company at their original purchase price or are
forfeited to the Company, such Shares shall become available for future grant
under the Plan.

4.             Administration
of the Plan.

(a)   Procedure.

(i)    Multiple
Administrative Bodies.  The Plan may
be administered by different Committees with respect to different groups of
Service Providers.

(ii)   Section 162(m).  To the extent that the Administrator
determines it to be desirable to qualify Awards granted hereunder as
“performance-based compensation” within the meaning of Section 162(m) of
the Code, the Plan shall be administered by a Compensation Committee of two or
more “outside directors” within the meaning of Section 162(m) of the Code.

(iii)  Rule 16b-3.  To the extent desirable to qualify
transactions hereunder as exempt under Rule 16b-3, the transactions
contemplated hereunder shall be structured to satisfy the requirements for
exemption under Rule 16b-3.

(iv)  Other
Administration.  Other than as
provided above, the Plan shall be administered by (A) the Compensation
Committee, or (B) a different Committee, in either case which shall be
constituted to satisfy Applicable Laws. Grants to Independent Directors under
Section 11 of the Plan shall be administered by the Company’s Inside Directors.

 

-5-

 

(b)   Powers of the Administrator. 
Subject to the provisions of the Plan the Administrator shall have the
authority, in its discretion:

(i)       to
determine the Fair Market Value;

(ii)      to select
the Service Providers to whom Awards may be granted hereunder;

(iii)     to
determine the number of shares of Common Stock to be covered by each Award
granted hereunder;

(iv)     to
approve forms of agreement for use under the Plan;

(v)      to
determine the terms and conditions, not inconsistent with the terms of the
Plan, of any Award granted hereunder. 
Such terms and conditions include, but are not limited to, the exercise
or purchase price, the time or times when Awards may be vested, exercised,
purchased or granted (which may be based on performance criteria), any vesting
acceleration or waiver of forfeiture restrictions or repurchase rights, and any
restriction or limitation regarding any Award or the shares of Common Stock
relating thereto, based in each case on such factors as the Administrator, in
its sole discretion, shall determine;

(vi)     to
construe and interpret the terms of the Plan and awards granted pursuant to the
Plan, including, but not limited to, a determination of a Participant’s date of
termination with respect to any Award granted under the Plan;

(vii)  to
prescribe, amend and rescind rules and regulations relating to the Plan,
including rules and regulations relating to sub-plans established for the
purpose of qualifying for preferred tax treatment under foreign tax laws,
satisfying foreign securities law or achieving other foreign legal compliance
objectives;

(viii)   to
modify or amend each Award (subject to Section 16 of the Plan), including
the discretionary authority to extend the post-termination vesting or
exercisability or Offering Period of Awards longer than is otherwise provided
for in the Plan;

(ix)      to
allow Participants to satisfy withholding tax obligations by electing to have
the Company withhold from the Shares to be issued upon exercise of an Option or
SAR or upon the vesting or earlier tax recognition of Restricted Stock that
number of Shares having a Fair Market Value equal to the amount required to be
withheld.  The Fair Market Value of the Shares
to be withheld shall be determined on the date that the amount of tax to be
withheld is to be determined.  All
elections by a Participant to have Shares withheld for this purpose shall be
made in such form and under such conditions as the Administrator may deem
necessary or advisable;

(x)       to
authorize any person to execute on behalf of the Company any instrument
required to effect the grant of an Award previously granted by the
Administrator; and

 

-6-

 

(xi)     to make
all other determinations deemed necessary or advisable for administering the
Plan.

(c)           Effect of Administrator’s Decision.   The Administrator’s decisions,
determinations and interpretations shall be final and binding on all
Participants and any other holders of Awards.

5.             Eligibility.

(a)           Awards and Discretionary Stock
Options.   Awards and
Discretionary Options may be granted to Service Providers.  Incentive Stock Options may be granted only
to Employees.

(b)           Automatic
Independent Director Option Grants.   Automatic Option grants under Section 11 hereof shall only
be made to Independent Directors.

6.             Limitations.

(a)           Each Option shall be designated in
the Option Agreement as either an Incentive Stock Option or a Nonstatutory
Stock Option.  However, notwithstanding
such designation, to the extent that the aggregate Fair Market Value of the
Shares with respect to which Incentive Stock Options are exercisable for the
first time by the Optionee during any calendar year (under all plans of the
Company and any Parent or subsidiary as defined in Code Section 424(f))
exceeds $100,000, such Options shall be treated as Nonstatutory Stock
Options.  For purposes of this
Section 6(a), Incentive Stock Options shall be taken into account in the
order in which they were granted.  The
Fair Market Value of the Shares shall be determined as of the time the Option
with respect to such Shares is granted.

(b)           Neither
the Plan nor any Award shall confer upon a Participant any right with respect
to continuing their relationship as a Service Provider, nor shall they
interfere in any way with the right of the Participant or the right of the
Company or its Parent or Subsidiaries to terminate such relationship at any
time, with or without cause.

(c)           The
following limitations shall apply to grants of Options and SARs with an
exercise price equal to or exceeding 100% of Fair Market Value on the grant
date:

(i)    No Service
Provider shall be granted, in any fiscal year of the Company, Option or SARs to
purchase more than 1,750,000 Shares.

(ii)   In
connection with his or her initial service, a Service Provider may be granted
Options to purchase up to an additional 1,750,000 Shares which shall not count
against the limit set forth in subsection (i) above.

(iii)  The
foregoing limitations shall be adjusted proportionately in connection with any
change in the Company’s capitalization as described in Section 14(a).

 

-7-

 

(iv)  If an
Option is cancelled in the same fiscal year of the Company in which it was
granted (other than in connection with a transaction described in
Section 14(c)), the cancelled Option will be counted against the limits
set forth in subsections (i) and (ii) above.

7.             Term of Plan.   The Plan shall become effective upon the
date of stockholder approval of the Plan in 2003.  It shall continue in effect for a term of ten (10) years from the
date upon which the Board approved the Plan subject to obtaining stockholder
approval, namely July 15, 2013.

8.             Stock
Options.

(a)   Term of Option.   The term of each Option shall be stated in
the Option Agreement and shall be no more than seven (7) years from the date of
grant.  Moreover, in the case of an
Incentive Stock Option granted to an Optionee who, at the time the Incentive
Stock Option is granted, owns stock representing more than ten percent (10%) of
the total combined voting power of all classes of stock of the Company or any
Parent or subsidiary that qualifies under Code Section 424(f), the term of
the Incentive Stock Option shall be five (5) years from the date of grant or
such shorter term as may be provided in the Option Agreement.

(b)   Option Exercise Price, Waiting Period
and Consideration.

(i)    Exercise
Price.  The per share exercise price
for the Shares to be issued pursuant to exercise of an Option shall be determined
by the Administrator, subject to the following:

(1)   In the case of an Incentive Stock Option

a)     granted to
an Employee who, at the time the Incentive Stock Option is granted, owns stock
representing more than ten percent (10%) of the voting power of all classes of
stock of the Company or any Parent or Code Section 424(f) subsidiary, the
per Share exercise price shall be no less than 110% of the Fair Market Value
per Share on the date of grant.

b)    granted to
any Employee other than an Employee described in paragraph a) immediately
above, the per Share exercise price shall be no less than 100% of the Fair
Market Value per Share on the date of grant.

(2)   In the case
of a Nonstatutory Stock Option, the per Share exercise price shall be
determined by the Administrator, with a minimum exercise price equal to par
value.

(ii)   Waiting
Period and Exercise Dates.  At the
time an Option is granted, the Administrator shall fix the period within which
the Option may become vested or be exercised and shall determine any conditions
which must be satisfied before the Option may vest or be exercised.

(iii)  Form of
Consideration.  The Administrator
shall determine the acceptable form of consideration for exercising an Option,
including the method of payment.  In the
case of an Incentive Stock Option, the Administrator shall determine the
acceptable form of 

 

-8-

 

consideration at the time of grant. 
Such consideration, subject to Applicable Laws, may consist entirely of:

(1)   cash;

(2)   check;

(3)   other
Shares which (A) in the case of Shares acquired upon exercise of an
option, have been owned by the Optionee for more than six months on the date of
surrender, and (B) have a Fair Market Value on the date of surrender equal
to the aggregate exercise price of the Shares as to which said Option shall be
exercised;

(4)   consideration
received by the Company under a broker-assisted cashless exercise program
acceptable to the Company, in its sole discretion;

(5)   any
combination of the foregoing methods of payment; or

(6)   such other
consideration and method of payment for the issuance of Shares to the extent
permitted by Applicable Laws.

(iv)  Exercise
of Option; Rights as a Stockholder. 
Any Option granted hereunder shall be exercisable according to the terms
of the Plan and at such times and under such conditions as determined by the
Administrator and set forth in the Option Agreement.

An
Option shall be deemed exercised when the Company receives: (i) written or
electronic notice of exercise (in accordance with the Option Agreement) from
the person entitled to exercise the Option, and (ii) full payment for the
Shares with respect to which the Option is exercised.  Full payment may consist of any consideration and method of
payment authorized by the Administrator and permitted by the Option Agreement
and the Plan.  Shares issued upon
exercise of an Option shall be issued in the name of the Optionee or, if
requested by the Optionee, in the name of the Optionee and his or her
spouse.  Until the Shares are issued (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company), no right to vote or receive
dividends or any other rights as a stockholder shall exist with respect to the
Optioned Stock, notwithstanding the exercise of the Option.  The Company shall issue (or cause to be
issued) such Shares promptly after the Option is exercised.  No adjustment will be made for a dividend or
other right for which the record date is prior to the date the Shares are
issued, except as provided in Section 14 of the Plan.

Exercising
an Option in any manner shall decrease the number of Shares thereafter
available, both for purposes of the Plan and for sale under the Option, by the
number of Shares as to which the Option is exercised.  An Option may not be exercised for a fraction of a Share.

(c)           Termination of Relationship as a
Service Provider.   If an
Optionee ceases to be a Service Provider, other than upon the Optionee’s death
or Disability, the Optionee may exercise his 

 

-9-

 

or her Option within such period of time as is
specified in the Option Agreement to the extent that the Option is vested and
exercisable on the date of termination (but in no event later than the
expiration of the term of such Option as set forth in the Option
Agreement).  In the absence of a
specified time in the Option Agreement, the Option shall remain exercisable for
three (3) months following the Optionee’s termination.  If, on the date of termination, the Optionee
is not vested as to his or her entire Option, the Shares covered by the
unvested portion of the Option shall revert to the Plan.  If, after termination, the Optionee does not
exercise his or her Option within the time specified by the Administrator, the
Option shall terminate, and the Shares covered by such Option shall revert to
the Plan.

Notwithstanding
the above, in the event of an Optionee’s change in status from Consultant,
Employee or Director to Employee, Consultant or Director (e.g., an Inside
Director becoming an Independent Director), an Optionee’s status as a Service
Provider shall continue notwithstanding the change in status.  However, in such event, an Incentive Stock
Option held by the Optionee shall cease to be treated as an Incentive Stock
Option and shall be treated for tax purposes as a Nonstatutory Stock Option
three months and one day following such change of status.

(d)           Disability of Optionee.   If an Optionee ceases to be a Service
Provider as a result of the Optionee’s Disability, the Optionee may exercise
his or her Option within such period of time as is specified in the Option
Agreement to the extent the Option is vested and exercisable on the date of
termination (but in no event later than the expiration of the term of such
Option as set forth in the Option Agreement). 
In the absence of a specified time in the Option Agreement, the Option
shall remain exercisable for twelve (12) months following the Optionee’s
termination.  If, on the date of termination,
the Optionee is not vested as to his or her entire Option, the Shares covered
by the unvested portion of the Option shall revert to the Plan.  If, after termination, the Optionee does not
exercise his or her Option within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.

(e)           Death of Optionee.   If an Optionee dies while a Service
Provider, the Option may be exercised within such period of time as is
specified in the Option Agreement (but in no event later than the expiration of
the term of such Option as set forth in the Notice of Grant), by the Optionee’s
estate or by a person who acquires the right to exercise the Option by bequest
or inheritance, but only to the extent that the Option is vested and
exercisable on the date of death.  In
the absence of a specified time in the Option Agreement, the Option shall
remain exercisable for twelve (12) months following the Optionee’s termination.  If, at the time of death, the Optionee is
not vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option shall immediately revert to the Plan.  The Option may be exercised by the executor
or administrator of the Optionee’s estate or, if none, by the person(s)
entitled to exercise the Option under the Optionee’s will or the laws of
descent or distribution.  If the Option
is not so exercised within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.

(f)            Buyout Provisions.   The Administrator may at any time offer to
buy out for a payment in cash or Shares an Option previously granted based on
such terms and conditions as the Administrator shall establish and communicate
to the Optionee at the time that such offer is made.

 

-10-

 

9.             Restricted Stock.

(a)           Grant of Restricted Stock.  Subject
to the terms and conditions of the Plan, Restricted Stock may be granted to
Service Providers at any time and from time to time as shall be determined by
the Administrator, in its sole discretion. 
The Administrator shall have complete discretion to determine
(i) the number of Shares subject to a Restricted Stock award granted to
any Participant, (ii) whether the form of the award shall be Shares or
units/rights to acquire Shares, and (iii) the conditions that must be
satisfied, including performance-based milestones, upon which is conditioned
the grant or vesting of Restricted Stock. 
For Restricted Stock granted in the form of units/rights to acquire
Shares, each such unit/right shall be the equivalent of one Share of Common
Stock for purposes of determining the number of Shares subject to an
Award.  Until the Shares are issued, no
right to vote or receive dividends or any other rights as a stockholder shall
exist with respect to the units/rights to acquire Shares.

(b)           Exercise Price and other Terms.   The Administrator, subject to the provisions
of the Plan, shall have complete discretion to determine the terms and
conditions of Restricted Stock granted under the Plan.  Restricted Stock grants shall be subject to
the terms, conditions, and restrictions determined by the Administrator at the
time the stock is awarded, which may include such performance-based milestones
as are determined appropriate by the Administrator.  The Administrator may require the recipient to sign a Restricted
Stock Agreement as a condition of the award. 
Any certificates representing the shares of Stock awarded shall bear
such legends as shall be determined by the Administrator.

(c)           Restricted Stock Award Agreement.   Each Restricted Stock grant shall be
evidenced by an Award Agreement that shall specify the purchase price (if any)
and such other terms and conditions as the Administrator, in its sole
discretion, shall determine; provided; however, that if the Restricted Stock
grant has a purchase price, such purchase price must be paid no more than seven
(7) years following the date of grant.

10.           Stock Appreciation Rights.

(a)           Grant of SARs.   Subject to the terms and conditions of the
Plan, SARs may be granted to Service Providers at any time and from time to
time as shall be determined by the Administrator, in its sole discretion.  The Administrator shall have complete
discretion to determine the number of SARs granted to any Participant.

(b)           Exercise Price and other Terms.   The Administrator, subject to the provisions
of the Plan, shall have complete discretion to determine the terms and
conditions of SARs granted under the Plan; provided, however, that no SAR may
have a term of more than seven (7) years from the date of grant.

(c)           Payment of SAR Amount.   Upon exercise of a SAR, a Participant shall
be entitled to receive payment from the Company in an amount determined by
multiplying:

 

-11-

 

(i)    The
difference between the Fair Market Value of a Share on the date of exercise
over the exercise price; times

(ii)   The number
of Shares with respect to which the SAR is exercised.

(d)           Payment upon Exercise of SAR.   At the discretion of the Administrator,
payment for a SAR may be in cash, Shares or a combination thereof.

(e)           Cash Settlements and Plan Share
Allocation.   Cash payments
of Stock Appreciation Rights as well as Common Stock issued upon exercise of
Stock Appreciation Rights shall be applied against the maximum number of shares
of Common Stock that may be issued pursuant to the Plan.  The number of shares to be applied against
such maximum number of shares in such circumstances shall be the number of
shares equal to the amount of the cash payment divided by the Fair Market Value
of a share of Common Stock on the date the Stock Appreciation Right is granted.

(f)            SAR Agreement.   Each SAR grant shall be evidenced by an Award Agreement that
shall specify the exercise price, the term of the SAR, the conditions of
exercise, and such other terms and conditions as the Administrator, in its sole
discretion, shall determine.

(g)           Expiration of SARs.   A SAR granted under the Plan shall expire
upon the date determined by the Administrator, in its sole discretion, and set
forth in the Award Agreement.

(h)           Termination of Relationship as a
Service Provider.   If a
Participant ceases to be a Service Provider, other than upon the Participant’s
death or Disability, the Participant may exercise his or her Stock Appreciation
Right within such period of time as is specified in the Stock Appreciation
Right Agreement to the extent that the Stock Appreciation Right is vested and
exercisable on the date of termination (but in no event later than the
expiration of the term of such Stock Appreciation Right as set forth in the
Stock Appreciation Right Agreement).  In
the absence of a specified time in the Stock Appreciation Right Agreement, the
Stock Appreciation Right shall remain exercisable for three (3) months
following the Participant’s termination. 
If, on the date of termination, the Participant is not vested as to his
or her entire Stock Appreciation Right, the Shares covered by the unvested
portion of the Stock Appreciation Right shall revert to the Plan.  If, after termination, the Participant does
not exercise his or her Stock Appreciation Right within the time specified by
the Administrator, the Stock Appreciation Right shall terminate, and the Shares
covered by such Stock Appreciation Right shall revert to the Plan.

Notwithstanding
the above, in the event of a Participant’s change in status from Consultant,
Employee or Director to Employee, Consultant or Director (e.g., an Inside
Director becoming an Independent Director), a Participant’s status as a Service
Provider shall continue notwithstanding the change in status.

(i)            Disability of Participant.   If a Participant ceases to be a Service
Provider as a result of the Participant’s Disability, the Participant may exercise
his or her Stock Appreciation Right within such period of time as is specified
in the Stock Appreciation Right Agreement to the 

 

-12-

 

extent the Stock Appreciation Right is vested and
exercisable on the date of termination (but in no event later than the
expiration of the term of such Stock Appreciation Right as set forth in the
Stock Appreciation Right Agreement).  In
the absence of a specified time in the Stock Appreciation Right Agreement, the
Stock Appreciation Right shall remain exercisable for twelve (12) months
following the Participant’s termination. 
If, on the date of termination, the Participant is not vested as to his
or her entire Stock Appreciation Right, the Shares covered by the unvested
portion of the Stock Appreciation Right shall revert to the Plan.  If, after termination, the Participant does
not exercise his or her Stock Appreciation Right within the time specified
herein, the Stock Appreciation Right shall terminate, and the Shares covered by
such Stock Appreciation Right shall revert to the Plan.

(j)            Death of Participant.   If a Participant dies while a Service
Provider, the Stock Appreciation Right may be exercised within such period of
time as is specified in the Stock Appreciation Right Agreement (but in no event
later than the expiration of the term of such Stock Appreciation Right as set
forth in the Notice of Grant), by the Participant’s estate or by a person who
acquires the right to exercise the Stock Appreciation Right by bequest or
inheritance, but only to the extent that the Stock Appreciation Right is vested
and exercisable on the date of death. 
In the absence of a specified time in the Stock Appreciation Right
Agreement, the Stock Appreciation Right shall remain exercisable for twelve
(12) months following the Participant’s termination.  If, at the time of death, the Participant is not vested as to his
or her entire Stock Appreciation Right, the Shares covered by the unvested
portion of the Stock Appreciation Right shall immediately revert to the
Plan.  The Stock Appreciation Right may
be exercised by the executor or administrator of the Participant’s estate or,
if none, by the person(s) entitled to exercise the Stock Appreciation Right
under the Participant’s will or the laws of descent or distribution.  If the Stock Appreciation Right is not so
exercised within the time specified herein, the Stock Appreciation Right shall
terminate, and the Shares covered by such Stock Appreciation Right shall revert
to the Plan.

(k)           Buyout Provisions.   The Administrator may at any time offer to
buy out for a payment in cash or Shares a Stock Appreciation Right previously
granted based on such terms and conditions as the Administrator shall establish
and communicate to the Participant at the time that such offer is made.

11.           Option Grants to Independent
Directors.   All grants of
Options to Independent Directors pursuant to this Section shall be shall
be made strictly in accordance with the following provisions:

(a)           Nonstatutory Stock Options.  All
Options granted pursuant to this Section shall be Nonstatutory Stock
Options and, except as otherwise provided herein, shall be subject to the other
terms and conditions of the Plan.

(b)           Administration.  Option grants under this
Section 11 shall be administered by a committee consisting of the Company’s
Inside Directors; provided, however, that such committee shall not have any
discretion to select which Independent Directors shall be granted Options under
this Section 11.

(c)           Guidelines.  The committee of Inside Directors
shall establish guidelines (the “Guidelines”) that determine the number of
shares to be subject to the options granted under this 

 

-13-

 

Section 11, subject to the per option limits set forth
in Sections 11(d) and 11(f).  The
Guidelines must provide that on each grant date, the number of shares of Common
Stock subject to each option automatically granted pursuant to
Section 11(d) or 11(f), as the case may be, shall be equal for each
eligible participant, subject to distinctions based on the outside director’s
position as Chairman of the Board, designation as the “lead” outside director,
and service on Board committees, including service as chairman of such
committees.

(d)           Initial Grant.  Each
person who first becomes an Independent Director following the effective date
of this Plan shall be automatically granted an Option to purchase that number
of shares as may be specified in the Guidelines then currently in effect (the
“Guideline Amount”) for service on the Board, not to exceed 120,000 shares of
Common Stock (or 160,000 shares if the participant is the lead director or
Chairman of the Board on the date of grant), at the first Board meeting
following the date upon which he or she first becomes an Independent Director
whether through election by the stockholders of the Company or appointment by
the Board to fill a vacancy (the “Initial Grant”); provided, however, that an
Inside Director who ceases to be an Inside Director and thereby becomes an
Independent Director shall not receive an Initial Grant. Subject to accelerated
vesting upon certain Change of Control transactions as specified in Section
14(c)(iii), the Initial Grant shall vest as to 25% of the shares subject
thereto on each anniversary of the date of grant, so as to be 100% vested on
the fourth anniversary of the date of grant, subject to the optionee remaining
a director through such vesting dates.

(e)           Pro-Rata Grant.  Additionally, at the time an
Initial Grant is made to a new director, he or she shall receive an option
grant with the number of shares subject thereto equal to the Guideline Amount
multiplied by a fraction, the numerator of which is the number of full months
of service remaining prior to the next annual stockholder meeting  and the denominator of which is 12 (the
“Pro-Rata Grant”).  Subject to
accelerated vesting upon a Change of Control as specified in Section
14(c)(iii), the Pro-Rata Grant will vest as to 50% of the shares subject
thereto on each anniversary of the date of grant, so as to be 100% vested on
the second anniversary of the date of grant, subject to the optionee remaining
a director through such vesting dates.

(f)            Annual Grant.  On the date of each regularly
scheduled Company annual stockholder meeting, each Independent Director, if as
of such date, he or she shall have served as an Independent Director for at
least the preceding six (6) months, shall be automatically granted an Option to
purchase  that number of shares equal to
the Guideline Amount for service on the Board, not to exceed 120,000 shares of
Common Stock, or 160,000 shares if the participant is the lead director or  Chairman
of the Board on the date of grant (the “Annual Grants”).  Subject to accelerated vesting upon certain
Change of Control transactions as specified in Section 14(c)(iii), Annual
Grants shall vest as to 50% of the shares subject thereto on the day prior to
the next year’s regularly scheduled Company annual stockholder meeting and as
to the balance of the shares subject thereto on the day prior to the next
year’s regularly scheduled Company annual stockholder meeting, so as to be 100%
vested on the day prior to the Company annual stockholder meeting held
approximately two years following the grant date, subject to the optionee
remaining a director through such vesting dates.

 

-14-

 

(g)   Other Option Terms: The other terms of each
option granted pursuant to this Section 11 shall be as follows:

(i)    the option
term shall be seven (7) years.

(ii)   the
exercise price per Share shall be no less than 100% of the Fair Market Value
per Share on the date of grant.

(iii)  In the
event an Optionee’s service as a Director terminates more than six (6) months
following the commencement of service as an Independent Director, then the
Option shall immediately accelerate as to one year’s additional vesting or,
with respect to an Annual Grant, as to the number of shares that would have
vested on the day prior to the next regularly scheduled meeting of the
stockholders.  The Option shall remain
exercisable, to the extent vested and exercisable on the date of termination of
Board service, for one year following such termination date (but in no event
longer than the original term of the Option); provided, however, that in the
event of a Qualifying Board Retirement, the Option shall vest as to 100% of the
Shares and shall remain exercisable for three years following such termination
(but in no event longer than the original term of the Option); provided,
further that in the event of the termination of service as an Independent
Director due to the death or Disability of the Optionee while an Independent
Director, the Option shall immediately accelerate as to one year’s additional
vesting or, with respect to an Annual Grant, as to the number of shares that
would have vested on the day prior to the next regularly scheduled meeting of
the stockholders (or more, in any event, if the cessation of Board Service
would have been a Qualifying Retirement) even if such termination of service is
within six (6) months following the commencement of service as an Independent
Director.

(iv)  The
permissible forms of consideration for exercising the option shall be the same
as for discretionary options as specified in Section 7(b)(iii) hereof.

(v)   The
provisions of Section 7(b)(iv) hereof relating to stockholder rights shall also
apply to options granted under this Section 11.

(vi)  The options
granted under this Section 11 shall be subject to the other terms and
conditions set forth in the form of option agreement selected by the committee
of Inside Directors, in their sole discretion.

12.           Leaves of Absence.   Unless the Administrator provides otherwise
or as otherwise required by Applicable Laws, vesting of Awards granted hereunder
shall cease commencing on the 91st day of any unpaid leave of absence and shall
only recommence upon return to active service.

13.           Non-Transferability of Awards  An Award may not be sold, pledged, assigned,
hypothecated, transferred, or disposed of in any manner other than by will or
by the laws of descent or distribution and may be exercised, during the
lifetime of the Participant, only by the Participant.

 

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14.           Adjustments Upon Changes in Capitalization,
Dissolution, Liquidation or Change of Control.

(a)   Changes in Capitalization.  Subject to any required action by the
stockholders of the Company, the number of shares of Common Stock covered by
each outstanding Award, the number of shares of Common Stock which have been
authorized for issuance under the Plan but as to which no Awards have yet been
granted or which have been returned to the Plan upon cancellation or expiration
of an Award, as well as the price per share of Common Stock covered by each
such outstanding Award and the 162(m) annual share issuance limits under
Section 6(c) shall be proportionately adjusted for any increase or
decrease in the number of issued shares of Common Stock resulting from a stock
split, reverse stock split, stock dividend, combination or reclassification of
the Common Stock, or any other increase or decrease in the number of issued
shares of Common Stock effected without receipt of consideration by the
Company; provided, however, that conversion of any convertible securities of
the Company shall not be deemed to have been “effected without receipt of
consideration.”  Such adjustment shall
be made by the Compensation Committee, whose determination in that respect
shall be final, binding and conclusive. 
Except as expressly provided herein, no issuance by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares of Common Stock subject to an Award.

(b)   Dissolution or Liquidation.  In the event of the proposed dissolution or
liquidation of the Company, the Administrator shall notify each Participant as
soon as practicable prior to the effective date of such proposed
transaction.  The Administrator in its
discretion may provide for a Participant to have the right to exercise his or
her Award until ten (10) days prior to such transaction as to all of the stock
covered thereby, including Shares as to which the Award would not otherwise be
vested or exercisable.  In addition, the
Administrator may provide that any Company repurchase option or forfeiture
applicable to any Shares covered by an Award shall lapse as to all such Shares,
provided the proposed dissolution or liquidation takes place at the time and in
the manner contemplated.  To the extent
it has not been previously exercised, an Award will terminate immediately prior
to the consummation of such proposed action.

(c)   Change of Control.

(i)    SARs
and Discretionary Options.  In the
event of a Change of Control, each outstanding SAR and Discretionary Option
shall be assumed or an equivalent option substituted by the successor
corporation or a Parent or subsidiary of the successor corporation.  In the event that the successor corporation
refuses to assume or substitute for the SAR and Discretionary Option, the
Participant shall fully vest in and have the right to exercise the SAR or
Discretionary Option as to all of the Optioned Stock, including Shares as to
which it would not otherwise be vested or exercisable.  If an SAR or Discretionary Option becomes
fully vested and exercisable in lieu of assumption or substitution in the event
of a Change of Control, the Administrator shall notify the Participant in
writing or electronically that the SAR or Discretionary Option shall be fully
vested and exercisable for a period of fifteen (15) days from the date of such
notice, and the SAR or Discretionary Option shall terminate upon the expiration
of such period.  For the purposes of
this paragraph, the SAR or Discretionary Option shall be considered assumed if,
following the Change of Control, the SAR or option confers the right to
purchase or receive, for each Share of Optioned Stock subject to the SAR or
Discretionary Option immediately prior to the Change of Control, the
consideration (whether 

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stock, cash, or other securities or property) received in the Change of
Control by holders of Common Stock for each Share held on the effective date of
the transaction (and if holders were offered a choice of consideration, the
type of consideration chosen by the holders of a majority of the outstanding
Shares); provided, however, that if such consideration received in the Change
of Control is not solely common stock of the successor corporation or its
Parent, the Administrator may, with the consent of the successor corporation,
provide for the consideration to be received upon the exercise of the SAR or
Discretionary Option, for each Share of Optioned Stock subject to the SAR or
Discretionary Option, to be solely common stock of the successor corporation or
its Parent equal in fair market value to the per share consideration received
by holders of Common Stock in the Change of Control.

(ii)   Restricted
Stock.  In the event of a Change of
Control, each outstanding Restricted Stock award shall be assumed or an
equivalent award substituted by the successor corporation or a Parent or
subsidiary of the successor corporation. 
In the event that the successor corporation refuses to assume or
substitute for the Restricted Stock, the Participant shall fully vest in the
Restricted Stock, including Shares as to which it would not otherwise be
vested.  For the purposes of this
paragraph, the Restricted Stock shall be considered assumed if, following the
Change of Control, the Restricted Stock confers the right to receive, for each
Share and each unit/right to acquire a Share that is subject to the Restricted
Stock award immediately prior to the Change of Control, the consideration
(whether stock, cash, or other securities or property) received in the Change
of Control by holders of Common Stock for each Share and each unit/right to
acquire a Share held on the effective date of the transaction (and if holders
were offered a choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding Shares); provided, however, that if
such consideration received in the Change of Control is not solely common stock
of the successor corporation or its Parent, the Administrator may, with the
consent of the successor corporation, provide for the consideration to be
received, for each Share and each unit/right to acquire a Share subject to the
Restricted Stock award, to be solely common stock of the successor corporation
or its Parent equal in fair market value to the per share consideration
received by holders of Common Stock in the Change of Control.

(iii)  Automatic
Independent Director Options.  In
the event of a Change of Control in which the Independent Directors are
terminated or asked to resign either upon the Change of Control or within one
year following the Change of Control, their Options granted under
Section 11 hereof shall vest 100% immediately prior to such Change in Control.  In the event of a Change of Control in which
the Independent Directors are not terminated or asked to resign, their Options
granted under Section 11 hereof shall be treated the same as Discretionary
Options hereunder.

(iv)  Certain
Terminations Within Twelve Months Following a Change of Control.  In the event that, within twelve (12) months
following a Change of Control a Participant’s employment with the Company, its
Parent, or a Subsidiary is terminated involuntarily by his or her employer
other than for Cause, then such Participant’s Awards shall have their vesting
accelerated as to fifty percent (50%) of the Shares that are unvested as of the
date of such termination of employment.

 

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15.           Award Date of Grant.   The date of grant of an Award shall be, for
all purposes, the date on which the Administrator makes the determination
granting such Award, or such other later date as is determined by the
Administrator.  Notice of the
determination shall be provided to each Participant within a reasonable time
after the date of such grant.

16.           Amendment and Termination of the Plan.

                (a)           Amendment and Termination; No
Repricing.   The Committee
may at any time amend, alter, suspend or terminate the Plan, provided that the
Board may not amend the Plan to permit the repricing, including by way of
exchange, of any Award without 
receiving prior stockholder approval.

                (b)           Stockholder
Approval.   The Company
shall obtain stockholder approval of any Plan amendment to the extent necessary
and desirable to comply with Applicable Laws.

                (c)           Effect of Amendment or Termination.   No amendment, alteration, suspension or
termination of the Plan shall impair the rights of any Participant, unless
mutually agreed otherwise between the Participant and the Administrator, which
agreement must be in writing and signed by the Participant and the
Company.  Termination of the Plan shall
not affect the Administrator’s ability to exercise the powers granted to it
hereunder with respect to Awards granted under the Plan prior to the date of
such termination.

17.           Conditions Upon Issuance of Shares.

                (a)           Legal
Compliance.   Shares shall
not be issued pursuant to the exercise or vesting of an Award unless the
exercise or vesting of such Award and the issuance and delivery of such Shares
shall comply with Applicable Laws and shall be further subject to the approval
of counsel for the Company with respect to such compliance.

                (b)           Investment
Representations.   As a
condition to the exercise of an Award, the Company may require the person
exercising such Award to represent and warrant at the time of any such exercise
that the Shares are being purchased only for investment and without any present
intention to sell or distribute such Shares if, in the opinion of counsel for
the Company, such a representation is required.

18.           Inability to Obtain Authority.   The inability of the Company to obtain
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company’s counsel to be necessary to the lawful issuance and sale
of any Shares hereunder, shall relieve the Company of any liability in respect
of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.

19.           Reservation of Shares.   The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.

 

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20.           Stockholder Approval.   The Plan shall be subject to approval by the
stockholders of the Company within twelve (12) months after the date the Plan
is adopted.  Such stockholder approval
shall be obtained in the manner and to the degree required under Applicable
Laws.

 

 

 

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