Document:

exv10w4

Exhibit 10.4

McAFEE, INC.

1997 STOCK INCENTIVE PLAN

(as amended on October 23, 2007)

ARTICLE 1. INTRODUCTION

     The Plan was adopted by the Board effective December 1, 1997. The purpose of the Plan is to
promote the long-term success of the Company and the creation of stockholder value by (a)
encouraging Employees, Outside Directors and Consultants to focus on critical long-range
objectives, (b) encouraging the attraction and retention of Employees, Outside Directors and
Consultants with exceptional qualifications and (c) linking Employees, Outside Directors and
Consultants directly to stockholder interests through increased stock ownership. The Plan seeks to
achieve this purpose by providing for Awards in the form of Restricted Shares, Stock Units, Options
(which may constitute incentive stock options or nonstatutory stock options) or stock appreciation
rights.

     The Plan shall be governed by, and construed in accordance with, the laws of the State of
Delaware (except their choice-of-law provisions).

ARTICLE 2. ADMINISTRATION

     2.1 Committee Composition. The Plan shall be administered by the Committee. The Committee
shall consist exclusively of two or more directors of the Company, who shall be appointed by the
Board. In addition, the composition of the Committee shall satisfy:

          (a) Such requirements as the Securities and Exchange Commission may establish for
administrators acting under plans intended to qualify for exemption under Rule 16b-3 (or its
successor) under the Exchange Act; and

          (b) Such requirements as the Internal Revenue Service may establish for outside directors
acting under plans intended to qualify for exemption under section 162(m)(4)(C) of the Code.

The Board may also appoint one or more separate committees of the Board, each composed of one or
more directors of the Company who need not satisfy the foregoing requirements, who may administer
the Plan with respect to Employees and Consultants who are not considered officers or directors of
the Company under section 16 of the Exchange Act, may grant Awards under the Plan to such Employees
and Consultants and may determine all terms of such Awards.

     2.2 Committee Responsibilities. The Committee shall (a) select the Employees, Outside
Directors and Consultants who are to receive Awards under the Plan, (b) determine the type, number,
vesting requirements and other
features and conditions of such Awards, (c) interpret the Plan and (d) make all other
decisions relating to the operation of the Plan, including but not limited

 

 

to delegation of
authority to an administrative committee in keeping with the Plan and applicable laws. The
Committee may adopt such rules or guidelines as it deems appropriate to implement the Plan,
including rules and regulations relating to sub-plans established for the purpose of qualifying for
preferred tax treatment under foreign tax laws and to otherwise accommodate the requirements of
local laws and procedures outside the United States. The Committee’s determinations under the Plan
shall be final and binding on all persons.

ARTICLE 3. SHARES AVAILABLE FOR GRANTS

     3.1 Basic Limitation. Common Shares issued pursuant to the Plan may be authorized but
unissued shares or treasury shares. The aggregate number of Options, SARs, Stock Units and
Restricted Shares awarded under the Plan shall not exceed (a) 43,475,000 plus (b) the additional
Common Shares described in Section 3.2. The limitation of this Section 3.1 shall be subject to
adjustment pursuant to Article 10.

     3.2 Additional Shares. If Restricted Shares, Stock Units, Options or SARs granted under this
Plan or the Predecessor Plan are forfeited or if Options or SARs granted under this Plan or the
Predecessor Plan terminate for any other reason before being exercised, then the corresponding
Common Shares shall become available for Awards under the Plan. If Stock Units are settled, all
Common Shares underlying such Stock Units shall reduce the number available under Section 3.1. If
SARs are exercised, all Common Shares underlying such SARs shall reduce the number available under
Section 3.1. The foregoing notwithstanding, the aggregate number of Common Shares that may be
issued under the Plan upon the exercise of ISOs shall not be increased when Restricted Shares are
forfeited. In addition, to the extent that (i) Common Shares are surrendered to the Company in
payment of the Exercise Price of an Option, (ii) Common Shares are purchased by the Company in the
open market with the proceeds from the sale of Common Shares pursuant to the exercise of Options,
or (iii) Restricted Shares are repurchased by the Company at their original purchase price, in each
case, such Common Shares shall not be available for issuance under the Plan.

ARTICLE 4. ELIGIBILITY

     4.1 Incentive Stock Options. Only Employees who are common-law employees of the Company, a
Parent or a Subsidiary on the date of grant shall be eligible for the grant of ISOs. In addition,
an Employee who owns more than 10% of the total combined voting power of all classes of outstanding
stock of the Company or any of its Parents or Subsidiaries shall not be eligible for the grant of
an ISO unless the requirements set forth in section 422(c)(6) of the Code are satisfied.

     4.2 Other Grants. Only Employees, Outside Directors and Consultants shall be eligible for the grant of
Restricted Shares, Stock Units, NSOs or SARs.

     4.3 Prospective Employees and Consultants. For purposes of this Article 4, (a) “Employees”
shall include prospective Employees to whom Awards are granted in connection with written offers of
employment from the Company, a Parent or a Subsidiary and (b) “Consultants” shall include
prospective Consultants to whom Awards are granted in connection with written offers of engagement
from the Company, a Parent or a Subsidiary. If an ISO is granted

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to a prospective Employee, the
date when his or her service as an Employee commences shall be deemed to be the date of grant of
such ISO for all purposes under the Plan (including, without limitation, Section 5.3). No Award
granted to a prospective Employee or prospective Consultant shall become exercisable or vested
unless and until his or her service as an Employee or Consultant commences.

ARTICLE 5. OPTIONS

     5.1 Stock Option Agreement. Each grant of an Option under the Plan shall be evidenced by a
Stock Option Agreement between the Optionee and the Company. Such Option shall be subject to all
applicable terms of the Plan and may be subject to any other terms that are not inconsistent with
the Plan. The Stock Option Agreement shall specify whether the Option is an ISO or an NSO. The
provisions of the various Stock Option Agreements entered into under the Plan need not be
identical. Options may be granted in consideration of a reduction in the Optionee’s other
compensation. A Stock Option Agreement may provide that a new Option will be granted automatically
to the Optionee when he or she exercises a prior Option and pays the Exercise Price in the form
described in Section 6.2.

     5.2 Number of Shares. Each Stock Option Agreement shall specify the number of Common Shares
subject to the Option and shall provide for the adjustment of such number in accordance with
Article 10. Options granted to any Optionee in a single fiscal year of the Company shall not cover
more than 1,000,000 Common Shares, except that Options granted to a new Employee in the fiscal year
of the Company in which his or her service as an Employee first commences shall not cover more than
1,500,000 Common Shares. The limitations set forth in the preceding sentence shall be subject to
adjustment in accordance with Article 10.

     5.3 Exercise Price. Each Stock Option Agreement shall specify the Exercise Price; provided
that the Exercise Price under an ISO shall in no event be less than 100% of the Fair Market Value
of a Common Share on the date of grant and the Exercise Price under an NSO shall in no event be
less than 85% of the Fair Market Value of a Common Share on the date of grant. In the case of an
NSO, a Stock Option Agreement may specify an Exercise Price that varies in accordance with a
predetermined formula while the NSO is outstanding.

     5.4 Exercisability and Term. Each Stock Option Agreement shall specify the date or event when
all or any installment of the Option is to become exercisable. The Stock Option Agreement shall
also specify the term of the Option; provided that the term of an ISO shall in no event exceed 10
years from the date of grant. A Stock Option Agreement may provide for accelerated exercisability
in the event of the Optionee’s death, disability or retirement or other events and may provide for
expiration prior to the end of its term in the event of the termination of the Optionee’s service.
Options may be awarded in combination with SARs, and such an Award may provide that the Options
will not be exercisable unless the related SARs are forfeited.

     5.5 Effect of Transfer of Control. The Committee may determine, at the time of granting an
Option or thereafter, that such Option shall become exercisable as to all or part of the Common
Shares subject to such Option in the event that a Transfer of Control occurs with respect to

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the
Company, except that the exercisability of an ISO shall not be accelerated without the Optionee’s
written consent. In addition, a separate agreement between the Optionee and the Company may
provide that such Optionee’s Options shall become exercisable as to all or part of the Common
Shares subject to such Options in the event that a Transfer of Control occurs with respect to the
Company.

     5.6 Substitution of Options. The Committee may accept the cancellation of outstanding options
granted by another issuer in return for the grant of new Options under the Plan for the same or a
different number of Common Shares and at the same or a different Exercise Price.

     5.7 Buyout Provisions. The Committee may at any time (a) offer to buy out for a payment in
cash, cash equivalents, Shares or other form of equity compensation available under the Company’s
stock plans, an Option previously granted or (b) authorize an Optionee to elect to cash out an
Option previously granted, in either case at such time and based upon such terms and conditions as
the Committee shall establish and in compliance with applicable laws. Notwithstanding anything
contained in this Section 5.7 to the contrary, the Committee shall not be allowed to authorize a
buyout of underwater options or stock appreciation rights without the prior consent of the
Company’s stockholders.

ARTICLE 6. PAYMENT FOR OPTION SHARES

     6.1 General Rule. The entire Exercise Price of Common Shares issued upon exercise of Options
shall be payable in cash or cash equivalents at the time when such Common Shares are purchased,
except as follows:

          (a) In the case of an ISO granted under the Plan, payment shall be made only pursuant to the
express provisions of the applicable Stock Option Agreement. The Stock Option Agreement may
specify that payment may be made in any form(s) described in this Article 6.

          (b) In the case of an NSO, the Committee may at any time accept payment in any form(s)
described in this Article 6 to the extent permissible under applicable laws.

     6.2 Surrender of Stock. To the extent that this Section 6.2 is applicable, all or any part of
the Exercise Price may be paid by surrendering, or attesting to the ownership of, Common Shares
that are already owned by the Optionee. Such Common Shares shall be valued at their Fair Market
Value on the date when the new Common Shares are purchased under the Plan. The Optionee shall not
surrender, or attest to the ownership of, Common Shares in payment of the Exercise Price if such
action would cause the Company to recognize compensation expense (or additional compensation
expense) with respect to the Option for financial reporting purposes.

     6.3 Exercise/Sale. To the extent that this Section 6.3 is applicable, all or any part of the
Exercise Price and any withholding taxes may be paid by delivering (on a form prescribed by the
Company) an irrevocable direction to a securities broker approved by the Company to sell all or
part of the Common Shares being purchased under the Plan and to deliver all or part of the sales
proceeds to the Company.

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     6.4 Exercise/Pledge. To the extent that this Section 6.4 is applicable, all or any part of
the Exercise Price and any withholding taxes may be paid by delivering (on a form prescribed by the
Company) an irrevocable direction to pledge all or part of the Common Shares being purchased under
the Plan to a securities broker or lender approved by the Company, as security for a loan, and to
deliver all or part of the loan proceeds to the Company.

     6.5 Promissory Note. To the extent that this Section 6.5 is applicable, all or any part of
the Exercise Price and any withholding taxes may be paid by delivering (on a form prescribed by the
Company) a full-recourse promissory note; provided that the par value of the Common Shares being
purchased under the Plan shall be paid in cash or cash equivalents.

     6.6 Other Forms of Payment. To the extent that this Section 6.6 is applicable, all or any
part of the Exercise Price and any withholding taxes may be paid in any other form that is
consistent with applicable laws, regulations and rules.

ARTICLE 7. STOCK APPRECIATION RIGHTS

     7.1 SAR Agreement. Each grant of an SAR under the Plan shall be evidenced by an SAR Agreement
between the Optionee and the Company. Such SAR shall be subject to all applicable terms of the
Plan and may be subject to any other terms that are not inconsistent with the Plan. The provisions
of the various SAR Agreements entered into under the Plan need not be identical. SARs may be
granted in consideration of a reduction in the Optionee’s other compensation to the extent
permissible under applicable laws.

     7.2 Number of Shares. Each SAR Agreement shall specify the number of Common Shares to which
the SAR pertains and shall provide for the adjustment of such number in accordance with Article 10.
SARs granted to any Optionee in a single calendar year shall in no event pertain to more than
1,000,000 Common Shares, except that SARs granted to a new Employee in the fiscal year of the
Company in which his or her service as an Employee first commences shall not pertain to more than
1,500,000 Common Shares. The limitations set forth in the preceding sentence shall be subject to
adjustment in accordance with Article 10.

     7.3 Exercise Price. Each SAR Agreement shall specify the Exercise Price. An SAR Agreement
may specify an Exercise Price that varies in accordance with a predetermined formula while the SAR
is outstanding.

     7.4 Exercisability and Term. Each SAR Agreement shall specify the date when all or any
installment of the SAR is to become exercisable. The SAR Agreement shall also specify the term of
the SAR. An SAR Agreement may provide for accelerated exercisability in the event of the
Optionee’s death, disability or retirement or other events and may provide for expiration prior to
the end of its term in the event of the termination of the Optionee’s service. SARs may be awarded
in combination with Options, and such an Award may provide that the SARs will not be exercisable
unless the related Options are forfeited. An SAR may be included in an ISO only at the time of
grant but may be included in an NSO at the time of grant or thereafter. An SAR granted under the
Plan may provide that it will be exercisable only in the event of a Transfer of Control.

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     7.5 Effect of Transfer of Control. The Committee may determine, at the time of granting an
SAR or thereafter, that such SAR shall become exercisable as to all or part of the Common Shares
subject to such SAR in the event that a Transfer of Control occurs with respect to the Company. In
addition, a separate agreement between the Optionee and the Company may provide that such
Optionee’s SARs shall become exercisable as to all or part of the Common Shares subject to such
SARs in the event that a Transfer of Control occurs with respect to the Company.

     7.6 Exercise of SARs. Upon exercise of an SAR, the Optionee (or any person having the right to exercise the SAR
after his or her death) shall receive from the Company (a) Common Shares, (b) cash or (c) a
combination of Common Shares and cash, as the Committee shall determine. The amount of cash and/or
the Fair Market Value of Common Shares received upon exercise of SARs shall, in the aggregate, be
equal to the amount by which the Fair Market Value (on the date of surrender) of the Common Shares
subject to the SARs exceeds the Exercise Price. If, on the date when an SAR expires, the Exercise
Price under such SAR is less than the Fair Market Value on such date but any portion of such SAR
has not been exercised or surrendered, then such SAR shall automatically be deemed to be exercised
as of such date with respect to such portion.

     7.7 Modification or Assumption of SARs. Within the limitations of the Plan, the Committee may
modify, extend or assume outstanding SARs or may accept the cancellation of outstanding SARs
(whether granted by the Company or by another issuer) in return for the grant of new SARs for the
same or a different number of shares and at the same or a different exercise price. The foregoing
notwithstanding, no modification of an SAR shall, without the consent of the Optionee, alter or
impair his or her rights or obligations under such SAR.

ARTICLE 8. RESTRICTED SHARES

     8.1 Restricted Stock Agreement. Each grant of Restricted Shares under the Plan shall be
evidenced by a Restricted Stock Agreement between the recipient and the Company. Such Restricted
Shares shall be subject to all applicable terms of the Plan and may be subject to any other terms
that are not inconsistent with the Plan. The provisions of the various Restricted Stock Agreements
entered into under the Plan need not be identical. Restricted Shares may be granted in
consideration of a reduction in the recipient’s other compensation.

     8.2 Payment for Awards. To the extent that an Award is granted in the form of newly issued
Restricted Shares, the Award recipient, as a condition to the grant of such Award, shall be
required to pay the Company in cash or cash equivalents an amount equal to the par value of such
Restricted Shares. To the extent that an Award is granted in the form of Restricted Shares from
the Company’s treasury, no cash consideration shall be required of the Award recipients. Any
amount not paid in cash may be paid with a full-recourse promissory note, subject to applicable
laws allowing such form of payment.

     8.3 Vesting Conditions. Each Award of Restricted Shares may or may not be subject to vesting.
Vesting shall occur, in full or in installments, upon satisfaction of the conditions specified in
the Restricted Stock Agreement. The Committee may include among such conditions the requirement
that the performance of the Company or a business unit of the Company for a specified

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period of one
or more years equal or exceed a target determined in advance by the Committee. Such performance
shall be determined by the Company’s independent auditors. Such target shall be based on one or
more of the criteria set forth in Appendix A. The Committee shall determine such target not
later than the 90th day of such period. In no event shall the number of Restricted Shares which
are subject to performance-based vesting conditions and which are granted to any Participant in a
single calendar year exceed 300,000, subject to adjustment in accordance with Article 10. A
Restricted Stock Agreement may provide for accelerated vesting in the event of the Participant’s
death, disability or retirement or other events.

     8.4 Effect of Transfer of Control. The Committee may determine, at the time of granting
Restricted Shares or thereafter, that all or part of such Restricted Shares shall become vested in
the event that a Transfer of Control occurs with respect to the Company. In addition, a separate
agreement between the Participant and the Company may provide that all or part of such
Participant’s Restricted Shares shall become vested in the event that a Transfer of Control occurs
with respect to the Company.

     8.5 Voting and Dividend Rights. The holders of Restricted Shares awarded under the Plan shall
have the same voting, dividend and other rights as the Company’s other stockholders. A Restricted
Stock Agreement, however, may require that the holders of Restricted Shares invest any cash
dividends received in additional Restricted Shares. Such additional Restricted Shares shall be
subject to the same conditions and restrictions as the Award with respect to which the dividends
were paid.

ARTICLE 9. STOCK UNITS

     9.1 Stock Unit Agreement. Each grant of Stock Units under the Plan shall be evidenced by a
Stock Unit Agreement between the recipient and the Company. Such Stock Units shall be subject to
all applicable terms of the Plan and may be subject to any other terms that are not inconsistent
with the Plan. The provisions of the various Stock Unit Agreements entered into under the Plan
need not be identical. Stock Units may be granted in consideration of a reduction in the
recipient’s other compensation.

     9.2 Payment for Awards. To the extent that an Award is granted in the form of Stock Units, no
cash consideration shall be required of the Award recipients.

     9.3 Vesting Conditions. Each Award of Stock Units may or may not be subject to vesting.
Vesting shall occur, in full or in installments, upon satisfaction of the conditions specified in
the Stock Unit Agreement. The Committee may include among such conditions the requirement that the
performance of the Company or a business unit of the Company for a specified period of one or more
years equal or exceed a target determined in advance by the Committee. Such performance shall be
determined by the Company’s independent auditors. Such target shall be based on one or more of the
criteria set forth in Appendix A. The Committee shall determine such target not later than the
90th day of such
period. In no event shall the number of Stock Units which are subject to performance-based
vesting conditions and which are granted to any Participant in a single calendar year exceed
300,000, subject to adjustment in accordance with Article 10. A Stock Unit Agreement

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may provide
for accelerated vesting in the event of the Participant’s death, disability or retirement or other
events.

     9.4 Effect of Transfer of Control. The Committee may determine, at the time of granting Stock
Units or thereafter, that all or part of such Stock Units shall become vested in the event that a
Transfer of Control occurs with respect to the Company. In addition, a separate agreement between
the Participant and the Company may provide that all or part of such Participant’s Stock Units
shall become vested in the event that a Transfer of Control occurs with respect to the Company.

     9.5 Voting and Dividend Rights. The holders of Stock Units shall have no voting or dividend
rights.

     9.6 Form and Time of Settlement of Stock Units. Settlement of vested Stock Units may be made
in the form of (a) cash, (b) Common Shares or (c) any combination of both, as determined by the
Committee. The actual number of Stock Units eligible for settlement may be larger or smaller than
the number included in the original Award, based on predetermined performance factors. Methods of
converting Stock Units into cash may include (without limitation) a method based on the average
Fair Market Value of Common Shares over a series of trading days. Vested Stock Units may be
settled in a lump sum or in installments. The distribution may occur or commence when all vesting
conditions applicable to the Stock Units have been satisfied or have lapsed, or it may be deferred
to any later date. The amount of a deferred distribution may be increased by an interest factor or
by dividend equivalents. Until an Award of Stock Units is settled, the number of such Stock Units
shall be subject to adjustment pursuant to Article 10.

     9.7 Death of Recipient. Any Stock Units Award that becomes payable after the recipient’s
death shall be distributed to the recipient’s beneficiary or beneficiaries. Each recipient of a
Stock Units Award under the Plan may designate one or more beneficiaries for this purpose by filing
the prescribed form with the Company. A beneficiary designation may be changed by filing the
prescribed form with the Company at any time before the Award recipient’s death. If no beneficiary
was designated or if no designated beneficiary survives the Award recipient, then any Stock Units
that become payable after the recipient’s death shall be distributed to the recipient’s estate.

     9.8 Creditors’ Rights. A holder of Stock Units shall have no rights other than those of a
general creditor of the Company. Stock Units represent an unfunded and unsecured obligation of the
Company, subject to the terms and conditions of the applicable Stock Unit Agreement.

ARTICLE 10. PROTECTION AGAINST DILUTION

     10.1 Adjustments. In the event of a subdivision of the outstanding Common Shares, a
declaration of a dividend payable in Common Shares, a declaration of a dividend payable in a form
other than Common Shares in an amount that has a material effect on the price of Common Shares, a
combination or consolidation of the outstanding Common Shares (by reclassification or otherwise)
into a lesser number of Common Shares, a recapitalization, a spin-off or a similar occurrence, the

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Committee shall make such adjustments as it, in its sole discretion, deems appropriate in one or
more of:

          (a) The number of Options, SARs, Restricted Shares and Stock Units available for future Awards
under Article 3;

          (b) The limitations set forth in Sections 5.2, 7.2, 8.3 and 9.3;

          (c) The number of Common Shares covered by each outstanding Option and SAR;

          (d) The Exercise Price under each outstanding Option and SAR; or

          (e) The number of Stock Units included in any prior Award which has not yet been settled.

Except as provided in this Article 10, a Participant shall have no rights by reason of any issue by
the Company of stock of any class or securities convertible into stock of any class, any
subdivision or consolidation of shares of stock of any class, the payment of any stock dividend or
any other increase or decrease in the number of shares of stock of any class.

     10.2 Dissolution or Liquidation. To the extent not previously exercised or settled, Options,
SARs and Stock Units shall terminate immediately prior to the dissolution or liquidation of the
Company.

     10.3 Reorganizations. In the event that the Company is a party to a merger or other
reorganization, outstanding Awards shall be subject to the agreement of merger or reorganization.
Such agreement shall provide for (a) the continuation of the outstanding Awards by the Company, if
the Company is a surviving corporation, (b) the assumption of the outstanding Awards by the
surviving corporation or its parent or subsidiary, (c) the substitution by the surviving
corporation or its parent or subsidiary of its own awards for the outstanding Awards, (d) full
exercisability or vesting and accelerated expiration of the outstanding Awards or (e) settlement of
the full value of the outstanding Awards in cash or cash equivalents followed by cancellation of
such Awards. If such agreement does not provide for any of the above, all outstanding Awards shall
fully vest, become immediately exercisable or payable or
have all restrictions lifted as may apply to the type of Award upon or after a Change in
Control unless otherwise determined by the Committee.

ARTICLE 11. DEFERRAL OF AWARDS

     The Committee (in its sole discretion) may permit or require a Participant to:

          (a) Have cash that otherwise would be paid to such Participant as a result of the exercise of
an SAR or the settlement of Stock Units credited to a deferred compensation account established for
such Participant by the Committee as an entry on the Company’s books;

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          (b) Have Common Shares that otherwise would be delivered to such Participant as a result of
the exercise of an Option or SAR converted into an equal number of Stock Units; or

          (c) Have Common Shares that otherwise would be delivered to such Participant as a result of
the exercise of an Option or SAR, or the settlement of Stock Units, converted into amounts credited
to a deferred compensation account established for such Participant by the Committee as an entry on
the Company’s books. Such amounts shall be determined by reference to the Fair Market Value of
such Common Shares as of the date when they otherwise would have been delivered to such
Participant.

A deferred compensation account established under this Article 11 may be credited with interest or
other forms of investment return, as determined by the Committee. A Participant for whom such an
account is established shall have no rights other than those of a general creditor of the Company.
Such an account shall represent an unfunded and unsecured obligation of the Company and shall be
subject to the terms and conditions of the applicable agreement between such Participant and the
Company. If the deferral or conversion of Awards is permitted or required, the Committee (in its
sole discretion) may establish rules, procedures and forms pertaining to such Awards, including
(without limitation) the settlement of deferred compensation accounts established under this
Article 11.

ARTICLE 12. AWARDS UNDER OTHER PLANS

     The Company may grant awards under other plans or programs. Such awards may be settled in the
form of Common Shares issued under this Plan. Such Common Shares shall be treated for all purposes
under the Plan like Common Shares issued in settlement of Stock Units and shall, when issued,
reduce the number of Common Shares available under Article 3.

ARTICLE 13. LIMITATION ON RIGHTS

     13.1 Retention Rights. Neither the Plan nor any Award granted under the Plan shall be deemed
to give any individual a right to remain an Employee, Outside Director or Consultant. The Company
and its Parents, Subsidiaries and Affiliates reserve the right to terminate the service of any
Employee or Consultant at any time, with or without cause, subject to applicable laws and a written
employment agreement (if any).

     13.2 Stockholders’ Rights. A Participant shall have no dividend rights, voting rights or
other rights as a stockholder with respect to any Common Shares covered by his or her Award prior
to the time when a stock certificate for such Common Shares is issued or, if applicable, the time
when he or she becomes entitled to receive such Common Shares by filing any required notice of
exercise and paying any required Exercise Price. No adjustment shall be made for cash dividends or
other rights for which the record date is prior to such time, except as expressly provided in the
Plan.

     13.3 Regulatory Requirements. Any other provision of the Plan notwithstanding, the obligation
of the Company to issue Common Shares under the Plan shall be subject to all applicable laws, rules
and regulations and such approval by any regulatory body as may be required. The

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Company reserves
the right to restrict, in whole or in part, the delivery of Common Shares pursuant to any Award
prior to the satisfaction of all legal requirements relating to the issuance of such Common Shares,
to their registration, qualification or listing or to an exemption from registration, qualification
or listing.

ARTICLE 14. WITHHOLDING TAXES

     14.1 General. To the extent required by applicable federal, state, local or foreign law, a
Participant or his or her successor shall make arrangements satisfactory to the Company for the
satisfaction of any withholding tax obligations that arise in connection with the Plan. The
Company shall not be required to issue any Common Shares or make any cash payment under the Plan
until such obligations are satisfied.

     14.2 Share Withholding. The Committee may permit a Participant to satisfy all or part of his
or her withholding or income tax obligations by having the Company withhold all or a portion of any
Common Shares that otherwise would be issued to him or her or by surrendering all or a portion of
any Common Shares that he or she previously acquired. Such Common Shares shall be valued at their
Fair Market Value on the date when taxes otherwise would be withheld in cash.

ARTICLE 15. FUTURE OF THE PLAN

     15.1 Term of the Plan. The Plan, as set forth herein, shall become effective on June 5, 1997.
The Plan shall remain in effect until it is terminated under Section 15.2, except that no ISOs
shall be granted on or after the 10th anniversary of the later of (a) the date when the Board
adopted the Plan or (b) the date when the Board adopted the most recent increase in the number of
Common Shares available under Article 3 which was approved by the Company’s stockholders.

     15.2 Amendment or Termination. The Board or the Committee may, at any time and for any reason, amend, suspend or terminate
the Plan. An amendment of the Plan shall be subject to the approval of the Company’s stockholders
only to the extent required by applicable laws, regulations or rules. No Awards shall be granted
under the Plan after the termination thereof. The termination of the Plan, or any amendment
thereof, shall not affect any Award previously granted under the Plan.

     15.3 No Repricing. The exercise price for the Common Shares to be issued pursuant to an
already granted Stock Option or Stock Appreciation Right may not be lowered without the prior
consent of the Company’s stockholders. This shall include, without limitation, a repricing of the
Stock Option or Stock Appreciation Right as well as a Stock Option or Stock Appreciation Right
exchange program whereby the Participant agrees to cancel an existing Stock Option or Stock
Appreciation Right in exchange for an Option, Stock Appreciation Right or other Award.

ARTICLE 16. DEFINITIONS

     16.1 “Affiliate” means any entity other than a Subsidiary, if the Company and/or one or more
Subsidiaries own not less than 50% of such entity.

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     16.2 “Award” means any award of an Option, an SAR, a Restricted Share or a Stock Unit under
the Plan.

     16.3 “Board” means the Company’s Board of Directors, as constituted from time to time.

     16.4 “Code” means the Internal Revenue Code of 1986, as amended.

     16.5 “Committee” means a committee of the Board, as described in Article 2.

     16.6 “Common Share” means one share of the Common Stock of the Company.

     16.7 “Company” means McAfee, Inc., a Delaware corporation.

     16.8 “Consultant” means a consultant or adviser who provides bona fide services to the
Company, a Parent, a Subsidiary or an Affiliate as an independent contractor. Service as a
Consultant shall be considered employment for all purposes of the Plan, except as provided in
Section 4.1.

     16.9 “Employee” means a common-law employee of the Company, a Parent, a Subsidiary or an
Affiliate.

     16.10 “Exchange Act” means the Securities Exchange Act of 1934, as amended.

     16.11 “Exercise Price,” in the case of an Option, means the amount for which one Common Share
may be purchased upon exercise of such Option, as specified in the applicable Stock Option
Agreement. “Exercise Price,” in the case of an SAR, means an amount, as specified in the
applicable SAR Agreement, which is subtracted from the Fair Market Value of one Common Share
in determining the amount payable upon exercise of such SAR.

     16.12 “Fair Market Value” means the market price of Common Shares, determined by the Committee
in good faith on such basis as it deems appropriate. Whenever possible, the determination of Fair
Market Value by the Committee shall be based on the prices reported in The Wall Street
Journal. Such determination shall be conclusive and binding on all persons.

     16.13 “ISO” means an incentive stock option described in section 422(b) of the Code.

     16.14 “NSO” means a stock option not described in sections 422 or 423 of the Code.

     16.15 “Option” means an ISO or NSO granted under the Plan and entitling the holder to purchase
Common Shares.

     16.16 “Optionee” means an individual or estate who holds an Option or SAR.

     16.17 “Outside Director” shall mean a member of the Board who is not an Employee. Service as
an Outside Director shall be considered employment for all purposes of the Plan, except as provided
in Section 4.1.

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     16.18 “Parent” means any corporation (other than the Company) in an unbroken chain of
corporations ending with the Company, if each of the corporations other than the Company owns stock
possessing 50% or more of the total combined voting power of all classes of stock in one of the
other corporations in such chain. A corporation that attains the status of a Parent on a date
after the adoption of the Plan shall be considered a Parent commencing as of such date.

     16.19 “Participant” means an individual or estate who holds an Award.

     16.20 “Plan” means this McAfee, Inc. 1997 Stock Incentive Plan, as amended from time to time.

     16.21 “Predecessor Plan” means the McAfee, Inc. 1995 Stock Incentive Plan, as amended.

     16.22 “Restricted Share” means a Common Share awarded under the Plan.

     16.23 “Restricted Stock Agreement” means the agreement between the Company and the recipient
of a Restricted Share which contains the terms, conditions and restrictions pertaining to such
Restricted Share.

     16.24 “SAR” means a stock appreciation right granted under the Plan.

     16.25 “SAR Agreement” means the agreement between the Company and an Optionee which contains
the terms, conditions and restrictions pertaining to his or her SAR.

     16.26 “Stock Option Agreement” means the agreement between the Company and an Optionee that
contains the terms, conditions and restrictions pertaining to his or her Option.

     16.27 “Stock Unit” means a bookkeeping entry representing the equivalent of one Common Share,
as awarded under the Plan.

     16.28 “Stock Unit Agreement” means the agreement between the Company and the recipient of a
Stock Unit which contains the terms, conditions and restrictions pertaining to such Stock Unit.

     16.29 “Subsidiary” means any corporation (other than the Company) in an unbroken chain of
corporations beginning with the Company, if each of the corporations other than the last
corporation in the unbroken chain owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in such chain. A corporation that
attains the status of a Subsidiary on a date after the adoption of the Plan shall be considered a
Subsidiary commencing as of such date.

     16.30 “Transfer of Control” shall mean:

          (a) The direct or indirect sale or exchange by the stockholders of the Company of all or
substantially all of the voting stock of the Company wherein the stockholders of the Company
immediately before such sale or exchange do not retain in substantially the same proportions as
their

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ownership of shares of the Company’s voting stock immediately before such event, directly or
indirectly (including, without limitation, through their ownership of shares of the voting stock of
a corporation which, as a result of such sale or exchange, owns the Company either directly or
through one or more subsidiaries), at least a majority of the beneficial interest in the voting
stock of the Company immediately after such sale or exchange;

          (b) A merger or consolidation wherein the stockholders of the Company immediately before such
merger or consolidation do not retain in substantially the same proportions as their ownership of
shares of the Company’s voting stock immediately before such event, directly or indirectly
(including, without limitation, through their ownership of shares of the voting stock of a
corporation which, as a result of such merger or consolidation, owns the Company either directly or
through one or more subsidiaries), at least a majority of the beneficial interest in the voting
stock of the Company immediately after such merger or consolidation;

          (c) The sale, exchange, or transfer of all or substantially all of the assets of the Company
(other than a sale, exchange, or transfer to one or more corporations (the “Transferee
Corporation(s)”) wherein the stockholders of the Company immediately before such sale, exchange, or
transfer retain in substantially the same proportions as their ownership of shares of the Company’s
voting stock immediately before such event, directly or indirectly (including, without limitation,
through their ownership of shares of the voting stock of a corporation which owns the Transferee
Corporation(s) either directly or through one or more subsidiaries), at least a majority of the
beneficial interest in the voting stock of the Transferee Corporation(s) immediately after such
event; or

          (d) A liquidation or dissolution of the Company.

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APPENDIX A

McAfee, Inc. 1997 Stock Incentive Plan

Performance Goals

	 	 	 
	• cash flow,

	 	• return on capital,
	• earnings per share,

	 	• return on stockholder equity,
	• gross margin,

	 	• growth with respect to any of the foregoing measures,
	• net income,

	 	• expense reduction,
	• operating income,

	 	• growth in bookings,
	• operating margin,

	 	• growth in revenues, and
	• pre-tax profit,

	 	• stock price increase.
	• return on assets,exv10w5

Exhibit 10.5

McAFEE, INC.

AMENDED AND RESTATED 1993 STOCK OPTION PLAN FOR OUTSIDE DIRECTORS

(as amended October 23, 2007)

ARTICLE I

INTRODUCTION

     1.1 Establishment. On January 19, 1993, McAfee, Inc., a Delaware corporation, the
predecessor to McAfee, Inc., a Delaware corporation (together with any successor corporation
thereto, the “Company”), established the McAfee, Inc. Stock Option Plan for Outside Directors (the
“Initial Plan”) for certain members of its Board (as defined in Section 2.1(d)) who are not
employees of the Company or any Affiliated Corporation (as defined in Section 2.1(b)) and who are
eligible to participate in the Plan based upon the definition of an Outside Director set forth in
Section 2.1(i). The Initial Plan was amended and restated in its entirety in April 1995 by the
Board of Directors of the Company and ratified by the Company’s stockholders in June 1995 as the
Amended and Restated McAfee, Inc. Stock Option Plan for Outside Directors (the “Plan”).

     1.2 Purposes. The purpose of the Plan is to provide certain directors of the Company
who are not also employees of the Company or an Affiliated Corporation (as defined in
Section 2.1(b)) added incentive to continue in the service of the Company and a more direct
interest in the future success of the operations of the Company.

     1.3 Effective Date. The effective date of the Plan shall be January 1, 1993 (the
“Effective Date”), subject to approval by the affirmative votes of the holders of a majority of the
shares of the Company present or represented and entitled to vote at a meeting duly held (in person
or through written consent) in accordance with governing law within one year following the
Effective Date. If the stockholders of the Company do not approve the Plan as specified above,
Options granted under the Plan shall be deemed to be rescinded without any further action by the
Board or the Company, and the Plan shall automatically terminate, notwithstanding any other
provision in the Plan to the contrary.

ARTICLE II

DEFINITIONS

     2.1 Definitions. For purposes of the Plan:

          (a) “Affiliate” and “Associate” shall have the meanings specified in
Rule 12b-2 or any successor regulation under the Exchange Act.

          (b) “Affiliated Corporation” means any corporation or other entity (including but not
limited to a partnership) that is affiliated with the Company through stock ownership or otherwise
and is treated as a common employer under the provisions of Sections 414(b) and (c) of the Code.

 

 

          (c) “Annual Meeting” means the annual meeting of the Company’s stockholders.

          (d) “Board” means the Board of Directors of the Company. If a committee of the Board
has been appointed to administer the Plan, “Board” also means such committee.

          (e) “Code” means the Internal Revenue Code of 1986, as amended from time to time.

          (f) “Disabled” or “Disability” shall have the meaning given to such terms in
Section 22(e)(3) of the Code.

          (g) “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to
time.

          (h) “Fair Market Value” of a share of Stock shall be the last reported sale price of
the Stock on the NASDAQ National Market System on the day the determination is to be made, or if no
sale took place on such day, the average of the closing bid and asked prices of the Stock on the
NASDAQ National Market System on such day, or if the market is closed on such day, on the last day
prior to the date of determination on which the market was open for the transaction of business, as
reported by NASDAQ. If, however, the Stock should be listed or admitted for trading on a national
securities exchange, the Fair Market Value of a share of the Stock shall be the last reported sale
price on such securities exchange on the date the determination is to be made, or if no sale took
place on such day, the average of the closing bid and asked prices on such day, or if the market is
closed on such day, on the last day prior to the date of determination on which the market was open
for the transaction of business, as reported in the principal consolidated transaction reporting
system for the principal national securities exchange on which the Stock is listed or admitted for
trading. If the Stock is not listed or traded on the NASDAQ National Market System or on any
national securities exchange, the Fair Market Value of the Stock for purposes of the grant of
Options under the Plan shall be determined by the Board in good faith.

          (i) “Outside Director” is an individual who is (i) a member of the Board and (ii) not
an employee of the Company or an Affiliated Corporation. For purposes of the Plan, an employee is
an individual whose wages are subject to the withholding of federal income tax under Section 3401
of the Code. Furthermore, any individual who performs services, whether as an employee, partner,
sole proprietor, director, trustee, independent contractor, or consultant, for any entity or group
of affiliated entities which own at least ten percent (10%) of the total combined voting power of
all classes of stock of the Company shall not be considered to be a “Outside Director” for purposes
of the Plan.

          (j) “Holder” means an Outside Director who has received one or more Options under the
terms of the Plan.

          (k) “Option” means a right granted under the Plan to purchase Stock at a stated price
for a specified period of time. The Options granted under the Plan shall be nonstatutory stock
options, that is options that do not satisfy the requirements of Section 422 of the Code.

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          (l) “Option Agreement” means a written agreement between the Company and the Holder of
an Option as described in Section 3.2(c) hereof.

          (m) “Option Price” means the price at which shares of Stock subject to an Option may
be purchased, determined in accordance with Section 3.3(b).

          (n) “Share” means a share of Stock.

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

ARTICLE III

OPTIONS

     3.1 Participation. Each Outside Director who is elected or re-elected at an Annual
Meeting or at any other time (such as an individual who becomes an Outside Director by filling a
vacancy on the Board or a newly created directorship) shall receive an Option as of the date of
such election. Each Outside Director who is elected or re-elected for a term longer than one year,
including Outside Directors elected or re-elected prior to the Effective Date, shall receive
Options as of the date of his or her election and as of each anniversary date during his or her
term. Options shall be granted in accordance with Section 3.2 on the terms and conditions herein
described.

     3.2 Grant.

          (a) Annual Grants. Each Outside Director of the Company shall automatically receive,
on the date of that Outside Director’s initial election to the Board, an Option to purchase 30,000
Shares (the “Initial Grant”). Each Outside Director of the Company who has already received an
Initial Grant shall automatically receive, on each anniversary date of the Initial Grant, an Option
to purchase 15,000 Shares.

          (b) Date of Grant. The date on which an Outside Director receives an Option hereunder
is referred to as the date of grant of such Option.

          (c) Option Agreement. Each Option granted under the Plan shall be evidenced by an
Option Agreement which shall incorporate and conform to the terms and conditions set forth in
Section 3.3 of the Plan.

     3.3 Terms and Conditions. Options issued pursuant to the Plan shall have the
following terms and conditions:

          (a) Number and Timing. Each Outside Director shall receive under the Plan Options to
purchase the number of Shares determined as specified in Section 3.2, subject to adjustment as
provided in Section 4.2. Such grants shall be made at the times specified in Section 3.2.

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          (b) Price. The price at which each Share covered by the Option may be purchased by
each Outside Director shall be the Fair Market Value of a share of the Stock on the date of grant,
subject to adjustment as provided in Section 4.2.

          (c) Duration of Options. Each Option shall expire ten years from the date the Option
is granted (the “Option Period”), unless terminated sooner pursuant to Section 3.3(d) below or
fully exercised prior to the end of such period.

          (d) Termination of Service, Death, Etc. An Option shall terminate in the following
circumstances if the Holder ceases to be a director of the Company:

               (i) Removal for Cause. If the Holder is removed as a director of the Company during
the Option Period for cause, the Option shall be void thereafter for all purposes, including as to
Shares for which the Option was otherwise exercisable according to Section 3.3(g) prior to the
Holder’s removal as a director of the Company.

               (ii) Disability. If the Holder ceases to be a director of the Company on account of
Disability, the Option may be exercised by the Holder (or, in case of death thereafter, by the
persons specified in Section 3.3(d)(iii)) within one year following the date on which the Holder
ceased to be a director (if otherwise within the Option Period), but not thereafter. In any such
case, the Option may be exercised only as to Shares for which the Option had become exercisable on
or before the date the Holder ceased to be a director on account of Disability.

               (iii) Death. If the Holder dies during the Option Period while still serving as a
director or within the three-month period referred to in Section 3.3(d)(iv) below, the Option may
be exercised by those entitled to do so under the Holder’s will or by the laws of descent and
distribution within one year following the Holder’s death (if otherwise within the Option Period),
but not thereafter. In any such case, the Option may be exercised only as to the Shares for which
the Option had become exercisable on or before the date of the Holder’s death.

               (iv) Other Termination. If the Holder ceases to be a director within the Option
Period for any reason other than removal for cause, Disability or death, the Option may be
exercised by the Holder within three months following the date of such termination (if otherwise
within the Option Period), but not thereafter. In any such case, the Option may be exercised only
as to the Shares for which the Option had become exercisable on or before the date the Holder
ceased to be a director.

               (v) Extension if Holder Subject to Section 16(b). Notwithstanding the foregoing, if a
sale within the applicable time periods set forth in Sections 3.3(d)(i), (ii), (iii), or (iv) of
Shares acquired upon the exercise of the Option would subject the Holder to suit under
Section 16(b) of the Exchange Act, the Option shall remain exercisable until the earliest to occur
of (i) the tenth (10th) day following the date on which a sale of such Shares by the
Holder would no longer be subject to such suit, (ii) the one hundred and ninetieth
(190th) day after the Holder’s termination of service as a director, or (iii) the
expiration of the Option Period.

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               (vi) Extension if Exercise Prevented by Law. Notwithstanding the foregoing, if the
exercise of the Option within the applicable time periods set forth in Section 3.3(d)(i), (ii),
(iii) or (iv) is prevented by the provisions of Section 3.3(e)(iv), the Option shall remain
exercisable until three (3) months after the date the Holder is notified by the Company that the
Option is exercisable, but in any event no later than the expiration of the Option Period.

          (e) Transferability, Exercisability.

               (i) Each Option granted under the Plan shall not be transferable by a Holder other than by
will or the laws of descent and distribution.

               (ii) Each Option granted under the Plan shall be exercisable during the Holder’s lifetime only
by the Holder or, in the event of disability or incapacity, by the Holder’s guardian or legal
representative.

               (iii) Notwithstanding any other provision of the Plan, no Option may be unconditionally
granted unless and until the Plan is approved by the stockholders of the Company in accordance with
Section 1.3, and for any Option granted prior to the time of such stockholder approval which is
subject to such approval, the date of grant of the Option shall be the date on which the
stockholders of the Company approve the Plan.

               (iv) The grant of an Option and the issuance of Shares upon exercise of an Option shall be
subject to compliance with all applicable requirements of federal and state law with respect to
such securities. An Option may not be exercised if the issuance of Shares upon exercise would
constitute a violation of any applicable federal or state securities laws or other law or
regulations or the requirements of any stock exchange or market system upon which the Stock may
then be listed. In addition, no Option may not be exercised unless (i) a registration statement
under the Securities Act of 1933, as amended (the “Securities Act”), shall at the time of exercise
of the Option be in effect with respect to the shares issuable upon exercise of the Option or
(ii) in the opinion of legal counsel to the Company, the shares issuable upon exercise of the
Option may be issued in accordance with the terms of an applicable exemption from the registration
requirements of the Securities Act. The inability of the Company to obtain from any regulatory
body having jurisdiction the authority, if any, deemed by the Company’s legal counsel to be
necessary to the lawful issuance and sale of any shares subject to an Option 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. As a condition to the exercise of an Option, the
Company may require the Holder to satisfy any qualifications that may be necessary or appropriate,
to evidence compliance with any applicable law or regulation and to make any representation or
warranty with respect thereto as may be requested by the Company.

          (f) Exercise, Payments, Etc.

               (i) Method of Exercise. The method for exercising each Option granted shall be by
delivery to the Company of written notice specifying the number of shares with respect to which the
Option is exercised. The purchase of Stock pursuant to the Option shall take place at the
principal office of the Company within thirty days following delivery of such notice, at which

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time the purchase price of the Stock shall be paid in full by any of the methods set forth in
Section 3.3(f)(ii) or a combination thereof. A properly executed certificate or certificates
representing the Stock shall be delivered to the Holder upon payment therefore.

               (ii) Payment of Option Price. The Option Price shall be paid by any of the following
methods or any combination of such methods, at the option of the Holder: (A) cash; (B) certified,
cashier’s or other check acceptable to the Company, payable to the order of the Company;
(C) delivery to the Company of certificates representing a number of shares of Stock then owned by
the Holder, the Fair Market Value of which (determined as of the date the notice of exercise is
delivered to the Company) equals the price of the Stock to be purchased pursuant to the Option,
properly endorsed for transfer to the Company; or (D) by the assignment of the proceeds of a sale
of some or all of the shares being acquired upon the exercise of the Option (including, without
limitation, through an exercise complying with the provisions of Regulation T as promulgated from
time to time by the Board of Governors of the Federal Reserve System) (“Immediate Sales Proceeds”).
No Option may be exercised by delivery to the Company of certificates representing Stock that has
been held by the Option Holder for less than six months or such other period as shall be sufficient
for the Company to avoid, if possible, the recognition of expense with respect to the Option for
accounting purposes. The payment of the exercise price with Immediate Sales Proceeds shall comply
with procedures established by the Company, which procedures may be changed from time to time in
the Company’s sole discretion. The Company retains the right to discontinue the availability of
payment with Immediate Sales Proceeds at any time.

          (g) Service Required for Exercise. Except as set forth in Section 1.3 and 3.3(d), the
Initial Grant made to an Outside Director under the Plan shall become exercisable (i) for one-third
(1/3) of the total number of shares subject to such Option after one year of continuous service by
the Holder as a director of the Company after the date of grant and (ii) for an additional
one-third (1/3) of the total number of shares subject to the Option at the end of each full year of
continuous service as a director of the Company thereafter, in each case rounded to the nearest
whole number of shares. Except as set forth in Sections 1.3 and 3.3(d), each subsequent Option
granted to an Outside Director under the Plan shall be exercisable in its entirety after three (3)
years of continuous service by the Holder as a director of the Company after the date of grant.
Except as set forth in Section 5.2, the Option shall not be exercisable as to any Shares as to
which the applicable continuous service requirements has not been satisfied, regardless of the
circumstances under which the Holder ceased to be a director.

ARTICLE IV

AUTHORIZED STOCK

     4.1 The Stock. Subject to adjustment pursuant to Section 4.2, the maximum aggregate
number of shares of Stock that may be issued under the Plan shall be 1,132,813 and shall consist of
authorized but unissued shares or treasury shares of Stock or any combination thereof. Shares of
Stock underlying expired or canceled and unexercised Options shall again be available for issuance
under the Plan. However, shares surrendered to the Company in payment of the Option Price of an
Option and shares purchased by the Company in the open market with the proceeds from the sale of
Stock pursuant to the exercise of Options shall not be available for issuance under the Plan.

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     4.2 Adjustments.

          (a) Stock Splits, Stock Dividends, Etc. If the Company at any time increases or
decreases the number of its outstanding shares of Stock, or changes in any way the rights and
privileges of such shares, by means of the payment of a stock dividend or the making of any other
distribution upon such shares payable in Stock, or through a stock split or subdivision of shares,
or a consolidation or combination of shares, or through a reclassification or recapitalization
involving the Stock, then the class, numbers, rights and privileges of the following shall be
increased, decreased or changed in like manner as if the Stock issuable upon exercise of the Option
had been validly issued and outstanding, fully paid and nonassessable at the time of such
occurrence: (i) the number and class of shares issuable pursuant to the Plan as provided in
Section 4.1, (ii) the number and class of shares for which Options may be granted under the Plan
pursuant to Section 3.2, (iii) the number and class of shares then subject to each outstanding
Option granted under the Plan, and (iv) the Option Price for each outstanding Option.

     If a majority of the shares which are of the same class as the shares that are subject to
outstanding Options are exchanged for, converted into, or otherwise become (whether or not pursuant
to a Transfer of Control (as defined in Section 5.1) shares of another corporation (the “New
Shares”), the Board may unilaterally amend the outstanding Options to provide that such Options are
exercisable for New Shares. In the event of any such amendment, the number of shares subject to,
and the Option Price of, the outstanding Options shall be adjusted in a fair and equitable manner
as determined by the Board, in its sole discretion.

          (b) Adjustments for Certain Distributions of Property. If the Company shall at any
time distribute with respect to its outstanding Stock, assets or securities of other persons
(excluding cash dividends, distributions payable out of capital surplus, and dividends or other
distributions referred to in Sections 4.2(a) and (c)), then the Option Price of outstanding Options
shall be adjusted to reflect the fair market value of the assets or securities distributed, the
Company shall provide for the delivery upon exercise of such Options of cash in an amount equal to
the appropriate portion of the fair market value of the assets or securities distributed, or a
combination of such actions shall be taken, all as determined by the Company in its discretion.
Fair market value of the assets or securities distributed for this purpose shall be as determined
by the Company.

          (c) Distributions of Capital Stock and Indebtedness. If the Company at any time
distributes to all holders of Stock shares of its capital stock (other than Stock), or evidences of
its indebtedness, then a proportionate part of such capital stock and evidences of indebtedness
shall be set aside for each outstanding Option and, upon exercise of the Option, delivered to the
Holder of such Option.

     4.3 No Rights as Stockholder. A Holder shall have none of the rights of a stockholder
with respect to the shares subject to an Option until such shares are transferred to the Holder
upon exercise of such Option. Except as provided in Section 4.2, no adjustments shall be made for
dividends, rights or other property distributed to stockholders (whether ordinary or extraordinary)
for which the record date is prior to the date such shares are so transferred.

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     4.4 Fractional Shares. No adjustments or substitution provided for in this Article IV
shall require the Company to sell a fractional share. The total substitution or adjustment with
respect to each Option shall be limited by deleting any fractional share. In no event may the
Option Price of any Option be decreased to an amount less than the par value, if any, of the stock
subject to the Option.

ARTICLE V

TRANSFER OF CONTROL

     5.1 Definition. A “Transfer of Control” shall be deemed to have occurred in the event
any of the following occurs with respect to the Company.

          (a) the direct or indirect sale or exchange by the stockholders of the Company of all or
substantially all of the voting stock of the Company wherein the stockholders of the Company
immediately before such sale or exchange do not retain in substantially the same proportions as
their ownership of shares of the Company’s voting stock immediately before such event, directly or
indirectly (including without limitation, through their ownership of shares of the voting stock of
a corporation which, as a result of such sale or exchange, owns the Company either directly or
through one or more subsidiaries), at least a majority of the beneficial interest in the voting
stock of the Company’s immediately after such sale or exchange;

          (b) a merger or consolidation wherein the stockholders of the Company immediately before such
merger or consolidation do not retain in substantially the same proportions as their ownership of
shares of the Company’s voting stock immediately before such event, directly or indirectly
(including, without limitation, through their ownership of shares of the voting stock of a
corporation which, as a result of such merger or consolidation, owns the Company either directly or
through one or more subsidiaries), at least a majority of the beneficial interest in the voting
stock of the Company immediately after such merger or consolidation;

          (c) the sale, exchange, or transfer of all or substantially all of the assets of the Company
(other than a sale, exchange, or transfer to one or more corporations (the “Transferee
Corporation(s)”) wherein the stockholders of the Company immediately before such sale, exchange, or
transfer retain in substantially the same proportions as their ownership of shares of the Company’s
voting stock immediately before such event, directly or indirectly (including, without limitation,
through their ownership of shares of the voting stock of a corporation which owns the Transferee
Corporation(s) either directly or through one or more subsidiaries, at least a majority of the
beneficial interest in the voting stock of the Transferee Corporation(s) immediately after such
event); or

          (d) a liquidation or dissolution of the Company.

     5.2 Effect on Options. In the event of a Transfer of Control, any unexercisable or
unvested portion of the outstanding Options shall be immediately exercisable and vested in full as
of the date ten (10) days prior to the date of the Transfer of Control, and the Company shall
provide each Holder of an outstanding Option with at least ten (10) days advance written notice of
the

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pending Transfer of Control prior to the consummation thereof. The exercise or vesting of any
Option that was permissible solely by reason of this Section 5.2 shall be conditioned upon the
consummation of the Transfer of Control. In addition, the Board, in its sole discretion, may
arrange with the surviving, continuing, successor, or purchasing corporation or parent corporation
thereof, as the case may be (the “Acquiring Corporation”), for the Acquiring Corporation to either
assume the Company’s rights and obligations under outstanding Options or substitute substantially
equivalent options for the Acquiring Corporation’s stock for such outstanding Options. Any Options
which are neither assumed or substituted for by the Acquiring Corporation in connection with the
Transfer of Control nor exercised as of the date of the Transfer of Control shall terminate and
cease to be outstanding effective as of the date of the Transfer of Control. Notwithstanding the
foregoing, shares acquired upon exercise of an Option prior to the Transfer of Control and any
consideration received pursuant to the Transfer of Control with respect to such shares shall
continue to be subject to all applicable provisions of the Option Agreement evidencing such Option
except as otherwise provided in such Option Agreement. If the corporation the stock of which is
subject to the outstanding Options immediately prior to a Transfer of Control described in
Section 8.1(a) is the surviving or continuing corporation, the outstanding Options shall be deemed
to have been assumed by the Acquiring Corporation for purposes of this Section 5.2.

ARTICLE VI

GENERAL PROVISIONS

     6.1 Administration. The Plan shall be administered by the Board and/or any duly
appointed committee of the Board having such powers as shall be specified by the Board. Unless the
powers of the committee have been specifically limited, the committee shall have all of the powers
of the Board granted herein, including, without limitation, the power to terminate or amend the
Plan at any time, subject to the terms of the Plan and any applicable limitations imposed by law.
The Board shall have no authority, discretion, or power to select the Outside Directors who will
receive Options under the Plan, to set the Option Price of the Options, to determine the number of
Shares to be granted under option or the time at which such Options are to be granted, to establish
the duration of Options, or alter any other terms or conditions specified in the Plan, except in
the sense of administering the Plan subject to the provisions of the Plan. All questions of
interpretation of the Plan or of any Options granted under the Plan shall be determined by the
Board, and such determinations shall be final and binding upon all persons having an interest in
the Plan and/or any Option. Any officer of the Company shall have the authority to act on behalf
of the Company with respect to any matter, right, obligation, or election which is the
responsibility of or which is allocated to the Company herein, provided the officer has apparent
authority with respect to such matter, right, obligation, or election.

     6.2 Expiration. The Plan shall terminate whenever the Board adopts a resolution to
that effect. After termination, no additional Options shall be granted under the Plan, but the
Company shall continue to recognize Options previously granted.

     6.3 Amendments, Etc. The Board may from time to time amend, modify, suspend or
terminate the Plan. Nevertheless, no such amendment, modification, suspension or termination shall
impair any Option theretofore granted under the Plan or deprive any Holder of any Shares that he

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may have acquired through or as a result of the Plan without the consent of the Holder. The
Plan may not be amended more than once every six months with respect to the persons entitled to be
granted Options hereunder, the timing of grants to Outside Directors, the number of Shares subject
to an Option or the Option Price thereof, other than amendments necessary to comport with changes
in the Code, ERISA or the rules and regulations thereunder. The Company shall obtain the approval
of stockholders to any amendment or modification of the Plan to the extent required by Rule 16b-3
under the Exchange Act or by the listing requirements of the National Association of Securities
Dealers, Inc. or any stock exchange on which the Company’s securities are quoted or listed for
trading.

     6.4 Treatment of Proceeds. Proceeds from the sale of Stock pursuant to Options
granted under the Plan shall constitute general funds of the Company.

     6.5 Paragraph Headings. The paragraph headings are included herein only for
convenience, and they shall have no effect on the interpretation of the Plan.

     6.6 Severability. If any article, section, subsection or specific provision is found
to be illegal or invalid for any reason, such illegality or invalidity shall not affect the
remaining provisions of the Plan, and the Plan shall be construed and enforced as if such illegal
and invalid provision had never been set forth in the Plan.

     6.7 Rule 16b-3. This Plan is intended to comply with the requirements of Rule 16b.3
under the Exchange Act. To the extent the Plan does not conform to such requirements, it shall be
deemed amended to so conform without any further action on the part of the Board of Directors or
stockholders.

     6.8 Continuation of Initial Plan as to Outstanding Options. Notwithstanding any other
provision of the Plan to the contrary, the terms of the Initial Plan shall remain in effect and
apply to all Options granted pursuant to the Initial Plan.

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