Document:

exv10w66

 

EXHIBIT 10.66

EMPLOYMENT AGREEMENT

     This Amended and Restated Employment Agreement (this “Agreement”) is effective as
of December 4, 2006 (the “Effective Date”), and is entered into by and between Michael
Tansey (“Employee”) and La Jolla Pharmaceutical Company (the “Company”).

     WHEREAS, the Company offered Employee employment pursuant to an offer letter and agreement
dated July 10, 2006 (the “Offer Letter”);

     WHEREAS, the parties hereto desire to amend and restate the terms of Employee’s
employment in this Agreement.

     NOW, THEREFORE, for good and valuable consideration the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:

     1. Title; Other Consulting. Employee shall have the title of EVP & Chief Medical
Officer. In this capacity, Employee will report to the Company’s Chief Executive Officer.
Employee will be permitted to provide consulting services to other entities and persons during his
employment hereunder provided (i) such consulting does not interfere with Employee’s ability to
perform his duties and responsibilities hereunder, and (ii) such consulting does not involve
anything pertaining to research, diagnosis or treatment of lupus, including but not limited to any
therapeutics for lupus.

     2. Compensation,

          (a) Annual Base Salary. As compensation for all services to be rendered by Employee under
this Agreement, the Company shall pay Employee a base annual salary of $325,000, which salary
shall be paid in conformity with the Company’s pay practices generally applicable to Company
executives.

          (b) Bonus. Employee will be eligible for a target bonus of up to 40% of his base annual
salary, with any bonus for 2006 to be prorated. The bonus for each year will be determined by
the achievement of goals established for (i) Employee’s position, and (ii) overall Company
performance, and is subject to approval by the Company’s Board of Directors.

          (c) Benefits. During the term of his employment, Executive shall be entitled to
participate in all employee benefit plans and programs, including paid vacations, to the same
extent generally available to Company executives, in accordance with the terms of those plans
and programs. The Company shall have the right to terminate or change any such plan or program
at any time.

          (d) Health Insurance. If Employee declines to participate in the Company’s group health
plan, then for each full year of non-participation, the Company will pay Employee $9600 to
compensate him for the purchase of supplemental medical coverage. Said payment will be made in
a lump sum on or before August 1 of each year of employment hereunder.

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          (d) Stock Options. In connection with this Agreement, Employee has been granted a stock
option to purchase 87,000 shares of the Company’s stock pursuant to the terms of the Company’s
2004 Equity Incentive Plan. This option is in addition to an earlier option to purchase
113,000 shares pursuant to the same Plan.

     3. Termination; Severance.

          (a) If (i) Employee’s employment is terminated by the Company without Cause or (ii) if a
Change in Control of the Company occurs and Employee’s employment with the Company or its
successor Terminates In Connection With a Change in Control, and in the absence of any event or
circumstance constituting Cause, then, in either case:

               (A) Employee will be entitled to receive from the Company an amount in severance equal to 9
months of Employee’s then-current base salary (the “Severance Amount”). The
Severance Amount will be paid in a lump sum promptly after Employee has executed and delivered to
the Company a release, in form and substance satisfactory to the Company, of all claims arising in
connection with Employee’s employment with the Company and termination thereof;

               (B) Provided that Employee has elected not to be covered by the Company’s group health
insurance plan, Employee will be paid $800 for each month during the 9-month severance period that
Employee has not previously received payment to compensate him for his supplemental medical
coverage.

               (C) Notwithstanding anything to the contrary in the option plan pursuant to which Employee’s
options were granted, all options granted to Employee prior to the Termination Date (the
“Options”) shall automatically vest and become fully exercisable as of the Termination Date
notwithstanding any vesting or performance conditions applicable thereto, and such Options shall
remain exercisable for (i) one year following the Termination Date or (ii) if the plan or grant
agreement pursuant to which certain Options were granted provides that such Options will be
exercisable for a period longer than one year in circumstances where Employee is terminated
without Cause or Employee’s employment Terminates In Connection With a Change in Control, then
such longer exercise period shall apply with respect to such Options; provided that, in either
case, (A) in no event will Options be exercisable beyond the duration of the original term thereof
and (B) if the Options qualify as an incentive stock option under the Internal Revenue Code and
applicable regulations thereunder, the exercise period thereof shall not be extended in such a
manner as to cause the Options to cease to qualify as an incentive stock option unless Executive
elects to forego incentive stock option treatment and extend the exercise period thereof as
provided herein.

          (b) “Change in Control” of the Company has the meaning set forth in the La Jolla
Pharmaceutical Company 2004 Equity Incentive Plan.

          (c) “Cause” means the occurrence of one or more of the following: (i) Employee
commits a felony or any crime involving moral turpitude, embezzlement, fraud or misappropriation;
(ii) Employee breaches this Agreement or any other agreement entered into with the Company, or
breaches a material policy of the Company;

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(iii) Employee engages in a dishonest act or willful misconduct ; or (iv) Employee fails,
after receipt of written notice and after receiving a period of at least 10 days following such
notice, to follow a lawful direction of the CEO or Board of Directors.

          (d) Employee’s employment with the Company or its successor will be deemed a “Termination
In Connection With” a Change in Control if, within 180 days after the consummation of the
Change of Control: (i) Employee is removed from Employee’s employment by, or resigns his employment
upon the request of, a person exercising practical voting control over the Company or its successor
following the Change in Control or a person acting upon authority or at the instruction of such
person; (ii) Employee’s position is eliminated as a result of a reduction in force made to reduce
over-capacity or unnecessary duplication of personnel and Employee is not offered a replacement
position with the Company or its successor as a Vice President with compensation and functional
duties substantially similar to the compensation and duties in effect immediately before the Change
in Control; or (iii) Employee resigns his employment with the Company or its successor rather than
comply with a relocation of his primary work site more than 50 miles from the Company’s
headquarters.

      4. Section 409A.

          (a) Notwithstanding any provision of this Agreement to the contrary, if, at the time of
Employee’s termination of employment with the Company, Employee is a “specified employee” as
defined in Section 409A of the Internal Revenue Code (the “Code”), and one or more of the payments
or benefits received or to be received by Employee pursuant to this Agreement or otherwise would
constitute deferred compensation subject to Section 409A, then no such payment will be made under
this Agreement until the earliest of (i) the date which is six months after Employee’s “separation
from service” for any reason, other than “death” or “disability” (as such terms are used in Section
409A(a)(2) of the Code), (ii) the date of Employee’s “death” or “disability” (as such terms are
used in Section 409A(a)(2) of the Code), or (iii) the effective date of a “change in the ownership
or effective control” of the Company (as such term is used in Section 409A(a)(2)(A)(v) of the
Code).

          (b) The provisions of this Section 4 shall only apply to the extent required to avoid
Employee’s incurrence of any penalty tax or interest under Section 409A of the Code or any
regulations or United States Treasury guidance promulgated thereunder. In addition, if any
provision of this Agreement would cause Employee to incur any penalty tax or interest under Section
409A of the Code or any regulations or Treasury guidance promulgated thereunder, the Company may
reform such provision to maintain to the maximum extent practicable the original intent of the
applicable provision without violating the provisions of Section 409A of the Code.

     5. Arbitration of Disputes. If any dispute arises which cannot be resolved by mutual
discussion between the Company and Employee, each party hereto agrees to resolve that dispute by
binding arbitration before an arbitrator experienced in employment law. Said arbitration will be
conducted in accordance with the rules applicable to employment disputes of the Judicial
Arbitration and Mediation Service (JAMS) or such other arbitration service as the Company and
Employee agree upon, and the substantive law of California. Except as provided herein, the Federal
Arbitration Act shall govern the interpretation and enforcement

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of such arbitration proceeding. The Company will be responsible for paying any filing fee and
the fees and costs of the arbitrator, unless Employee initiates the claim, in which case he will
contribute an amount equal to the filing fee for a claim initiated in a state court of general
jurisdiction in California. The Company and Employee agree that this promise to arbitrate covers
any disputes that the Company may have against Employee, or that Employee may have against the
Company and all of its affiliated entities and their directors, officers and employees, arising out
of or relating to this Agreement, the employment relationship or termination of employment,
including any claims concerning the validity, interpretation, effect or violation of this
Agreement; violation of any federal, state or local law; any tort; and any other aspect of
Employee’s compensation or employment. The Company and Employee further agree that arbitration as
provided in this Section 5 shall be the exclusive and binding remedy for any such dispute and will
be used instead of any court action, which is hereby expressly waived, except for any request by
either party hereto for temporary or preliminary injunctive relief pending arbitration in
accordance with applicable law, or an administrative claim with an administrative agency. The
Company and Employee agree that any such arbitration shall be conducted in the San Diego,
California metropolitan area unless otherwise mutually agreed.

     6. Miscellaneous.

          (a) Captions. The captions of this Agreement are inserted for convenience and do
not constitute a part hereof.

          (b) Entire Agreement. This Agreement constitutes the entire agreement, and supersedes
all prior written agreements, arrangements, communications and understandings and all prior and
contemporaneous oral agreements, arrangements, communications and understandings, among the parties
with respect to the subject matter of this Agreement. For the sake of clarity, this Agreement
supersedes and replaces the terms set forth in the Offer Letter. This Agreement shall be binding
upon and inure solely to the benefit of each of the parties and their respective successors and
assigns.

          (c) Amendment. This Agreement may not be amended, modified or supplemented in any
manner, whether by course of conduct or otherwise, except by an instrument in writing signed on
behalf of each party hereto.

          (d) Severability. In case any one or more of the provisions contained in this
Agreement shall for any reason be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision of this Agreement,
but this Agreement shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein and there shall be deemed substituted for such invalid, illegal or
unenforceable provision such other provision as will most nearly accomplish the intent of the
parties to the extent permitted by the applicable law. In case this Agreement, or any one or more
of the provisions hereof, shall be held to be invalid, illegal or unenforceable within any
governmental jurisdiction or subdivision thereof, this Agreement or any such provision thereof
shall not as a consequence thereof be deemed to be invalid, illegal or unenforceable in any other
governmental jurisdiction or subdivision thereof.

          (e) Further Assurances. Each party hereto shall promptly execute and deliver such
further instruments and take such further actions as the other party may
reasonably require or request in order to carry out the intent of this Agreement.

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          (f) No Change in Terms of Employment. Employee will continue to be bound by the
Company’s policies and this Agreement does not change Employee’s employment status with the
Company. As with all employees at the Company, Employee or the Company may, subject to the terms of
this Agreement, terminate Employee’s employment at any time for any reason whatsoever, with or
without cause or advance notice.

          (g) Withholding Taxes. The Company may withhold from any compensation and benefits
payable under this Agreement all federal, state, city and other taxes or amounts as shall be
determined by the Company to be required to be withheld pursuant to applicable laws, or
governmental regulations or rulings.

          (h) Governing Law. This Agreement and all disputes or controversies arising out of or
relating to this Agreement or the transactions contemplated hereby shall be governed by, and
construed in accordance with, the internal laws of the State of California.

          (i) Counterparts. This Agreement may be executed in two or more counterparts, all of
which shall be considered one and the same instrument and shall become effective when one or more
counterparts have been signed by each of the parties and delivered to the other party. This
Agreement may be executed by facsimile signature and a facsimile signature shall constitute an
original for all purposes.

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and
delivered effective as of the day and year first written above in San Diego, California.

	 	 	 	 	 	 	 	 	 
	 	 	LA JOLLA PHARMACEUTICAL COMPANY	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Deirdre Gillespie
	 	12/1/2006
	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Deirdre Gillespie

President and CEO
	 	Date	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	EMPLOYEE	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Michael Tansey
	 	12/1/2006	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Michael Tansey
	 	Date	 	 

5exv10w32

 

Exhibit 10.32

PACKETEER, INC.

NOTICE OF GRANT OF PERFORMANCE SHARES

(For U.S. Participant)

The
Participant has been granted an award of Performance Shares (the
“Award”) pursuant to the
Packeteer, Inc. 1999 Stock Incentive Plan (the
“Plan”) and the Performance Share Agreement attached
hereto (the “Agreement”), each of which represents the right to receive on the Settlement Date one
(1) share of Common Stock, as follows:

	 	 	 	 	 
	Participant:

	 	                                        
	 	Employee ID:                                          
	 
	 	 	 	 
	Grant Date:

	 	                                        
	 	Grant No.:                                          
	 
	 	 	 	 
	Target Number of
Performance Shares:	 	[_______________], subject to adjustment as provided by the Agreement.
	 
	 	 	 	 
	Maximum Number of
Performance Shares:	 	[_______________], subject to adjustment as provided by the Agreement. [Not to
exceed 750,000 shares for 3-year Performance Period]
	 
	 	 	 	 
	Performance Period:	 	The three fiscal years of the Corporation beginning January 1, 2007 and ending
December 31, 2009.
	 
	 	 	 	 
	Performance Measures:	 	Revenue Growth
Percentage, as defined by the Agreement.

Average Operating Income Margin Percentage, as defined by the Agreement.
	 
	 	 	 	 
	Vesting Date:	 	[_______________], 2010, except as provided by the Agreement.
	 
	 	 	 	 
	Vested Performance 

Shares:	 	Except as provided by the Agreement, and provided that the Participant’s Service
has not terminated prior to the Vesting Date, on the Vesting Date the number of
Vested Performance Shares (not to exceed the Maximum Number of Performance Shares)
shall be determined by multiplying the Target Number of Performance Shares by the
product of the Revenue Growth Percentage Multiplier (as defined by the Agreement)
and the Average Operating Income Margin Percentage Multiplier (as defined by the
Agreement).
	 
	 	 	 	 
	Settlement Date:	 	The Vesting Date, except as otherwise provided by the Agreement.

By their signatures below or by electronic acceptance or authentication in a form authorized by the
Corporation, the Corporation and the Participant agree that the Award is governed by this Notice
and by the provisions of the Plan and the Agreement, both of which are made a part of this
document. The Participant acknowledges that copies of the Plan, the Agreement and the prospectus
for the Plan are available on the Corporation’s internal web site and may be viewed and printed by
the Participant for attachment to the Participant’s copy of this Grant Notice. The Participant
represents that the Participant has read and is familiar with the provisions of the Plan and the
Agreement, and hereby accepts the Award subject to all of their terms and conditions.

	 	 	 	 	 	 	 	 	 
	PACKETEER, INC.	 	 	 	PARTICIPANT	 	 
	 
	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 
	 

	 	 

	 	 	 	 

Signature
	 	 
	Its:
	 	 	 	 	 	 	 	 
	 

	 	 

	 	 	 	 

Date
	 	 
	Address:  10201 North de Anza Boulevard	 	 	 	 	 	 
	 

	 	         Cupertino, CA 95014, USA
	 	 	 	 

Address

	 	 
	 

	 	 	 	 	 	 

	 	 

			
	ATTACHMENTS:	 	1999 Stock Incentive Plan, as amended to the Grant Date; Performance Share Agreement
and Plan Prospectus

 

 

PACKETEER, INC.

PERFORMANCE SHARE AGREEMENT

(For U.S. Participants)

     Packeteer, Inc. has granted to the Participant named in the Notice of Grant of Performance
Shares (the “Grant Notice”)
to which this Performance Share Agreement (the “Agreement”) is attached
an Award consisting of Performance Shares subject to the terms and conditions set forth in the
Grant Notice and this Agreement. The Award has been granted pursuant to the Packeteer, Inc. 1999
Stock Incentive Plan (the “Plan”), as amended to the Grant Date, the provisions of which are
incorporated herein by reference. By signing the Grant Notice, the Participant: (a) acknowledges
receipt of and represents that the Participant has read and is familiar with the Grant Notice, this
Agreement, the Plan and a prospectus for the Plan (the
“Plan Prospectus”) in the form most recently
prepared in connection with the registration with the Securities and Exchange Commission of shares
issuable pursuant to the Plan, (b) accepts the Award subject to all of the terms and conditions of
the Grant Notice, this Agreement and the Plan and (c) agrees to accept as binding, conclusive and
final all decisions or interpretations of the Plan Administrator upon any questions arising under
the Grant Notice, this Agreement or the Plan.

     1. Definitions and Construction.

          1.1 Definitions. Unless otherwise defined herein, capitalized terms shall have the meanings
assigned to such terms in the Grant Notice or the Plan.

               (a) “Average Operating Income Margin Percentage” means a percentage equal to the annual
average for the Performance Period of the Pro Forma Annual Operating Income Margin determined for
each fiscal year of the Corporation contained in the Performance Period and certified by the Plan
Administrator in accordance with Section 4.

               (b) “Average Operating Income Margin Percentage Multiplier” means a number determined as
follows:

	 	 	 
	Average Operating Income	 	Average Operating Income Margin
	Margin Percentage	 	Percentage Multiplier
	Less than 12.0%
	 	0.00
	12.0%
	 	0.75
	Equal to or greater than 15%
	 	1.00

The Average Operating Income Margin Percentage Multiplier for Average Operating Income Margin
Percentages falling between the percentages set forth in the table above shall be determined by
linear interpolation.

               (c) “Cause” means the occurrence of any of the following: (1) Participant’s theft,
dishonesty, misconduct, breach of fiduciary duty for personal profit, or falsification of any
documents or records of the Corporation; (2) Participant’s material failure to abide by the code of
conduct or other policies (including, without limitation, policies relating to confidentiality and
reasonable workplace conduct) of the Corporation; (3) misconduct by Participant within the scope of
Section 304 of the Sarbanes-Oxley Act of 2002 as a result of which of the Corporation is required
to prepare an accounting restatement; (4) Participant’s unauthorized use, misappropriation,
destruction or diversion of any tangible or intangible asset or corporate opportunity of the
Corporation (including, without limitation, Participant’s improper use or disclosure of the
confidential or proprietary information of the Corporation); (5) any intentional act by Participant
which has a material detrimental effect on reputation or business of the Corporation; (6)
Participant’s repeated failure or inability to perform any reasonable assigned duties after written
notice from the Corporation of, and a reasonable opportunity to cure, such failure or inability;
(7) any material breach by Participant of any employment, non-disclosure, non-competition,
non-solicitation or other similar agreement between Participant and the Corporation, which breach
is not cured pursuant to the terms of such agreement; (8) Participant’s failure to cooperate in any
investigation by the Corporation that has been approved by the Board or the Audit Committee of the
Board; or (9) Participant’s conviction (including any plea of guilty or nolo contendere) of any
criminal act involving fraud, dishonesty, misappropriation or moral turpitude, or which impairs
Participant’s ability to perform his duties with the Corporation.

               (d) “Disability” means either (1) the inability of Participant to engage in any
substantial gainful activity by reason of any medically determinable physical or mental impairment
which can be expected to result in death or can be expected to last for a continuous period of not
less than twelve (12) months, or (2) Participant is, by reason of any medically determinable
physical or mental impairment which can be expected to result in death or can be expected to last
for a continuous period of not less than twelve (12) months, receiving income replacement benefits
for a period of not less than three (3) months under an accident and health plan covering employees
of Participant’s employer accident and health plan covering employees of Participant’s employer.

               (e) “ Involuntary Termination of Service” means the involuntary termination by the
Corporation (or its successor) of the Service of the Participant for reasons other than Cause; provided, however, that Involuntary Termination of Service shall not
include any voluntary termination or any termination of Participant’s employment which is a result
of Participant’s death or Disability.

 

 

               (f) “Operating Income” means the operating income of the Corporation for a fiscal year of the
Corporation determined in accordance with generally accepted accounting principles but prior to the
accrual or payment of any Performance Award (as defined by the Plan) for the Performance Period.

               (g) “Performance Share” means a right to receive on the Settlement Date one (1) share of
Common Stock if such Performance Share is then a Vested Performance Share.

               (h) “Plan Administrator” shall mean the Primary Committee (as defined by the Plan).

               (i) “Pro Forma Annual Operating Income Margin” means, for each fiscal year of the Corporation
contained in the Performance Period, a percentage determined by dividing the Pro Forma Operating
Income for such fiscal year by the Revenue for such fiscal year.

               (j) “Pro Forma Operating Income” means, for each fiscal year of the Corporation contained in
the Performance Period, the Operating Income of the Corporation for such fiscal year, adjusted to
exclude (i) amortization of purchased intangible assets, (ii) in-process research and development
expense, (iii) stock-based compensation expense from acquisitions and (iv) stock-based compensation
expense determined in accordance with Statement of Financial Accounting Standards No. 123 (revised
2004).

               (k) “Revenue” means the total revenue of the Corporation for a fiscal year of the Corporation
determined in accordance with generally accepted accounting principles.

               (l) “Revenue Growth Percentage” means a percentage equal to the Three-Year Annual Revenue
Compound Annual Growth Rate measured over the Performance Period and certified by the Plan
Administrator in accordance with Section 4.

               (m) “Revenue Growth Percentage Multiplier” means a number determined as follows:

	 	 	 
	Revenue Growth Percentage	 	Revenue Growth Percentage Multiplier
	Less than 15.0%
	 	0.00
	15.0%
	 	0.75
	18.0%
	 	1.00
	20.0%
	 	1.25
	25.0%
	 	1.50
	30.0%
	 	2.00
	Equal to or greater than 35%
	 	2.50

The Revenue Growth Percentage Multiplier for Revenue Growth Percentages falling between the
percentages set forth in the table above shall be determined by linear interpolation.

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               (n) “Three-Year Annual Revenue Compound Annual Growth Rate” means a percentage determined by
the following formula: [(FY09 Revenue/FY06 Revenue)^(1/3)] — 1, where, “FY09 Revenue” means the
Revenue of the Corporation for the fiscal year of the Corporation ending December 31, 2009 and
“FY06 Revenue” means the Revenue of the Corporation for the fiscal year of the Corporation ending
December 31, 2006.

          1.2 Construction. Captions and titles contained herein are for convenience only and shall not
affect the meaning or interpretation of any provision of this Agreement. Except when otherwise
indicated by the context, the singular shall include the plural and the plural shall include the
singular. Use of the term “or” is not intended to be exclusive, unless the context clearly
requires otherwise.

     2. Administration.

          All questions of interpretation concerning the Grant Notice, this Agreement and the Plan shall
be determined by the Plan Administrator. All determinations by the Plan Administrator shall be
final and binding upon all persons having an interest in the Award. Any officer of the Corporation
shall have the authority to act on behalf of the Corporation with respect to any matter, right,
obligation, or election which is the responsibility of or which is allocated to the Corporation
herein, provided that such officer has apparent authority with respect to such matter, right,
obligation, or election. If the Participant is a Covered Employee (as defined by the Plan),
compensation realized by the Participant pursuant to the Award is intended to constitute qualified
performance-based compensation within the meaning of Section 162(m) of the Code and the regulations
thereunder, and the provisions of this Agreement shall be construed and administered in a manner
consistent with this intent.

     3. The Award.

          3.1 Grant of Performance Shares. On the Grant Date, the Participant shall acquire, subject to
the provisions of this Agreement, a right to receive a number of Performance Shares which shall not
exceed the Maximum Number of Performance Shares set forth in the Grant Notice, subject to
adjustment as provided in Section 10. The number of Performance Shares, if any, ultimately earned
by the Participant, shall be that number of Performance Shares which become Vested Performance
Shares.

          3.2 No Monetary Payment Required. The Participant is not required to make any monetary
payment (other than applicable tax withholding, if any) as a condition to receiving the Performance
Shares or shares of Common Stock issued upon settlement of the Performance Shares, the
consideration for which shall be past services actually rendered and/or future services to be
rendered to the Corporation (or any Parent or Subsidiary) or for its benefit. Notwithstanding the
foregoing, if required by applicable state corporate law, the Participant shall furnish
consideration in the form of cash or past services rendered to the Corporation (or any Parent or
Subsidiary) or for its benefit having a value not less than the par value of the shares of Common
Stock issued upon settlement of the Performance Shares.

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     4. Certification of Plan Administrator.

          4.1 Level of Performance Measures Attained. As soon as practicable following completion of
the Performance Period, and in any event prior to the Vesting Date, the Plan Administrator shall
certify in writing the level of attainment of the Performance Measures during the Performance
Period and the resulting number of Performance Shares which shall become Vested Performance Shares
on the Vesting Date, subject to the Participant’s continued Service until the Vesting Date. The
Corporation shall promptly notify the Participant of the determination by the Plan Administrator.

          4.2 Adjustment to Performance Measures for Extraordinary Items. The Plan Administrator shall
adjust one or both of the Performance Measures, as it deems appropriate, to exclude the effect
(whether positive or negative) of any of the following occurring after the grant of the Award: (a)
a change in accounting standards required by generally accepted accounting principles, (b) a merger
with or acquisition of any other business entity or business assets, (c) restructurings,
discontinued operations, extraordinary items or other unusual or non-recurring charges, (d) an
event either not directly related to the operations of the Corporation or not within the reasonable
control of the Corporation’s management or (e) changes in applicable laws or regulations affecting
the Corporation. Each such adjustment, if any, shall be made solely for the purpose of providing a
consistent basis from period to period for the calculation of Performance Measures in order to
prevent the dilution or enlargement of the Participant’s rights with respect to the Award.

     5. Vesting of Performance Shares.

          5.1 In General. Except as provided by this Section and Section 9, the Performance Shares
shall vest and become Vested Performance Shares as provided in the Grant Notice and certified by
the Plan Administrator.

          5.2 Effect of Leave of Absence. Unless otherwise required by law, in event that the
Participant has taken in excess of thirty (30) days in unpaid leaves of absence during the
Performance Period, the number of Performance Shares determined to be Vested Performance Shares, if
any, shall be prorated on the basis of the number of days of the Participant’s Service during the
Performance Period during which the Participant was not on an unpaid leave of absence.

          5.3 Effect of Involuntary Termination of Service Following a Corporate Transaction. In the
event of the Involuntary Termination of Service of the Participant upon or within twelve (12)
months following a Corporate Transaction in which the Performance Shares are assumed, continued or
replaced by the Acquiror pursuant to Section 9 and prior to the Vesting Date, then a number of
Performance Shares equal to the product of the Target Number of Performance Shares, as adjusted
pursuant to Section 10 in connection with the Corporate Transaction, and the greater of (a) fifty
percent (50%) or (b) the percentage that the number of days elapsed from the commencement of the
Performance Period to the date of such Involuntary Termination bears to the total number of days
contained in the Performance Period shall be accelerated and shall be deemed Vested Performance
Shares effective as of the date of such termination of Service, and the Award shall be settled in
full in accordance with Section 7

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immediately upon the date of such termination of Service, which shall be deemed the Settlement
Date for this purpose. This Section 5.3 shall govern exclusively the vesting of the Award in the
event of a termination of the Participant’s Service upon or following a Corporate Transaction or
Change in Control.

     6. Termination of Service; Forfeiture of Unvested Performance Shares.

          Except as provided by Section 5.3 and Section 9, in the event that the Participant’s Service
terminates prior to the Vesting Date for any reason or no reason, with or without cause, the
Participant shall forfeit and the Corporation shall automatically reacquire all Performance Shares
subject to this Award. On the Vesting Date, the Participant shall forfeit and the Corporation
shall automatically reacquire all Performance Shares which have not become Vested Performance
Shares. The Participant shall not be entitled to any payment for such forfeited Performance
Shares.

     7. Settlement of the Award.

          7.1 Issuance of Shares of Common Stock. Subject to the provisions of Section 7.3 below, the
Corporation shall issue to the Participant on the Settlement Date with respect to each Vested
Performance Share one (1) share of Common Stock. Shares of Common Stock issued in settlement of
Performance Shares shall not be subject to any restriction on transfer other than any such
restriction as may be required pursuant to Section 7.3, Section 8 or the Corporation’s Insider
Trading Policy.

          7.2 Beneficial Ownership of Shares; Certificate Registration. The Participant hereby
authorizes the Corporation, in its sole discretion, to deposit for the benefit of the Participant
with any broker with which the Participant has an account relationship of which the Corporation has
notice any or all shares acquired by the Participant pursuant to the settlement of the Award.
Except as provided by the preceding sentence, a certificate for the shares as to which the Award is
settled shall be registered in the name of the Participant, or, if applicable, in the names of the
heirs of the Participant.

          7.3 Restrictions on Grant of the Award and Issuance of Shares. The grant of the Award and
issuance of shares of Common Stock upon settlement of the Award shall be subject to compliance with
all applicable requirements of federal, state law or foreign law with respect to such securities.
No shares of Common Stock may be issued hereunder if the issuance of such shares would constitute a
violation of any applicable federal, state or foreign securities laws or other law or regulations
or the requirements of any stock exchange or market system upon which the Common Stock may then be
listed. The inability of the Corporation to obtain from any regulatory body having jurisdiction
the authority, if any, deemed by the Corporation’s legal counsel to be necessary to the lawful
issuance of any shares subject to the Award shall relieve the Corporation of any liability in
respect of the failure to issue such shares as to which such requisite authority shall not have
been obtained. As a condition to the settlement of the Award, the Corporation may require the
Participant to satisfy any qualifications that may be necessary or appropriate, to evidence
compliance with any applicable law or regulation and to

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make any representation or warranty with respect thereto as may be requested by the
Corporation.

          7.4 Fractional Shares. The Corporation shall not be required to issue fractional shares upon
the settlement of the Award. Any fractional share resulting from the determination of the number
of Vested Performance Shares shall be rounded down to the nearest whole number.

     8. Tax Withholding.

          8.1 In General. At the time the Grant Notice is executed, or at any time thereafter as
requested by the Corporation, the Participant hereby authorizes withholding from payroll and any
other amounts payable to the Participant, and otherwise agrees to make adequate provision for, any
sums required to satisfy the federal, state, local and foreign tax withholding obligations of the
Corporation, if any, which arise in connection with the Award or the issuance of shares of Stock in
settlement thereof. The Corporation shall have no obligation to process the settlement of the
Award or to deliver shares until the tax withholding obligations as described in this Section have
been satisfied by the Participant.

          8.2 Withholding in Shares. Subject to applicable law, the Corporation shall require the
Participant to satisfy its tax withholding obligations by deducting from the shares of Common Stock
otherwise deliverable to the Participant in settlement of the Award a number of whole shares having
a fair market value, as determined by the Corporation as of the date on which the tax withholding
obligations arise, not in excess of the amount of such tax withholding obligations determined by
the applicable minimum statutory withholding rates.

     9. Corporate Transaction.

          9.1 Effect of Corporate Transaction on the Award. In the event of a Corporate Transaction,
the surviving, continuing, successor, or purchasing entity or parent thereof, as the case may be
(the “Acquiror”), may, without the consent of the Participant, either assume or continue the
Corporation’s rights and obligations with respect to the outstanding Performance Shares or
substitute for outstanding Performance Shares substantially equivalent rights with respect to the
Acquiror’s stock. For purposes of this Section, a Performance Share shall be deemed assumed if,
following the Corporate Transaction, the Performance Share confers the right to receive, subject to
the terms and conditions of the Plan and this Agreement, the consideration (whether stock, cash,
other securities or property or a combination thereof) to which a holder of a share of Common Stock
on the effective date of the Corporate Transaction was entitled; provided, however, that if such
consideration is not solely common stock of the Acquiror, the Board may, with the consent of the
Acquiror, provide for the consideration to be received upon settlement of the Performance Share to
consist solely of common stock of the Acquiror equal in Fair Market Value to the per share
consideration received by holders of Common Stock pursuant to the Corporate Transaction. In the
event the Acquiror elects not to assume, continue or substitute for the outstanding Performance
Shares in connection with a Corporate Transaction, the vesting of 100% of the Target Number of
Performance Shares shall be accelerated and shall be deemed Vested Performance Shares effective as
of the date of the Corporate Transaction, and the Award shall be settled in full in accordance with
Section 7

6

 

immediately prior to the Corporate Transaction, provided that the Participant’s Service has
not terminated prior to such date. The vesting of Performance Shares and settlement of the Award
that was permissible solely by reason of this Section shall be conditioned upon the consummation of
the Corporate Transaction.

          9.2 Federal Excise Tax Under Section 4999 of the Code.

               (a) Excess Parachute Payment. In the event that any acceleration of vesting the Performance
Shares and any other payment or benefit received or to be received by the Participant would subject
the Participant to any excise tax pursuant to Section 4999 of the Code due to the characterization
of such acceleration of vesting, payment or benefit as an “excess parachute payment” under Section
280G of the Code, the Participant may elect, in his or her sole discretion, to reduce the amount of
any acceleration of vesting called for by this Agreement in order to avoid such characterization.

               (b) Determination by Independent Accountants. To aid the Participant in making any election
called for under Section 9.2(a), no later than the date of the occurrence of any event that might
reasonably be anticipated to result in an “excess parachute payment” to the Participant as
described in Section 9.2(a), the Corporation shall request a determination in writing by
independent public accountants selected by the Corporation (the
“Accountants”). As soon as
practicable thereafter, the Accountants shall determine and report to the Corporation and the
Participant the amount of such acceleration of vesting, payments and benefits which would produce
the greatest after-tax benefit to the Participant. For the purposes of such determination, the
Accountants may rely on reasonable, good faith interpretations concerning the application of
Sections 280G and 4999 of the Code. The Corporation and the Participant shall furnish to the
Accountants such information and documents as the Accountants may reasonably request in order to
make their required determination. The Corporation shall bear all fees and expenses the
Accountants may reasonably charge in connection with their services contemplated by this Section
9.2(b).

     10. Adjustments for Changes in Capital Structure.

          Subject to any required action by the stockholders of the Corporation, in the event of any
change in the Common Stock effected without receipt of consideration by the Corporation, whether
through merger, consolidation, reorganization, reincorporation, recapitalization, reclassification,
stock dividend, stock split, reverse stock split, split-up, split-off, spin-off, combination of
shares, exchange of shares, or similar change in the capital structure of the Corporation,
appropriate adjustments shall be made in the number of Performance Shares subject to the Award
and/or the number and kind of shares to be issued in settlement of the Award, in order to prevent
dilution or enlargement of the Participant’s rights under the Award. For purposes of the
foregoing, conversion of any convertible securities of the Corporation shall not be treated as
“effected without receipt of consideration by the Corporation.” Any fractional share resulting
from an adjustment pursuant to this Section shall be rounded down to the nearest whole number.
Such adjustments shall be determined by the Plan Administrator, and its determination shall be
final, binding and conclusive.

     11. Rights as a Stockholder or Employee.

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          The Participant shall have no rights as a stockholder with respect to any shares which may be
issued in settlement of this Award until the date of the issuance of a certificate for such shares
(as evidenced by the appropriate entry on the books of the Corporation or of a duly authorized
transfer agent of the Corporation). No adjustment shall be made for dividends, distributions or
other rights for which the record date is prior to the date such certificate is issued, except as
provided in Section 10. If the Participant is an Employee, the Participant understands and
acknowledges that, except as otherwise provided in a separate, written employment agreement between
the Corporation or a Parent or Subsidiary and the Participant, the Participant’s employment is “at
will” and is for no specified term. Nothing in this Agreement shall confer upon the Participant
any right to continue in Service interfere in any way with any right of the Corporation or any
Parent or Subsidiary to terminate the Participant’s Service at any time.

     12. Legends.

          The Corporation may at any time place legends referencing any applicable federal, state or
foreign securities law restrictions on all certificates representing shares of Common Stock issued
pursuant to this Agreement. The Participant shall, at the request of the Corporation, promptly
present to the Corporation any and all certificates representing shares acquired pursuant to this
Award in the possession of the Participant in order to carry out the provisions of this Section.

     13. Miscellaneous Provisions.

          13.1 Termination or Amendment. The Plan Administrator may terminate or amend the Plan or this
Agreement at any time; provided, however, that except as provided in Section 9 in connection with a
Corporate Transaction, no such termination or amendment may adversely affect the Participant’s
rights under this Agreement without the consent of the Participant unless such termination or
amendment is necessary to comply with applicable law or government regulation, including, but not
limited to, Section 409A of the Code. No amendment or addition to this Agreement shall be
effective unless in writing.

          13.2 Nontransferability of the Award. Prior the issuance of shares of Common Stock on the
Settlement Date, neither this Award nor any Performance Shares subject to this Award shall be
subject in any manner to anticipation, alienation, sale, exchange, transfer, assignment, pledge,
encumbrance, or garnishment by creditors of the Participant or the Participant’s beneficiary,
except transfer by will or by the laws of descent and distribution. All rights with respect to the
Award shall be exercisable during the Participant’s lifetime only by the Participant or the
Participant’s guardian or legal representative.

          13.3 Unfunded Obligation. The Participant shall have the status of a general unsecured
creditor of the Corporation. Any amounts payable to the Participant pursuant to the Award shall be
an unfunded and unsecured obligation for all purposes, including, without limitation, Title I of
the Employee Retirement Income Security Act of 1974. The Corporation shall not be required to
segregate any monies from its general funds, or to create any trusts, or establish any special
accounts with respect to such obligations. The Corporation shall retain at all times beneficial
ownership of any investments, including trust investments, which the

8

 

Corporation may make to fulfill its payment obligations hereunder. Any investments or the
creation or maintenance of any trust or any Participant account shall not create or constitute a
trust or fiduciary relationship between the Plan Administrator or the Corporation and the
Participant, or otherwise create any vested or beneficial interest in the Participant or the
Participant’s creditors in any assets of the Corporation. The Participant shall have no claim
against the Corporation for any changes in the value of any assets which may be invested or
reinvested by the Corporation with respect to the Award.

          13.4 Further Instruments. The parties hereto agree to execute such further instruments and to
take such further action as may reasonably be necessary to carry out the intent of this Agreement.

          13.5 Binding Effect. This Agreement shall inure to the benefit of the successors and assigns
of the Corporation and, subject to the restrictions on transfer set forth herein, be binding upon
the Participant and the Participant’s heirs, executors, administrators, successors and assigns.

          13.6 Delivery of Documents and Notices. Any document relating to participation in the Plan or
any notice required or permitted hereunder shall be given in writing and shall be deemed
effectively given (except to the extent that this Agreement provides for effectiveness only upon
actual receipt of such notice) upon personal delivery, electronic delivery at the e-mail address,
if any, provided for the Participant by the Corporation or a Parent or Subsidiary, or upon deposit
in the U.S. Post Office or foreign postal service, by registered or certified mail, or with a
nationally recognized overnight courier service, with postage and fees prepaid, addressed to the
other party at the address shown below that party’s signature to the Grant Notice or at such other
address as such party may designate in writing from time to time to the other party.

               (a) Description of Electronic Delivery. The Plan documents, which may include but do not
necessarily include: the Plan, the Grant Notice, this Agreement, the Plan Prospectus, and any
reports of the Corporation provided generally to the Corporation’s stockholders, may be delivered
to the Participant electronically. In addition, the Participant may deliver electronically the
Grant Notice to the Corporation or to such third party involved in administering the Plan as the
Corporation may designate from time to time. Such means of electronic delivery may include but do
not necessarily include the delivery of a link to a Corporation intranet or the internet site of a
third party involved in administering the Plan, the delivery of the document via e-mail or such
other means of electronic delivery specified by the Corporation.

               (b) Consent to Electronic Delivery. The Participant acknowledges that the Participant has
read Section 13.6(a) of this Agreement and consents to the electronic delivery of the Plan
documents and Grant Notice, as described in Section 13.6(a). The Participant acknowledges that he
or she may receive from the Corporation a paper copy of any documents delivered electronically at
no cost to the Participant by contacting the Corporation by telephone or in writing. The
Participant further acknowledges that the Participant will be provided with a paper copy of any
documents if the attempted electronic delivery of such documents fails. Similarly, the Participant
understands that the Participant must provide the

9

 

Corporation or any designated third party administrator with a paper copy of any documents if
the attempted electronic delivery of such documents fails. The Participant may revoke his or her
consent to the electronic delivery of documents described in Section 13.6(a) or may change the
electronic mail address to which such documents are to be delivered (if Participant has provided an
electronic mail address) at any time by notifying the Corporation of such revoked consent or
revised e-mail address by telephone, postal service or electronic mail. Finally, the Participant
understands that he or she is not required to consent to electronic delivery of documents described
in Section 13.6(a).

          13.7 Integrated Agreement. The Grant Notice, this Agreement and the Plan shall constitute the
entire understanding and agreement of the Participant and the Corporation with respect to the
subject matter contained herein or therein and supersedes any prior agreements, understandings,
restrictions, representations, or warranties between the Participant and the Corporation with
respect to such subject matter other than those as set forth or provided for herein or therein. To
the extent contemplated herein or therein, the provisions of the Grant Notice and the Agreement
shall survive any settlement of the Award and shall remain in full force and effect.

          13.8 Applicable Law. This Agreement shall be governed by the laws of the State of California
as such laws are applied to agreements between California residents entered into and to be
performed entirely within the State of California.

          13.9 Counterparts. The Grant Notice may be executed in counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same instrument.

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