Document:

exv10w63

 

Exhibit 10.63

Solexa, Inc.

2005 Equity Incentive
Plan

Adopted: June 3,
2005

Approved By
Stockholders:                     ,
2005

Termination Date:
June 2, 2015

			
	 	1.     	
    Purposes.
    

     
(a) Eligible Stock Award Recipients. The persons
eligible to receive Stock Awards are Employees, Directors and
Consultants.

     
(b) Available Stock Awards. The Plan provides for
the grant of the following Stock Awards: (i) Incentive
Stock Options, (ii) Nonstatutory Stock Options,
(iii) Stock Purchase Awards, (iv) Stock Bonus Awards,
(v) Stock Appreciation Rights, (vi) Stock Unit Awards
and (vii) Other Stock Awards.

     
(c) General Purpose. The Company, by means of the
Plan, seeks to secure and retain the services of the group of
persons eligible to receive Stock Awards, to provide incentives
for such persons to exert maximum efforts for the success of the
Company and its Affiliates and to provide a means by which such
eligible recipients may be given an opportunity to benefit from
increases in value of the Common Stock through the granting of
Stock Awards.

     
2.     Definitions.

     
(a) “Affiliate” means any parent
corporation or subsidiary corporation of the Company, as of the
day of determination, as those terms are defined in
Sections 424(e) and (f), respectively, of the Code.

     
(b) “Board” means the Board of
Directors of the Company.

     
(c) “Capitalization Adjustment” has
the meaning ascribed to that term in Section 11(a).

     
(d) “Change in Control” means the
occurrence, in a single transaction or in a series of related
transactions, of any one or more of the following events:

		
	 	     
    (i) any Exchange Act Person becomes the Owner,
    directly or indirectly, of securities of the Company
    representing more than fifty percent (50%) of the combined
    voting power of the Company’s then outstanding securities
    other than by virtue of a merger, consolidation or similar
    transaction. Notwithstanding the foregoing, a Change in Control
    shall not be deemed to occur (A) on account of the
    acquisition of securities of the Company by an investor, any
    affiliate thereof or any other Exchange Act Person from the
    Company in a transaction or series of related transactions the
    primary purpose of which is to obtain financing for the Company
    through the issuance of equity securities, or (B) solely
    because the level of Ownership held by any Exchange Act Person
    (the “Subject Person”) exceeds the designated
    percentage threshold of the outstanding voting securities as a
    result of a repurchase or other acquisition of voting securities
    by the Company reducing the number of shares outstanding,
    provided that if a Change in Control would occur (but for the
    operation of this sentence) as a result of the acquisition of
    voting securities by the Company, and after such share
    acquisition, the Subject Person becomes the Owner of any
    additional voting securities that, assuming the repurchase or
    other acquisition had not occurred, increases the percentage of
    the then outstanding voting securities Owned by the Subject
    Person over the designated percentage threshold, then a Change
    in Control shall be deemed to occur;
	 
	 	     
    (ii) there is consummated a merger, consolidation or
    similar transaction involving (directly or indirectly) the
    Company and, immediately after the consummation of such merger,
    consolidation or similar transaction, the stockholders of the
    Company immediately prior thereto do not Own, directly or
    indirectly, either (A) outstanding voting securities
    representing more than fifty percent (50%) of the combined
    outstanding voting power of the surviving Entity in such merger,
    consolidation or similar transaction or (B) more than fifty
    percent (50%) of the combined outstanding voting power of the
    parent

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    of the surviving Entity in such merger, consolidation or similar
    transaction, in each case in substantially the same proportions
    as their Ownership of the outstanding voting securities of the
    Company immediately prior to such transaction;
	 
	 	     
    (iii) the stockholders of the Company approve or the
    Board approves a plan of complete dissolution or liquidation of
    the Company, or a complete dissolution or liquidation of the
    Company shall otherwise occur; or
	 
	 	     
    (iv) there is consummated a sale, lease, license or
    other disposition of all or substantially all of the
    consolidated assets of the Company and its Subsidiaries, other
    than a sale, lease, license or other disposition of all or
    substantially all of the consolidated assets of the Company and
    its Subsidiaries to an Entity, more than fifty percent (50%) of
    the combined voting power of the voting securities of which are
    Owned by stockholders of the Company in substantially the same
    proportions as their Ownership of the outstanding voting
    securities of the Company immediately prior to such sale, lease,
    license or other disposition.

     
The term Change in Control shall not include a sale of assets,
merger or other transaction effected exclusively for the purpose
of changing the domicile of the Company.

     
Notwithstanding the foregoing or any other provision of this
Plan, the definition of Change in Control (or any analogous
term) in an individual written agreement between the Company or
any Affiliate and the Participant shall supersede the foregoing
definition with respect to Stock Awards subject to such
agreement (it being understood, however, that if no definition
of Change in Control or any analogous term is set forth in such
an individual written agreement, the foregoing definition shall
apply).

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

     
(f) “Committee” means a committee
of one (1) or more members of the Board appointed by the
Board in accordance with Section 3(c).

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

     
(h) “Company” means Solexa, Inc., a
Delaware corporation.

     
(i) “Consultant” means any person,
including an advisor, who (i) is engaged by the Company or
an Affiliate to render consulting or advisory services and is
compensated for such services or (ii) is serving as a
member of the Board of Directors of an Affiliate and is
compensated for such services. However, service solely as a
Director, or payment of a fee for such service, shall not cause
a Director to be considered a “Consultant” for
purposes of the Plan.

     
(j) “Continuous Service” means that
the Participant’s service with the Company or an Affiliate,
whether as an Employee, Director or Consultant, is not
interrupted or terminated. A change in the capacity in which the
Participant renders service to the Company or an Affiliate as an
Employee, Consultant or Director or a change in the entity for
which the Participant renders such service, provided that there
is no interruption or termination of the Participant’s
service with the Company or an Affiliate, shall not terminate a
Participant’s Continuous Service. For example, a change in
status from an employee of the Company to a consultant of an
Affiliate or to a Director shall not constitute an interruption
of Continuous Service. The Board or the chief executive officer
of the Company, in that party’s sole discretion, may
determine whether Continuous Service shall be considered
interrupted in the case of any leave of absence approved by that
party, including sick leave, military leave or any other
personal leave. Notwithstanding the foregoing, a leave of
absence shall be treated as Continuous Service for purposes of
vesting in a Stock Award only to such extent as may be provided
in the Company’s leave of absence policy or in the written
terms of the Participant’s leave of absence.

     
(k) “Corporate Transaction” means
the occurrence, in a single transaction or in a series of
related transactions, of any one or more of the following events:

		
	 	     
    (i) a sale or other disposition of all or
    substantially all, as determined by the Board in its sole
    discretion, of the consolidated assets of the Company and its
    Subsidiaries;

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    (ii) a sale or other disposition of at least fifty
    percent (50%) of the outstanding securities of the Company;
	 
	 	     
    (iii) a merger, consolidation or similar transaction
    following which the Company is not the surviving
    corporation; or
	 
	 	     
    (iv) a merger, consolidation or similar transaction
    following which the Company is the surviving corporation but the
    shares of Common Stock outstanding immediately preceding the
    merger, consolidation or similar transaction are converted or
    exchanged by virtue of the merger, consolidation or similar
    transaction into other property, whether in the form of
    securities, cash or otherwise.

     
(l) “Covered Employee” means the
chief executive officer and the four (4) other highest
compensated officers of the Company for whom total compensation
is required to be reported to stockholders under the Exchange
Act, as determined for purposes of Section 162(m) of the
Code.

     
(m) “Director” means a member of
the Board.

     
(n) “Disability” means the
permanent and total disability of a person within the meaning of
Section 22(e)(3) of the Code.

     
(o) “Employee” means any person
employed by the Company or an Affiliate. However, service solely
as a Director, or payment of a fee for such service, shall not
cause a Director to be considered an “Employee” for
purposes of the Plan.

     
(p) “Entity” means a corporation,
partnership or other entity.

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

     
(r) “Exchange Act Person” means any
natural person, Entity or “group” (within the meaning
of Section 13(d) or 14(d) of the Exchange Act), except that
“Exchange Act Person” shall not include (i) the
Company or any Subsidiary of the Company, (ii) any employee
benefit plan of the Company or any Subsidiary of the Company or
any trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any Subsidiary of the
Company, (iii) an underwriter temporarily holding
securities pursuant to an offering of such securities, or
(iv) an Entity Owned, directly or indirectly, by the
stockholders of the Company in substantially the same
proportions as their Ownership of stock of the Company; or
(v) any natural person, Entity or “group” (within
the meaning of Section 13(d) or 14(d) of the Exchange Act)
that, as of the effective date of the Plan as set forth in
Section 14, is the Owner, directly or indirectly, of
securities of the Company representing more than fifty percent
(50%) of the combined voting power of the Company’s then
outstanding securities.

     
(s) “Fair Market Value” means, as
of any date, the value of the Common Stock determined as follows
and, if applicable, in a manner consistent with
Section 260.140.50 of Title 10 of the California Code
of Regulations:

		
	 	     
    (i) If the Common Stock is listed on any established
    stock exchange or traded on the Nasdaq National Market, the
    Nasdaq SmallCap Market or over-the-counter market, the Fair
    Market Value of a share of Common Stock shall be the closing
    sales price for such stock (or the closing bid, if no sales were
    reported) as quoted on such exchange or market (or the exchange
    or market with the greatest volume of trading in the Common
    Stock) on the last market trading day prior to the day of
    determination, as reported in The Wall Street Journal or
    such other source as the Board deems reliable.
	 
	 	     
    (ii) In the absence of such markets for the Common
    Stock, the Fair Market Value shall be determined by the Board in
    good faith.

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

     
(u) “Non-Employee Director” means a
Director who either (i) is not a current employee or
officer of the Company or an Affiliate, does not receive
compensation, either directly or indirectly, from the Company or
an Affiliate for services rendered as a consultant or in any
capacity other than as a Director (except for an

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amount as to which disclosure would not be required under
Item 404(a) of Regulation S-K promulgated pursuant to
the Securities Act (“Regulation S-K”)), does not
possess an interest in any other transaction for which
disclosure would be required under Item 404(a) of
Regulation S-K, and is not engaged in a business
relationship for which disclosure would be required pursuant to
Item 404(b) of Regulation S-K; or (ii) is
otherwise considered a “non-employee director” for
purposes of Rule 16b-3.

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

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

     
(x) “Option” means a stock option
to purchase shares of Common Stock granted pursuant to the Plan.

     
(y) “Option Agreement” means a
written agreement between the Company and an Optionholder
evidencing the terms and conditions of an Option grant. Each
Option Agreement shall be subject to the terms and conditions of
the Plan.

     
(z) “Optionholder” means a person
to whom an Option is granted pursuant to the Plan or, if
applicable, such other person who holds an outstanding Option.

     
(aa) “Other Stock Award” means an
award based in whole or in part by reference to the Common Stock
which is granted pursuant to the terms and conditions of
Section 7(e).

     
(bb) “Other Stock Award Agreement”
means a written agreement between the Company and a
holder of an Other Stock Award evidencing the terms and
conditions of an Other Stock Award grant. Each Other Stock Award
Agreement shall be subject to the terms and conditions of the
Plan.

     
(cc) “Outside Director” means a
Director who either (i) is not a current employee of the
Company or an “affiliated corporation” (within the
meaning of Treasury Regulations promulgated under
Section 162(m) of the Code), is not a former employee of
the Company or an “affiliated corporation” who
receives compensation for prior services (other than benefits
under a tax-qualified retirement plan) during the taxable year,
has not been an officer of the Company or an “affiliated
corporation,” and does not receive remuneration from the
Company or an “affiliated corporation,” either
directly or indirectly, in any capacity other than as a Director
or (ii) is otherwise considered an “outside
director” for purposes of Section 162(m) of the Code.

     
(dd) “Own,” “Owned,”
“Owner,” “Ownership” A person or
Entity shall be deemed to “Own,” to have
“Owned,” to be the “Owner” of, or to have
acquired “Ownership” of securities if such person or
Entity, directly or indirectly, through any contract,
arrangement, understanding, relationship or otherwise, has or
shares voting power, which includes the power to vote or to
direct the voting, with respect to such securities.

     
(ee) “Participant” means a person
to whom a Stock Award is granted pursuant to the Plan or, if
applicable, such other person who holds an outstanding Stock
Award.

     
(ff) “Plan” means this Solexa, Inc.
2005 Equity Incentive Plan.

     
(gg) “Rule 16b-3” means
Rule 16b-3 promulgated under the Exchange Act or any
successor to Rule 16b-3, as in effect from time to time.

     
(hh) “Securities Act” means the
Securities Act of 1933, as amended.

     
(ii) “Stock Appreciation Right”
means a right to receive the appreciation on Common
Stock that is granted pursuant to the terms and conditions of
Section 7(d).

     
(jj) “Stock Appreciation Right Agreement”
means a written agreement between the Company and a
holder of a Stock Appreciation Right evidencing the terms and
conditions of a Stock Appreciation Right grant. Each Stock
Appreciation Right Agreement shall be subject to the terms and
conditions of the Plan.

     
(kk) “Stock Award” means any right
granted under the Plan, including an Option, a Stock Purchase
Award, Stock Bonus Award, a Stock Appreciation Right, a Stock
Unit Award or any Other Stock Award.

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(ll) “Stock Award Agreement” means
a written agreement between the Company and a Participant
evidencing the terms and conditions of a Stock Award grant. Each
Stock Award Agreement shall be subject to the terms and
conditions of the Plan.

     
(mm) “Stock Bonus Award” means an
award of shares of Common Stock which is granted pursuant to the
terms and conditions of Section 7(b).

     
(nn) “Stock Bonus Award Agreement”
means a written agreement between the Company and a
holder of a Stock Bonus Award evidencing the terms and
conditions of a Stock Bonus Award grant. Each Stock Bonus Award
Agreement shall be subject to the terms and conditions of the
Plan.

     
(oo) “Stock Purchase Award” means
an award of shares of Common Stock which is granted pursuant to
the terms and conditions of Section 7(a).

     
(pp) “Stock Purchase Award Agreement”
means a written agreement between the Company and a
holder of a Stock Purchase Award evidencing the terms and
conditions of a Stock Purchase Award grant. Each Stock Purchase
Award Agreement shall be subject to the terms and conditions of
the Plan.

     
(qq) “Stock Unit Award” means a
right to receive shares of Common Stock which is granted
pursuant to the terms and conditions of Section 7(c).

     
(rr) “Stock Unit Award Agreement”
means a written agreement between the Company and a
holder of a Stock Unit Award evidencing the terms and conditions
of a Stock Unit Award grant. Each Stock Unit Award Agreement
shall be subject to the terms and conditions of the Plan.

     
(ss) “Subsidiary” means, with
respect to the Company, (i) any corporation of which more
than fifty percent (50%) of the outstanding capital stock having
ordinary voting power to elect a majority of the board of
directors of such corporation (irrespective of whether, at the
time, stock of any other class or classes of such corporation
shall have or might have voting power by reason of the happening
of any contingency) is at the time, directly or indirectly,
Owned by the Company, and (ii) any partnership in which the
Company has a direct or indirect interest (whether in the form
of voting or participation in profits or capital contribution)
of more than fifty percent (50%).

     
(tt) “Ten Percent Stockholder”
means a person who Owns (or is deemed to Own pursuant to
Section 424(d) of the Code) stock possessing more than ten
percent (10%) of the total combined voting power of all classes
of stock of the Company or of any of its Affiliates.

     
3.     Administration.

     
(a) Administration by Board. The Board shall
administer the Plan unless and until the Board delegates
administration of the Plan to a Committee, as provided in
Section 3(c).

     
(b) Powers of Board. The Board shall have the power,
subject to, and within the limitations of, the express
provisions of the Plan:

		
	 	     
    (i) To determine from time to time which of the
    persons eligible under the Plan shall be granted Stock Awards;
    when and how each Stock Award shall be granted; what type or
    combination of types of Stock Award shall be granted; the
    provisions of each Stock Award granted (which need not be
    identical), including the time or times when a person shall be
    permitted to receive Common Stock pursuant to a Stock Award; and
    the number of shares of Common Stock with respect to which a
    Stock Award shall be granted to each such person.
	 
	 	     
    (ii) To construe and interpret the Plan and Stock
    Awards granted under it, and to establish, amend and revoke
    rules and regulations for its administration. The Board, in the
    exercise of this power, may correct any defect, omission or
    inconsistency in the Plan or in any Stock Award Agreement, in a
    manner and to the extent it shall deem necessary or expedient to
    make the Plan fully effective.
	 
	 	     
    (iii) To amend the Plan or a Stock Award as provided
    in Section 12.
	 
	 	     
    (iv) To terminate or suspend the Plan as provided in
    Section 13.

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    (v) Generally, to exercise such powers and to
    perform such acts as the Board deems necessary or expedient to
    promote the best interests of the Company and that are not in
    conflict with the provisions of the Plan.
	 
	 	     
    (vi) To adopt such procedures and sub-plans as are
    necessary or appropriate to permit participation in the Plan by
    Employees who are foreign nationals or employed outside the
    United States.

     
(c) Delegation to Committee.

		
	 	     
    (i) General. The Board may delegate some or all of
    the administration of the Plan to a Committee or Committees of
    one (1) or more members of the Board, and the term
    “Committee” shall apply to any person or
    persons to whom such authority has been delegated. If
    administration is delegated to a Committee, the Committee shall
    have, in connection with the administration of the Plan, the
    powers theretofore possessed by the Board that have been
    delegated to the Committee, including the power to delegate to a
    subcommittee any of the administrative powers the Committee is
    authorized to exercise (and references in this Plan to the Board
    shall thereafter be to the Committee or subcommittee), subject,
    however, to such resolutions, not inconsistent with the
    provisions of the Plan, as may be adopted from time to time by
    the Board. The Board may retain the authority to concurrently
    administer the Plan with the Committee and may, at any time,
    revest in the Board some or all of the powers previously
    delegated.
	 
	 	     
    (ii) Section 162(m) and Rule 16b-3
    Compliance. In the sole discretion of the Board, the
    Committee may consist solely of two or more Outside Directors,
    in accordance with Section 162(m) of the Code, and/or
    solely of two or more Non-Employee Directors, in accordance with
    Rule 16b-3. In addition, the Board or the Committee, in its
    sole discretion, may (1) delegate to a committee of one or
    more members of the Board who need not be Outside Directors the
    authority to grant Stock Awards to eligible persons who are
    either (a) not then Covered Employees and are not expected
    to be Covered Employees at the time of recognition of income
    resulting from such Stock Award, or (b) not persons with
    respect to whom the Company wishes to comply with
    Section 162(m) of the Code, and/or (2) delegate to a
    committee of one or more members of the Board who need not be
    Non-Employee Directors the authority to grant Stock Awards to
    eligible persons who are not then subject to Section 16 of
    the Exchange Act.

     
(d) Delegation to an Officer. The Board may delegate
to one or more Officers of the Company the authority to do one
or both of the following (i) designate Officers and
Employees of the Company or any of its Subsidiaries to be
recipients of Stock Awards and (ii) determine the number of
shares of Common Stock to be subject to such Stock Awards
granted to such Officers and Employees of the Company;
provided, however, that the Board resolutions regarding
such delegation shall specify the total number of shares of
Common Stock that may be subject to the Stock Awards granted by
such Officer and that such Officer may not grant a Stock Award
to himself or herself. Notwithstanding anything to the contrary
in this Section 3(d), the Board may not delegate to an
Officer authority to determine the Fair Market Value of the
Common Stock pursuant to Section 2(s)(ii) above.

     
(e) Effect of Board’s Decision. All
determinations, interpretations and constructions made by the
Board in good faith shall not be subject to review by any person
and shall be final, binding and conclusive on all persons.

     
4.     Shares
Subject to the Plan.

     
(a) Initial Share Reserve. Subject to the provisions
of Section 11(a) relating to Capitalization Adjustments,
the Common Stock that may be issued pursuant to Stock Awards
shall not exceed in the aggregate one million nine hundred
seventy-eight thousand seven hundred sixty-seven (1,978,767)
shares of Common Stock (which includes a total of one hundred
seventy-eight thousand seven hundred sixty-seven (178,767)
shares of Common Stock that were previously held in reserve
under the Lynx Therapeutics, Inc. 1992 Stock Option Plan, but
which were unused, and which have been transferred to this
Plan). Additionally, if any outstanding stock options granted
under the Lynx Therapeutics, Inc. 1992 Stock Option Plan shall
for any reason expire or otherwise terminate, in whole or in
part, without having been exercised in full, the shares of
Common Stock that are not acquired under any such stock options
shall revert to, and become available for

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issuance under this Plan. The maximum aggregate number of
additional shares of Common Stock that may revert to this Plan
under this provision is one million one hundred seventy-one
thousand seven hundred thirty-seven (1,171,737) shares.

     
(b) Reversion of Shares to the Share Reserve. If any
Stock Award under this Plan shall for any reason expire or
otherwise terminate, in whole or in part, without having been
exercised in full, or if any shares of Common Stock issued to a
Participant pursuant to a Stock Award are forfeited to or
repurchased by the Company, including, but not limited to, any
repurchase or forfeiture caused by the failure to meet a
contingency or condition required for the vesting of such
shares, then the shares of Common Stock not issued under such
Stock Award, or forfeited to or repurchased by the Company,
shall revert to and again become available for issuance under
the Plan. If any shares subject to a Stock Award are not
delivered to a Participant because such shares are withheld for
the payment of taxes or the Stock Award is exercised through a
reduction of shares subject to the Stock Award (i.e.,
“net exercised”), the number of shares that are not
delivered to the Participant shall remain available for issuance
under the Plan. If the exercise price of any Stock Award is
satisfied by tendering shares of Common Stock held by the
Participant (either by actual delivery or attestation), then the
number of shares so tendered shall remain available for issuance
under the Plan. Notwithstanding anything to the contrary in this
Section 4(b), subject to the provisions of
Section 11(a) relating to Capitalization Adjustments, the
aggregate maximum number of shares of Common Stock that may be
issued pursuant to the exercise of Incentive Stock Options shall
be three million one hundred fifty thousand five hundred four
(3,150,504) shares of Common Stock (which includes a total of
one million one hundred seventy-one thousand seven hundred
thirty-seven (1,171,737) shares of Common Stock that may revert
to this Plan under Section 4(a)).

     
(c) Source of Shares. The shares of Common Stock
subject to the Plan may be unissued shares or reacquired shares,
bought on the market or otherwise.

     
(d) Share Reserve Limitation. Notwithstanding
Section 4(a), to the extent required by
Section 260.140.45 of Title 10 of the California Code
of Regulations, the total number of shares of Common Stock
issuable upon exercise of all outstanding Options and the total
number of shares of Common Stock provided for under any stock
bonus or similar plan of the Company shall not exceed the
applicable percentage as calculated in accordance with the
conditions and exclusions of Section 260.140.45 of
Title 10 of the California Code of Regulations, based on
the shares of Common Stock of the Company that are outstanding
at the time the calculation is made.

     
5.     Eligibility.

     
(a) Eligibility for Specific Stock Awards. Incentive
Stock Options may be granted only to Employees. Stock Awards
other than Incentive Stock Options may be granted to Employees,
Directors and Consultants.

     
(b) Ten Percent Stockholders.

		
	 	     
    (i) A Ten Percent Stockholder shall not be granted
    an Incentive Stock Option unless the exercise price of such
    Option is at least one hundred ten percent (110%) of the Fair
    Market Value of the Common Stock on the date of grant and the
    Option is not exercisable after the expiration of five
    (5) years from the date of grant.
	 
	 	     
    (ii) To the extent Section 260.140.41 of
    Title 10 of the California Code of Regulations is
    applicable, a Ten Percent Stockholder shall not be granted a
    Nonstatutory Stock Option unless the exercise price of the
    Option is at least (a) one hundred ten percent (110%) of
    the Fair Market Value of the Common Stock on the date of grant,
    or (b) such lower percentage of the Fair Market Value of
    the Common Stock on the date of grant as is permitted by Section
    260.140.41 of Title 10 of the California Code of
    Regulations at the time of the grant of the Option.
	 
	 	     
    (iii) To the extent Section 260.140.42 of
    Title 10 of the California Code of Regulations is
    applicable, a Ten Percent Stockholder shall not be granted a
    Stock Purchase Award, Stock Appreciation Right (if such award
    could be settled in shares of Common Stock), or a Stock Unit
    Award (if such award could be settled in shares of Common
    Stock), unless the purchase price of the stock is at least

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    (i) one hundred percent (100%) of the Fair Market Value of
    the Common Stock on the date of grant, or (ii) such lower
    percentage of the Fair Market Value of the Common Stock on the
    date of grant as is permitted by Section 260.140.42 of
    Title 10 of the California Code of Regulations at the time
    of the grant of the award.

     
(c) Section 162(m) Limitation on Annual Grants.
Subject to the provisions of Section 11(a) relating to
Capitalization Adjustments, no Employee shall be eligible to be
granted Options or Stock Appreciation Rights covering more than
one million five hundred thousand (1,500,000) shares of Common
Stock during any calendar year.

     
(d) Consultants. A Consultant shall not be eligible
for the grant of a Stock Award if, at the time of grant, a
Form S-8 Registration Statement under the Securities Act
(“Form S-8”) is not available to
register either the offer or the sale of the Company’s
securities to such Consultant because of the nature of the
services that the Consultant is providing to the Company,
because the Consultant is not a natural person, or because of
any other rule governing the use of Form S-8.

     
6.     Option
Provisions.

     
Each Option shall be in such form and shall contain such terms
and conditions as the Board shall deem appropriate. All Options
shall be separately designated Incentive Stock Options or
Nonstatutory Stock Options at the time of grant, and, if
certificates are issued, a separate certificate or certificates
shall be issued for shares of Common Stock purchased on exercise
of each type of Option. The provisions of separate Options need
not be identical, provided, however, that each Option
Agreement shall include (through incorporation of provisions
hereof by reference in the Option or otherwise) the substance of
each of the following provisions:

     
(a) Term. The Board shall determine the term of an
Option; provided, however, that subject to the provisions
of Section 5(b) regarding Ten Percent Stockholders, no
Incentive Stock Option shall be exercisable after the expiration
of ten (10) years from the date on which it was granted.

     
(b) Exercise Price of an Incentive Stock Option.
Subject to the provisions of Section 5(b) regarding Ten
Percent Stockholders, the exercise price of each Incentive Stock
Option shall be not less than one hundred percent (100%) of the
Fair Market Value of the Common Stock subject to the Option on
the date the Option is granted. Notwithstanding the foregoing,
an Incentive Stock Option may be granted with an exercise price
lower than that set forth in the preceding sentence if such
Option is granted pursuant to an assumption or substitution for
another option in a manner satisfying the provisions of
Section 424(a) of the Code.

     
(c) Exercise Price of a Nonstatutory Stock Option.
Subject to the provisions of Section 5(b) regarding Ten
Percent Stockholders, the exercise price of each Nonstatutory
Stock Option shall be not less than one hundred percent (100%)
of the Fair Market Value of the Common Stock subject to the
Option on the date the Option is granted. Notwithstanding the
foregoing, a Nonstatutory Stock Option may be granted with an
exercise price lower than that set forth in the preceding
sentence if such Option is granted pursuant to an assumption or
substitution for another option in a manner consistent with the
provisions of Section 424(a) of the Code.

     
(d) Consideration. The purchase price of Common
Stock acquired pursuant to an Option shall be paid, to the
extent permitted by applicable statutes and regulations, either
(i) in cash at the time the Option is exercised or
(ii) at the sole discretion of the Board at the time of the
grant of the Option (or subsequently in the case of a
Nonstatutory Stock Option) (1) by delivery to the Company
(either by actual delivery or attestation) of other Common Stock
at the time the Option is exercised, (2) by a “net
exercise” of the Option (as further described below),
(3) pursuant to a program developed under Regulation T
as promulgated by the Federal Reserve Board that, prior to the
issuance of Common Stock, results in either the receipt of cash
(or check) by the Company or the receipt of irrevocable
instructions to pay the aggregate exercise price to the Company
from the sales proceeds, or (4) in any other form of legal
consideration that may be acceptable to the Board. Unless
otherwise specifically provided in the Option, the purchase
price of Common Stock acquired pursuant to an Option that is
paid by delivery to the Company of other Common Stock acquired,
directly or indirectly from the Company, shall be paid only by
shares of the Common Stock of the Company

8

 

that have been held for more than six (6) months (or such
longer or shorter period of time required to avoid a charge to
earnings for financial accounting purposes). At any time that
the Company is incorporated in Delaware, payment of the Common
Stock’s “par value,” as defined in the Delaware
General Corporation Law, shall not be made by deferred payment.

     
In the case of a “net exercise” of an Option, the
Company will not require a payment of the exercise price of the
Option from the Participant but will reduce the number of shares
of Common Stock issued upon the exercise by the largest number
of whole shares that has a Fair Market Value that does not
exceed the aggregate exercise price. With respect to any
remaining balance of the aggregate exercise price, the Company
shall accept a cash payment from the Participant. Shares of
Common Stock will no longer be outstanding under an Option (and
will therefore not thereafter be exercisable) following the
exercise of such Option to the extent of (i) shares used to
pay the exercise price of an Option under the “net
exercise,” (ii) shares actually delivered to the
Participant as a result of such exercise and (iii) shares
withheld for purposes of tax withholding.

     
(e) Transferability of an Incentive Stock Option. An
Incentive Stock Option shall not be transferable except by will
or by the laws of descent and distribution and shall be
exercisable during the lifetime of the Optionholder only by the
Optionholder. Notwithstanding the foregoing, the Optionholder
may, by delivering written notice to the Company, in a form
provided by or otherwise satisfactory to the Company, designate
a third party who, in the event of the death of the
Optionholder, shall thereafter be entitled to exercise the
Option.

     
(f) Transferability of a Nonstatutory Stock Option.
A Nonstatutory Stock Option shall be transferable pursuant to a
domestic relations order and to such further extent provided in
the Option Agreement; provided, however, if the
Nonstatutory Stock Option does not provide for transferability,
then the Nonstatutory Stock Option shall not be transferable
except by will or by the laws of descent and distribution and
shall be exercisable during the lifetime of the Optionholder
only by the Optionholder. Notwithstanding the foregoing, the
Optionholder may, by delivering written notice to the Company,
in a form provided by or otherwise satisfactory to the Company,
designate a third party who, in the event of the death of the
Optionholder, shall thereafter be entitled to exercise the
Option. Notwithstanding the above, to the extent
Section 260.140.41(d) of Title 10 of the California
Code of Regulations is applicable at the time of grant of the
Nonstatutory Stock Option, the Option shall not be transferable
except by will or by the laws of descent and distribution or as
otherwise permitted by Section 260.141.41(d) and shall be
exercisable during the lifetime of the Optionholder only by the
Optionholder.

     
(g) Vesting Generally. The total number of shares of
Common Stock subject to an Option may vest and therefore become
exercisable in periodic installments that may be equal. The
Option may be subject to such other terms and conditions on the
time or times when it may be exercised (which may be based on
performance or other criteria) as the Board may deem
appropriate. The vesting provisions of individual Options may
vary. The provisions of this Section 6(g) are subject to
any Option provisions governing the minimum number of shares of
Common Stock as to which an Option may be exercised.

     
(h) Minimum Vesting. Notwithstanding the foregoing
Section 6(g), to the extent that the following restrictions
on vesting are required by Section 260.140.41(f) of
Title 10 of the California Code of Regulations at the time
of the grant of the Option, then:

		
	 	     
    (i) Options granted to an Employee who is not an
    Officer, Director or Consultant shall provide for vesting of the
    total number of shares of Common Stock at a rate of at least
    twenty percent (20%) per year over five (5) years from the
    date the Option was granted, subject to reasonable conditions
    such as continued employment; and
	 
	 	     
    (ii) Options granted to Officers, Directors or
    Consultants may be made fully exercisable, subject to reasonable
    conditions such as continued employment, at any time or during
    any period established by the Company.

     
(i) Termination of Continuous Service. In the event
that an Optionholder’s Continuous Service terminates (other
than upon the Optionholder’s death or Disability), the
Optionholder may exercise his or her

9

 

Option (to the extent that the Optionholder was entitled to
exercise such Option as of the date of termination of Continuous
Service) but only within such period of time ending on the
earlier of (i) the expiration of the term of the Option as
set forth in the Option Agreement, or (ii) the date three
(3) months following the termination of the
Optionholder’s Continuous Service (or such longer or
shorter period specified in the Option Agreement, which period
shall not be less than thirty (30) days in the case of an
Option subject to Section 260.140.41(g) of Title 10 of
the California Code of Regulations, unless such termination is
for cause). If, after termination of Continuous Service, the
Optionholder does not exercise his or her Option within the time
specified herein or in the Option Agreement (as applicable), the
Option shall terminate.

     
(j) Extension of Termination Date. An
Optionholder’s Option Agreement may provide that if the
exercise of the Option following the termination of the
Optionholder’s Continuous Service (other than upon the
Optionholder’s death or Disability) would be prohibited at
any time solely because the issuance of shares of Common Stock
would violate the registration requirements under the Securities
Act, then the Option shall terminate on the earlier of
(i) the expiration of the term of the Option set forth in
the Option Agreement or (ii) the expiration of a period of
three (3) months after the termination of the
Optionholder’s Continuous Service during which the exercise
of the Option would not be in violation of such registration
requirements.

     
(k) Disability of Optionholder. In the event that an
Optionholder’s Continuous Service terminates as a result of
the Optionholder’s Disability, the Optionholder may
exercise his or her Option (to the extent that the Optionholder
was entitled to exercise such Option as of the date of
termination of Continuous Service), but only within such period
of time ending on the earlier of (i) the expiration of the
term of the Option as set forth in the Option Agreement, or
(ii) the date twelve (12) months following such
termination of Continuous Service (or such longer or shorter
period specified in the Option Agreement, which period shall not
be less than six (6) months in the case of an Option
subject to Section 260.140.41(g) of Title 10 of the
California Code of Regulations). If, after termination of
Continuous Service, the Optionholder does not exercise his or
her Option within the time specified herein or in the Option
Agreement (as applicable), the Option shall terminate.

     
(l) Death of Optionholder. In the event that
(i) an Optionholder’s Continuous Service terminates as
a result of the Optionholder’s death, or (ii) the
Optionholder dies within the period (if any) specified in the
Option Agreement after the termination of the
Optionholder’s Continuous Service, then the Option may be
exercised (to the extent the Optionholder was entitled to
exercise such Option as of the date of death) by the
Optionholder’s estate, by a person who acquired the right
to exercise the Option by bequest or inheritance or by a person
designated to exercise the option upon the Optionholder’s
death pursuant to Sections 6(e) or 6(f), but only within
the period ending on the earlier of (i) the expiration of
the term of such Option as set forth in the Option Agreement or
(ii) the date eighteen (18) months following the date
of death (or such longer or shorter period specified in the
Option Agreement, which period shall not be less than six
(6) months in the case of an Option subject to
Section 260.140.41(g) of Title 10 of the California
Code of Regulations). If, after the Optionholder’s death,
the Option is not exercised within the time specified herein or
in the Option Agreement (as applicable), the Option shall
terminate.

     
(m) Early Exercise. The Option may include a
provision whereby the Optionholder may elect at any time before
the Optionholder’s Continuous Service terminates to
exercise the Option as to any part or all of the shares of
Common Stock subject to the Option prior to the full vesting of
the Option. Subject to the “Repurchase Limitation” in
Section 10(i), any unvested shares of Common Stock so
purchased may be subject to a repurchase option in favor of the
Company or to any other restriction the Board determines to be
appropriate. Provided that the “Repurchase Limitation”
in Section 10(i) is not violated, the Company shall not be
required to exercise its repurchase option until at least six
(6) months (or such longer or shorter period of time
required to avoid a charge to earnings for financial accounting
purposes) have elapsed following exercise of the Option unless
the Board otherwise specifically provides in the Option.

     
(n) Right of Repurchase. Subject to the
“Repurchase Limitation” in Section 10(i), the
Option may, but need not, include a provision whereby the
Company may elect to repurchase all or any part of the vested
shares of Common Stock acquired by the Optionholder pursuant to
the exercise of the Option. Provided that the “Repurchase
Limitation” in Section 10(i) is not violated, the
Company will not exercise its repurchase

10

 

option until at least six (6) months (or such longer or
shorter period of time required to avoid a charge to earnings
for financial accounting purposes) have elapsed following
exercise of the Option unless otherwise specifically provided in
the Option.

     
(o) Right of First Refusal. The Option may, but need
not, include a provision whereby the Company may elect to
exercise a right of first refusal following receipt of notice
from the Optionholder of the intent to transfer all or any part
of the shares of Common Stock received upon the exercise of the
Option. Except as expressly provided in this Section 6(o)
or in the Stock Award Agreement for the Option, such right of
first refusal shall otherwise comply with any applicable
provisions of the Bylaws of the Company. The Company will not
exercise its right of first refusal until at least six
(6) months (or such longer or shorter period of time
required to avoid a charge to earnings for financial accounting
purposes) have elapsed following exercise of the Option unless
otherwise specifically provided in the Option.

     
7.     Provisions
of Stock Awards other than Options.

     
(a) Stock Purchase Awards. Each Stock Purchase Award
Agreement shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. At the
Board’s election, shares of Common Stock may be
(i) held in book entry form subject to the Company’s
instructions until any restrictions relating to the Stock
Purchase Award lapse, or (ii) evidenced by a certificate,
which certificate shall be held in such form and manner as
determined by the Board. The terms and conditions of Stock
Purchase Award Agreements may change from time to time, and the
terms and conditions of separate Stock Purchase Award Agreements
need not be identical, provided, however, that each Stock
Purchase Award Agreement shall include (through incorporation of
the provisions hereof by reference in the agreement or
otherwise) the substance of each of the following provisions:

		
	 	     
    (i) Purchase Price. At the time of the grant of a
    Stock Purchase Award, the Board will determine the price to be
    paid by the Participant for each share subject to the Stock
    Purchase Award. To the extent required by applicable law, the
    price to be paid by the Participant for each share of the Stock
    Purchase Award will not be less than the par value of a share of
    Common Stock.
	 
	 	     
    (ii) Consideration. At the time of the grant of a
    Stock Purchase Award, the Board will determine the consideration
    permissible for the payment of the purchase price of the Stock
    Purchase Award. The purchase price of Common Stock acquired
    pursuant to the Stock Purchase Award shall be paid either:
    (i) in cash at the time of purchase, or (ii) in any
    other form of legal consideration that may be acceptable to the
    Board in its sole discretion and permissible under applicable
    law.
	 
	 	     
    (iii) Vesting. Subject to the “Repurchase
    Limitation” in Section 10(i), shares of Common Stock
    acquired under a Stock Purchase Award may be subject to a share
    repurchase right or option in favor of the Company in accordance
    with a vesting schedule to be determined by the Board.
	 
	 	     
    (iv) Termination of Participant’s Continuous
    Service. Subject to the “Repurchase Limitation” in
    Section 10(i), in the event that a Participant’s
    Continuous Service terminates, the Company shall have the right,
    but not the obligation, to repurchase or otherwise reacquire,
    any or all of the shares of Common Stock held by the Participant
    that have not vested as of the date of termination under the
    terms of the Stock Purchase Award Agreement. At the Board’s
    election, the repurchase right may be the lesser of:
    (i) the Fair Market Value on the relevant date, or
    (ii) the Participant’s original cost. Provided that
    the “Repurchase Limitation” in Section 10(i) is
    not violated, the Company shall not be required to exercise its
    repurchase option until at least six (6) months (or such
    longer or shorter period of time required to avoid a charge to
    earnings for financial accounting purposes) have elapsed
    following the purchase of the restricted stock unless otherwise
    determined by the Board or provided in the Stock Purchase Award
    Agreement.
	 
	 	     
    (v) Transferability. Rights to purchase or receive
    shares of Common Stock granted under a Stock Purchase Award
    shall be transferable by the Participant only upon such terms
    and conditions as are set forth in the Stock Purchase Award
    Agreement, as the Board shall determine in its sole discretion,
    and so long as Common Stock awarded under the Stock Purchase
    Award remains subject to the terms of the Stock Purchase Award
    Agreement.

11

 

     
(b) Stock Bonus Awards. Each Stock Bonus Award
Agreement shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. At the
Board’s election, shares of Common Stock may be
(i) held in book entry form subject to the Company’s
instructions until any restrictions relating to the Stock Bonus
Award lapse; or (ii) evidenced by a certificate, which
certificate shall be held in such form and manner as determined
by the Board. The terms and conditions of Stock Bonus Award
Agreements may change from time to time, and the terms and
conditions of separate Stock Bonus Award Agreements need not be
identical, provided, however, that each Stock Bonus Award
Agreement shall include (through incorporation of provisions
hereof by reference in the agreement or otherwise) the substance
of each of the following provisions:

		
	 	     
    (i) Consideration. A Stock Bonus Award may be
    awarded in consideration for (i) past services actually
    rendered to the Company or an Affiliate or (ii) any other
    form of legal consideration that may be acceptable to the Board
    in its sole discretion and permissible under applicable law.
	 
	 	     
    (ii) Vesting. Subject to the “Repurchase
    Limitation” in Section 10(i), shares of Common Stock
    awarded under the Stock Bonus Award Agreement may be subject to
    forfeiture to the Company in accordance with a vesting schedule
    to be determined by the Board.
	 
	 	     
    (iii) Termination of Participant’s Continuous
    Service. Subject to the “Repurchase Limitation” in
    Section 10(i), in the event a Participant’s Continuous
    Service terminates, the Company may receive via a forfeiture
    condition, any or all of the shares of Common Stock held by the
    Participant which have not vested as of the date of termination
    of Continuous Service under the terms of the Stock Bonus Award
    Agreement.
	 
	 	     
    (iv) Transferability. Rights to acquire shares of
    Common Stock under the Stock Bonus Award Agreement shall be
    transferable by the Participant only upon such terms and
    conditions as are set forth in the Stock Bonus Award Agreement,
    as the Board shall determine in its sole discretion, so long as
    Common Stock awarded under the Stock Bonus Award Agreement
    remains subject to the terms of the Stock Bonus Award Agreement.

     
(c) Stock Unit Awards. Each Stock Unit Award
Agreement shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. The terms and
conditions of Stock Unit Award Agreements may change from time
to time, and the terms and conditions of separate Stock Unit
Award Agreements need not be identical, provided, however,
that each Stock Unit Award Agreement shall include (through
incorporation of the provisions hereof by reference in the
agreement or otherwise) the substance of each of the following
provisions:

		
	 	     
    (i) Consideration. At the time of grant of a Stock
    Unit Award, the Board will determine the consideration, if any,
    to be paid by the Participant upon delivery of each share of
    Common Stock subject to the Stock Unit Award. The consideration
    to be paid (if any) by the Participant for each share of Common
    Stock subject to a Stock Unit Award may be paid in any form of
    legal consideration that may be acceptable to the Board in its
    sole discretion and permissible under applicable law.
	 
	 	     
    (ii) Vesting. At the time of the grant of a Stock
    Unit Award, the Board may impose such restrictions or conditions
    to the vesting of the Stock Unit Award as it, in its sole
    discretion, deems appropriate; provided, however, that a Stock
    Unit Award that could be settled in shares of Common Stock shall
    be subject to the provisions of Section 10(i).
	 
	 	     
    (iii) Payment. A Stock Unit Award may be settled by
    the delivery of shares of Common Stock, their cash equivalent,
    any combination thereof or in any other form of consideration as
    determined by the Board and contained in the Stock Unit Award
    Agreement.
	 
	 	     
    (iv) Additional Restrictions. At the time of the
    grant of a Stock Unit Award, the Board, as it deems appropriate,
    may impose such restrictions or conditions that delay the
    delivery of the shares of Common Stock (or their cash
    equivalent) subject to a Stock Unit Award after the vesting of
    such Stock Unit Award.

12

 

\

		
	 	     
    (v) Dividend Equivalents. Dividend equivalents may
    be credited in respect of shares of Common Stock covered by a
    Stock Unit Award, as determined by the Board and contained in
    the Stock Unit Award Agreement. At the sole discretion of the
    Board, such dividend equivalents may be converted into
    additional shares of Common Stock covered by the Stock Unit
    Award in such manner as determined by the Board. Any additional
    shares covered by the Stock Unit Award credited by reason of
    such dividend equivalents will be subject to all the terms and
    conditions of the underlying Stock Unit Award Agreement to which
    they relate.
	 
	 	     
    (vi) Termination of Participant’s Continuous
    Service. Except as otherwise provided in the applicable
    Stock Unit Award Agreement, such portion of the Stock Unit Award
    that has not vested will be forfeited upon the
    Participant’s termination of Continuous Service.

     
(d) Stock Appreciation Rights. Each Stock
Appreciation Right Agreement shall be in such form and shall
contain such terms and conditions as the Board shall deem
appropriate. The terms and conditions of Stock Appreciation
Right Agreements may change from time to time, and the terms and
conditions of separate Stock Appreciation Right Agreements need
not be identical, provided, however, that each Stock
Appreciation Right Agreement shall include (through
incorporation of the provisions hereof by reference in the
agreement or otherwise) the substance of each of the following
provisions:

		
	 	     
    (i) Strike Price and Calculation of Appreciation.
    Each Stock Appreciation Right will be denominated in share of
    Common Stock equivalents. The appreciation distribution payable
    on the exercise of a Stock Appreciation Right will be not
    greater than an amount equal to the excess of (A) the
    aggregate Fair Market Value (on the date of the exercise of the
    Stock Appreciation Right) of a number of shares of Common Stock
    equal to the number of share of Common Stock equivalents in
    which the Participant is vested under such Stock Appreciation
    Right, and with respect to which the Participant is exercising
    the Stock Appreciation Right on such date, over (B) an
    amount (the strike price) that will be determined by the Board
    at the time of grant of the Stock Appreciation Right.
	 
	 	     
    (ii) Vesting. At the time of the grant of a Stock
    Appreciation Right, the Board may impose such restrictions or
    conditions to the vesting of such Stock Appreciation Right as
    it, in its sole discretion, deems appropriate; provided,
    however, that a Stock Appreciation Right that could be settled
    in shares of Common Stock shall be subject to the provisions of
    Section 10(i).
	 
	 	     
    (iii) Exercise. To exercise any outstanding Stock
    Appreciation Right, the Participant must provide written notice
    of exercise to the Company in compliance with the provisions of
    the Stock Appreciation Right Agreement evidencing such Stock
    Appreciation Right.
	 
	 	     
    (iv) Payment. The appreciation distribution in
    respect to a Stock Appreciation Right may be paid in Common
    Stock, in cash, in any combination of the two or in any other
    form of consideration as determined by the Board and contained
    in the Stock Appreciation Right Agreement evidencing such Stock
    Appreciation Right.
	 
	 	     
    (v) Termination of Continuous Service. In the event
    that a Participant’s Continuous Service terminates, the
    Participant may exercise his or her Stock Appreciation Right (to
    the extent that the Participant was entitled to exercise such
    Stock Appreciation Right as of the date of termination) but only
    within such period of time ending on the earlier of (i) the
    date three (3) months following the termination of the
    Participant’s Continuous Service (or such longer or shorter
    period specified in the Stock Appreciation Right Agreement) or
    (ii) the expiration of the term of the Stock Appreciation
    Right as set forth in the Stock Appreciation Right Agreement.
    If, after termination, the Participant does not exercise his or
    her Stock Appreciation Right within the time specified herein or
    in the Stock Appreciation Right Agreement (as applicable), the
    Stock Appreciation Right shall terminate.

     
(e) Other Stock Awards. Other forms of Stock Awards
valued in whole or in part by reference to, or otherwise based
on, Common Stock may be granted either alone or in addition to
Stock Awards provided for under Section 6 and the preceding
provisions of this Section 7. Subject to the provisions of
the Plan, the Board shall have sole and complete authority to
determine the persons to whom and the time or times at which
such Other Stock Awards will be granted, the number of shares of
Common Stock (or the cash equivalent thereof)

13

 

to be granted pursuant to such Other Stock Awards and all other
terms and conditions of such Other Stock Awards.

     
8.     Covenants
of the Company.

     
(a) Availability of Shares. During the terms of the
Stock Awards, the Company shall keep available at all times the
number of shares of Common Stock required to satisfy such Stock
Awards.

     
(b) Securities Law Compliance. The Company shall
seek to obtain from each regulatory commission or agency having
jurisdiction over the Plan such authority as may be required to
grant Stock Awards and to issue and sell shares of Common Stock
upon exercise of the Stock Awards; provided, however,
that this undertaking shall not require the Company to
register under the Securities Act the Plan, any Stock Award or
any Common Stock issued or issuable pursuant to any such Stock
Award. If, after reasonable efforts, the Company is unable to
obtain from any such regulatory commission or agency the
authority which counsel for the Company deems necessary for the
lawful issuance and sale of Common Stock under the Plan, the
Company shall be relieved from any liability for failure to
issue and sell Common Stock upon exercise of such Stock Awards
unless and until such authority is obtained.

     
9.     Use
of Proceeds from Stock.

     
Proceeds from the sale of Common Stock pursuant to Stock Awards
shall constitute general funds of the Company.

     
10.     Miscellaneous.

     
(a) Acceleration of Exercisability and Vesting. The
Board shall have the power to accelerate the time at which a
Stock Award may first be exercised or the time during which a
Stock Award or any part thereof will vest in accordance with the
Plan, notwithstanding the provisions in the Stock Award stating
the time at which it may first be exercised or the time during
which it will vest.

     
(b) Stockholder Rights. No Participant shall be
deemed to be the holder of, or to have any of the rights of a
holder with respect to, any shares of Common Stock subject to
such Stock Award unless and until such Participant has satisfied
all requirements for exercise of the Stock Award pursuant to its
terms.

     
(c) No Employment or other Service Rights. Nothing
in the Plan, any Stock Award Agreement or other instrument
executed thereunder or any Stock Award granted pursuant thereto
shall confer upon any Participant any right to continue to serve
the Company or an Affiliate in the capacity in effect at the
time the Stock Award was granted or shall affect the right of
the Company or an Affiliate to terminate (i) the employment
of an Employee with or without notice and with or without cause,
(ii) the service of a Consultant pursuant to the terms of
such Consultant’s agreement with the Company or an
Affiliate or (iii) the service of a Director pursuant to
the Bylaws of the Company or an Affiliate, and any applicable
provisions of the corporate law of the state in which the
Company or the Affiliate is incorporated, as the case may be.

     
(d) Incentive Stock Option $100,000 Limitation. To
the extent that the aggregate Fair Market Value (determined at
the time of grant) of Common Stock with respect to which
Incentive Stock Options are exercisable for the first time by
any Optionholder during any calendar year (under all plans of
the Company and its Affiliates) exceeds one hundred thousand
dollars ($100,000), the Options or portions thereof that exceed
such limit (according to the order in which they were granted)
shall be treated as Nonstatutory Stock Options, notwithstanding
any contrary provision of the applicable Option Agreement(s).

     
(e) Investment Assurances. The Company may require a
Participant, as a condition of exercising or acquiring Common
Stock under any Stock Award, (i) to give written assurances
satisfactory to the Company as to the Participant’s
knowledge and experience in financial and business matters
and/or to employ a purchaser representative reasonably
satisfactory to the Company who is knowledgeable and experienced
in financial and business matters and that he or she is capable
of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the Stock
Award; and (ii) to give written assurances satisfactory to
the Company stating that the Participant is acquiring Common
Stock subject to the Stock Award for the Participant’s own
account and not with any present intention of selling or
otherwise distributing

14

 

the Common Stock. The foregoing requirements, and any assurances
given pursuant to such requirements, shall be inoperative if
(1) the issuance of the shares of Common Stock upon the
exercise or acquisition of Common Stock under the Stock Award
has been registered under a then currently effective
registration statement under the Securities Act or (2) as
to any particular requirement, a determination is made by
counsel for the Company that such requirement need not be met in
the circumstances under the then applicable securities laws. The
Company may, upon advice of counsel to the Company, place
legends on stock certificates issued under the Plan as such
counsel deems necessary or appropriate in order to comply with
applicable securities laws, including, but not limited to,
legends restricting the transfer of the Common Stock.

     
(f) Withholding Obligations. To the extent provided
by the terms of a Stock Award Agreement, the Company may in its
sole discretion, satisfy any federal, state or local tax
withholding obligation relating to a Stock Award by any of the
following means (in addition to the Company’s right to
withhold from any compensation paid to the Participant by the
Company) or by a combination of such means: (i) causing the
Participant to tender a cash payment; (ii) withholding
shares of Common Stock from the shares of Common Stock issued or
otherwise issuable to the Participant in connection with the
Stock Award; or (iii) by such other method as may be set
forth in the Stock Award Agreement.

     
(g) Electronic Delivery. Any reference herein to a
“written” agreement or document shall include any
agreement or document delivered electronically or posted on the
Company’s intranet.

     
(h) Information Obligation. To the extent required
by Section 260.140.46 of Title 10 of the California
Code of Regulations, the Company shall deliver financial
statements to Participants at least annually. This
Section 10(h) shall not apply to key Employees whose duties
in connection with the Company assure them access to equivalent
information.

     
(i) Repurchase Limitation. The terms of any
repurchase option shall be specified in the Stock Award, and the
repurchase price may be either the Fair Market Value of the
shares of Common Stock on the date of termination of Continuous
Service, or the lower of (i) the Fair Market Value of the
shares of Common Stock on the date of repurchase or
(ii) their original purchase price. To the extent required
by Section 260.140.41 and Section 260.140.42 of
Title 10 of the California Code of Regulations at the time
a Stock Award is made, any repurchase option contained in a
Stock Award granted to a person who is not an Officer, Director
or Consultant shall be upon the terms described below:

		
	 	     
    (i) Fair Market Value. If the repurchase option
    gives the Company the right to repurchase the shares of Common
    Stock upon termination of Continuous Service at not less than
    the Fair Market Value of the shares of Common Stock to be
    purchased on the date of termination of Continuous Service, then
    (i) the right to repurchase shall be exercised for cash or
    cancellation of purchase money indebtedness for the shares of
    Common Stock within ninety (90) days of termination of
    Continuous Service (or in the case of shares of Common Stock
    issued upon exercise of Stock Awards after such date of
    termination, within ninety (90) days after the date of the
    exercise) or such longer period as may be agreed to by the
    Company and the Participant (for example, for purposes of
    satisfying the requirements of Section 1202(c)(3) of the
    Code regarding “qualified small business stock”) and
    (ii) the right terminates when the shares of Common Stock
    become publicly traded.
	 
	 	     
    (ii) Original Purchase Price. If the repurchase
    option gives the Company the right to repurchase the shares of
    Common Stock upon termination of Continuous Service at the lower
    of (i) the Fair Market Value of the shares of Common Stock
    on the date of repurchase or (ii) their original purchase
    price, then (x) the right to repurchase at the original
    purchase price shall lapse at the rate of at least twenty
    percent (20%) of the shares of Common Stock per year over five
    (5) years from the date the Stock Award is granted (without
    respect to the date the Stock Award was exercised or became
    exercisable) and (y) the right to repurchase shall be
    exercised for cash or cancellation of purchase money
    indebtedness for the shares of Common Stock within ninety
    (90) days of termination of Continuous Service (or in the
    case of shares of Common Stock issued upon exercise of Options
    after such date of termination, within ninety (90) days
    after the date of the exercise) or such longer period as may be
    agreed to by the Company and the Participant (for example, for
    purposes of satisfying the requirements of
    Section 1202(c)(3) of the Code regarding “qualified
    small business stock”).

15

 

			
	 	11.     	
    Adjustments upon Changes
    in Stock.
    

     
(a) Capitalization Adjustments. If any change is
made in, or other event occurs with respect to, the Common Stock
subject to the Plan or subject to any Stock Award without the
receipt of consideration by the Company (through merger,
consolidation, reorganization, recapitalization,
reincorporation, stock dividend, dividend in property other than
cash, stock split, liquidating dividend, combination of shares,
exchange of shares, change in corporate structure or other
transaction not involving the receipt of consideration by the
Company (each a “Capitalization Adjustment”), the Plan
will be appropriately adjusted in the class(es) and maximum
number of securities subject to the Plan pursuant to
Sections 4(a) and 4(b) and the maximum number of securities
subject to award to any person pursuant to Section 5(c),
and the outstanding Stock Awards will be appropriately adjusted
in the class(es) and number of securities and price per share of
Common Stock subject to such outstanding Stock Awards. The Board
shall make such adjustments, and its determination shall be
final, binding and conclusive. (Notwithstanding the foregoing,
the conversion of any convertible securities of the Company
shall not be treated as a transaction “without receipt of
consideration” by the Company.)

     
(b) Dissolution or Liquidation. In the event of a
dissolution or liquidation of the Company, all outstanding Stock
Awards (other than Stock Awards consisting of vested and
outstanding shares of Common Stock not subject to the
Company’s right of repurchase) shall terminate immediately
prior to the completion of such dissolution or liquidation, and
the shares of Common Stock subject to the Company’s
repurchase option may be repurchased by the Company
notwithstanding the fact that the holder of such Stock Award is
providing Continuous Service, provided, however, that the
Board may, in its sole discretion, cause some or all Stock
Awards to become fully vested, exercisable and/or no longer
subject to repurchase or forfeiture (to the extent such Stock
Awards have not previously expired or terminated) before the
dissolution or liquidation is completed but contingent on its
completion.

     
(c) Corporate Transaction. In the event of a
Corporate Transaction, any surviving corporation or acquiring
corporation may assume or continue any or all Stock Awards
outstanding under the Plan or may substitute similar stock
awards for Stock Awards outstanding under the Plan (including
but not limited to, awards to acquire the same consideration
paid to the stockholders of the Company, as the case may be,
pursuant to the Corporate Transaction), and any reacquisition or
repurchase rights held by the Company in respect of Common Stock
issued pursuant to Stock Awards may be assigned by the Company
to the successor of the Company (or the successor’s parent
company), if any, in connection with such Corporate Transaction.
A surviving corporation or acquiring corporation may not choose
to assume or continue only a portion of a Stock Award or
substitute a similar stock award for only a portion of a Stock
Award. The terms of any assumption, continuation or substitution
shall be set by the Board in accordance with the provisions of
Section 3. In the event that any surviving corporation or
acquiring corporation does not assume or continue all such
outstanding Stock Awards or substitute similar stock awards for
all such outstanding Stock Awards, then with respect to Stock
Awards that have been not assumed, continued or substituted and
that are held by Participants whose Continuous Service has not
terminated prior to the effective time of the Corporate
Transaction, the vesting of such Stock Awards (and, if
applicable, the time at which such Stock Awards may be
exercised) shall (contingent upon the effectiveness of the
Corporate Transaction) be accelerated in full to a date prior to
the effective time of such Corporate Transaction as the Board
shall determine (or, if the Board shall not determine such a
date, to the date that is five (5) days prior to the
effective time of the Corporate Transaction), and such Stock
Awards shall terminate if not exercised (if applicable) at or
prior to such effective time, and any reacquisition or
repurchase rights held by the Company with respect to such Stock
Awards shall (contingent upon the effectiveness of the Corporate
Transaction) lapse. With respect to any other Stock Awards
outstanding under the Plan that have not been assumed, continued
or substituted, the vesting of such Stock Awards (and, if
applicable, the time at which such Stock Award may be exercised)
shall not be accelerated, unless otherwise provided in a written
agreement between the Company or any Affiliate and the holder of
such Stock Award, and such Stock Awards (other than Stock Awards
consisting of vested and outstanding shares of Common Stock not
subject to the Company’s right of repurchase) shall
terminate if not exercised (if applicable) prior to the
effective time of the Corporate Transaction.

16

 

     
(d) Change in Control. A Stock Award may be subject
to additional acceleration of vesting and exercisability upon or
after a Change in Control as may be provided in the Stock Award
Agreement for such Stock Award or as may be provided in any
other written agreement between the Company or any Affiliate and
the Participant, but in the absence of such provision, no such
acceleration shall occur.

			
	 	12.     	
    Amendment of the Plan and
    Stock Awards.
    

     
(a) Amendment of Plan. Subject to the limitations,
if any, of applicable law, the Board at any time, and from time
to time, may amend the Plan. However, except as provided in
Section 11(a) relating to Capitalization Adjustments, no
amendment shall be effective unless approved by the stockholders
of the Company to the extent stockholder approval is necessary
to satisfy applicable law.

     
(b) Stockholder Approval. The Board, in its sole
discretion, may submit any other amendment to the Plan for
stockholder approval, including, but not limited to, amendments
to the Plan intended to satisfy the requirements of
Section 162(m) of the Code and the regulations thereunder
regarding the exclusion of performance-based compensation from
the limit on corporate deductibility of compensation paid to
Covered Employees.

     
(c) Contemplated Amendments. It is expressly
contemplated that the Board may amend the Plan in any respect
the Board deems necessary or advisable to provide eligible
Employees with the maximum benefits provided or to be provided
under the provisions of the Code and the regulations promulgated
thereunder relating to Incentive Stock Options and/or to bring
the Plan and/or Incentive Stock Options granted under it into
compliance therewith.

     
(d) No Impairment of Rights. Rights under any Stock
Award granted before amendment of the Plan shall not be impaired
by any amendment of the Plan unless (i) the Company
requests the consent of the Participant and (ii) the
Participant consents in writing.

     
(e) Amendment of Stock Awards. The Board at any
time, and from time to time, may amend the terms of any one or
more Stock Awards, including, but not limited to, amendments to
provide terms more favorable than previously provided in the
agreement evidencing a Stock Award, subject to any specified
limits in the Plan that are not subject to Board discretion;
provided, however, that the rights under any Stock Award
shall not be impaired by any such amendment unless (i) the
Company requests the consent of the Participant and
(ii) the Participant consents in writing.

			
	 	13.     	
    Termination or Suspension
    of the Plan.
    

     
(a) Plan Term. The Board may suspend or terminate
the Plan at any time. Unless sooner terminated, the Plan shall
terminate on the day before the tenth (10th) anniversary of the
date the Plan is adopted by the Board or approved by the
stockholders of the Company, whichever is earlier. No Stock
Awards may be granted under the Plan while the Plan is suspended
or after it is terminated.

     
(b) No Impairment of Rights. Suspension or
termination of the Plan shall not impair rights and obligations
under any Stock Award granted while the Plan is in effect except
with the written consent of the Participant.

			
	 	14.     	
    Effective Date of Plan.
    

     
The Plan shall become effective on June 3, 2005, but no
Stock Award shall be exercised (or, in the case of a stock
bonus, shall be granted) unless and until the Plan has been
approved by the stockholders of the Company, which approval
shall be within twelve (12) months before or after the date
the Plan is adopted by the Board.

			
	 	15.     	
    Choice of Law.
    

     
The law of the State of Delaware shall govern all questions
concerning the construction, validity and interpretation of this
Plan, without regard to such state’s conflict of laws rules.

17exv10w64

 

Exhibit 10.64

Solexa, Inc.

2005 Equity Incentive Plan

Stock Option Agreement

(Incentive Stock Option or Nonstatutory Stock Option)

     Pursuant to your Stock Option Grant Notice (“Grant Notice”) and this Stock Option Agreement,
Solexa, Inc. (the “Company”) has granted you an option under its 2005 Equity Incentive Plan (the
“Plan”) to purchase the number of shares of the Company’s Common Stock indicated in your Grant
Notice at the exercise price indicated in your Grant Notice. Defined terms not explicitly defined
in this Stock Option Agreement but defined in the Plan shall have the same definitions as in the
Plan.

     The details of your option are as follows:

     1. Vesting. Subject to the limitations contained herein, your option will vest as
provided in your Grant Notice, provided that vesting will cease upon the termination of your
Continuous Service.

     2. Number of Shares and Exercise Price. The number of shares of Common Stock subject
to your option and your exercise price per share referenced in your Grant Notice may be adjusted
from time to time for Capitalization Adjustments.

     3. Exercise prior to Vesting (“Early Exercise”). If permitted in your Grant Notice
(i.e., the “Exercise Schedule” indicates that “Early Exercise” of your option is permitted) and
subject to the provisions of your option, you may elect at any time that is both (i) during the
period of your Continuous Service and (ii) during the term of your option, to exercise all or part
of your option, including the nonvested portion of your option; provided, however, that:

          (a) a partial exercise of your option shall be deemed to cover first vested shares of Common
Stock and then the earliest vesting installment of unvested shares of Common Stock;

          (b) any shares of Common Stock so purchased from installments that have not vested as of the
date of exercise shall be subject to the purchase option in favor of the Company as described in
the Company’s form of Early Exercise Stock Purchase Agreement;

          (c) you shall enter into the Company’s form of Early Exercise Stock Purchase Agreement with a
vesting schedule that will result in the same vesting as if no early exercise had occurred; and

          (d) if your option is an Incentive Stock Option, then, to the extent that the aggregate Fair
Market Value (determined at the time of grant) of the shares of Common Stock with respect to which
your option plus all other Incentive Stock Options you hold are exercisable for the first time by you during any calendar year (under all plans of the Company
and its Affiliates) exceeds one hundred thousand dollars ($100,000), your option(s) or portions thereof

1

 

that exceed such limit (according to the order in which they were granted) shall be treated
as Nonstatutory Stock Options.

     4. Method of Payment. Payment of the exercise price is due in full upon exercise of
all or any part of your option. You may elect to make payment of the exercise price in cash or by
check or in any other manner permitted by your Grant Notice, which may include one or more of the
following:

          (a) In the Company’s sole discretion at the time your option is exercised and provided that at
the time of exercise the Common Stock is publicly traded and quoted regularly in The Wall Street
Journal, pursuant to a program developed under Regulation T as promulgated by the Federal Reserve
Board that, prior to the issuance of Common Stock, results in either the receipt of cash (or check)
by the Company or the receipt of irrevocable instructions to pay the aggregate exercise price to
the Company from the sales proceeds.

          (b) Provided that at the time of exercise the Common Stock is publicly traded and quoted
regularly in The Wall Street Journal, by delivery of already-owned shares of Common Stock either
that you have held for the period required to avoid a charge to the Company’s reported earnings
(generally six (6) months) or that you did not acquire, directly or indirectly from the Company,
that are owned free and clear of any liens, claims, encumbrances or security interests, and that
are valued at Fair Market Value on the date of exercise. “Delivery” for these purposes, in the
sole discretion of the Company at the time you exercise your option, shall include delivery to the
Company of your attestation of ownership of such shares of Common Stock in a form approved by the
Company. Notwithstanding the foregoing, you may not exercise your option by tender to the Company
of Common Stock to the extent such tender would violate the provisions of any law, regulation or
agreement restricting the redemption of the Company’s stock.

          (c) Pursuant to the following deferred payment alternative:

               (i) Not less than one hundred percent (100%) of the aggregate exercise price, plus accrued
interest, shall be due no later than four (4) years from date of exercise or, at the Company’s
election, upon termination of your Continuous Service.

               (ii) Interest shall be compounded at least annually and shall be charged at the minimum rate
of interest necessary to avoid (1) the treatment as interest, under any applicable provisions of
the Code, of any amounts other than amounts stated to be interest under the deferred payment
arrangement and (2) the treatment of the Option as a variable award for financial accounting
purposes.

               (iii) At any time that the Company is incorporated in Delaware, payment of the Common Stock’s
“par value,” as defined in the Delaware General Corporation Law, shall be made in cash and not by
deferred payment.

               (iv) In order to elect the deferred payment alternative, you must, as a part of your written
notice of exercise, give notice of the election of this payment alternative and, in order to secure the payment of the deferred exercise price to the Company
hereunder, if the Company so requests, you must tender to the Company a promissory note and a
pledge

2

 

agreement covering the purchased shares of Common Stock, both in form and substance
satisfactory to the Company, or such other or additional documentation as the Company may request.

     5. Whole Shares. You may exercise your option only for whole shares of Common Stock.

     6. Securities Law Compliance. Notwithstanding anything to the contrary contained
herein, you may not exercise your option unless the shares of Common Stock issuable upon such
exercise are then registered under the Securities Act or, if such shares of Common Stock are not
then so registered, the Company has determined that such exercise and issuance would be exempt from
the registration requirements of the Securities Act. The exercise of your option also must comply
with other applicable laws and regulations governing your option, and you may not exercise your
option if the Company determines that such exercise would not be in material compliance with such
laws and regulations.

     7. Term. You may not exercise your option before the commencement or after the
expiration of its term. The term of your option commences on the Date of Grant and expires upon
the earliest of the following:

          (a) three (3) months after the termination of your Continuous Service for any reason other
than your Disability or death, provided that if during any part of such three (3) month period your
option is not exercisable solely because of the condition set forth in Section 6, your option shall
not expire until the earlier of the Expiration Date or until it shall have been exercisable for an
aggregate period of three (3) months after the termination of your Continuous Service;

          (b) twelve (12) months after the termination of your Continuous Service due to your
Disability;

          (c) eighteen (18) months after your death if you die either during your Continuous Service or
within three (3) months after your Continuous Service terminates;

          (d) the Expiration Date indicated in your Grant Notice; or

          (e) the day before the tenth (10th) anniversary of the Date of Grant.

     If your option is an Incentive Stock Option, note that to obtain the federal income tax
advantages associated with an Incentive Stock Option, the Code requires that at all times beginning
on the date of grant of your option and ending on the day three (3) months before the date of your
option’s exercise, you must be an employee of the Company or an Affiliate, except in the event of
your death or your disability, as defined in Section 22(e) of the Code. The Company has provided
for extended exercisability of your option under certain circumstances for your benefit but cannot
guarantee that your option will necessarily be treated as an Incentive Stock Option if you continue
to provide services to the Company or an Affiliate as a Consultant or Director after your
employment terminates or if you otherwise exercise your option more than three (3) months after the date your
employment with the Company or an Affiliate terminates.

3

 

     8. Exercise.

          (a) You may exercise the vested portion of your option (and the unvested portion of your
option if your Grant Notice so permits) during its term by delivering a Notice of Exercise (in a
form designated by the Company) together with the exercise price to the Secretary of the Company,
or to such other person as the Company may designate, during regular business hours, together with
such additional documents as the Company may then require.

          (b) By exercising your option you agree that, as a condition to any exercise of your option,
the Company may require you to enter into an arrangement providing for the payment by you to the
Company of any tax withholding obligation of the Company arising by reason of (1) the exercise of
your option, (2) the lapse of any substantial risk of forfeiture to which the shares of Common
Stock are subject at the time of exercise, or (3) the disposition of shares of Common Stock
acquired upon such exercise.

          (c) If your option is an Incentive Stock Option, by exercising your option you agree that you
will notify the Company in writing within fifteen (15) days after the date of any disposition of
any of the shares of the Common Stock issued upon exercise of your option that occurs within two
(2) years after the date of your option grant or within one (1) year after such shares of Common
Stock are transferred upon exercise of your option.

     9. Transferability. Your option is not transferable, except by will or by the laws
of descent and distribution, and is exercisable during your life only by you. Notwithstanding the
foregoing, by delivering written notice to the Company, in a form satisfactory to the Company, you
may designate a third party who, in the event of your death, shall thereafter be entitled to
exercise your option.

     10. Option not a Service Contract. Your option is not an employment or service
contract, and nothing in your option shall be deemed to create in any way whatsoever any obligation
on your part to continue in the employ of the Company or an Affiliate, or of the Company or an
Affiliate to continue your employment. In addition, nothing in your option shall obligate the
Company or an Affiliate, their respective stockholders, Boards of Directors, Officers or Employees
to continue any relationship that you might have as a Director or Consultant for the Company or an
Affiliate.

     11. Withholding Obligations.

          (a) At the time you exercise your option, in whole or in part, or at any time thereafter as
requested by the Company, you hereby authorize withholding from payroll and any other amounts
payable to you, and otherwise agree to make adequate provision for (including by means of a
“cashless exercise” pursuant to a program developed under Regulation T as promulgated by the
Federal Reserve Board to the extent permitted by the Company), any sums required to satisfy the
federal, state, local and foreign tax withholding obligations of the Company or an Affiliate, if any, which arise in
connection with the exercise of your option.

          (b) Upon your request and subject to approval by the Company, in its sole discretion, and
compliance with any applicable legal conditions or restrictions, the Company may withhold from
fully vested shares of Common Stock otherwise issuable to you upon the

4

 

exercise of your option a number of whole shares of Common Stock having a Fair Market Value, determined by the Company as of
the date of exercise, not in excess of the minimum amount of tax required to be withheld by law (or
such lower amount as may be necessary to avoid variable award accounting). If the date of
determination of any tax withholding obligation is deferred to a date later than the date of
exercise of your option, share withholding pursuant to the preceding sentence shall not be
permitted unless you make a proper and timely election under Section 83(b) of the Code, covering
the aggregate number of shares of Common Stock acquired upon such exercise with respect to which
such determination is otherwise deferred, to accelerate the determination of such tax withholding
obligation to the date of exercise of your option. Notwithstanding the filing of such election,
shares of Common Stock shall be withheld solely from fully vested shares of Common Stock determined
as of the date of exercise of your option that are otherwise issuable to you upon such exercise.
Any adverse consequences to you arising in connection with such share withholding procedure shall
be your sole responsibility.

          (c) You may not exercise your option unless the tax withholding obligations of the Company
and/or any Affiliate are satisfied. Accordingly, you may not be able to exercise your option when
desired even though your option is vested, and the Company shall have no obligation to issue a
certificate for such shares of Common Stock or release such shares of Common Stock from any escrow
provided for herein unless such obligations are satisfied.

     12. Notices. Any notices provided for in your option or the Plan shall be given in
writing and shall be deemed effectively given upon receipt or, in the case of notices delivered by
mail by the Company to you, five (5) days after deposit in the United States mail, postage prepaid,
addressed to you at the last address you provided to the Company.

     13. Governing Plan Document. Your option is subject to all the provisions of the
Plan, the provisions of which are hereby made a part of your option, and is further subject to all
interpretations, amendments, rules and regulations, which may from time to time be promulgated and
adopted pursuant to the Plan. In the event of any conflict between the provisions of your option
and those of the Plan, the provisions of the Plan shall control.

5

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