Document:

Prepared by R.R. Donnelley Financial -- Amended & Restated 1998 Incentive Plan

 EXHIBIT 4.1 
  
 WOMEN FIRST HEALTHCARE, INC. 
  
 AMENDED AND RESTATED 
  
 1998 LONG-TERM INCENTIVE PLAN 
  
 (as amended and restated March 6, 2002) 
  

	1.
	 
	Introduction and Purpose.    The Plan is submitted to the Board of Directors for adoption subject to approval by the Company’s
stockholders. The Plan is fully effective as of the date approved by the shareholders. The Plan supersedes in its entirety all prior versions of the Women First HealthCare, Inc. 1998 Long-Term Incentive Plan. 
 

 
 The purpose of the Plan is to promote the interests of the Company, and its shareholders by encouraging Key Associates to
acquire stock or increase their proprietary interest in the Company. By thus providing the opportunity to acquire Company stock and receive incentive payments, the Company seeks to attract and retain such Key Associates upon whose judgment,
initiative, and leadership the success of the Company largely depends. 
  
 The Plan shall be governed by, and
construed in accordance with the laws of the State of Delaware, without regard to the conflicts of law provisions thereof. 
  

	2.
	 
	Definitions.    Whenever the following terms are used in this Plan, they will have the meanings specified below unless the context
clearly indicates the contrary. 
 

  

	 	a)
	 
	“Associate” means any person who is an employee (as defined in accordance with Section 3401(c) of the Code) of the Company or any Subsidiary.

 

  

	 	b)
	 
	“Board of Directors” or “Board” means the Board of Directors of the Company, as constituted from time to time. 

  

	 	c)
	 
	“Change-in-Control” occurs in the following instances (1) a tender or exchange for all or part of the Common Stock (except an offer by the Company
itself); (2) Company shareholder approval of a merger in which the shareholders of the Company prior to such consolidation or merger own less than fifty percent (50%) of the Company’s voting power immediately after such consolidation or merger,
excluding any consolidation or merger effected exclusively to change the domicile of the Company; (3) Company shareholder approval of a consolidation or sale, exchange or other disposition of all, or substantially all, of the Company’s
assets; (4) change in the composition of the Board over a two consecutive year period so that individuals who were directors at the beginning of that period no longer constitute a majority of the Board (unless the election or nomination of each new
director was approved by at least two-thirds of the directors who had been directors at the beginning of the period and who were still in office at the time of the election or nomination). 
 

  

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

 

 1 

	 	e)
	 
	“Committee” means the committee appointed to administer the Plan pursuant to Section 4. 
 

  

	 	f)
	 
	“Company” means Women First HealthCare, Inc. a Delaware corporation. 
 

  

	 	g)
	 
	“Common Shares” or “Common Stock” means the shares of the Company’s common stock and any class of common shares into which such common
shares may hereafter be converted. 
 

  

	 	h)
	 
	“Consultant” means any consultant or adviser if: (i) the consultant or adviser renders bona fide services to the Company or any Subsidiary; (ii) the
services rendered by the consultant or adviser are not in connection with the offer or sale of securities in a capital-raising transaction and do not directly or indirectly promote or maintain a market for the Company’s securities; and (iii)
the consultant or adviser is a natural person who has contracted directly with the Company or any Subsidiary of the Company to render such services. 
 

  

	 	i)
	 
	“Dividend Equivalent” means the additional amount of Common Stock issued in connection with an Option, as described in Section 14. 

  

	 	j)
	 
	“Eligible Person” means a Key Associate eligible to receive an Incentive Award. 
 

  

	 	k)
	 
	“Exchange Act” means the Securities and Exchange Act of 1934, as amended. 
 

  

	 	l)
	 
	“Fair Market Value” means the market price of Common Shares, determined by the Committee as follows: 
 

  

	 	i)
	 
	If none of the provisions ii) through iv) listed below are applicable, the Fair Market Value shall be determined by the Committee in good faith on such basis,
as it deems appropriate. 
 

  

	 	ii)
	 
	If the Common Shares were traded over-the-counter on the date in question but were not traded on the Nasdaq system or the Nasdaq National Market System, then
the Fair Market Value shall be equal to the mean between the last reported representative bid and asked prices quoted for such date by the principal automated inter-dealer quotation system on which the Common Shares are quoted or, if the Common
Shares are not quoted on any such system, by the “Pink Sheets” published by the National Quotation Bureau, Inc. 
 

  

	 	iii)
	 
	If the Common Shares were traded over-the-counter on the date in question and were traded on the Nasdaq system or the Nasdaq National Market System, then the
Fair Market Value shall be equal to the last transaction price quoted for such date by the Nasdaq system or the Nasdaq National Market System. 
 

  

	 	iv)
	 
	If the Common Shares were traded on a stock exchange on the date in question, then the Fair Market Value shall be equal to the closing price reported by the
applicable composite transactions report for such date: and 
 

 

 2 

 In all cases, the determination of Fair Market Value by the Committee shall be conclusive and binding on all persons.

  

	 	m)
	 
	“Holder” means a person, estate, trust or entity holding an Incentive Award. 
 

  

	 	n)
	 
	“Incentive Award” means any Nonqualified Stock Option, Incentive Stock Option, Common Stock, Restricted Stock, Stock Appreciation Right, Dividend
Equivalent, Stock Payment or Performance Award granted under the Plan. 
 

  

	 	o)
	 
	“Incentive Stock Option” means an Option as defined under Section 422 of the Code, including an Incentive Stock Option granted pursuant to Section 8
of the Plan. 
 

  

	 	p)
	 
	“Key Associate” shall mean (i) any individual who is an Associate, (ii) a member of the Board of Directors, including (without limitation) an Outside
Director, or an affiliate of a member of the Board of Directors, a member of the Board of Directors of a Subsidiary and (iv) a Consultant. Service as a member of the Board of Directors, a member of the board of directors of a Subsidiary or as a
Consultant shall be considered employment for all purposes of the Plan. 
 

  

	 	q)
	 
	“Nonqualified Stock Option” means an Option other than an Incentive Stock Option granted pursuant to Section 8 of the Plan. 

  

	 	r)
	 
	“Option” means either a Nonqualified Stock Option or Incentive Stock Option. 
 

  

	 	s)
	 
	“Outside Director” shall mean a member of the Board of Directors who is not an Associate. 
 

  

	 	t)
	 
	“Performance Award” means an award whose value may be linked to stock value, or other specific performance criteria which may be set by the board of
Directors, but which is paid in cash, stock, or a combination of both. 
 

  

	 	u)
	 
	“Plan” means the Amended and Restated 1998 Long-Term Incentive Plan, which may be amended from time to time. 
 

 

	 	v)
	 
	“Restricted Stock” means Common Stock sold or granted to an Eligible Person, which is nontransferable and subject to substantial risk of forfeiture
until restrictions lapse. 
 

  

	 	w)
	 
	“Rule 16b-3” means that certain Rule 16b-3 under the Exchange Act, as such rule may be amended from time to time. 
 

 

	 	x)
	 
	“Stock Appreciation Right” or “Right” means a right granted pursuant to Section 11 of the Plan to receive a number of shares of Common Stock
or, in the discretion of the Committee, an amount of cash or a combination of shares and cash, based on the increase in the fair market value or book value of the shares subject to the right. 
 

 

 3 

  

	 	y)
	 
	“Stock Payment” means a payment in shares of the Common Stock to replace all or any portion of the compensation (other than base salary) that would
otherwise become payable to a Key Associate in cash. 
 

  

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

  

	 	aa)
	 
	“Total and Permanent Disability” means that the Holder is unable to engage in any substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death or which has lasted, or can be expected to last, for a continuous period of not less than one year. 
 

  

	3.
	 
	Shares of Common Stock Subject to the Plan. 
 

  

	 	a)
	 
	Subject to the provisions of Sections 3(c) and 15 of the Plan, the aggregate number of shares of Common Stock that may be issued or transferred pursuant to
Incentive Awards or covered by Stock Appreciation Rights unrelated to Options under the Plan shall not exceed 3,949,985. No Eligible Person shall be granted, in any calendar year, Options to purchase, or Stock Appreciation Rights with respect to, as
applicable, more than 250,000 shares of Common Stock. 
 

  

	 	b)
	 
	The shares to be delivered under the Plan will be made available, at the discretion of the Board of Directors or the Committee, either from authorized but
unissued shares of Common Stock or from previously issued shares of Common Stock reacquired by the Company. 
 

  

	 	c)
	 
	If Incentive Awards are forfeited or if Incentive Awards terminate for any other reason before being exercised, then any shares of Common Stock subject to such
Incentive Awards shall again become available for award under the Plan. If Stock Appreciation Rights are exercised, then only the number of Common Shares (if any) actually issued in settlement of such Stock Appreciation Rights shall reduce the
number of Common Shares available under Section 3(a) and the balance shall again become available for award under the Plan. If Restricted Stock is cancelled or forfeited then such Restricted Stock shall again become available for award under the
Plan. 
 

  

	4.
	 
	Administration of the Plan. 
 

  

	 	a)
	 
	The Plan shall be administered by the Committee. The Committee shall be appointed by the Board and shall consist shall consist solely of two or more Outside
Directors each of whom is both an “outside director,” within the meaning 
 

 

 4 

 of Section 162(m) of the Code, and a “non-employee director” within the meaning of Rule 16b-3. 

 

	 	b)
	 
	Notwithstanding Section 4(a), the Board or the Committee may (i) delegate to one or more members of the Board who are not Outside Directors the authority to
grant Incentive Awards under the Plan to eligible persons who are either (1) not then “covered employees,” within the meaning of Section 162(m) of the Code and are not expected to be “covered employees” at the time of
recognition of income resulting from such award or (2) not persons with respect to whom the Company wishes to comply with Section 162(m) of the Code and/or (ii) delegate to a committee of one or more members of the Board who are not
“non-employee directors,” within the meaning of Rule 16b-3, the authority to grant Incentive Awards under the Plan to Eligible Persons who are not then subject to Section 16 of the Exchange Act. 
 

  

	 	c)
	 
	The Committee has and may exercise such powers and authority as may be necessary or appropriate for the Committee to carry out its functions as described in the
Plan. The Committee has authority in its discretion to determine the Eligible Persons to whom, and the time or times at which, Incentive Awards may be granted and the number of shares or Rights subject to each award. Subject to the express
provisions of the Plan, the Committee also has authority to interpret the Plan, and to determine the terms and provisions of the respective Incentive Award agreements (which need not be identical) and to make all other determinations necessary or
advisable for Plan Administration. The Committee has authority to prescribe, amend, and rescind rules and regulations relating to the Plan. All interpretations, determinations and actions by the Committee will be final, conclusive, and binding upon
all parties. 
 

  

	 	d)
	 
	No member of the Board of Directors or the Committee will be liable for any action or determination made in good faith by the Committee with respect to the Plan
or any Incentive and Performance Award under it. 
 

  

	5.
	 
	Eligibility and Date of Grant.    The date of grant of an Incentive Award will be the date the Committee takes the necessary action
to approve the grant; provided, however, that if the minutes or appropriate resolutions of the Committee provide that an Incentive Award is to be granted as of a date in the future, the date of grant will be such future date. 

  

	6.
	 
	Outside Director Participation.    Outside Directors shall receive Option grants under the Plan as described below: 

  

	 	a)
	 
	Upon the conclusion of each regular annual meeting of the Company’s shareholders, each incumbent Outside Director who will continue serving as a member of
the Board thereafter may receive a grant of a Nonstatutory Option for such number of Common Shares (subject to adjustment under Section 15 and prorated for partial year service) as the Board shall determine in its sole discretion. 

 

 5 

  

	 	b)
	 
	New Outside Directors shall receive a one-time grant of a Nonstatutory Option for a number of Common Shares as determined in the sole discretion of the Board.
Such Option shall be granted on the date when such Outside Director first joins the Board of Directors of the Company or the board of directors of a Subsidiary. 
 

  

	 	c)
	 
	Total grants under this Section 6 (less forfeitures) shall not exceed 15% of the maximum number of Common Shares available for grant under Section 3(a) of the
Plan (subject to adjustment under Section 15). 
 

  

	7.
	 
	Nonqualified Stock Options.    The Committee may approve the grant of Nonqualified Stock Options to Eligible Persons, subject to the
following terms and conditions: 
 

  

	 	a)
	 
	The purchase price of Common Stock under each Nonqualified Stock Option may not be less than eighty-five percent (85%) of the Fair Market Value of the Common
Stock on the date the Nonqualified Stock Option is granted. 
 

  

	 	b)
	 
	No Nonqualified Stock Option may be exercised after ten years from the date of grant. 
 

  

	 	c)
	 
	No fractional shares will be issued pursuant to the exercise of a Nonqualified Stock Option nor will any cash payment be made in lieu of fractional shares.

 

  

	8.
	 
	Incentive Stock Options.    The Committee may approve the grant of Incentive Stock Options to Eligible Persons who are Employees,
subject to the following terms and conditions. 
 

  

	 	a)
	 
	The exercise price of each share of Common Stock under an Incentive Stock Option will be at least equal to the Fair Market Value of a share of the Common Stock
on the date of grant: provided, however, that if the Associate, at the time an Incentive Stock Option is granted to him or her, owns stock representing more than ten percent (10%) of the total combined voting power of all classes of stock of the
Company (as defined in Section 424 of the Code), then the exercise price of each share of Common Stock subject to such Incentive Stock Option shall be at least one hundred and ten percent (110%) of the Fair Market Value of such share of Common
Stock, as determined in the manner stated above. 
 

  

	 	b)
	 
	No Incentive Stock Option may be exercised after ten (10) years from the date of grant: provided, however, that the Associate, at the time an Incentive Stock
Option is granted to him or her, owns stock representing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company (as defined in Section 424 of the Code), the Incentive Stock Option granted shall not be
exercisable after the expiration of 5 years from the date of grant. 
 

  

	 	c)
	 
	No fractional shares will be issued pursuant to the exercise of an Incentive Stock Option nor will any cash payment be made in lieu of fractional shares.

 

 

 6 

  

	9.
	 
	Option Rules.    The purchase price under each Option may be paid in (a) cash, (b) cash equivalents or notes acceptable to the
Committee, (c) by arrangement with a broker which is acceptable to the Committee where payment of the Option price is made pursuant to an irrevocable direction to the broker to deliver all or part of the proceeds from the sale of the Option shares
to the Company, (d) by the surrender of shares of Common Stock owned by the Holder exercising the Option having a Fair Market Value on the date of exercise equal to the purchase price (and which, in the case of shares of Common Stock acquired from
the Company, have been owned by the Holder for more than 6 months on the date of surrender) or (e) in any combination of the foregoing. Each Option granted to an Eligible Person shall be exercisable in such manner and at such times as the Committee
shall determine. The Committee may modify, accelerate the exercisability of, extend or assume outstanding Options or may accept the cancellation of outstanding Options (whether granted by the Company or by another issuer) in return for the grant of
new Options for the same or a different number of shares and at the same or a different purchase price. The foregoing notwithstanding, no modification of an Option shall, without the consent of the Holder, alter or impair his or her rights or
obligations under such Option. Notwithstanding anything to the contrary, each Option shall vest at the rate of at least 20% per year over 5 years from the date of grant. Each Option shall provide for a period of exercise of at least 6 months in the
event of a termination of employment as a result of death or disability and at least 30 days in the case of termination other than death or disability. 
 

  

	10.
	 
	Restricted Stock.    The Committee may approve the grant of Restricted Stock unrelated to Nonqualified Stock Options or Stock
Appreciation Rights to Eligible Persons, subject to the following terms and conditions: 
 

  

	 	a)
	 
	The Committee in its discretion will determine the purchase price. 
 

  

	 	b)
	 
	All shares of Restricted Stock sold or granted pursuant to the Plan (including any shares of Restricted Stock received by the Holder as a result of stock
dividends, stock splits, or any other forms of capitalization), will be subject to the following restrictions: 
 

  

	 	i)
	 
	The shares may not be sold, transferred, or otherwise alienated or hypothecated until the restrictions are removed or expire. 
 

 

	 	ii)
	 
	The Committee may require the Holder to enter into an escrow agreement providing that the certificates representing Restricted Stock sold or granted pursuant to
the Plan will remain in the physical custody of an escrow holder until all restrictions are removed or expire. 
 

  

	 	iii)
	 
	Each certificate representing Restricted Stock sold or granted pursuant to the Plan will bear a legend making appropriate reference to the Restrictions imposed
on the Restricted Stock. 
 

  

	 	iv)
	 
	The Committee may impose restrictions on any shares sold pursuant to the Plan as it may deem advisable, including without limitation, restrictions designed to
facilitate exemption from or compliance with the Securities 
 

 

 7 

 Exchange Act of 1934, as amended, with requirements of any stock exchange upon which such shares or shares of the same
class are then listed and with any blue sky or other securities laws applicable to such shares; provided, however, the restrictions imposed on any Restricted Stock must comply with California Securities Rule 260.140.42. 
  

	 	c)
	 
	The restrictions imposed under subparagraph (b) above upon Restricted Stock will lapse in accordance with a schedule or other conditions as determined by the
Committee, subject to the provisions of Section 17, subparagraph (d). 
 

  

	 	d)
	 
	Subject to the provisions of subparagraph (b) above and Section 17, subparagraph (d), the Holder will have all rights of a shareholder with respect to the
Restricted Stock granted or sold, including the right to vote the shares and receive all dividends and other distributions paid or made with respect thereto. 
 

  

	 	e)
	 
	Notwithstanding the provisions of subparagraph (b) above and Section 17, subparagraph (d), Restricted Stock granted or sold may be held by the trustee of a
revocable inter vivos trust (or other trust if such transfer associated therewith does not cause income to be recognized pursuant to Section 83 of the Code and if the trust takes subject to the forfeiture provisions of the Restricted Stock),
approved by the Company, established in whole or in part by the Holder and/or the Holder’s spouse. So long as the Holder is still an Associate, transfer to such trust shall not violate the provisions of subparagraph (b) above and ownership
by such trust shall not invoke any right or obligation of the Company under Section 17, subparagraph (d). 
 

  

	11.
	 
	Stock Appreciation Rights.  The Committee may approve the grant of Rights related or unrelated to Options to Eligible Persons, subject to the
following terms and conditions: 
 

  

	 	a)
	 
	A Stock Appreciation Right may be granted 
 

  

	 	i)
	 
	at any time if unrelated to an Option: 
 

  

	 	ii)
	 
	either at the time of Option grant, or at any time thereafter during the Option term if related to a Nonqualified Stock Option: or 

  

	 	iii)
	 
	only at the time of Option grant if related to an Incentive Stock Option. 
 

  

	 	b)
	 
	A Stock Appreciation Right granted in connection with an Option will entitle the Holder of the related Option, upon execution of the Stock Appreciation Right,
to surrender such Option or any portion thereof to the extent unexercised, with respect to the number of shares as to which such Stock Appreciation Right is exercised, and to receive payment of an amount computed pursuant to Section 11(d). Such
Option will, to the extent surrendered, then cease to be exercisable. 
 

  

	 	c)
	 
	Subject to Section 11(g), a Stock Appreciation Right granted in connection with an Option hereunder will be exercisable at such time or times as the Committee
in its discretion may determine, and only to the extent that a related Option is 
 

 

 8 

	 	    
	 
	exercisable, and will not be transferable except to the extent that such related Option is exercisable. 
 

  

	 	d)
	 
	Upon the exercise of a Stock Appreciation Right related to an Option, the Holder will be entitled to receive payment of an amount determined by multiplying:

 

  

	 	i)
	 
	The difference obtained by subtracting the purchase price of a share of Common Stock specified in the related Option from the Fair Market Value of a share of
Common Stock on the date of exercise of such Stock Appreciation Right, by 
 

  

	 	ii)
	 
	The number of shares as to which such Stock Appreciation Right has been exercised. 
 

  

	 	e)
	 
	The Committee may grant Stock Appreciation Rights unrelated to Options to Eligible Persons that will be exercisable at such times as the Committee shall
determine. Section 11(d) shall be used to determine the amount payable at exercise under such Stock Appreciation Right if Fair Market Value is used, except that Fair Market Value shall not be used if the Committee specifies in the grant of the Right
that book value or other measure as deemed appropriate by the Committee is to be used, and the initial share value specified in the award shall be used in lieu of “price of a Common Stock specified in the related Option,” as provided in
Section 11(d). 
 

  

	 	f)
	 
	Payment of the amount determined under Section 11(d) or (c) may be made solely in whole shares of Common Stock in a number determined at their Fair Market Value
on the date of exercise of the Stock Appreciation Right or alternatively at the sole discretion of the Committee, solely in cash or in a combination of cash and shares as the Committee deems advisable. If the Committee decides to make full payment
in shares of Common Stock, and the amount payable results in a fractional share, payment for the fractional share will be made in cash. 
 

  

	 	g)
	 
	The Committee shall, at the time a Stock Appreciation Right is granted, impose such conditions on the exercise of the Stock Appreciation Right as may be
required to satisfy the requirements of Rule 16b-3 under the Securities Exchange Act of 1934 (or any other comparable provisions in effect at the time or times in question). In addition, a Stock Appreciation Right granted under the Plan may provide
that it will be exercisable only in the event of a Change-in-Control. 
 

  

	12.
	 
	Performance Awards.  The Committee may approve Performance Awards to Eligible Persons. Such awards may be based on Common Stock performance over a
period determined in advance by the Committee or any other measures as determined appropriate by the Committee. Payment will be in cash unless replaced by a Stock Payment in full or in part as determined by the Committee. 

  

	13.
	 
	Stock Payment. The Committee may approve Stock Payments of Common Stock to Eligible Persons for all or any portion of the compensation (other than base salary)
that would otherwise become payable to an employee in cash. 
 

 

 9 

  

	14.
	 
	Dividend Equivalents.    A Holder may also be granted at no additional cost “Dividend Equivalents” based on the dividends
declared on the Common Stock on record dates during the period between the date an Option is granted and the date such Option is exercised, or such other equivalent period, as determined by the Committee. Such Dividend Equivalents shall be converted
to additional shares or cash by such formula as may be determined by the Committee. 
 

  
 Dividend
Equivalents shall be computed, as of each dividend record date, both with respect to the number of shares under the Option and with respect to the number of Dividend Equivalent shares previously earned by the Holder (or his or her successor in
interest) and not issued during the period prior to the dividend record date. 
  

	15.
	 
	Adjustment Provisions. 
 

  

	 	a)
	 
	Subject to Section 15(b), if the outstanding shares of Common Stock are increased, decreased, or exchanged for a different number or kind of shares or other
securities, or if additional shares or new or different shares or other securities are distributed with respect to such shares of Common Stock or other securities, through merger, consolidation, sale of all or substantially all of the property of
the Company, reorganization, recapitalization, reclassification, stock dividend stock split, reverse stock split or other distribution with respect to such shares of Common Stock, or other securities, an appropriate and proportionate adjustment
shall be made in (i) the maximum number and kind of shares provided in Section 3 of the Plan, (ii) the number and kind of shares or other securities subject to the then outstanding Incentive Awards, and (iii) the price for each share or other unit
of any other securities subject to the then outstanding Incentive Awards without change in the aggregate purchase price or value as to which Incentive Awards remain exercisable or subject to restrictions. 
 

  

	 	b)
	 
	In addition, upon a Change-in-Control all Options, Stock Appreciation Rights, and Performance Awards then outstanding under the Plan will be fully vested and
exercisable and all restrictions on Restricted Stock will immediately cease. The Committee or any agreement of merger or reorganization may offer the Holder the right to exchange such vested Incentive Awards for fully vested and equivalent value
awards under a successor plan. 
 

  

	16.
	 
	General Provisions. 
 

  

	 	a)
	 
	With respect to any shares of Common Stock issued or transferred under any provision of the Plan such shares may be issued or transferred subject to such
conditions, in addition to those specifically provided in the Plan, as the Committee may direct; provided that any such conditions must comply with California Corporate Securities Rules 260.140.41 and 260.140.42. 
 

 

	 	b)
	 
	Nothing in the Plan or in any instrument executed pursuant to the Plan will confer upon any Holder any right to continue in the employ of the Company or any of
its Subsidiaries or affect the right of the Company to terminate the employment of any Holder at any time and for any reason. 
 

 

 10 

  

	 	c)
	 
	No shares of Common Stock will be issued or transferred pursuant to an Incentive Award unless and until all then applicable requirements imposed by federal and
state securities and other laws, rules, and regulations and by any regulatory agencies having jurisdiction, and by any stock exchanges upon which the Common Stock may be listed, have been fully met. As a condition precedent to the issue of shares
pursuant to the grant or exercise of an Incentive Award, the Company may require the Holder to take any reasonable action to meet such requirements. 
 

  

	 	d)
	 
	No Holder (individually or as a member of a group) and no beneficiary or other person claiming under or through such Holder will have any right, title, or
interest in or to any shares of Common Stock allocated or reserved under the plan or subject to any Incentive Award except as to such shares of Common Stock, if any, that have been issued or transferred to such Holder. 

  

	 	e)
	 
	The Company may make such provisions, as it deems appropriate to withhold any taxes, which it determines it is required to withhold in connection with any
Incentive or Performance Award. 
 

  

	 	f)
	 
	No Incentive Award and no right under the Plan contingent or otherwise, will be assignable or subject to any encumbrance, pledge (other than a pledge to secure
a loan from the Company), or charge of any nature except that, under such rules and regulations as the Company may establish pursuant to the terms of the Plan, a beneficiary may be designated with respect to an Incentive Award in the event of death
of a Holder of such Incentive Award. If such beneficiary is the executor or administrator of the estate of the Holder of such Incentive Award, any rights with respect to such Incentive Award may be transferred to the person or persons or entity
(including a trust) entitled thereto under the will of the Holder of such Incentive Award or, in the case of intestacy, under the laws relating to intestacy. Except as determined by the Committee, no Incentive Award shall be transferable by any
Eligible Person other than by will of the laws of descent and distribution or pursuant to a qualified domestic relations order. In considering transferability of an Incentive Award, the Committee may also consider the registration limitation of SEC
Form S-8 and on that basis may in its discretion determine whether to prohibit transferability, permit alternative registration of the Incentive Award, treat the Incentive Award as SEC Rule 144 “restricted stock,” or take such other
measures as the Committee deems appropriate. 
 

  

	 	g)
	 
	The Committee may permit a Holder to satisfy all or part of his or her withholding or income tax obligations by having the Company withhold a portion of any
Common Stock that otherwise would be issued to him having a value equal to the statutory minimum amount required to be withheld, or by surrendering all or a portion of any Common Stock that he or she previously acquired (and which, in the case of
shares of Common Stock acquired from the Company, have been owned by the Holder for more than 6 months on the date of surrender). Such Common Stock shall be valued at its Fair Market Value on the date when taxes otherwise would be withheld in cash.
Any payment of taxes by assigning 
 

 

 11 

 Common Stock to the Company may be subject to restrictions, including any restrictions required by rules of the
Securities and Exchange Commission. 
  

	 	h)
	 
	All Incentive Awards, to the extent then outstanding, shall become 100% vested in the event of death or total and permanent disability. 

  

	17.
	 
	Amendment and Termination. 
 

  

	 	a)
	 
	The Board of Directors may, in its discretion, amend, suspend, or terminate the Plan at any time. An amendment of the Plan shall be subject to the approval of
the Company’s shareholders to the extent it affects the application of the accelerated vesting provisions herein, Section 15, or to the extent required by applicable laws, regulations and or rules. 
 

  

	 	b)
	 
	The Committee may, with the consent of a Holder, make such modifications in the terms and conditions of the Incentive Award as it deems advisable or cancel the
Incentive Award (with or without consideration) with the consent of the Holder. 
 

  

	 	c)
	 
	No amendment, suspension, or termination of the Plan will, without the consent of the Holder, alter, terminate, impair, or adversely affect any right or
obligation under any Incentive Award previously granted under the Plan. 
 

  

	 	d)
	 
	In the event a Holder of Restricted Stock ceases to be a Key Associate all such Holder’s Restricted Stock which remains subject to substantial risk of
forfeiture at the time his or her employment terminates will be repurchased by the Company at the original price at which such Restricted Stock had been purchased unless the Committee determines otherwise. 
 

  

	 	e)
	 
	In the event a Holder of a Performance Award ceases to be a Key Associate, all such Holder’s Performance Awards will terminate except in the case of
retirement, death, or Total and Permanent Disability. The Committee, in its discretion, may authorize full or partial payment of Performance Awards in all cases involving retirement, death, or permanent and total disability. 

  

	 	f)
	 
	The Committee may in its sole discretion determine, with respect to an Incentive Award that any Holder who is on unpaid leave of absence for any reason will be
considered as still in the employ of the Company, provided that rights to such Incentive Award during an unpaid leave of absence will be limited to the extent to which such right was earned or vested at the commencement of such leave of absence.

 

  

	18.
	 
	Effective Date of Plan and Duration of Plan.    This Plan will become effective upon approval by the shareholders of the Company
within twelve (12) months following the date of its adoption by the Board of Directors. Unless previously terminated by the Board of Directors, the Plan will terminate ten (10) years after its approval by the shareholders of the Company.

 

 

 12Prepared by R.R. Donnelley Financial -- 1996 Stock Option Plan Amended 07/13/2002

  
 EXHIBIT 10.2 
  
 COLDWATER CREEK INC. 
 1996 STOCK OPTION/STOCK ISSUANCE PLAN 
 (Amended and Restated as of July 13, 2002) 
  
 ARTICLE ONE 
  
 GENERAL 
  
 I.     PURPOSE OF THE PLAN 
  
         This 1996 Stock Option/Stock Issuance Plan (the “Plan”) is intended to promote the interests of Coldwater Creek Inc., a Delaware corporation (the
“Corporation”), by providing eligible individuals with the opportunity to acquire a proprietary interest, or otherwise increase their proprietary interest, in the Corporation as an incentive for them to remain in the service of the
Corporation (or its parent or subsidiary corporations). 
  
 II.    DEFINITIONS

  
         A.    For purposes of the Plan, the
following definitions shall be in effect: 
  
         Board:    the Corporation’s Board of Directors. 
  
         Change in Control:    a change in ownership or control of the Corporation effected through either of the following
transactions: 
  
                 (i)    the acquisition directly or indirectly by any person or related group of persons (other than the Corporation
or a person that directly or indirectly controls, is controlled by, or is under common control with, the Corporation) of beneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act) of securities possessing more than fifty percent (50%)
of the total combined voting power of the Corporation’s outstanding securities pursuant to a tender or exchange offer made directly to the Corporation’s stockholders which the Board does not recommend such stockholders to accept; or

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

 
         Code:    the Internal Revenue Code of 1986, as
amended. 
  
         Common Stock:    shares of
the Corporation’s common stock. 
 

 1 

  
         Corporate
Transaction:    either of the following stockholder-approved transactions to which the Corporation is a party: 
  
         (i)    a merger or consolidation in which securities possessing more than fifty percent (50%) of the total combined voting power of
the Corporation’s outstanding securities are transferred to a person or persons different from the persons holding those securities immediately prior to such transaction, or 
  
         (ii)    the sale, transfer or other disposition of all or substantially all of the
Corporation’s assets in complete liquidation or dissolution of the Corporation. 
  
         Disability:    the inability of an individual to engage in any substantial gainful activity by reason of any medically determinable physical or mental
impairment which is expected to result in death or has lasted or can be expected to last for a continuous period of not less than twelve (12) months. However, for purposes of the Automatic Option Grant Program, Disability shall mean the inability of
the non-employee Board member to perform his or her usual duties as a Board member by reason of any medically determinable physical or mental impairment expected to result in death or to be of continuous duration of twelve (12) months or more.

  
         Employee:    an individual who
performs services while in the employ of the Corporation or one or more parent or subsidiary corporations, subject to the control and direction of the employer entity not only as to the work to be performed but also as to the manner and method of
performance. 
  
         Exercise Date:    the
date on which the Corporation shall have received written notice of the option exercise. 
  
         Fair Market Value:    the Fair Market Value per share of Common Stock determined in accordance with the following provisions: 
  
         –    If the Common Stock is not at the time
listed or admitted to trading on any national securities exchange but is traded on the Nasdaq National Market, then the Fair Market Value shall be the closing selling price per share on the date in question, as such price is reported by the National
Association of Securities Dealers on the Nasdaq National Market. If there is no reported closing selling price for the Common Stock on the date in question, then the closing selling price on the last preceding date for which such quotation exists
shall be determinative of Fair Market Value. 
  
         –    If the Common Stock is at the time listed or admitted to trading on any national securities exchange, then the Fair Market Value shall be the closing
selling price per share on the date in question on the exchange determined by the Plan Administrator to be the primary market for the Common Stock, as 
 

 2 

  
 such price is officially quoted in the composite tape of transactions on such exchange. If there is no
reported sale of Common Stock on such exchange on the date in question, then the Fair Market Value shall be the closing selling price on the exchange on the last preceding date for which such quotation exists. 
  
         –    If the Common Stock is on the date in question neither
listed nor admitted to trading on any national securities exchange nor traded on the Nasdaq National Market, then the Fair Market Value of the Common Stock on such date shall be determined by the Plan Administrator after taking into account such
factors as the Plan Administrator shall deem appropriate. 
  
         –    For any option granted on the Automatic Option Grant Program Effective Date, the Fair Market Value per share of Common Stock shall be deemed equal to the
price per share at which the Common Stock is sold in the initial public offering pursuant to the Underwriting Agreement. 
  
         Incentive Option:    a stock option which satisfies the requirements of Code Section 422. 
  
         Involuntary Termination:    the termination of any individual’s Service which occurs by
reason of: 
  
         (iii)    such
individual’s involuntary dismissal or discharge by the Corporation for reasons other than Misconduct, or 
  
         (iv)    such individual’s voluntary resignation following (A) a change in his or her position with the Corporation which materially reduces his or her level of
responsibility, (B) a reduction in his or her level of compensation (including base salary, fringe benefits and participation in corporate-performance based bonus or incentive programs) by more than fifteen percent (15%) or (C) a relocation of such
individual’s place of employment by more than fifty (50) miles, provided and only if such change, reduction or relocation is effected by the Corporation without the individual’s consent. 
  
         Misconduct:    the commission of any act of fraud, embezzlement
or dishonesty by the Optionee or Participant, any unauthorized use or disclosure by such person of confidential information or trade secrets of the Corporation (or any parent or subsidiary), or any other intentional misconduct by such person
adversely affecting the business or affairs of the Corporation (or any parent or subsidiary) in a material manner. The foregoing definition shall not be deemed to be inclusive of all the acts or omissions which the Corporation (or any parent or
subsidiary) may consider as grounds for the dismissal or discharge of any Optionee, Participant or other person in the Service of the Corporation (or any parent or subsidiary). 
  
         1933 Act:    the Securities Act of 1933, as amended from time to time. 
  
         1934 Act:    the Securities Exchange Act of 1934, as amended
from time to time. 
 

 3 

  
         Non-Statutory
Option:    a stock option not intended to meet the requirements of Code Section 422. 
  
         Optionee:    a person to whom an option is granted under the Discretionary Option Grant or Automatic Option Grant Program. 
  
         Participant:    a person who is issued Common Stock under the
Stock Issuance Program. 
  
         Plan
Administrator:    either the Board, the Primary Committee or a Secondary Committee, to the extent such entity is at the time responsible for the administration of the Plan in accordance with Section IV of Article One.

  
         Plan Effective Date:    March 4, 1996.

  
         Primary Committee:    the committee of
two (2) or more non-employee Board members appointed by the Board to administer the Plan with respect to Section 16 Insiders. 
  
         Secondary Committee:    a committee of one or more Board members appointed by the Board to administer the Discretionary Option Grant and Stock Issuance
Programs with respect to eligible persons other than Section 16 Insiders. 
  
         Service:    the performance of services on a periodic basis for the Corporation (or any parent or subsidiary corporation) in the capacity of an Employee, a
non-employee member of the board of directors or an independent consultant or advisor, except to the extent otherwise specifically provided in the applicable stock option or stock issuance agreement. 
  
         10% Stockholder:    the owner of stock (as determined under
Code Section 424(d)) possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Corporation or any parent or subsidiary corporation. 
  
         B.    The following provisions shall be applicable in determining the parent and
subsidiary corporations of the Corporation: 
  
         Any
corporation (other than the Corporation) in an unbroken chain of corporations ending with the Corporation shall be considered to be a parent of the Corporation, provided each such corporation in the unbroken chain (other than the Corporation)
owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. 
  

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

 4 

  
 III.  STRUCTURE OF THE PLAN 
  
         A.    Stock Programs.    The Plan
shall be divided into three (3) separate components: the Discretionary Option Grant Program specified in Article Two, the Stock Issuance Program specified in Article Three and the Automatic Option Grant Program specified in Article Four. Under the
Discretionary Option Grant Program, eligible individuals may, at the discretion of the Plan Administrator, be granted options to purchase shares of Common Stock in accordance with the provisions of Article Two. Under the Stock Issuance Program,
eligible individuals may be issued shares of Common Stock directly, either through the immediate purchase of such shares at a price not less than one hundred percent (100%) of the Fair Market Value of the shares at the time of issuance or as a bonus
for services rendered the Corporation. Under the Automatic Option Grant Program, each individual serving as a non-employee Board member on the Automatic Option Grant Program Effective Date and each individual who first joins the Board as a
non-employee director at any time after such Effective Date shall at periodic intervals receive option grants to purchase shares of Common Stock in accordance with the provisions of the Automatic Option Grant Program of Article Four, with the first
such grants to be made on the Automatic Option Grant Program Effective Date. 
  
         B.    General Provisions.    Unless the context clearly indicates otherwise, the provisions of Articles One and Five shall apply to
the Discretionary Option Grant Program, the Automatic Option Grant Program and the Stock Issuance Program and shall accordingly govern the interests of all individuals under the Plan. 
  
         IV.  ADMINISTRATION OF THE PLAN 
  
         A.    The Primary Committee shall have sole and exclusive authority to administer the Discretionary Option Grant and Stock Issuance
Programs with respect to Section 16 Insiders. Administration of the Discretionary Option Grant and Stock Issuance Programs with respect to all other persons eligible to participate in those programs may, at the Board’s discretion, be vested in
the Primary Committee or a Secondary Committee, or the Board may retain the power to administer those programs with respect to all such persons. 
  
         B.    Members of the Primary Committee or any Secondary Committee shall serve for such period of time as the Board may determine and
may be removed by the Board at any time. The Board may also at any time terminate the functions of any Secondary Committee and reassume all powers and authority previously delegated to such committee. 
  
         C.    Each Plan Administrator shall, within the scope of its
administrative functions under the Plan, have full power and authority (subject to the provisions of the Plan) to establish such rules and regulations as it may deem appropriate for proper administration of the Discretionary Option Grant and Stock
Issuance Programs and to make such determinations under, and issue such interpretations of, the provisions of such programs and any outstanding options or stock issuances thereunder as it may deem necessary or advisable. Decisions of the Plan
Administrator within the scope of its administrative functions under the Plan shall be final and binding on all parties who have an interest in the Discretionary Option Grant and Stock Issuance Programs under its jurisdiction or any option or stock
issuance thereunder. 
 

 5 

  
         D.    Administration of the Automatic Option Grant Program shall be self-executing in accordance with the express terms and conditions of Article Four, and the Plan
Administrator shall exercise no discretionary functions with respect to the grant of options pursuant to that program, but may amend such options in accordance with the provisions of Article Four. 
  
 V.    OPTION GRANTS AND STOCK ISSUANCES 
  
         A.    The persons eligible to participate in the Discretionary Option Grant Program under Article Two
and the Stock Issuance Program under Article Three shall be limited to the following: 
  
         (i)    officers and other key employees of the Corporation (or its parent or subsidiary corporations) who render services which contribute to the management, growth
and financial success of the Corporation (or its parent or subsidiary corporations); 
  
         (ii)    non-employee members of the Board; and 
  
         (iii)    those consultants or other independent advisors who provide valuable services to the Corporation (or its parent or
subsidiary corporations). 
  
         B.    A Board
member shall not vote as a member of the Board or a member of a committee concerning any award, or amendment of any award, to such Board member pursuant to the Discretionary Option Grant Program or the Stock Issuance Program, other than an award or
amendment that applies uniformly to all non-employee Board members and shall absent himself or herself from the discussion of any such award. 
  
         C.    The Plan Administrator shall have full authority to determine, (i) with respect to the option grants made under the
Discretionary Option Grant Program, which eligible individuals are to receive option grants, the time or times when such options are to be granted, the number of shares to be covered by each such grant, the status of the granted option as either an
Incentive Option or a Non-Statutory Option, the time or times at which each granted option is to become exercisable and the maximum term for which the option may remain outstanding, and (ii) with respect to stock issuances under the Stock Issuance
Program, the number of shares to be issued to each Participant, the vesting schedule (if any) to be applicable to the issued shares and the consideration for which such shares are to be issued. 
  

VI.    STOCK SUBJECT TO THE PLAN 
  
         A.    The stock issuable under the Plan shall be shares of authorized but unissued or reacquired Common Stock, including shares
repurchased by the Corporation on the open market. The maximum number of shares of Common Stock which may be issued over the term of the Plan shall not exceed 1,861,847 shares. Such authorized share reserve consists of (i) the 1,111,847 shares
initially reserved under the Plan, (ii) an additional 350,000 shares added to the 
 

 6 

  
 Plan as authorized by the Board in February 1998 and subsequently approved by the stockholders, (iii) an
additional 100,000 shares added to the Plan as authorized by the Board in May 2000 and subsequently approved by the stockholders plus (iv) an increase of 300,000 shares authorized by the Board in May 2001 and subsequently approved by the
stockholders. 
  
         B.    In no event shall the
aggregate number of shares of Common Stock for which any one individual participating in the Plan may be granted stock options and direct stock issuances exceed 250,793 shares per calendar year. 
  

        C.    Should one or more outstanding options under this Plan expire or terminate for any reason
prior to exercise in full (including any option cancelled in accordance with the cancellation-regrant provisions of Section IV of Article Two of the Plan), then the shares subject to the portion of each option not so exercised shall be available for
subsequent option grants under the Plan. Unvested shares issued under the Plan and subsequently cancelled or repurchased by the Corporation, at the original issue price paid per share, pursuant to the Corporation’s repurchase rights under the
Plan shall be added back to the number of shares of Common Stock reserved for issuance under the Plan and shall accordingly be available for reissuance through one or more subsequent option grants or direct stock issuances under the Plan. Should the
exercise price of an outstanding option under the Plan be paid with shares of Common Stock or should shares of Common Stock otherwise issuable under the Plan be withheld by the Corporation in satisfaction of the withholding taxes incurred in
connection with the exercise of an outstanding option under the Plan or the vesting of a direct share issuance made under the Plan, then the number of shares of Common Stock available for issuance under the Plan shall be reduced by the gross number
of shares for which the option is exercised or which vest under the share issuance, and not by the net number of shares of Common Stock actually issued to the holder of such option or share issuance. 
  
         D.    Should any change be made to the Common Stock issuable under the
Plan by reason of any stock split, stock dividend, recapitalization, combination of shares, exchange of shares or other change affecting the outstanding Common Stock as a class without the Corporation’s receipt of consideration, then
appropriate adjustments shall be made to (i) the maximum number and/or class of securities issuable under the Plan, (ii) the maximum number and/or class of securities for which any one individual participating in the Plan may be granted stock
options and direct stock issuances in the aggregate per calendar year, (iii) the number and/or class of securities for which automatic option grants are to be subsequently made per eligible non-employee Board member under the Automatic Option Grant
Program and (iv) the number and/or class of securities and price per share in effect under each option outstanding under either the Discretionary Option Grant or Automatic Option Grant Program. Such adjustments to the outstanding options are to be
effected in a manner which shall preclude the enlargement or dilution of rights and benefits under such options. The adjustments determined by the Plan Administrator shall be final, binding and conclusive. 
 

 7 

  
 ARTICLE TWO 
  
 DISCRETIONARY OPTION GRANT PROGRAM 
  
 I.    TERMS AND CONDITIONS OF OPTIONS 
  
         Options granted pursuant to the Discretionary Option Grant Program shall be authorized by action of the Plan Administrator and may, at the Plan Administrator’s discretion, be
either Incentive Options or Non-Statutory Options. Individuals who are not Employees of the Corporation or its parent or subsidiary corporations may only be granted Non-Statutory Options. Each granted option shall be evidenced by one or more
instruments in the form approved by the Plan Administrator; provided, however, that each such instrument shall comply with the terms and conditions specified below. Each instrument evidencing an Incentive Option shall, in addition, be subject
to the applicable provisions of Section II of this Article Two. 
  
         A.    Exercise Price. 
  
                 1.    The exercise price per share shall be fixed by the Plan Administrator in accordance with the following
provisions: 
  
                 (i)    The exercise price per share of Common Stock subject to an Incentive Option shall in no event be less than one
hundred percent (100%) of the Fair Market Value of such Common Stock on the grant date. 
  
                 (ii)    The exercise price per share of Common Stock subject to a Non-Statutory Option shall in no event be less than
eighty-five percent (85%) of the Fair Market Value of such Common Stock on the grant date. 
  
                 2.    The exercise price shall become immediately due upon exercise of the option and shall, subject to the
provisions of Section I of Article Five, be payable as follows: 
  
                 (i)    in cash or check made payable to the Corporation; 
  
                 (ii)    in shares of Common Stock held
by the Optionee for the requisite period necessary to avoid a charge to the Corporation’s earnings for financial reporting purposes and valued at Fair Market Value on the Exercise Date, or 
  

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

 8 

  
 reason of such purchase and (b) to the Corporation to deliver the certificates
for the purchased shares directly to such brokerage firm in order to complete the sale transaction. 
  
                 3.    Except to the extent such sale and remittance procedure is utilized, payment of the exercise price for the
purchased shares must be made on the Exercise Date. 
  
         B.    Term and Exercise of Options.    Each option granted under this Discretionary Option Grant Program shall be exercisable at
such time or times and during such period as is determined by the Plan Administrator and set forth in the instrument evidencing the grant. No such option, however, shall have a maximum term in excess of ten (10) years from the grant date.

  
         During the lifetime of the Optionee, Incentive Options shall be
exercisable only by the Optionee and shall not be assignable or transferable by the Optionee other than by will or by the laws of descent and distribution following the Optionee’s death. However, a Non-Statutory Option may, in connection with
the Optionee’s estate plan, be assigned in whole or in part during the Optionee’s lifetime to one or more members of the Optionee’s immediate family or to a trust established exclusively for one or more such family members. The
assigned portion may only be exercised by the person or persons who acquire a proprietary interest in the option pursuant to the assignment. The terms applicable to the assigned portion shall be the same as those in effect for the option immediately
prior to such assignment and shall be set forth in such documents issued to the assignee as the Plan Administrator may deem appropriate. 
  
         C.    Termination of Service. 
  
                 1.    Except to the extent otherwise provided pursuant to subsection C.2 below, the following provisions
shall govern the exercise period applicable to any options held by the Optionee at the time of cessation of Service or death: 
  
                 (i)    Should the Optionee cease to remain in Service for any reason other than death
or Disability, then the period during which each outstanding option held by such Optionee is to remain exercisable shall be limited to the three (3)-month period following the date of such cessation of Service. 
  
                 (ii)    Should such Service terminate by reason of Disability, then the period during which each outstanding option
held by the Optionee is to remain exercisable shall be limited to the twelve (12)-month period following the date of such cessation of Service. 
  
                 (iii)    Should the Optionee die while holding one or more outstanding options, then
the period during which each such option is to remain exercisable shall be limited to the twelve (12)-month period following the date of the Optionee’s death. During such limited period, the option may be exercised by the personal
representative of the Optionee’s estate or by the person or persons to 
 

 9 

  
 whom the option is transferred pursuant to the Optionee’s will or in
accordance with the laws of descent and distribution. 
  
         (iii)    Should the Optionee’s Service be terminated for Misconduct, then all outstanding options held by the Optionee shall terminate immediately and cease to
be outstanding. 
  
         (iv)    Under
no circumstances, however, shall any such option be exercisable after the specified expiration date of the option term. 
  
         (v)    During the applicable post-Service exercise period, the option may not be exercised in the aggregate for more than the number of vested shares for
which the option is exercisable on the date of the Optionee’s cessation of Service. Upon the expiration of the applicable exercise period or (if earlier) upon the expiration of the option term, the option shall terminate and cease to be
exercisable for any vested shares for which the option has not been exercised. However, the option shall, immediately upon the Optionee’s cessation of Service for any reason, terminate and cease to be outstanding with respect to any option
shares for which the option is not at that time exercisable or in which the Optionee is not otherwise at that time vested. 
  
         (vi)    In the event of an Involuntary Termination following a Corporate Transaction or a Change in Control, the provisions of Section III of this Article
Two shall govern the period for which the outstanding options are to remain exercisable following the Optionee’s cessation of Service and shall supersede any provisions to the contrary in this Section. 
  
         2.    The Plan Administrator shall have complete discretion,
exercisable either at the time the option is granted or at any time while the option remains outstanding, 
  
 –    to extend the period of time for which the option is to remain exercisable following the Optionee’s cessation of Service or death from the limited period in effect under subsection C.1 of this
Article Two to such greater period of time as the Plan Administrator shall deem appropriate; provided, that in no event shall such option be exercisable after the specified expiration date of the option term; and/or 
  
 –    to permit one or more options held by the Optionee under this Article Two to be exercised,
during the limited post-Service exercise period applicable under this paragraph C., not only with respect to the number of vested shares of Common Stock for which each such option is exercisable at the time of the Optionee’s cessation of
Service but also with respect to one or more subsequent installments in which the Optionee would otherwise have vested had such cessation of Service not occurred. 
 

 10 

  
         D.  Stockholder
Rights.  An Optionee shall have no stockholder rights with respect to any shares covered by the option until such individual shall have exercised the option, paid the exercise price and become the holder of record of the purchased
shares. 
  
         E.  Unvested
Shares.    The Plan Administrator shall have the discretion to authorize the issuance of unvested shares of Common Stock under this Discretionary Option Grant Program. Should the Optionee cease Service while holding such
unvested shares, the Corporation shall have the right to repurchase, at the exercise price paid per share any or all of those unvested shares. The terms and conditions upon which such repurchase right shall be exercisable (including the period and
procedure for exercise and the appropriate vesting schedule for the purchased shares) shall be established by the Plan Administrator and set forth in the agreement evidencing such repurchase right. 
  
 II.    INCENTIVE OPTIONS 
  
         Incentive Options may only be granted to individuals who are Employees, and the terms and conditions specified below shall
be applicable to all Incentive Options granted under the Plan. Except as modified by the provisions of this Section II, all provisions of Articles One, Two and Five shall be applicable to Incentive Options. Any Options specifically designated as
Non-Statutory shall not be subject to such terms and conditions. 
  
         A.  Dollar Limitation.    The aggregate Fair Market Value (determined as of the respective date or dates of grant) of the Common Stock for
which one or more options granted to any Employee under this Plan (or any other option plan of the Corporation or its parent or subsidiary corporations) may for the first time become exercisable as incentive stock options under the Federal tax laws
during any one calendar year shall not exceed the sum of One Hundred Thousand Dollars ($100,000). To the extent the Employee holds two (2) or more such options which become exercisable for the first time in the same calendar year, the foregoing
limitation on the exercisability of such options as incentive stock options under the Federal tax laws shall be applied on the basis of the order in which such options are granted. Should the number of shares of Common Stock for which any Incentive
Option first becomes exercisable in any calendar year exceed the applicable One Hundred Thousand Dollar ($100,000) limitation, then that option may nevertheless be exercised in that calendar year for the excess number of shares as a Non-Statutory
Option under the Federal tax laws. 
  
         B.  10%
Stockholder.    If any individual to whom an Incentive Option is granted is a 10% Stockholder, then the exercise price per share shall not be less than one hundred-ten percent (110%) of the Fair Market Value per
share of Common Stock on the grant date, and the option term shall not exceed five (5) years measured from the grant date. 
  
 III.    CORPORATE TRANSACTION/CHANGE IN CONTROL 
  
         A.  In the event of any Corporate Transaction, each outstanding option shall automatically accelerate so that each such option shall, immediately prior to the effective date
of the Corporate Transaction, become fully exercisable with respect to the total number of shares of Common Stock at the time subject to such option and may be exercised for any or all of those 
 

 11 

  
 shares as fully-vested shares of Common Stock. However, an outstanding option shall not so accelerate if
and to the extent: (i) such option is, in connection with the Corporate Transaction, either to be assumed by the successor corporation (or parent thereof) or to be replaced with a comparable option to purchase shares of the capital stock of the
successor corporation (or parent thereof), (ii) such option is to be replaced with a cash incentive program of the successor corporation which preserves the spread existing on the unvested option shares at the time of the Corporate Transaction and
provides for subsequent payout in accordance with the same vesting schedule applicable to such option or (iii) the acceleration of such option is subject to other limitations imposed by the Plan Administrator at the time of the option grant. The
determination of option comparability under clause (i) above shall be made by the Plan Administrator, and its determination shall be final, binding and conclusive. 
  
         B.    All outstanding repurchase rights shall also terminate automatically, and the shares of Common
Stock subject to those terminated rights shall immediately vest in full, in the event of any Corporate Transaction, except to the extent: (i) those repurchase rights are to be assigned to the successor corporation (or parent thereof) in connection
with such Corporate Transaction or (ii) such accelerated vesting is precluded by other limitations imposed by the Plan Administrator at the time the repurchase right is issued. 
  
         C.    Immediately following the consummation of the Corporate Transaction, all outstanding options shall
terminate and cease to be outstanding, except to the extent assumed by the successor corporation (or parent thereof). 
  
         D.    Each option which is assumed in connection with a Corporate Transaction shall be appropriately adjusted, immediately after such Corporate Transaction, to apply
to the number and class of securities which would have been issuable to the Optionee in consummation of such Corporate Transaction had the option been exercised immediately prior to such Corporate Transaction. Appropriate adjustments to reflect such
Corporate Transaction shall also be made to (i) the exercise price payable per share under each outstanding option, provided the aggregate exercise price payable for such securities shall remain the same, (ii) the maximum number and/or class of
securities available for issuance under the remaining term of the Plan and (iii) the maximum number and/or class of securities for which any one person may be granted stock options and direct stock issuances under the Plan per calendar year.

  
         E.    The Plan Administrator shall have full
power and authority to grant options under the Discretionary Option Grant Program which will automatically accelerate in the event the Optionee’s Service subsequently terminates by reason of an Involuntary Termination within a designated period
(not to exceed twelve (12) months) following the effective date of any Corporate Transaction in which those options are assumed or replaced and do not otherwise accelerate. Any options so accelerated shall remain exercisable for fully-vested shares
until the earlier of (i) the expiration of the option term or (ii) the expiration of the one (1)-year period measured from the effective date of the Involuntary Termination. In addition, the Plan Administrator may structure one or more of the
Corporation’s outstanding repurchase rights so that those rights shall immediately terminate with respect to any unvested shares held by the Optionee at the time of such Involuntary Termination, and the shares subject to those terminated
repurchase rights shall accordingly vest in full upon such Involuntary Termination. 
 

 12 

  
         F.    The
Plan Administrator shall have full power and authority to grant options under the Discretionary Option Grant Program which will automatically accelerate in the event the Optionee’s Service subsequently terminates by reason of an Involuntary
Termination within a designated period (not to exceed twelve (12) months) following the effective date of any Change in Control. Each option so accelerated shall remain exercisable for fully-vested shares until the earlier of (i) the
expiration of the option term or (ii) the expiration of the one (1)-year period measured from the effective date of the Involuntary Termination. In addition, the Plan Administrator may structure one or more of the Corporation’s outstanding
repurchase rights so that those rights shall immediately terminate with respect to any unvested shares held by the Optionee at the time of such Involuntary Termination, and the shares subject to those terminated repurchase rights shall accordingly
vest in full. 
  
         G.    The portion of any
Incentive Option accelerated in connection with a Corporate Transaction or Change in Control shall remain exercisable as an Incentive Option only to the extent the applicable One Hundred Thousand Dollar limitation is not exceeded. To the extent such
dollar limitation is exceeded, the accelerated portion of such option shall be exercisable as a Non-Statutory Option under the Federal tax laws. 
  
         H.    The outstanding options shall in no way affect the right of the Corporation to adjust, reclassify, reorganize or otherwise
change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets. 
  
 IV.    CANCELLATION AND REGRANT OF OPTIONS 
  
         The Plan Administrator shall have the authority to effect, at any time and from time to time, with the consent of the affected Optionees, the cancellation of any or all outstanding
options under this Article Two and to grant in substitution new options under the Plan covering the same or different numbers of shares of Common Stock but with an exercise price per share not less than (i) one hundred percent (100%) of the Fair
Market Value per share of Common Stock on the new grant date in the case of a grant of an Incentive Option, (ii) one hundred ten percent (110%) of such Fair Market Value in the case of a grant of an Incentive Option to a 10% Stockholder or (iii)
eighty-five percent (85%) of such Fair Market Value in the case of all other grants. 
 

 13 

  
 ARTICLE THREE 
  
 STOCK ISSUANCE PROGRAM 
  
 I.    TERMS AND CONDITIONS OF STOCK ISSUANCES 
  
         Shares of Common Stock may be issued under the Stock Issuance Program directly without any intervening option grants. Each such stock issuance shall be evidenced by a Stock Issuance
Agreement which complies with the terms specified below. 
  
         A.    The shares shall be issued for such valid consideration as the Plan Administrator may deem appropriate, but the value of such consideration as determined by
the Plan Administrator shall not be less than one hundred percent (100%) of the Fair Market Value of the issued shares of Common Stock on the issuance date. 
  
         B.    The Plan Administrator shall have full power and authority to issue shares of Common Stock under the Stock Issuance Program as
a bonus for past services rendered to the Corporation (or any parent or subsidiary). All such bonus shares shall be fully and immediately vested upon issuance. 
  
         C.    Subject to the provisions of Section I of Article Five, shares of Common Stock may be issued under the Stock Issuance Program
for any of the following items of consideration which the Plan Administrator may deem appropriate in each individual instance: (i) cash or check made payable to the Corporation, or (ii) past services rendered to the Corporation (or any Parent or
Subsidiary). 
  
         D.    Shares of Common Stock
issued under the Stock Issuance Program may, in the discretion of the Plan Administrator, be fully and immediately vested upon issuance or may vest in one or more installments over the Participant’s period of Service or upon attainment of
specified performance objectives. The elements of the vesting schedule applicable to any unvested shares of Common Stock issued under the Stock Issuance Program, namely: 
  
         (i)    the Service period to be completed by the Participant or the performance
objectives to be attained, 
  
         (ii)    the number of installments in which the shares are to vest, 
  
         (iii)    the interval or intervals (if any) which are to lapse between installments, and

  
         (iv)    the effect which
death, Permanent Disability or other event designated by the Plan Administrator is to have upon the vesting schedule, shall be determined by the Plan Administrator and incorporated into the Stock Issuance Agreement. 
 

 14 

  
         E.    Any
new, substituted or additional securities or other property (including money paid other than as a regular cash dividend) which the Participant may have the right to receive with respect to the Participant’s unvested shares of Common Stock by
reason of any stock dividend, stock split, recapitalization, combination of shares, exchange of shares or other change affecting the outstanding Common Stock as a class without the Corporation’s receipt of consideration shall be issued subject
to (i) the same vesting requirements applicable to the Participant’s unvested shares of Common Stock and (ii) such escrow arrangements as the Plan Administrator shall deem appropriate. 
  
         F.    The Participant shall have full stockholder rights with respect to any shares of Common Stock
issued to the Participant under the Stock Issuance Program, whether or not the Participant’s interest in those shares is vested. Accordingly, the Participant shall have the right to vote such shares and to receive any regular cash dividends
paid on such shares. 
  
         G.    Should the
Participant cease to remain in Service while holding one or more unvested shares of Common Stock issued under the Stock Issuance Program or should the performance objectives not be attained with respect to one or more such unvested shares of Common
Stock, then those shares shall be immediately surrendered to the Corporation for cancellation, and the Participant shall have no further stockholder rights with respect to those shares. To the extent the surrendered shares were previously issued to
the Participant for consideration paid in cash or cash equivalent (including the Participant’s purchase-money indebtedness), the Corporation shall repay to the Participant the cash consideration paid for the surrendered shares and shall cancel
the unpaid principal balance of any outstanding purchase-money note of the Participant attributable to such surrendered shares. 
  
         H.    The Plan Administrator shall have full power and authority, exercisable upon a Participant’s termination of Service, to waive the surrender and
cancellation of any or all unvested shares of Common Stock (or other assets attributable thereto) at the time held by that Participant, if the Plan Administrator determines such waiver to be an appropriate severance benefit for the Participant.

  
 II.    CORPORATE TRANSACTION/CHANGE IN CONTROL 
  
         A.    All of the Corporation’s outstanding repurchase rights
under the Stock Issuance Program shall terminate automatically, and all the shares of Common Stock subject to those terminated rights shall immediately vest in full, in the event of any Corporate Transaction, except to the extent (i) those
repurchase rights are assigned to the successor corporation (or parent thereof) in connection with such Corporate Transaction or (ii) such accelerated vesting is precluded by other limitations imposed in the Stock Issuance Agreement. 

 
         B.    The Plan Administrator shall have the discretionary
authority to structure one or more of the Corporation’s repurchase rights under the Stock Issuance Program in such manner that those repurchase rights shall automatically terminate, and all the shares of Common Stock subject to those terminated
rights shall immediately vest in full, in the event the Participant’s Service should subsequently terminate by reason of an Involuntary Termination within twelve 
 

 15 

  
 (12) months following the effective date of any Corporate Transaction in which those repurchase rights
are assigned to the successor corporation (or parent thereof). 
  
         C.    The Plan Administrator shall have the discretionary authority to structure one or more of the Corporation’s repurchase rights under the Stock Issuance
Program in such manner that those repurchase rights shall automatically terminate, and all the shares of Common Stock subject to those terminated rights shall immediately vest in full, in the event the Participant’s Service should subsequently
terminate by reason of an Involuntary Termination within twelve (12) months following the effective date of any Change in Control. 
  
 III.    SHARE ESCROW/LEGENDS 
  
 Unvested shares may, in the Plan
Administrator’s discretion, be held in escrow by the Corporation until the Participant’s interest in such shares vests or may be issued directly to the Participant with restrictive legends on the certificates evidencing those unvested
shares. 
 

 16 

  
 ARTICLE FOUR 
  
 AUTOMATIC OPTION GRANT PROGRAM 
  
 I.      ELIGIBILITY 
  
         The individuals eligible to receive automatic option grants pursuant to the provisions of this Article Four program shall be limited to those individuals who are serving as non-employee
Board members or who are first elected or appointed as non-employee Board members, whether through appointment by the Board or election by the Corporation’s stockholders. 
  
 II.    TERMS AND CONDITIONS OF AUTOMATIC OPTION GRANTS 
  
         A.    Grant Dates.    Option grants shall be made under this Article Four on the dates specified
below: 
  
                 1.    Initial Grant.    Each individual who is first elected or appointed as a
non-employee Board member after the Automatic Option Grant Program Effective Date shall automatically be granted, on the date of such initial election or appointment, a Non-Statutory Option to purchase 13,376 shares of Common Stock upon the terms
and conditions of this Article Four. In no event, however, shall a non-employee Board member be eligible to receive such an initial option grant if such individual has at any time been in the prior employ of the Corporation (or any parent or
subsidiary corporation). 
  
                 2.    Annual Grant.    On the date of each Annual Stockholders Meeting (beginning
with the 2002 Annual Stockholders Meeting), each individual who will continue to serve as a non-employee Board member shall automatically be granted, whether or not such individual is standing for re-election as a Board member at that Annual
Meeting, a Non-Statutory Option to purchase an additional 2,500 shares of Common Stock upon the terms and conditions of this Article Four, provided he or she has served as a non-employee Board member for at least six (6) months prior to the date of
such Annual Meeting. Non-employee Board members who have previously been in the employ of the Corporation (or any parent or subsidiary) shall be eligible to receive such annual option grants over their continued period of Board service.

  
         There shall be no limit on the number of shares for which any one
non-employee Board member may be granted stock options under this Article Four over his or her period of Board service. 
  
         B.    Exercise Price.    The exercise price per share of Common Stock subject to each automatic option grant made under this
Article Four shall be equal to one hundred percent (100%) of the Fair Market Value per share of Common Stock on the automatic grant date. 
 

 17 

  
         C.    Payment.    The exercise price shall be payable in one of the alternative forms specified below: 

 
         (i)    full payment in cash or check drawn
to the Corporation’s order; 
  
         (ii)    full payment in shares of Common Stock held for the requisite period necessary to avoid a charge to the Corporation’s earnings for financial reporting
purposes and valued at Fair Market Value on the Exercise Date (as such term is defined below); 
  
         (iii)    full payment in a combination of shares of Common Stock held for the requisite period necessary to avoid a charge to the Corporation’s earnings for
financial reporting purposes and valued at Fair Market Value on the Exercise Date and cash or check drawn to the Corporation’s order; or 
  
         (iv)    to the extent the option is exercised for vested shares, full payment through a sale and remittance procedure pursuant to
which the Optionee shall provide irrevocable written instructions to (I) a Corporation-designated brokerage firm to effect the immediate sale of the purchased shares and remit to the Corporation, out of the sale proceeds available on the settlement
date, sufficient funds to cover the aggregate exercise price payable for the purchased shares and (II) the Corporation to deliver the certificates for the purchased shares directly to such brokerage firm in order to complete the sale transaction.

  
         Except to the extent the sale and remittance procedure specified
above is used for the exercise of the option for vested shares, payment of the exercise price for the purchased shares must accompany the exercise notice. 
  
         D.    Option Term.    Each automatic grant under this Article Four shall have a
maximum term of ten (10) years measured from the automatic grant date. 
  
         E.    Exercisability/Vesting.    Each automatic grant shall be immediately exercisable for any or all of the option
shares. However, any shares purchased under the option shall be subject to repurchase by the Corporation, at the exercise price paid per share, upon the Optionee’s cessation of Board service prior to vesting in those shares in accordance with
the applicable schedule below: 
  
         Initial
Grant.    Each initial 13,376-share automatic grant shall vest, and the Corporation’s repurchase right shall lapse, in a series of three (3) equal and successive annual installments over the Optionee’s period of
continued service as a Board member, with the first such installment to vest upon Optionee’s completion of one (1) year of Board service measured from the automatic grant date. 
 

 18 

  
         Annual
Grant.    Each additional 2,500-share automatic grant shall vest, and the Corporation’s repurchase right shall lapse, upon the Optionee’s completion of one (1) year of Board service measured from the automatic grant
date. 
  
         F.    Limited
Transferability.    Each automatic option grant may, in connection with the Optionee’s estate plan, be assigned in whole or in part during the Optionee’s lifetime to one or more members of the
Optionee’s immediate family or to a trust established exclusively for one or more such family members. The assigned portion may only be exercised by the person or persons who acquire a proprietary interest in the option pursuant to the
assignment. The terms applicable to the assigned portion shall be the same as those in effect for the option immediately prior to such assignment and shall be set forth in such documents issued to the assignee as the Plan Administrator may deem
appropriate. 
  
         G.    Effect of
Termination of Board Membership.    The following provisions shall govern the exercise of any outstanding options held by the Optionee under this Article Four at the time the Optionee ceases to serve as a Board
member: 
  
         (i)    The Optionee
(or, in the event of Optionee’s death, the personal representative of the Optionee’s estate or the person or persons to whom the option is transferred pursuant to the Optionee’s will or in accordance with the laws of descent and
distribution) shall have a two (2)-year period following the date of such cessation of Board service in which to exercise each such option. However, each option shall, immediately upon the Optionee’s cessation of Board service, terminate and
cease to remain outstanding with respect to any option shares in which the Optionee is not otherwise vested on the date of such cessation of Board service. 
  
         (ii)    During the two (2)-year period, the option may not be exercised in the aggregate
for more than the number of vested shares for which the option is exercisable at the time of the Optionee’s cessation of Board service. However, should the Optionee cease to serve as a Board member by reason of death or Disability, then all
shares at the time subject to the option shall immediately vest so that such option may, during the two (2)-year exercise period following such cessation of Board service, be exercised for all or any portion of such shares as fully-vested shares.

  
         (iii)    In no event shall
the option remain exercisable after the expiration of the option term. 
  
         H.    Stockholder Rights.    The holder of an automatic option grant under this Article Three shall have none of the
rights of a stockholder with respect to any shares subject to such option until such individual shall have exercised the option, paid the exercise price and become the holder of record of the purchased shares. 
 

 19 

  
         I.    Remaining Terms.    The remaining terms and conditions of each automatic option grant shall be the same as the
terms for option grants made under the Discretionary Option Grant Program. 
  
         III.    CORPORATE TRANSACTION/CHANGE IN CONTROL 
  
         A.    In the event of any Corporate Transaction, the shares of Common Stock at the time subject to each outstanding option under this Article Four but not
otherwise vested shall automatically vest in full so that each such option shall, immediately prior to the specified effective date for the Corporate Transaction, become fully exercisable for all of the shares of Common Stock at the time subject to
that option and may be exercised for all or any portion of those shares as fully-vested shares of Common Stock. Immediately following the consummation of the Corporate Transaction, all automatic option grants under this Article Four shall terminate
and cease to be outstanding, except to the extent assumed by the successor corporation or parent thereof. 
  
         B.    Each outstanding option under this Article Four which is assumed in connection with a Corporate Transaction outstanding shall be appropriately adjusted,
immediately after such Corporate Transaction, to apply and pertain to the number and class of securities which would have been issuable to the Optionee in the consummation of such Corporate Transaction, had the option been exercised immediately
prior to such Corporate Transaction. Appropriate adjustments shall also be made to (i) the class and number of securities available for issuance under the Plan following the consummation of such Corporate Transaction, and (ii) the exercise price
payable per share, provided the aggregate exercise price payable for such securities shall remain the same. 
  
         C.    In connection with any Change in Control of the Corporation, the shares of Common Stock at the time subject to each outstanding option under this Article Four
but not otherwise vested shall automatically vest in full so that each such option shall, immediately prior to the specified effective date for the Change in Control, become fully exercisable for all of the shares of Common Stock at the time subject
to that option and may be exercised for all or any portion of those shares as fully-vested shares of Common Stock. Each such option shall remain so exercisable for all the option shares following the Change in Control, until the expiration or sooner
termination of the option term. 
  
         D.    The
automatic option grants outstanding under this Article Four shall in no way affect the right of the Corporation to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or
sell or transfer all or any part of its business or assets. 
 

 20 

  
 ARTICLE FIVE 
 MISCELLANEOUS 
  
 I.    LOANS OR INSTALLMENT
PAYMENTS 
  
         A.    The Plan
Administrator may, in its discretion, assist any Optionee or Participant (including an Optionee or Participant who is an officer of the Corporation) in the exercise of one or more options granted to such Optionee under the Discretionary Option Grant
Program or the purchase of one or more shares issued to such Participant under the Stock Issuance Program, including the satisfaction of any Federal, state and local income and employment tax obligations arising therefrom, by (i) authorizing the
extension of a loan from the Corporation to such Optionee or Participant or (ii) permitting the Optionee or Participant to pay the exercise price or purchase price for the purchased Common Stock in installments over a period of years. The terms of
any loan or installment method of payment (including the interest rate and terms of repayment) shall be upon such terms as the Plan Administrator specifies in the applicable option or issuance agreement or otherwise deems appropriate at the time
such exercise price or purchase price becomes due and payable. Loans or installment payments may be authorized with or without security or collateral. In all events, the maximum credit available to the Optionee or Participant may not exceed the
option or purchase price of the acquired shares (less the par value of such shares) plus any Federal, state and local income and employment tax liability incurred by the Optionee or Participant in connection with the acquisition of such shares.

  
         B.    The Plan Administrator may, in its
absolute discretion, determine that one or more loans extended under this financial assistance program shall be subject to forgiveness in whole or in part upon such terms and conditions as the Plan Administrator may deem appropriate. 

 
 II.    AMENDMENT OF THE PLAN AND AWARDS 
  
         A.    The Board shall have complete and exclusive power and authority
to amend or modify the Plan in any or all respects. However, no such amendment or modification shall adversely affect the rights and obligations with respect to stock options or unvested stock issuances at the time outstanding under the Plan unless
the Optionee or the Participant consents to such amendment or modification. In addition, certain amendments may require stockholder approval pursuant to applicable laws or regulations. 
  
         B.    (i)    Options to purchase shares of Common Stock may be granted under the
Discretionary Option Grant Program and (ii) shares of Common Stock may be issued under the Stock Issuance Program, which are in both instances in excess of the number of shares then available for issuance under the Plan, provided any excess shares
actually issued under the Discretionary Option Grant Program or the Stock Issuance Program are held in escrow until stockholder approval is obtained for a sufficient increase in the number of shares available for issuance under the Plan. If such
stockholder approval is not obtained within twelve (12) months after the date the first such excess option grants or excess share issuances are made, then (I) any 
 

 21 

  
 unexercised excess options shall terminate and cease to be exercisable and (II) the Corporation shall
promptly refund the purchase price paid for any excess shares actually issued under the Plan and held in escrow, together with interest (at the applicable Short Term Federal Rate) for the period the shares were held in escrow. 

 
 III.    TAX WITHHOLDING 
  
         A.    The Corporation’s obligation to deliver shares of Common Stock upon the exercise of stock
options for such shares or the vesting of such shares under the Plan shall be subject to the satisfaction of all applicable Federal, state and local income tax and employment tax withholding requirements. 
  
         B.    The Plan Administrator may, in its discretion and in accordance
with the provisions of this Section III and such supplemental rules as the Plan Administrator may from time to time adopt (including the applicable safe-harbor provisions of Rule 16b-3 of the Securities and Exchange Commission), provide any or all
holders of Non-Statutory Options (other than the automatic grants made pursuant to Article Four of the Plan) or unvested shares under the Plan with the right to use shares of Common Stock in satisfaction of all or part of the Federal, state and
local income and employment withholding tax liabilities incurred by such holders in connection with the exercise of their options or the vesting of their shares (the “Taxes”). Such right may be provided to any such holder in either or both
of the following formats: 
  
         –    The holder of the Non-Statutory Option or unvested shares may be provided with the election to have the Corporation withhold, from the shares of Common
Stock otherwise issuable upon the exercise of such Non-Statutory Option or the vesting of such shares, a portion of those shares with an aggregate Fair Market Value equal to the percentage of the applicable Taxes (not to exceed one hundred percent
(100%)) designated by the holder. 
  
         –    The Plan Administrator may, in its discretion, provide the holder of the Non-Statutory Option or the unvested shares with the election to deliver to the
Corporation, at the time the Non-Statutory Option is exercised or the shares vest, one or more shares of Common Stock previously acquired by such individual (other than in connection with the option exercise or share vesting triggering the Taxes)
with an aggregate Fair Market Value equal to the percentage of the Taxes incurred in connection with such option exercise or share vesting (not to exceed one hundred percent (100%)) designated by the holder. 
  
 IV.    EFFECTIVE DATE AND TERM OF PLAN 
  
         A.    The Discretionary Option Grant and Stock Issuance Programs of the Plan became effective on March
4, 1996, upon the adoption of the Plan by the Corporation’s Board of Directors. Such date is hereby designated the “Plan Effective Date.” In addition, the Corporation’s stockholders approved the Plan on the Plan Effective Date.
The Automatic Option 
 

 22 

  
 Grant Program became effective on January 28, 1997, in connection with the initial public offering of
the Common Stock. 
  
         B.    The Plan was amended
in February 1998 to increase the number of shares of Common Stock reserved for issuance under the Plan by an additional 350,000 shares. The Corporation’s stockholders subsequently approved the February 1998 amendment at the 1998 Annual
Stockholders Meeting. 
  
         C.    The Plan was
amended by the Board on May 20, 2000 to increase the number of shares of Common Stock reserved for issuance under the Plan by an additional 100,000 shares. The Corporation’s stockholders subsequently approved the May 2000 amendment at the 2000
Annual Stockholders Meeting. 
  
         D.    The Plan
was amended by the Board on May 12, 2001 to increase the number of shares of Common Stock reserved for issuance under the Plan by an additional 300,000 shares. The Corporation’s stockholders approved the May 2001 amendment at the 2001 Annual
Stockholders Meeting. 
  
         E.    The Plan was
amended by the Board on July 14, 2001 to increase of the number of shares subject to the annual option grants automatically made to the non-Employee Board members from 1,672 to 2,500, subject to the Corporation’s stockholder approval at the
2002 Annual Stockholders Meeting. If the Corporation’s stockholders do not approve the July 2001 amendment, then the provisions of the Plan as in effect immediately prior to the time the Board approved the July 2001 amendment shall remain in
effect, and option grants and direct stock issuances may continue to be made pursuant to those provisions of the Plan. 
  
         F.    The Plan shall terminate upon the earlier of (i) March 3, 2006 or (ii) the date on which all shares available for issuance under the Plan shall have
been issued pursuant to the exercise of the options granted under the Plan or the issuance of shares (whether vested or unvested) under the Stock Issuance Program. If the date of termination is determined under clause (i) above, then all option
grants and unvested share issuances outstanding on such date shall thereafter continue to have force and effect in accordance with the provisions of the instruments evidencing such grants or issuance. 
  
 V.    REGULATORY APPROVALS 
  
         The implementation of the Plan and the granting of any option or issuance of shares under the Plan shall be subject to the
Corporation’s procurement of all approvals and permits required by regulatory authorities having jurisdiction over the Plan, the options granted under it, and the Common Stock issued pursuant to it. 
  
 VI.    USE OF PROCEEDS 
  
         Any cash proceeds received by the Corporation from the sale of shares pursuant to option grants or share issuances under the Plan shall be used for
general corporate purposes. 
 

 23 

 VII.    NO EMPLOYMENT/SERVICE RIGHTS 
  

        Neither the action of the Corporation in establishing the Plan, nor any action taken by the Plan Administrator
hereunder, nor any provision of the Plan shall be construed so as to grant any individual the right to remain in the employ or service of the Corporation (or any parent or subsidiary corporation) for any period of specific duration, and the
Corporation (or any parent or subsidiary corporation retaining the services of such individual) may terminate such individual’s employment or service at any time and for any reason, with or without cause. 
  
 VIII.    MISCELLANEOUS PROVISIONS 
  
         A.    Except as otherwise expressly provided under the Plan, the right to acquire Common Stock or other
assets under the Plan may not be assigned, encumbered or otherwise transferred by any Optionee or Participant. 
  
         B.    The provisions of the Plan relating to the exercise of options and the vesting of shares shall be governed by the laws of the State of Delaware without resort
to that State’s conflict-of-laws rules. 
  
         C.    The provisions of the Plan shall inure to the benefit of, and be binding upon, the Corporation and its successors or assigns, whether by Corporate Transaction
or otherwise, and the Participants and Optionees, the legal representatives of their respective estates, their respective heirs or legatees and their permitted assignees. 
 

 24

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