Document:

exv10w1

Exhibit 10.1

UNITED STATES DEPARTMENT OF THE TREASURY

LENDING AGREEMENT

CREDIT AND SECURITY TERMS

1.0 SCOPE

1.1 This Agreement sets forth the terms under which an entity may, in accordance with the
Housing and Economic Recovery Act of 2008, borrow from and pledge Collateral to the United
States Department of the Treasury (Treasury).

2.0 DEFINED TERMS

Account means the account described in section 3.2 of this Agreement.

Adverse Claim has the meaning set forth in Section 9.1(d).

Application Package means the Application Package, substantially in the form of Appendix I,
which the Borrower submitted in connection with its agreement to this Agreement.

Borrower means an entity that incurs an Obligation to the Treasury.

Borrower-in-Custody or BIC Arrangement means an arrangement whereby the Treasury authorizes a
Borrower, or an affiliate of the Borrower, to retain possession of the Collateral, as described
in Section 7 of this Agreement.

Business Day means any day the Federal Reserve Bank of New York is open for conducting all
or substantially all its banking functions.

Certificate means the certificate, substantially in the form set forth in the appropriate
Application Package, provided to the Treasury by the Borrower.

Collateral means:

(i) all the Borrower’s rights, title, and interest in property as described in section
7.0 (and any other property agreed to by Treasury) that is (a) identified on a Collateral
Schedule, (b) identified on the books or records of a Reserve Bank as pledged to, or
subject to a security interest in favor of, the Treasury or (c) in the possession or
control of, or maintained with, the Treasury including;

(ii) all documents, books and
records, including programs, tapes, and related electronic data processing software,
evidencing or relating to any or all of the foregoing; and

(iii) to the extent not
otherwise included, all proceeds and products of any and all of the foregoing and all
supporting obligations given by any person with respect to any of the foregoing,
including but not limited to interest, dividends, insurance, rents and refunds.

Collateral Schedule means the written, electronic or other statement(s) listing Collateral in
effect at any time. Each statement of Collateral shall be in the form required by the Treasury and
shall identify the items of Collateral with the specificity required by the Treasury. The removal
of an item from a statement of Collateral will not be effective and will not affect the Treasury’s
security interest in the item unless such removal is made in accordance with this Agreement and the
Treasury’s procedures, including prior Treasury approval or authorization.

Event of Default means any of the following:

 

 

(i) the Borrower fails to repay or satisfy any Obligation when due;

(ii) the Borrower fails to perform or observe any of its obligations or agreements under
the Lending Agreement or under any other instrument or agreement delivered or executed
in connection with the Lending Agreement;

(iii) any representation or warranty made or
deemed to be made by the Borrower under or in connection with the Lending Agreement, or
that is contained in any certificate, document, or financial or other statement
delivered by it or in connection with the Lending Agreement, is inaccurate in any
material respect on or as of the date made or deemed made;

(iv) the Insolvency of the
Borrower;

(v) the Lending Agreement or any other agreement delivered or executed in
connection with the Lending Agreement ceases, for any reason, to be in full force and
effect, or the Borrower so asserts or any security interest or lien created hereby
ceases to be enforceable or have the same effect and priority purported to be created
hereby;

(vi) the creation of an encumbrance upon Collateral, or placement of a levy,
judicial seizure of, or an attachment upon Collateral;

(vii) whenever the Secretary of
the Treasury determines that Treasury’s position is insecure with respect to the
financial condition of the Borrower or the Borrower’s ability to perform its
Obligations.

Federal Reserve Bank means any one of the Federal Reserve Banks.

Insolvency means:

(i) the condition of insolvency;

(ii) that a proceeding relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking to adjudicate an entity bankrupt or insolvent or seeking reorganization,
adjustment, dissolution, liquidation or other relief with respect to the Borrower or the
Borrower’s debt is commenced;

(iii) that an assignment for the benefit of the Borrower’s
creditors occurs;

(iv) that a receiver is appointed for the Borrower or for any of its
United States or foreign branches or agencies;

(v) that the Borrower has been closed by
order of its supervisory authorities, or a public officer has been appointed to take over
such entity;

(vi) that the Borrower ceases or refuses to make payments in the ordinary
course of business, or admits in a record its inability to pay its debt as they become
due;

(vii) the Borrower’s business is suspended, or any party has presented or filed a
petition for winding-up or liquidating the Borrower; or

(viii) any other circumstances
that evince the Borrower’s inability to pay its debts when due.

Lending Agreement means this Agreement, any Collateral Schedule, each document in the Application
Package executed or furnished to the Treasury by the Borrower, and any other agreement or document
executed by the Borrower in connection with this Agreement, in each case as the same may be
amended, supplemented or otherwise modified from time to time.

Lending Documents has the meaning set forth in Section 8 of this Agreement

Letter of Agreement means the Letter of Agreement, substantially in the form found in Appendix I
pursuant to which the Borrower agrees to be bound by the terms of this Agreement.

 

 

Loan means an extension of credit to the Borrower.

Loan Repayment Amount means the amount of a Loan, plus all accrued and unpaid interest thereon.

Obligation, whether now existing or hereafter incurred, means:

(i) Loan Repayment Amounts;

(ii) any other liabilities of the Borrower to the Treasury; and

(iv) any expense the Treasury
or its designee(s) may incur to:

a. obtain, preserve and/or enforce the Lending Agreement or
the Treasury’s security interest in Collateral and the Borrower’s Obligations under the
Lending Agreement,

b. collect any or all of the foregoing, or

c. assemble, transport, maintain
or preserve Collateral (including, without limitation, taxes, assessments, insurance premiums,
repairs, reasonable attorneys’ fees, rent, transportation, storage costs, and expenses of
sale).

Treasury means the United States Department of the Treasury. For operational purposes, the term
“Treasury” includes a Federal Reserve Bank acting as fiscal agent to the Treasury.

UCC means the Uniform Commercial Code.

3.0 LOANS

3.1 A request for a Loan shall be made to the Treasury in a form and time acceptable to the
Treasury. A Loan must be secured by Collateral acceptable to the Treasury. Upon Treasury’s
request, the Borrower shall submit a written application for a Loan.

3.2 The Treasury’s approval of a request for a Loan shall be evidenced by, and the Loan shall be
deemed made at the time of, the Treasury’s record of the credit of the amount of the Loan to an
Account agreed upon by the Borrower and the Treasury.

3.3 Loans to the Federal Home Loan Banks (FHLBs) or any FHLB under this Agreement shall be joint
and several obligations of all the FHLBs, issued under Section 11(a) of the Federal Home Loan Bank
Act, 12 U.S.C. § 1431(a), through the Office of Finance as agent of the FHLBs, and therefore are
consolidated obligations issued pursuant to part 966 of the rules of the Federal Housing Finance
Board, in continuing force and effect under Section 1312 of the Housing and Economic Recovery Act
of 2008, and any successor rule of the Federal Housing Finance Agency.

4.0 INTEREST

4.1 The interest rate applicable to a Loan shall be the rate, as from time to time established by
the Treasury. Interest on a Loan shall accrue from the day the Loan is credited to the Account
and shall be payable at the applicable rate in effect on that day, except that if the interest
rate changes while a Loan is outstanding, the new rate shall apply as of the day on which the
rate change is effective. Interest shall be computed on the basis of 365 days in a year.

4.2 If all or any portion of a Loan Repayment Amount is not paid when due (whether by
acceleration or otherwise), interest on the unpaid portion of the Loan Repayment Amount shall be
calculated at a rate 500 basis points higher than the applicable rate

 

 

then in effect until the unpaid Loan Repayment Amount is paid in full.

5.0 REPAYMENT OF LOAN

5.1 The Borrower promises to pay a Loan Repayment Amount when due in actually and finally
collected funds. A Loan Repayment Amount is immediately due and payable

(a) on demand;

(b) without
any demand, notice or other action on the due date and time specified by the Treasury in writing
(provided that if such date falls on a day that is not a Business Day, the due date shall be
extended to the next Business Day) or upon the occurrence of any Event of Default described in
clause (iv), (v) or (vii) of the definition of such term.

5.2 The Borrower waives any right to presentment, notice of dishonor, protest, and any other
notice of any kind except as expressly provided for herein.

5.3 Upon notice to the Treasury at least 2 days in advance, the Borrower may prepay a Loan
Repayment Amount, in whole or in part, without penalty.

5.4 The appropriate Federal Reserve Bank, acting on behalf of the Treasury, will debit the
Borrower’s Account for the Loan Repayment Amount and all other Obligations when due.

6.0 GRANT OF SECURITY INTEREST

For value received and in consideration of the Treasury permitting the Borrower to obtain Loans,
the Borrower hereby transfers and assigns to the Treasury and grants to the Treasury a continuing
security interest in and lien on the Collateral as collateral security for the timely and complete
payment and performance when due (whether at stated maturity, by acceleration or otherwise) of all
Obligations.

7.0 COLLATERAL

7.1 The Borrower shall ensure that the Collateral meets the requirements set forth in this section
or as the Treasury may otherwise from time to time prescribe.

7.2 Acceptable Collateral consists of Federal Home Loan Bank advances to member financial
institutions that have been collateralized in accordance with Federal Home Loan Bank standards
(FHLB advances) and mortgage backed securities issued by the Federal National Mortgage
Association or the Federal Home Loan Mortgage Corporation.

7.3 Acceptable FHLB advances shall be valued with a 13% haircut applied to the outstanding
principal amount of the asset on the balance sheet of the Federal Home Loan Bank. Haircuts may
also be applied to the value of mortgage backed securities as determined by Treasury.

7.4 FHLB advances pledged as Collateral under this Agreement may be held under a BIC Arrangement
subject to section 7.10 herein. FHLB advances must be prepositioned, in an amount acceptable to the
Treasury, before a Federal Home Loan Bank is eligible to receive a Loan under this Agreement. MBS
pledged as Collateral under this Agreement must be held in a custodial National Book Entry System
account established though the Federal Reserve Bank of New York. MBS pledged hereunder may be
repositioned from an investment account into the custodial account on a same-day basis.

 

 

7.5 On a weekly basis, Borrower must submit to the Federal Reserve Bank of New York acting as
fiscal agent of the Treasury, a Collateral Schedule listing the Collateral pledged to Treasury
under this Agreement, including the outstanding principal amount of any FHLB advances.

7.6 The Treasury may at any time request the Borrower to replace any item of Collateral or to
grant a lien and security interest in additional assets of a type and in an amount acceptable to
the Treasury, and the Borrower shall promptly do so.

7.7 Unless otherwise specified by the Treasury in writing, the Borrower shall promptly withdraw
from the Collateral Schedule:

(a) any Collateral that has a payment of principal or interest past
due, in whole or in part, for more than 30 days;

(b) any Collateral that has been paid in full by
the obligor; or

(c) any Collateral if the obligor on such Collateral becomes insolvent, or if a
receiver, custodian, or the like is appointed for the obligor.

Prior to such withdrawal, however, the Borrower shall update any relevant Collateral Schedule
and pledge substitute Collateral acceptable to the Treasury by submitting an updated Collateral
Schedule or otherwise pledging such Collateral to the Treasury.

7.8 The Treasury has no duty to collect any income accruing on Collateral or to preserve any rights
relating to Collateral.

7.9 The Borrower hereby:

(a) authorizes the Treasury at any time to file or record in any filing office in any
jurisdiction which the Treasury determines appropriate to perfect the security interests
set forth hereunder, financing statements, and any amendments or continuation statements
related thereto without the signature of the Borrower therein that describes the
Collateral and the Borrower shall, promptly at the Treasury’s request, provide any
additional information required by Article 9 of the UCC, as in effect in any relevant
jurisdiction, for the sufficiency or acceptability of any financing statement;

(b)
ratifies its authorization for the Treasury to have filed any financing statement,
including any amendment or continuation statement related thereto, in any jurisdiction,
where the same has been filed prior to the date on which the Letter of Agreement is
signed by the Borrower;

(c) authorizes the Treasury at any time, to take any and all
other actions that may be necessary or, in the Treasury’s sole discretion, desirable to
obtain, preserve, perfect or enforce the Treasury’s security interest in the Collateral;

(d) authorizes the Treasury to endorse or assign as the Borrower’s agent any item of
Collateral, to inspect Collateral held by the Borrower, and copy any relevant records
and/or documents.

7.10 Treasury will keep all information regarding the identity of borrowers identified in any
collateral documentation confidential and such information will not be disclosed except to as
authorized or necessary to effectuate the terms of this Agreement.

7.11 If the Treasury approves, the Borrower may hold certain Collateral in a BIC Arrangement
(“BIC-held Collateral”) subject to the following:

(a) BIC-held Collateral shall be prominently
identified as Pledged to the Treasury and subject exclusively to the Treasury’s written
instructions. At the Treasury’s request, the

 

 

Borrower shall, without delay, prominently and conspicuously affix a legend to items of BIC-held
Collateral indicating that such items are subject to a security interest in favor of the Treasury.

(b) The Borrower shall mark its records to show that BIC-held Collateral has been
pledged to the Treasury and is subject exclusively to the Treasury’s written
instructions. Any computer generated list or report containing BIC-held Collateral must
incorporate a legend indicating that such Collateral is pledged to the Treasury.

(c) Upon the Treasury’s request, the Borrower shall at all times segregate BIC-held
Collateral from its own assets or the assets of any other party and shall hold Collateral
in such location(s) approved by the Treasury. BIC-held Collateral shall not be removed
from such location(s) without the prior written approval of the Treasury.

(d) The Borrower may withdraw or replace BIC-held Collateral only with the approval of
the Treasury and on terms acceptable to the Treasury.

(e) The Treasury may from time to time notify Borrower of additional requirements on
BIC-held Collateral. The Borrower’s failure to comply with such requirements may
disqualify the Borrower from participation in the BIC Arrangement.

7.12 With respect to any item of Collateral not delivered or transferred to the Treasury or its
agent or custodian, including BIC-held Collateral, the Borrower shall hold such item of Collateral
in trust for the Treasury until the Collateral is delivered or transferred in accordance with the
Treasury’s instructions. The Borrower bears the risk of loss for any Collateral held in the
Borrower’s possession, at any custodian, maintained in an account at a securities intermediary
other than a Reserve Bank, or in transit to or from the Reserve Bank. The Borrower also bears the
risk of any accidental loss or damage to Collateral in the possession of the Treasury or its agent
to the extent the Treasury exercised reasonable care.

7.13 Unless an Event of Default occurs or the Treasury expressly directs otherwise, any proceeds,
dividend, interest, rent, proceeds of redemption, and/or any other payment received by the Borrower
regarding any Collateral may be retained by the Borrower. If the Treasury directs that any of the
foregoing be paid to the Treasury, the Borrower shall remit those payments, or cause such payments
to be remitted, promptly to the Treasury and, until receipt by the Treasury, such payments are
deemed to be held in trust for the Treasury.

7.14 The Treasury is under no obligation to allow for the withdrawal of any item of Collateral
from the pledge to the Treasury, or to allow the removal of any item of Collateral from the
Collateral Schedule or otherwise release its security interest in any item of Collateral unless:

(a) the Borrower has provided substitute Collateral acceptable to the Treasury; or

(b) the
Treasury has verified, in accordance with its normal customs and procedures, that all Obligations
have been unconditionally repaid in full and that the Borrower is not currently in default under
another agreement with the Treasury.

7.15 Borrower shall submit a written certification to Treasury including the following
information and attestations: (i) the location of all supporting documentation or records; (ii) a
statement that all supporting documentation or records are complete, controlled, and protected;
(iii) a description of the Borrower’s asset valuation criteria; (iv) a description of the
Borrower’s internal loan-rating system; (v) a description of how Collateral is marked as pledged
to the Treasury; and (vi) where applicable, a statement that Borrower’s Financial Statement
including its portfolio of FHLB advances is audited

 

 

in accordance with applicable auditing standards. This certification is only required on a
one-time basis, however, Borrower shall notify Treasury if any of the information contained in
the certification changes or is no longer accurate.

8.0 MAINTENANCE OF LENDING DOCUMENTS

The documents specified below must be maintained continuously as official records of the Borrower.
The documents listed in subparagraph
(a) shall at all times be kept together in one place, while
the document listed in subparagraph
(b) may be kept in any accessible and secure location on the
Borrower’s premises.

(a) a copy of the Lending Agreement; and

(b) a current statement of outstanding
Loans.

9.0 REPRESENTATIONS AND WARRANTIES

9.1 The Borrower represents and warrants that:

(a) (i) the Borrower has the power and authority, and the legal right, to make, deliver and perform
the Lending Agreement and to obtain a Loan; (ii) the Borrower has taken all necessary
organizational action to authorize the execution, delivery and performance of the Lending Agreement
and to authorize the obtaining of a Loan on the terms and conditions of the Lending Agreement;
(iii) no consent or authorization of, filing with, notice to or other act by or in respect of, any
governmental authority or any other person is required in connection with the obtaining of Loans
hereunder or with the execution, delivery, performance, validity or enforceability of the Lending
Agreement; and (iv) the Lending Agreement has been duly executed and delivered on behalf of the
Borrower;

(b) the Borrower is duly organized, validly existing and in good standing under the laws
of the jurisdiction of its organization and is not in violation of any laws or regulations in any
respect which could have any adverse effect whatsoever upon the validity, performance or
enforceability of any of the terms of the Lending Agreement;

(c) the Lending Agreement constitutes
a legal, valid and binding obligation of the Borrower, enforceable against the Borrower in
accordance with its terms;

(d) the Borrower has rights in Collateral sufficient to grant an
enforceable security interest to the Treasury and its rights in Collateral are free of any
assertion of a property right that would adversely affect the Treasury’s right to Collateral,
including but not limited to any claim, lien, security interest, encumbrance, preference or
priority arrangement or restriction on the transfer or pledge of Collateral (an “Adverse Claim”),
except as created by, or otherwise permitted under, the Lending Agreement or by the Treasury;

(e)
all information set forth on the Certificate is accurate and complete and there has been no change
in such information since the date of the Certificate;

(f) (i) the Lending Agreement is effective
to create in favor of the Treasury a legal, valid, and enforceable security interest in the
Collateral described in the Lending Agreement and proceeds thereof; (ii) when financing statements
are filed in the state filing offices located in the jurisdictions specified on the Certificate,
those security interests shall constitute a fully and validly perfected lien on, and security
interest in, all rights, title and interest of the Borrower in such Collateral as to which
perfection can be obtained by filing, as security for the Obligations, in each case prior and
superior in right to any other person (except for liens that arise by operation of law); and (iii)
no financing statement or other public notice with respect to all or any part of the Collateral is
on file or of record in any public office, except such as have been filed in favor of the Treasury
pursuant to the Lending Agreement, are permitted by the Lending Agreement, or are otherwise
permitted by the Treasury;

 

 

9.2 Each time the Borrower requests a Loan or grants a security interest in any Collateral to
Treasury, the Borrower is deemed to make all of the foregoing representations and warranties on
and as of the date such Loan is incurred or security granted. Such representations and warranties
shall be true on and as of such date and shall remain true and correct so long as the Lending
Agreement remains in effect, any Obligation remains outstanding, or any other amount is owing to
the Treasury.

10.0 COVENANTS

The Borrower covenants that so long as the Lending Agreement remains in effect or any Obligation
remains outstanding or any other amount is owing to the Treasury:

(a) except for the security
interest herein granted or otherwise permitted hereunder or by the Treasury, the Borrower shall
have rights in the Collateral free from any Adverse Claim, and shall maintain the security interest
created hereby with the priority set forth in Section 9.1(f) and shall take all actions necessary
or prudent to defend against Adverse Claims;

(b) except as otherwise permitted hereunder or by the
Treasury, the Borrower shall not (i) sell or otherwise dispose of, or offer to sell or otherwise
dispose of, the Collateral or any interest therein, or (ii) pledge, mortgage, or create, or permit
the existence of any right of any person in or claim to, the Collateral other than the security
interest granted herein;

(c) the Borrower shall not perform any act with respect to any Collateral
that would impair the Treasury’s rights or interests therein, nor will the Borrower fail to perform
any act that would reasonably be expected to prevent such impairment or that is necessary to
preserve the Treasury’s rights;

(d) the Borrower shall promptly notify the Treasury if the Borrower
fails or is about to fail to meet the capital requirements required by regulations applicable to
the Borrower.

(e) the Borrower shall renew or keep in full force and effect its organizational
existence or take all reasonable action to maintain all rights, privileges, licenses and franchises
necessary or desirable in the normal conduct of its business;

(f) in any BIC Arrangement, the
Borrower shall provide for periodic audits of BIC-held Collateral pledged to the Treasury, shall
notify the Treasury immediately of any irregularities discovered during any audits, and shall
certify periodically, as determined by the Treasury, that it is complying with the requirements of
the BIC Arrangement;

(g) without providing at least 30 days’ prior written notice to the Treasury
and submitting an updated Certificate to the Treasury, the Borrower shall not cause or permit any
of the information provided in the Certificate, including its jurisdiction of organization, to
become untrue;

(h) the Borrower shall promptly notify the Treasury of the occurrence or impending
occurrence of any Event of Default; and

(i) the Borrower shall promptly notify the Treasury of any
change in applicable law, the regulations or policies of its chartering and/or licensing authority,
or its charter, bylaws, or other governing documents, or any legal or regulatory process asserted
against the Borrower, that materially affects or may materially affect the Borrower’s authority or
ability to lawfully perform its obligations under the Lending Agreement.

11.0 WAIVER OF IMMUNITY; SUBMISSION TO JURISDICTION

11.1 If the Borrower or its property is now, or in the future becomes, entitled to any immunity,
whether characterized as sovereign or otherwise (including, without limitation, immunity from
set-off, from service of process, from jurisdiction of any court or tribunal, from attachment in
aid of execution, from attachment prior to the entry of a judgment, or from execution upon a
judgment) in any legal proceeding in Federal or State court then

 

 

the Borrower expressly and irrevocably waives, to the maximum extent permitted by law, any such
immunity. To the extent the Borrower receives any such entitlement in the future, the Borrower
shall promptly notify the Treasury of such entitlement.

11.2 The Borrower submits in any legal action or proceeding relating to or arising out of the
Lending Agreement, or the conduct of any party with respect therefor or for recognition and
enforcement of any judgment in respect thereof, to the nonexclusive general jurisdiction of the
Federal District Court for the District of Columbia and any appellate court thereof. The Borrower
agrees that service of process in any such action or proceeding may be effected by mailing a copy
thereof by registered or certified mail (or any substantially similar form of mail), postage
prepaid, to the address provided in the Letter of Agreement; and agrees that nothing herein shall
affect the right to effect service of process in any other manner permitted by law or shall limit
the right to sue in any other jurisdiction. The Borrower irrevocably waives, to the fullest extent
permitted by law, any objection which it may now or hereafter have to the venue of any such suit,
action, or proceeding brought in any such court and any claim that any such suit, action or
proceeding brought in such a court has been brought in an inconvenient forum. The Borrower also
agrees that a final judgment in any such suit, action, or proceeding brought in such court shall
be conclusive and binding upon the Borrower. The foregoing does not diminish or otherwise affect
any rights the Treasury may have under law.

12.0 REMEDIES UPON DEFAULT

12.1 Upon the occurrence of, and at any time during the continuance of, an Event of Default, the
Treasury may pursue any of the following remedies, separately, successively, or concurrently:

(a)
cause the Borrower’s Account to be debited in an amount up to the Borrower’s unpaid Obligations;

(b) set off any Obligation against any amount owed by the Treasury to the Borrower, whether or not
such amount owed is then due and payable;

(c) exercise any right of set-off or banker’s lien
provided by applicable law against the Borrower’s property in the possession or control of, or
maintained with, the Treasury, including but not limited to items in process of collection and
their proceeds and any balance to the credit of the Borrower with the Treasury;

(d) take possession
of any Collateral not already in Treasury’s possession, without demand and without legal process.
Upon the Treasury’s demand, the Borrower shall assemble and make Collateral available to the
Treasury as the Treasury directs. The Borrower grants to the Treasury the right, for this purpose
to enter into or on any premises where Collateral may be located; and

(e) pursue any other remedy
available to collect, enforce, or satisfy any Obligation, including exercising its rights as a
secured creditor to collect income on the Collateral, or to sell, assign, transfer, lease or
otherwise dispose of Collateral whether or not Collateral is in the Treasury’s possession, or to
take action against any other property or assets of the Borrower whether or not pledged to Treasury
as Collateral.

Where the Borrower is a FHLB, pursue any and all remedies available to collect, enforce, or
satisfy any Loan Repayment Amount against any other FHLB on the basis that the Loan Repayment
Amount is a consolidated obligation as described in section 3.3.. In the event that a FHLB other
than the Borrower satisfies a Loan Repayment Amount owed by the Borrower pursuant to this
subsection, Treasury will release any collateral remaining upon satisfaction of all Obligations
of the Borrower in accordance with instructions provided by the Office of Finance.

12.2 If the Treasury exercises its rights in Collateral upon an Event of Default:

 

 

(a) the Treasury may sell, assign, transfer, and deliver, at the Treasury’s option, all
or any part of Collateral at private or public sale, at such prices as the Treasury may,
in good faith, deem best, without advertisement, and the Borrower waives notice of the
time and place of the sale, except any notice that is required by law and may not be
waived;

(b) the Treasury has no obligation to prepare Collateral for sale, and the
Treasury may sell Collateral and disclaim any warranties without adversely affecting the
commercial reasonableness of the sale;

(c) the Treasury has no obligation to collect from
any third party or to marshal any assets in favor of the Borrower to satisfy any
Obligation; and

(d) the Treasury may purchase any or all of Collateral and pay for it by
applying the purchase price to reduce amounts owed by the Borrower to the Treasury.

12.3 The Borrower appoints the Treasury with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and stead of the Borrower,
to endorse, assign, transfer, and deliver Collateral to any party, and to take any action deemed
necessary or advisable by the Treasury either to protect the Treasury’s interests or exercise its
rights under the Lending Agreement, including taking any action to perfect or maintain the
Treasury’s security interest (including but not limited to recording an assignment of a mortgage or
filing a financing statement). This power of attorney is coupled with an interest and as such is
irrevocable and full power of substitution is granted to the assignee or holder. As
attorney-in-fact, the Treasury may take any lawful action to collect all sums due in connection
with Collateral, the Treasury may release any Collateral, instruments or agreements securing or
evidencing the Obligations as fully as the Borrower could do if acting for itself, and the Treasury
may take any action set forth in Section 7.9, but the Treasury has no obligation to take any such
actions or any other action in respect of the Collateral.

12.4 The proceeds realized by the Treasury upon selling or disposing of Collateral, to the extent
actually received in cash by the Treasury will be applied toward satisfaction of the Obligations.
The Treasury shall apply such proceeds first to any fees, other charges, penalties, indemnities,
and costs and expenses of, collection, or realizing on interests in Collateral (including
reasonable attorneys’ fees), next to accrued but unpaid interest, and last to the unpaid principal
balance. The Treasury will account to the Borrower for any surplus amount realized upon such sale
or other disposition, and the Borrower shall remain liable for any deficiency.

12.5 No delay or failure by the Treasury to exercise any right or remedy accruing upon an Event
of Default shall impair any right or remedy, waive any default or operate as an acquiescence to
the Event of Default, or affect any subsequent Event of Default of the same or of a different
nature.

12.6 On complying with the provisions of the Lending Agreement and applicable law, the Treasury is
fully discharged from any liability or responsibility to any person regarding Collateral.

13.0 INDEMNIFICATION

13.1 The Borrower shall indemnify the Treasury and its officers, directors, employees and agents
(each, an “Indemnified Party”) for any loss, claim, damage, liability, and expense (including,
without limitation, reasonable attorneys’ fees, court costs and expenses of litigation) incurred
by an Indemnified Party in the course of or arising out of

 

 

the performance of the Lending Agreement, any action related to Collateral, or any action to
which an Indemnified Party may become subject in connection with the Treasury’s exercise,
enforcement or preservation of any right or remedy granted to it under the Lending Agreement,
except to the extent that such loss, claim, damage, liability, or expense results, as
determined by a court, from the Treasury’s gross negligence or willful misconduct.

13.2 The Treasury will give the Borrower written notice of any claim that the Treasury or any other
person may have under this indemnity. The Borrower is not liable for any claim that is compromised
or settled by the Treasury or such persons without the Borrower’s prior written consent, provided
that the Borrower responded promptly and in the Treasury’s judgment, adequately, to the Treasury’s
notice of such claim. This indemnity remains an obligation of the Borrower notwithstanding
termination of the Lending Agreement, and is binding on the Borrower’s successors and assigns. Upon
written demand from the Treasury, the Borrower shall pay promptly amounts owed under this
indemnity, free and clear of any right of offset, counterclaim or other deduction, and the
Treasury’s reasonable determination of amounts owing hereunder is binding. If not promptly paid by
the Borrower, such obligation becomes an Obligation secured under the Lending Agreement.

14.0 MISCELLANEOUS

14.1 The Treasury is not obligated by the Lending Agreement or otherwise to make, increase,
renew, or extend any Loan to the Borrower.

14.2 The Borrower’s obligations under the Lending Agreement shall be performed by it at its own
cost and expense.

14.3 Unless expressly agreed otherwise by the Treasury, Eastern Time shall be used to determine
any deadline hereunder, including the time a Loan Repayment Amount is due and payable.

14.4 The Treasury or a Federal Reserve Bank acting on behalf of the Treasury may record
telephone communications with the Borrower and such recordings may be submitted in evidence to
any court or in any proceeding for the purpose of establishing any matters pertinent to the
Lending Agreement.

14.5 The Treasury’s rights and remedies under the Lending Agreement are in addition to any others
agreed to by the Borrower or that may exist at law or in equity.

14.6 Any provision of the Lending Agreement that is unenforceable or invalid under any law in any
jurisdiction is ineffective to the extent of such unenforceability or invalidity without
affecting the enforceability or validity of any other provision, and any such unenforceability or
invalidity shall not invalidate or render unenforceable such provision in any other jurisdiction.

14.7 The Lending Agreement is binding on the receivers, administrators, permitted assignees and
successors, and legal representatives of the Borrower and inures to the benefit of the Treasury,
its assignees and successors.

14.8 The Borrower may not assign its rights or obligations hereunder.

 

 

14.9 The Treasury is not required to provide a written advice to the Borrower for any Loan or
Loan Repayment Amount.

14.10 The Treasury has no liability for acting in reliance upon any communication (including a
fax, telex, electronic communication, or similar communication) reasonably believed by the
Treasury to be genuine or to be sent by an individual acting on behalf of the Borrower.

14.11 The Section headings used herein are for convenience only and are not to affect the
construction hereof or be taken into consideration in the construction hereof.

15.0 AMENDMENT

The Treasury, in its sole discretion, may amend the Lending Agreement without prior notice at any
time. The Treasury shall notify the Borrower of any such amendment and, thereafter, any pledge of
Collateral, request for any Loan or incurrence of any other Obligation shall constitute the
Borrower’s agreement to such amendment as of the effective date of such amendment. An amendment
does not modify the terms of an outstanding Loan.

16.0 NOTICE

16.1 Any and all notices, statements, demands or other communications hereunder may be given by a
party to the other by mail, facsimile, telegraph, messenger or otherwise to the address specified
in Appendix I hereto, or so sent to such party at any other place specified in a notice of change
of address hereafter received by the other. All notices, demands and requests hereunder may be
made orally, to be confirmed promptly in writing, or by other communication as specified in the
preceding sentence.

16.2 If sent to the Treasury, the notice must be addressed as specified by the Treasury.

17.0 TERMINATION

17.1 The Lending Agreement shall terminate on December 31, 2009 but shall remain in effect as to
any Loan outstanding on that date. Notwithstanding any other provision of this Agreement, the
Borrower may terminate its consent to be bound by the Lending Agreement prior to that time by
giving written notice to the Treasury in the manner specified by Treasury, so long as no Loan is
then outstanding. Termination does not release the Borrower or affect the Treasury’s rights,
remedies, powers, security interests or liens against Collateral in existence prior to the
termination or to Treasury’s receipt of the notice of termination, nor does termination affect any
provision of the Lending Agreement which by its terms survives termination of the Lending
Agreement.

17.2 Upon termination, the Treasury may retain Collateral until the Treasury has had a reasonable
opportunity to verify, in accordance with its normal customs and procedures, that all of the
Borrower’s Obligations, contingent or otherwise, to the Treasury have been fully satisfied and
discharged.

18.0 GOVERNING LAW

The Lending Agreement, including any Loan or any other transaction entered into pursuant
thereto, is governed by federal law or to the extent no applicable federal law exists by the
laws of the State of New York. The Lending Agreement is a security agreement for purposes of
the UCC, as in effect in any relevant jurisdiction, and other applicable law.

 

 

19.0 WAIVER OF JURY TRIAL

THE BORROWER AND THE TREASURY EACH HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVE ANY AND ALL RIGHT
TO TRIAL BY JURY IN ANY ACTION, SUIT, COUNTERCLAIM, OR CROSS CLAIM ARISING IN CONNECTION WITH,
OUT OF, OR OTHERWISE RELATING TO THE LENDING AGREEMENT, THE COLLATERAL, OR ANY TRANSACTION OR AGREEMENT ARISING THEREFROM OR RELATED THERETO.

[Appendix Omitted]exv10w1

Exhibit 10.1

3COM CORPORATION

2003 STOCK PLAN, AS AMENDED

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	1.
	 	Purposes of the Plan	 	 	1	 
	 
	 	 	 	 	 	 
	2.
	 	Definitions	 	 	1	 
	 
	 	 	 	 	 	 
	 
	 	(a) “Administrator”	 	 	1	 
	 
	 	(b) “Applicable Laws”	 	 	1	 
	 
	 	(c) “Award”	 	 	1	 
	 
	 	(d) “Award Agreement”	 	 	1	 
	 
	 	(e) “Cause”	 	 	1	 
	 
	 	(f) “Change in Control”	 	 	1	 
	 
	 	(g) “Code”	 	 	2	 
	 
	 	(h) “Committee”	 	 	2	 
	 
	 	(i) “Common Stock”	 	 	2	 
	 
	 	(j) “Company”	 	 	2	 
	 
	 	(k) “Consultant”	 	 	2	 
	 
	 	(l) “Director”	 	 	2	 
	 
	 	(m) “Disability”	 	 	2	 
	 
	 	(n) “Discretionary Options”	 	 	3	 
	 
	 	(o) “Employee”	 	 	3	 
	 
	 	(p) “Exchange Act”	 	 	3	 
	 
	 	(q) “Fair Market Value”	 	 	3	 
	 
	 	(r) “Incentive Stock Option”	 	 	3	 
	 
	 	(s) “Independent Director”	 	 	3	 
	 
	 	(t) “Inside Director”	 	 	3	 
	 
	 	(u) “Nonstatutory Stock Option”	 	 	3	 
	 
	 	(v) “Notice of Grant”	 	 	4	 
	 
	 	(w) “Officer”	 	 	4	 
	 
	 	(x) “Option”	 	 	4	 
	 
	 	(y) “Optioned Stock”	 	 	4	 
	 
	 	(z) “Parent”	 	 	4	 
	 
	 	(aa) “Participant”	 	 	4	 
	 
	 	(bb) “Plan”	 	 	4	 
	 
	 	(cc) “Qualifying Board Retirement”	 	 	4	 
	 
	 	(dd) “Restricted Stock”	 	 	4	 
	 
	 	(ee) “Rule 16b-3”	 	 	4	 
	 
	 	(ff) “Section 16(b)”	 	 	4	 
	 
	 	(gg) “Service Provider”	 	 	4	 
	 
	 	(hh)  “Share”	 	 	4	 
	 
	 	(ii) “Stock Appreciation Right” or “SAR”	 	 	4	 
	 
	 	(jj)“Subsidiary”	 	 	4	 
	 
	 	 	 	 	 	 
	3.
	 	Stock Subject to the Plan	 	 	4	 
	 
	 	 	 	 	 	 
	 
	 	(a) Maximum Shares	 	 	5	 

 

 

TABLE OF CONTENTS

(Continued)

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	 	(b) Full Value Awards	 	 	5	 
	 
	 	(c) Lapsed Awards	 	 	5	 
	 
	 	 	 	 	 	 
	4.
	 	Administration of the Plan	 	 	5	 
	 
	 	 	 	 	 	 
	 
	 	(a) Procedure	 	 	5	 
	 
	 	(b) Powers of the Administrator	 	 	6	 
	 
	 	(c) Effect of Administrator's Decision	 	 	7	 
	 
	 	 	 	 	 	 
	5.
	 	Eligibility	 	 	7	 
	 
	 	 	 	 	 	 
	 
	 	(a) Awards and Discretionary Stock Options	 	 	7	 
	 
	 	(b) Automatic Independent Director Option Grants	 	 	7	 
	 
	 	 	 	 	 	 
	6.
	 	Limitations	 	 	7	 
	 
	 	 	 	 	 	 
	7.
	 	Term of Plan	 	 	8	 
	 
	 	 	 	 	 	 
	8.
	 	Stock Options	 	 	8	 
	 
	 	 	 	 	 	 
	 
	 	(a) Term of Option	 	 	8	 
	 
	 	(b) Option Exercise Price, Waiting Period and Consideration	 	 	8	 
	 
	 	(c) Termination of Relationship as a Service Provider	 	 	10	 
	 
	 	(d) Disability of Optionee	 	 	10	 
	 
	 	(e) Death of Optionee	 	 	10	 
	 
	 	 	 	 	 	 
	9.
	 	Restricted Stock	 	 	11	 
	 
	 	 	 	 	 	 
	 
	 	(a) Grant of Restricted Stock	 	 	11	 
	 
	 	(b) Exercise Price and other Terms	 	 	11	 
	 
	 	(c) Restricted Stock Award Agreement	 	 	11	 
	 
	 	 	 	 	 	 
	10.
	 	Stock Appreciation Rights	 	 	11	 
	 
	 	 	 	 	 	 
	 
	 	(a) Grant of SARs	 	 	11	 
	 
	 	(b) Exercise Price and other Terms	 	 	11	 
	 
	 	(c) Payment of SAR Amount	 	 	11	 
	 
	 	(d) Payment upon Exercise of SAR	 	 	12	 
	 
	 	(e) Settlements and Plan Share Allocation	 	 	12	 
	 
	 	(f) SAR Agreement	 	 	12	 
	 
	 	(g) Expiration of SARs	 	 	12	 
	 
	 	(h) Termination of Relationship as a Service Provider	 	 	12	 
	 
	 	(i) Disability of Participant	 	 	12	 
	 
	 	(j) Death of Participant	 	 	13	 
	 
	 	 	 	 	 	 
	11.
	 	Option Grants to Independent Directors	 	 	13	 
	 
	 	 	 	 	 	 
	 
	 	(a) Nonstatutory Stock Options	 	 	13	 
	 
	 	(b) Administration	 	 	13	 
	 
	 	(c) Guidelines	 	 	13	 
	 
	 	(d) Initial Grant	 	 	14	 
	 
	 	(e) Pro-Rata Grant	 	 	14	 

ii

 

TABLE OF CONTENTS

(Continued)

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	 	(f) Annual Grant	 	 	14	 
	 
	 	(g) Other Option Terms	 	 	14	 
	 
	 	 	 	 	 	 
	12.
	 	Leaves of Absence	 	 	15	 
	 
	 	 	 	 	 	 
	13.
	 	Non-Transferability of Awards	 	 	15	 
	 
	 	 	 	 	 	 
	14.
	 	Adjustments Upon Changes in Capitalization, Dissolution, Liquidation or Change of Control	 	 	15	 
	 
	 	 	 	 	 	 
	 
	 	(a) Changes in Capitalization	 	 	15	 
	 
	 	(b) Dissolution or Liquidation	 	 	16	 
	 
	 	(c) Change of Control	 	 	16	 
	 
	 	 	 	 	 	 
	15.
	 	Award Date of Grant	 	 	17	 
	 
	 	 	 	 	 	 
	16.
	 	Amendment and Termination of the Plan	 	 	17	 
	 
	 	 	 	 	 	 
	 
	 	(a) Amendment and Termination; No Repricing	 	 	18	 
	 
	 	(b) Stockholder Approval	 	 	18	 
	 
	 	(c) Effect of Amendment or Termination	 	 	18	 
	 
	 	 	 	 	 	 
	17.
	 	Conditions Upon Issuance of Shares	 	 	18	 
	 
	 	 	 	 	 	 
	 
	 	(a) Legal Compliance	 	 	18	 
	 
	 	(b) Investment Representations	 	 	18	 
	 
	 	 	 	 	 	 
	18.
	 	Inability to Obtain Authority	 	 	18	 
	 
	 	 	 	 	 	 
	19.
	 	Reservation of Shares	 	 	18	 
	 
	 	 	 	 	 	 
	20.
	 	Stockholder Approval	 	 	18	 
	 
	 	 	 	 	 	 
	21.
	 	Compliance With Code Section 409A	 	 	18	 

iii

 

3COM CORPORATION

2003 STOCK PLAN, AS AMENDED

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

	 	•	 	to attract and retain the best available personnel for positions of
substantial responsibility,
	 
	 	•	 	to provide additional incentive to Employees and Consultants, and
	 
	 	•	 	to promote the success of the Company’s business.

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

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

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

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

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

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

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

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

1

 

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

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

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

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

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

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

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

          (j) “Company” means 3Com Corporation.

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

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

          (m) “Disability” means total and permanent disability as defined in Section 22(e)(3) of the Code, provided that
in the case of Awards other than Incentive Stock Options, the Administrator in its discretion may
determine whether a permanent and total disability exists in accordance with uniform and
non-discriminatory standards adopted by the Administrator from time to time.

2

 

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

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

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

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

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

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

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

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

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

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

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

3

 

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

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

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

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

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

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

          (bb) “Plan” means this 2003 Stock Plan, as from time to time amended and in effect.

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

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

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

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

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

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

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

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

     3. Stock Subject to the Plan.

4

 

          (a) Maximum Shares. Subject to the provisions of Section 14 of the Plan, the maximum aggregate number of Shares
which may be issued under the Plan is 73,000,000 Shares. The Shares may be authorized, but
unissued, or reacquired Common Stock.

          (b) Full Value Awards. This Section 3(b) is effective upon stockholder approval, after Board approval on June 18, 2008,
for new Awards granted under the Plan after such stockholder approval effective date. Any Shares
subject to Options or SARs shall be counted against the numerical limits of this Section 3 as one
Share for every Share subject thereto. Any Shares subject to Restricted Stock with a per share
purchase price lower than 100% of the Fair Market Value on the date of grant shall be counted
against the numerical limits of this Section 3 as 1.43 Shares for every one Share subject thereto.
If any Shares acquired pursuant to an Award of Restricted Stock are forfeited or repurchased by the
Company and would otherwise return to the Plan pursuant to Section 3(c), 1.43 times the number of
Shares so forfeited or repurchased will return to the Plan and will again become available for
future grant or sale under the Plan.

          (c) Lapsed Awards. If an Award expires or becomes unexercisable without having been exercised in full, or, with
respect to Restricted Stock, is forfeited back to or repurchased by the Company, the unpurchased
Shares (or for Restricted Stock, the forfeited or repurchased shares) which were subject thereto
shall become available for future grant or sale under the Plan (unless the Plan has terminated).
With respect to SARs, all shares which are the subject of an issued SAR shall cease to be available
under the Plan, except for SARs which expire or become unexercisable without having been exercised
in full. Shares that have actually been issued under the Plan under any Award shall not be
returned to the Plan and shall not become available for future distribution under the Plan, except
that if Shares of Restricted Stock are repurchased by the Company at their original purchase price
or are forfeited to the Company, such Shares shall become available for future grant under the
Plan. For the avoidance of doubt, except for Awards which expire or become unexercisable without
having been exercised in full, the following Shares shall not become available for issuance under
the Plan: (i) Shares tendered by Participants as full or partial payment to the Company upon
exercise of Options granted, or shares repurchased using cash proceeds upon exercise of Options
granted, under the Plan; (ii) Shares reserved for issuance upon the grant of SARs, to the extent
the number of reserved Shares exceeds the number of Shares actually issued upon exercise of the
SARs; and (iii) Shares withheld by, or otherwise remitted to, the Company to satisfy a
Participant’s tax withholding obligations upon the lapse of restrictions on Restricted Stock or the
exercise of options or SARs granted under the Plan or upon any other payment or issuance of Shares
under the Plan.

     4. Administration of the Plan.

          (a) Procedure.

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

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

5

 

Compensation Committee
of two or more “outside directors” within the meaning of Section 162(m) of the Code.

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

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

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

               (i) to determine the Fair Market Value;

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

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

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

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

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

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

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

               (ix) to allow Participants to satisfy withholding tax obligations by electing to have the
Company withhold from the Shares to be issued upon exercise of an Option

6

 

or SAR or upon the vesting or earlier tax recognition of Restricted Stock that number of Shares
having a Fair Market Value equal to the amount required to be withheld. The Fair Market Value of
the Shares to be withheld shall be determined on the date that the amount of tax to be withheld is
to be determined. All elections by a Participant to have Shares withheld for this purpose shall be
made in such form and under such conditions as the Administrator may deem necessary or advisable;

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

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

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

     5. Eligibility.

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

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

     6. Limitations.

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

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

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

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

7

 

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

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

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

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

     8. Stock Options.

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

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

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

                    (1) In the case of an Incentive Stock Option

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

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

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

8

 

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

               (iii) Form of Consideration. The Administrator shall determine the acceptable form of
consideration for exercising an Option, including the method of payment. In the case of an
Incentive Stock Option, the Administrator shall determine the acceptable form of consideration at
the time of grant. Such consideration, subject to Applicable Laws, may consist entirely of:

                    (1) cash;

                    (2) check;

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

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

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

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

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

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

               Exercising an Option in any manner shall decrease the number of Shares thereafter available,
both for purposes of the Plan and for sale under the Option, by the number

9

 

of Shares as to which
the Option is exercised. An Option may not be exercised for a fraction of a Share.

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

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

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

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

10

 

so exercised within the time specified herein,
the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

     9. Restricted Stock.

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

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

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

     10. Stock Appreciation Rights.

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

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

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

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

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

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

          (e) Settlements and Plan Share Allocation. Cash payments of Stock Appreciation Rights as well as Common Stock issued upon exercise of Stock
Appreciation Rights shall be applied against the maximum number of shares of Common Stock that may
be issued pursuant to the Plan. The number of shares to be applied against such maximum number of
shares in such circumstances shall be counted as one (1) share for every Stock Appreciation Right
subject thereto, regardless of the number of shares or amount of cash used to settle the Stock
Appreciation Right.

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

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

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

          (i) Disability of Participant. If a Participant ceases to be a Service Provider as a result of the Participant’s Disability,
the Participant may exercise his or her Stock Appreciation Right within such period of time as is
specified in the Stock Appreciation Right Agreement to the extent the Stock Appreciation Right is
vested and exercisable on the date of termination (but in no event later than the expiration of the
term of such Stock Appreciation Right as set forth in the Stock Appreciation Right Agreement). In
the absence of a specified time in the Stock Appreciation Right Agreement, the Stock Appreciation

12

 

Right shall remain exercisable for twelve (12) months following the Participant’s termination. If,
on the date of termination, the Participant is not vested as to his or her entire Stock
Appreciation Right, the Shares covered by the unvested portion of the Stock Appreciation Right
shall revert to the Plan. If, after termination, the Participant does not exercise his or her
Stock Appreciation Right within the time specified herein, the Stock Appreciation Right shall
terminate, and the Shares covered by such Stock Appreciation Right shall revert to the Plan.

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

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

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

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

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

13

 

          (d) Initial Grant. Each person who first becomes an Independent Director following the effective date of this Plan
shall be automatically granted an Option to purchase that number of shares as may be specified in
the Guidelines then currently in effect (the “Guideline Amount”) for service on the Board, not to
exceed 120,000 shares of Common Stock (or 160,000 shares if the participant is the lead director or
Chairman of the Board on the date of grant), as of the date that is the fifth (5th)
trading day of the month that immediately follows the month in which that individual first becomes
an Independent Director and commences service on the Board whether through election by the
stockholders of the Company or appointment by the Board to fill a vacancy (the “Initial Grant”);
provided, however, that an Inside Director who ceases to be an Inside Director and thereby becomes
an Independent Director shall not receive an Initial Grant. Subject to accelerated vesting upon
certain Change of Control transactions as specified in Section 14(c)(iii), the Initial Grant shall
vest as to 25% of the shares subject thereto on each anniversary of the date of grant, so as to be
100% vested on the fourth anniversary of the date of grant, subject to the Optionee remaining a
director through such vesting dates.

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

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

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

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

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

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

               (iv) The permissible forms of consideration for exercising the option shall be the same as for
discretionary options as specified in Section 8(b)(iii) hereof.

               (v) The provisions of Section 8(b)(iv) hereof relating to stockholder rights shall also apply
to options granted under this Section 11.

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

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

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

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

          (a) Changes in Capitalization. Subject to any required action by the stockholders of the Company, the number of shares of
Common Stock covered by each outstanding Award, the number of shares of Common Stock which have
been authorized for issuance under the Plan but as to which no Awards have yet been granted or
which have been returned to the Plan upon cancellation or expiration of an Award, as well as the
price per share of Common Stock covered by each such outstanding Award and the 162(m) annual share
issuance

15

 

limits under Section 6(c) shall be proportionately adjusted for any increase or decrease
in the number of issued shares of Common Stock resulting from a stock split, reverse stock split,
stock dividend, combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without receipt of consideration
by the Company; provided, however, that conversion of any convertible securities of the Company
shall not be deemed to have been “effected without receipt of consideration.” Such adjustment
shall be made by the Compensation Committee, whose determination in that respect shall be final,
binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares
of stock of any class, or securities convertible into shares of stock of any class, shall affect,
and no adjustment by reason thereof shall be made with respect to, the number or price of shares of
Common Stock subject to an Award.

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

          (c) Change of Control.

               (i) SARs and Discretionary Options. In the event of a Change of Control, each
outstanding SAR and Discretionary Option shall be assumed or an equivalent option substituted by
the successor corporation or a Parent or subsidiary of the successor corporation. In the event
that the successor corporation refuses to assume or substitute for the SAR and Discretionary
Option, the Participant shall fully vest in and have the right to exercise the SAR or Discretionary
Option as to all of the Optioned Stock, including Shares as to which it would not otherwise be
vested or exercisable. If a SAR or Discretionary Option becomes fully vested and exercisable in
lieu of assumption or substitution in the event of a Change of Control, the Administrator shall
notify the Participant in writing or electronically that the SAR or Discretionary Option shall be
fully vested and exercisable for a period of fifteen (15) days from the date of such notice, and
the SAR or Discretionary Option shall terminate upon the expiration of such period. For the
purposes of this paragraph, the SAR or Discretionary Option shall be considered assumed if,
following the Change of Control, the SAR or option confers the right to purchase or receive, for
each Share of Optioned Stock subject to the SAR or Discretionary Option immediately prior to the
Change of Control, the consideration (whether stock, cash, or other securities or property)
received in the Change of Control by holders of Common Stock for each Share held on the effective
date of the transaction (and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding Shares); provided, however,
that if such consideration received in the Change of Control is not solely common stock of the
successor corporation or its Parent, the Administrator may, with the consent of the successor
corporation, provide for the consideration to be received upon the exercise of the
SAR or
Discretionary Option, for each Share of Optioned Stock subject to the

16

 

SAR or Discretionary Option,
to be solely common
stock of the successor corporation or its Parent equal in fair market value to the per share
consideration received by holders of Common Stock in the Change of Control.

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

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

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

     15. Award Date of Grant. Other than as set forth in Section 11 hereof as to automatic grants to Independent Directors,
the date of grant of an Award shall be, for all purposes, the date on which the Administrator makes
the determination granting such Award, or such other later date as is determined by the
Administrator. Notice of the determination shall be provided to each Participant within a
reasonable time after the date of such grant.

     16. Amendment and Termination of the Plan.

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

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

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

     17. Conditions Upon Issuance of Shares.

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

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

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

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

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

     21. Compliance With Code Section 409A. Awards will be designed and operated in such a manner that they are either exempt from the
application of, or comply with, the requirements of Code Section 409A, except as otherwise
determined in the sole discretion of the Administrator. The Plan and each Award Agreement under
the Plan is intended to meet the requirements of Code Section 409A and will be construed and
interpreted in accordance with such intent, except as otherwise determined in the sole discretion
of the Administrator. To the extent that an Award

18

 

or payment, or the settlement or deferral
thereof, is subject to Code Section 409A the Award will be granted, paid, settled or deferred in a
manner that will meet the requirements of Code Section 409A, such that the grant, payment,
settlement or deferral will not be subject to the additional tax or interest applicable under Code
Section 409A.

19

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