Document:

exv10w17

 

			
	
	 	Exhibit 10.17

November 17, 2006

Scott Hanson

513 Winding Brook Court

San Ramon, CA 94583

Dear Mr. Hanson:

     Activant Group Inc., a Delaware corporation (“Activant”), is pleased to inform you
that you are eligible to receive a retention bonus of $96,250.00 (the “Bonus”), payable in
five equal annual installments, as provided below, as a reward for your continued
employment with Activant or one of its subsidiaries:

	 	 	 
	Date of Bonus Payment	 	Amount of Bonus
	September 30, 2007
	 	20%
	September 30, 2008
	 	20%
	September 30, 2009
	 	20%
	September 30, 2010
	 	20%
	September 30, 2011
	 	20%

Notwithstanding the foregoing, in the event of the consummation of a Change in Control (as
defined in the Amended and Restated Activant Group Inc. 2006 Stock Incentive Plan) of
Activant, all annual installments set forth above not previously paid shall become
immediately due and payable upon such consummation, subject to the following paragraph of
this letter.

     You must be employed by Activant or one of its subsidiaries, whether as an employee,
consultant or advisor, at the time each installment is payable in order to earn and receive
such installment, but there are no other conditions to the Bonus. In the event that your
service relationship with Activant or one of its subsidiaries terminates prior to the time
any annual installment is payable, you will forfeit that and all subsequent installments.
Activant may withhold from the Bonus any such Federal, state, local or other taxes,
including applicable taxes of any jurisdiction outside the United States, as shall be
required to be withheld pursuant to any applicable law or regulation.

     You understand that the Bonus made available to you hereunder does not constitute a
guarantee of continued employment with Activant or one of its subsidiaries, and that your
service relationship with Activant or its subsidiaries is at will. As such, you or Activant
or its subsidiaries may terminate your employment at any time and for any reason or no
reason, either with or without cause or advance notice. In addition, Activant and its
subsidiaries retain the right to modify your compensation and benefits, other than this
Bonus, within their sole discretion, upon notice to you, to the fullest extent allowed by
law.

 

 

     Unless otherwise determined by Activant’s Board of Directors, any payments made hereunder will
not be taken into account in computing your salary or compensation for the purposes of determining
any benefits or compensation under (i) any retirement, life insurance or other benefit plan of
Activant or (ii) any agreement between Activant and you.

	 	 	 	 	 
	 

	 	Sincerely,	 	 
	 
	 	 	 	 
	 

	 	/s/ Greg Petersen	 	 
	 

	 	 

Greg Petersen,
	 	 
	 

	 	Executive Vice Presidentexv10w18

 

Exhibit 10.18

Transition and Severance Agreement

Greg Petersen (“Petersen”) and LONE STAR MERGER CORP. (“Company”) agree as follows for
terms of employment to be effective immediately, without any further action required by
either party, upon the closing of the merger transaction between ACTIVANT SOLUTIONS
HOLDINGS and Lone Star Merger Corp.

	 	 	 
	Title:

	 	Executive Vice President & Chief Financial
Officer (title may be changed simply to
‘Executive Vice President’ upon hiring of
successor CFO)
	 
	 	 
	Reporting to:

	 	President & CEO
	 
	 	 
	Responsibilities:

	 	May be reduced by the CEO / Board with consent
of Petersen not to be unreasonably withheld. No
responsibilities will be added nor will Petersen
be required to serve on any Boards, or
Committees, without Petersen’s consent.
	 
	 	 
	Location:

	 	Duties will be carried out from the Company’s
Las Cimas facility in Austin, but certain travel
may be required in accordance with reasonable
demands considering Petersen’s responsibilities
as an Executive Vice President of the Company.
In no event will Petersen be asked to move.
	 
	 	 
	Term of Employment:

	 	Company shall employ Petersen commencing at the
close of the merger transaction referenced above
and ending on January 5, 2007. In the event that
the merger referenced above is not consummated,
this Transition and Severance Agreement shall be
void ab initio.
	 
	 	 
	Annual Base Salary:

	 	$290,000 paid to Petersen in accordance with
Company’s generally applicable payroll
practices.

 

 

	 	 	 
	Incentive Bonus:

	 	Petersen shall be paid bonuses reflecting
a $210,000 annualized target for fiscal
year 2006 and a $52,500 target for the
1st quarter of FY 2007 ending
on December 31, 2006, each to be
calculated and paid in accordance with
the same formula or methodology applied
to other senior executives (those having
the rank of senior vice president and
above), provided in the case of the FY
2006 bonus paid not later than December
31, 2006 and in the case of the
1st Quarter 2007 bonus paid
not later than February 15, 2007. Company
shall establish a formula and methodology
for the 1st quarter of FY 2007
similar in type and attainability as for
FY 2006; if Company does not do so the
bonus for the 1st quarter of
FY 2007 will be fixed at $52,500.
	 
	 	 
	Lump Sum Severance Payment:

	 	On January 5, 2007, company will pay
$500,000 in a lump sum; and will provide
12 months of company paid COBRA benefits.
	 
	 	 
	Interest in Company:

	 	Petersen will be paid for the interests
Petersen has in Company (whether stock,
option, restricted stock or other) in
accordance with the agreements and other
documents governing the merger
transaction referenced above or other
applicable agreements and documents.
	 
	 	 
	Early Termination:

	 	By Petersen: If Petersen voluntary
terminates employment prior to January 5,
2007 the Company will not pay the Lump
Sum Severance Payment. He will be
eligible for his base salary and bonuses
up to the date of voluntary termination
on the same basis as other senior
executives, as defined above, when they
voluntary terminate. Death or
“disability” (as defined under Section
22(e)(3) of the Internal Revenue Code of
1986, as amended) will not be considered
termination and all payments specified
herein will be paid to Petersen or to
Petersen’s estate or representative, as
appropriate, in the event of death or
disability on or before January 5, 2007.

	 
	 	 
	 

	 	
By the Company: If the Company chooses to
terminate Petersen prior to January 5,
2007 other than for Cause, Company will
pay (i) a lump sum equal to the January
severance payment plus the

 

 

	 	 	 
	 

	 	remaining base salary through January 5, 2007
in a lump sum within 5 days of termination,
plus (ii) if the termination is prior to
September 30, 2006, Petersen will be paid a
full FY 2006 bonus as if he had been employed
for the full FY 2006, and if the termination is
after September 30, 2006, Petersen will be paid
a full FY 2006 bonus plus a pro rata bonus for
the 1st quarter of FY 2007.
	 
	 	 
	 

	 	“Cause” is defined as any of the following:

	 	1.	 	Conviction of a felony or a crime
involving moral turpitude;
	 
	 	2.	 	Violation of any non-competition or
on-solicitation agreement, or material
violation of any confidentiality agreement;
	 
	 	3.	 	Material dishonesty or fraud in performing
responsibilities hereunder; and/or
	 
	 	4.	 	Gross negligence in performing
responsibilities hereunder.

	 	 	 
	Benefits:

	 	Petersen will continue to participate in the
company’s standard benefit programs at the same
level, including accruing vacation at the rate
of four weeks per year.
	 
	 	 
	D&O Coverage:

	 	Company will provide at its expense extended
(“tail”) coverage for Petersen for the same
term as provided to other officers or directors
but in any event not less than 6 years from the
closing of the merger transaction referenced
above
	 
	 	 
	Release/Restrictive Covenants:

	 	The payment of the Early Termination Benefits
described above and the Lump Sum Severance
Payment shall be subject to Petersen’s
execution of an effective release in the form
attached hereto. Petersen acknowledges that the
restrictive covenants provided for in the Employee Confidentiality, Non-disclosure,
Intellectual Property, Non-solicitation and
Non-competition Agreement dated September 13,
2001 between Petersen and the Company will
continue for 2 years from January 5, 2007.

 

 

	 	 	 	 	 
	AGREED:	 	 
	 
	 	 	 	 
	/s/ Greg Petersen	 	 
	 	 	 
	Greg Petersen	 	 
	 
	 	 	 	 
	Lone Star Merger Corp	 	 
	 
	 	 	 	 
	By:

	 	/s/ C Andrew Ballard	 	 
	 

	 	 	 	 
	 

	 	Name: C Andrew Ballard	 	 
	 

	 	Title: Vice Presidentexv10w21

 

Exhibit 10.21

AMENDED
AND RESTATED

ACTIVANT GROUP INC.

2006 STOCK INCENTIVE PLAN

1. Purpose of the Plan.

     The purpose of the Plan is to aid the Company and its Affiliates in recruiting and
retaining service providers of outstanding ability and to motivate such persons to exert their
best efforts on behalf of the Company and its Affiliates by providing incentives through the
granting of Stock Awards. The Company expects that it will benefit from the added interest that
such persons will have in the welfare of the Company as a result of their proprietary interest
in the Company.

2. Definitions.

     (a) Affiliate. Affiliate means, (i) with respect to the Company, any entity directly,
or indirectly through one or more intermediaries, controlling or controlled by (but not under
common control with) the Company, and (ii) with respect to the Initial Investors, any entity
directly, or indirectly through one or more intermediaries,
controlling or controlled by or under common control with the Initial Investors, respectively, but excluding the Company and the Company’s
Subsidiaries and other Affiliates that the Company controls. Solely with respect to the
granting of any Incentive Stock Options, Affiliate of the Company means any parent corporation or
subsidiary corporation of the Company, whether now or hereafter
existing, as those terms are defined in Sections 424(e) and (f), respectively, of the Code.

     (b) Applicable Law. Applicable Law means the legal requirements relating to the
administration of an equity compensation plan under applicable U.S. federal and state
corporate and securities laws, the Code, any stock exchange rules or regulations, and the applicable
laws of any other country or jurisdiction, as such laws, rules, regulations and requirements shall be
in place from time to time.

     (c) Applicable Stockholders Agreement. Applicable Stockholders Agreement shall
mean whichever of the Stockholders Agreement or the Employee Stockholders Agreement to
which a Participant shall be required to become a party pursuant to Section 14(a) hereto.

     (d) Beneficial Owner. The term “beneficial owner” shall have the meaning given to
such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act (or any successor rules
thereto).

     (e) Board. Board means the Board of Directors of the Company.

     (f) Cause. Cause means any of the following: (i) the Participant’s theft, dishonesty,
or falsification of any documents or records related to the Company or any of its Affiliates;
(ii) the Participant’s improper use or disclosure of the Company’s or any of its Affiliate’s
confidential or proprietary information; (iii) any action by the Participant which has a material detrimental
effect on the reputation or business of the Company or any of its Affiliates; (iv) the Participant’s
failure or inability to perform any reasonable assigned duties, if such failure or inability is
reasonably capable of cure, after being provided with a reasonable opportunity to cure, such failure or

 

 

inability; (v) any material breach by the Participant of any employment or service agreement
between the Participant and the Company or any of its Affiliates or applicable policy of the
Company or any of its Affiliates, which breach is not cured pursuant to the terms of such
agreement; or (vi) the Participant’s conviction (including any plea of guilty or nolo contendere)
of any criminal act which impairs the Participant’s ability to perform his or her duties with the
Company or any of its Affiliates. Notwithstanding the foregoing, the definition of “Cause” in an
individual written agreement between the Company or any of its Affiliates and the Participant
shall supersede the foregoing definition with respect to Stock Awards subject to such individual
agreement (it being understood, however, that if no definition of the term Cause is set forth in
such an individual written agreement, the foregoing definition shall apply).

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

          (i) The sale or other disposition, in one or a series of related transactions, of all
or substantially all, of the consolidated assets of the Company to any “person” or “group” (as
such terms are defined in Sections 13(d)(3) or 14(d)(2) of the Exchange Act) other than the
Initial Investors or its Affiliates; or

          (ii) (A) Any person or group, other than the Initial Investors or any of their
Affiliates, is or becomes the Beneficial Owner, directly or indirectly, of more than 50% of the
total voting power of the voting stock of the Company (or any entity which controls the Company,
or which is a successor to all or substantially all of the consolidated assets of the Company),
including by way of merger, consolidation, or otherwise, and (B) the Initial Investors or its
Affiliates (individually or in the aggregate) cease to control the Board.

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

     (i) Committee. Committee means a committee of one or more members of the Board
appointed by the Board in accordance with Section
 3(d).

     (j) Common Stock. Common Stock means the common stock, par value $0.01 per
share, of the Company.

     (k) Company. Company means Activant Group Inc., a Delaware corporation.

     (l) Consultant. Consultant means any person engaged by the Company, a Subsidiary,
or an Affiliate to render consulting or advisory services and who is compensated for such
services (other than as an Employee or Director). For the purposes of determining eligibility to
participate in the Plan, the term Consultant shall be clarified pursuant to the provisions of
Section 5(d).

     (m) Continuous Service. Continuous Service means that the Participant’s service
with the Company, a Subsidiary or an Affiliate in his or her capacity as an Employee, Director, or
Consultant, as applicable, is not interrupted or terminated. The Board or the chief executive
officer of the Company, in that party’s sole discretion, may determine whether Continuous Service
shall be considered interrupted in the case of any leave of absence, including sick leave, military
leave or any other personal leave. Notwithstanding the foregoing, a leave of absence shall be
treated as Continuous Service for purposes of vesting only to such extent as may be expressly

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provided in the Company’s leave of absence policy or in the written terms of the Participant’s
leave of absence documentation.

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

     (o) Director. Director means a member of the Board of Directors of the
Company.

     (p) Disability. Disability (i) means, to the extent necessary for qualification
of Options as Incentive Stock Options, the permanent and total disability of a person within the
meaning of Section 22(e)(3) of the Code, and (ii) for all other purposes, has the meaning under
Section 409A(a)(2)(C)(i) of the Code, that is, the Participant (1) is unable to engage in any
substantial gainful activity by reason of any medically determinable physical or mental impairment
which can be expected to result in death or can be expected to last for a continuous period of not
less than 12 months or (2) is, by reason of any medically determinable physical or mental
impairment which can be expected to result in death, or can be expected to last for a continuous
period of not less than 12 months, receiving income replacement benefits for a period of not less
than three (3) months under an accident and health plan covering employees of the Participant’s
employer.

     (q) Effective Date. Effective Date means September 28, 2006, the date the Board
first approved the Plan.

     (r) Employee. Employee means any person employed by the Company or an Affiliate.
Service as a Director or payment of a director’s fee by the Company or an Affiliate shall not be
sufficient to constitute “employment” by the Company or an Affiliate.

     (s) Employee Stockholders Agreement. Employee Stockholders Agreement means the
Employee Stockholders Agreement among the Company, HFCP and various other holders of equity
interests in the Company that are parties thereto, as such agreement may be amended from time to
time.

     (t) Exchange Act. Exchange Act means the Securities Exchange Act of 1934 and the
rules and regulations promulgated thereunder, as each may be amended from time to time.

     (u) Fair Market Value. Fair Market Value means, as of any date, the value of a
share of Common Stock determined as follows:

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

3

 

          (ii) In the absence of such markets for the Common Stock, the Fair
Market Value shall be determined in good faith by the Board.

          (iii) Prior to the Listing Date, the value of the Common Stock shall be
determined in a manner consistent with Section 260.140.50 of Title 10 of the
California Code of Regulations or any successor thereto.

          (iv) Notwithstanding the foregoing, the value of the Common Stock shall at
all times be determined in a manner consistent with Section 409A of the Code
(and the regulations and guidance promulgated thereunder), as may be amended
from time to time.

     (v) HFCP. HFCP means Hellman & Friedman Capital Partners V, L.P.

     (w) Incentive Stock Option. Incentive Stock Option means a stock option to
acquire Common Stock intended to qualify as an incentive stock option within the meaning of Section
422 of the Code and the regulations promulgated thereunder, as amended from time to time.

     (x) Initial Investors. Initial Investors means HFCP and its affiliated funds,
Thoma Cressey Fund VII, LP and its affiliated funds, and JMI Equity Fund IV, L.P. and its
affiliated funds.

     (y) Initial Public Offering. Initial Public Offering means the consummation of
an underwritten public offering (or series of offerings) of Common Stock pursuant to a registration
statement under the Securities Act.

     (z) Listing Date. Listing Date means the first date upon which any shares of
Common Stock of the Company are listed (or approved for listing) upon notice of issuance on any
securities exchange or designated (or approved for designation) upon notice of issuance as a
national market security on an interdealer quotation system if such securities exchange or
interdealer quotation system has been certified in accordance with the provisions of Section
25100(o) of the California Corporate Securities Law of 1968. For greater certainty, any public
offerings or listing of the stock of any predecessor to the Company shall not be considered for
this purpose.

     (aa) Non-Employee Director. Non-Employee Director means a Director who is considered
a “non-employee director” for purposes of Rule 16b-3.

     (bb) Nonstatutory Stock Option. Nonstatutory Stock Option means a stock option to
acquire Common Stock not intended to qualify as an Incentive Stock Option.

     (cc) Officer. Officer means (i) before the Listing Date, any person designated by
the Company as an officer and (ii) on and after the Listing Date, 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.

     (dd) Option. Option means an Incentive Stock Option or Nonstatutory Stock
Option granted pursuant to the Plan.

4

 

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

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

     (gg) Outside Director. Outside Director means a Director who is considered an
“outside director” for purposes of Section 162(m) of the Code.

     (hh) Own, Owned, Owner, Ownership. Except as otherwise required by Applicable Law,
a person or entity shall be deemed to “Own,” to have “Owned,” to be the “Owner” of, or to have
acquired “Ownership” of securities if such person or entity, directly or indirectly, through any
contract, arrangement, understanding, relationship or otherwise, has or shares voting power, which
includes the power to vote or to direct the voting, with respect to such securities.

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

     (jj) Performance-Based Award. Performance-Based Award means a Stock Award
granted pursuant to the provisions of Section 8 hereof.

     (kk) Performance Share Bonus. Performance Share Bonus means a grant of shares of the
Company’s Common Stock not requiring a Participant to pay any amount of monetary consideration
(other than par value to the extent required by Applicable Law), made pursuant to Section 7(a) of
the Plan.

     (II) Performance Share Unit. Performance Share Unit means the right to receive the value
of one (1) share of the Company’s Common Stock at the time the Performance Share Unit vests, with
the further right to elect to defer receipt of that value otherwise deliverable upon the vesting of
an award of Performance Share Units to the extent permitted in the Participant’s agreement.
Performance Share Units are granted pursuant to Section 7(a) of the Plan.

     (mm) Permitted Transferee. Permitted Transferee means: (i) to the extent provided by
the Applicable Stockholders Agreement with respect to a Participant, (1) a trust or custodianship
the beneficiaries of which may include only the Participant, his or her spouse and his or her
lineal descendants (including children by adoption and step children) or (2) any limited liability
company or partnership (I) with respect to which all of the outstanding equity interests are
beneficially owned solely by the Participant, his or her spouse and his or her lineal descendants
(including children by adoption and step children) and (II) with respect to which the Participant
is the sole manager or managing member (if a limited liability company) or the sole general partner
(if a limited partnership) and otherwise has the sole power to direct or cause the direction of the
management and policies, directly or indirectly, of such limited liability company or partnership,
whether through the ownership of voting securities, by contract or otherwise and (ii) in all cases,
a person to whom a Stock Award or share of Common Stock is permitted to be transferred pursuant to
the provisions of this Plan.

     (nn) Person. The term “person” shall have the meaning given to such term by 13(d)
or 14(d) of the Exchange Act (or any successor section thereto).

5

 

     (oo) Phantom Stock Unit. Phantom Stock Unit means the right to receive the value
of one (1) share of the Company’s Common Stock, which Award is made pursuant to Section 7(a) of
the Plan.

     (pp) Plan. Plan means this Activant Group Inc. 2006 Stock Incentive Plan, as
amended from time to time.

     (qq) Restricted Stock Purchase Award. Restricted Stock Purchase Award means the
right to acquire shares of the Company’s Common Stock upon the payment of the agreed-upon
monetary consideration, if any, granted pursuant to the provisions of Section 7(a) of the
Plan.

     (rr) Restricted Stock Unit. Restricted Stock Unit means the right to receive one
(1) share of the Company’s Common Stock at the time the Restricted Stock Unit vests, granted
pursuant to the provisions of Section 7(a) of the Plan.

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

     (tt) Securities Act. Securities Act means the Securities Act of 1933 and the
rules and regulations promulgated thereunder, as each may be amended from time to time.

     (uu) Stock Appreciation Right. Stock Appreciation Right means a stock appreciation
right granted pursuant to the provisions of Section 7(b) of the Plan.

     (vv) Stock Award. Stock Award means any right granted under the Plan, including,
but not limited to: (i) Options (including Incentive Stock Options and Nonstatutory Stock Options),
(ii) Restricted Stock Purchase Awards, (iii) Restricted Stock Units, (iv) Phantom Stock Units, (v)
Performance Share Unit, (vi) Performance Share Bonus, and (vii) Stock Appreciation Rights.

     (ww) Stock Award Agreement. Stock Award Agreement means a written agreement between
the Company and a holder of a Stock Award evidencing the terms and conditions of an individual
Stock Award, including but not limited to an Option Agreement. Each Stock Award Agreement shall be
subject to the terms and conditions of the Plan.

     (xx) Stockholders Agreement. Stockholders Agreement means the Stockholders
Agreement entered into, effective as of May 2, 2006, among the Company, HFCP and various other
holders of equity interests in the Company that are parties thereto, as such agreement may be
amended from time to time.

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

     (zz) Ten Percent Stockholder. Ten Percent Stockholder means a person who Owns
(or is deemed to Own pursuant to Section 424(d) of the Code) stock possessing more than ten
percent

6

 

(10%) of the total combined voting power of all classes of stock of the Company or of any of its
Affiliates.

3. Administration.

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

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

          (i) To determine from time to time which of the persons eligible
under the Plan shall be granted Stock Awards; when and how each Stock Award
shall be granted; what type or combination of types of Stock Award shall be
granted; the provisions of each Stock Award granted (which need not be
identical), including the time or times when a person shall be permitted to
receive Common Stock pursuant to a Stock Award; the number of shares of Common
Stock with respect to which a Stock Award shall be granted to each such person;
and whether and how a Stock Award will be adjusted to account for dividends paid
with respect to the Company’s Common Stock.

          (ii) To construe and interpret the Plan and Stock Awards granted
under it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any Stock Award Agreement,
in a manner and to the extent it shall deem necessary or expedient to make the
Plan and any Stock Award fully effective.

          (iii) To amend the Plan or a Stock Award, as provided in the Plan.

          (iv) To terminate or suspend the Plan, as provided in the Plan.

          (v) Generally, to exercise such powers and to perform such acts as
the Board deems necessary or expedient to promote the best interests of the
Company that are not in conflict with the provisions of the Plan.

     (c) International
Stock Awards. With respect to Participants who reside or work outside the United States of America and who are not (and are not expected to be) Covered
Employees, the Board may, in its sole discretion, amend the terms of the Plan and/or Stock
Awards with respect to such Participants in order to conform such terms with the requirements of
local law and/or to make such changes as are necessary or beneficial to the Company, its Affiliates
and/or the Participants.

     (d) Delegation to Committee.

          (i) General. The Board may delegate administration of the
Plan to a Committee or Committees of one (1) or more members of the Board, and
the term “Committee” shall apply to any person or persons to whom such
authority has been delegated. If administration is delegated to a Committee,
the

7

 

Committee shall have, in connection with the administration of the Plan, the
powers theretofore possessed by the Board, including the power to delegate to a
subcommittee any of the administrative powers the Committee is authorized to
exercise (and references in this Plan to the Board shall thereafter be to the
Committee or subcommittee), subject, however, to such resolutions, not
inconsistent with the provisions of the Plan, as may be adopted from time to
time by the Board. The Board may abolish the Committee at any time and revest
in the Board some or all of the administration of the Plan. The Board or the
Committee may delegate to one or more Officers of the Company the authority to
grant Stock Awards under this Plan to Participants who are not Officers in
accordance with the requirements of the Delaware General Corporation Law and/or
other Applicable Law.

          (ii) Committee Composition when Common Stock is Publicly
Traded. At such time as the Common Stock is publicly traded, in the
discretion of the Board, a Committee may consist solely of two or more Outside
Directors, in accordance with Section 162(m) of the Code, and/or solely of two
or more Non-Employee Directors, in accordance with Rule 16b-3. Within the scope
of such authority, the Board or the Committee may (1) delegate to a committee of
one or more members of the Board who are not Outside Directors the authority to
grant Stock Awards to eligible persons who are either (a) not then Covered
Employees and are not expected to be Covered Employees at the time of
recognition of income resulting from such Stock Award or (b) not persons with
respect to whom the Company wishes to comply with Section 162(m) of the Code)
and/or (2) delegate to a committee of one or more members of the Board who are
not Non-Employee Directors the authority to grant Stock Awards to eligible
persons who are not then subject to Section 16 of the Exchange Act. The Board or
the Committee may delegate to one or more Officers of the Company the authority
to grant Stock Awards under this Plan to Participants who are not Officers in
accordance with the requirements of the Delaware General Corporation Law and/or
other Applicable Law.

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

4. Shares Subject to the Plan.

     (a) Shares Reserved for Issuance Under the Plan. Subject to the provisions of Section 11
relating to adjustments upon changes in Common Stock, the Common Stock that may be issued pursuant
to Stock Awards shall not exceed in the aggregate seven million, seven hundred sixty-one thousand,
nine hundred and fifty-eight (7,761,958) shares of Common Stock (the
“Share Reserve”). The Share
Reserve shall be reduced by the number of shares of Common Stock: (i) issued, (ii) made subject to
the terms of a Stock Award pursuant to Section 3(c), or (iii) to the extent that a distribution
pursuant to a Stock Award is made in cash, the Share Reserve shall be reduced by the number of
shares of Common Stock bearing a value equal to the amount of the cash distribution as of the time
that such amount was determined. The maximum number of shares of Common Stock that may be issued
pursuant to Incentive Stock Options shall be seven million,

8

 

seven
hundred thousand, five hundred and fifty-two (7,700,552) shares of
Common Stock (the “ISO
Limit”).

     (b) Reversion of Shares to the Share Reserve. If any Stock Award shall for any reason
(i) expire, be cancelled or otherwise terminate, in whole or in part, without having been
exercised or redeemed in full, (ii) be reacquired by the Company prior to vesting, or (iii) be
repurchased at cost by the Company prior to vesting, the shares of Common Stock not acquired under such Stock
Award shall revert to and again become available for issuance under the Plan; provided,
however, that such shares of Common Stock shall not be available for issuance pursuant to the exercise
of Incentive Stock Options.

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

     (d) Share Reserve Limitation. Prior to the Listing Date and to the extent then
required by Section 260.140.45 of Title 10 of the California Code of Regulations or any successor
thereto (“Section 260.140.45”), the total number of shares of Common Stock issuable upon exercise of
all outstanding Options and the total number of shares of Common Stock provided for under any
stock bonus or similar or other plan or award of the Company shall not exceed thirty percent
(30%) (or such higher percentage limitation as may be approved by the stockholders of the Company
pursuant to Section 260.140.45) of the then outstanding shares of Common Stock of the Company
as calculated in accordance with the conditions and exclusions of Section 260.140.45.

5. Eligibility.

     (a) Eligibility
for Specific Stock Awards. Incentive Stock Options may be granted only to Employees. Stock Awards other than Incentive Stock Options may be granted to Employees,
Directors, and Consultants subject, however, to the limitations in Sections 5(c) and (d)
hereof.

     (b) Ten Percent Stockholders.

          (i) A Ten Percent Stockholder shall not be granted an Incentive Stock
Option unless the exercise price of such Option is at least one hundred ten
percent (110%) of the Fair Market Value of the Common Stock at the date of grant
and the Option is not exercisable after the expiration of five (5) years from the
date of grant.

          (ii) Prior to the Listing Date, a Ten Percent Stockholder shall not be
granted an Option unless the exercise price of such Option is at least (i) one
hundred ten percent (110%) of the Fair Market Value of the Common Stock at the
date of grant or (ii) such lower percentage of the Fair Market Value of the
Common Stock at the date of grant as is required or permitted by Section
260.140.41 of Title 10 of the California Code of Regulations or any successor
thereto at the time of the grant of the Option.

          (iii) Prior to the Listing Date, a Ten Percent Stockholder shall
not be granted any other form of Stock Award unless the grant
complies with the requirements of Section 260.140.42 of Title 10 of the California Code of

9

 

Regulations or any successor thereto at the time of the grant of the Stock
Award.

     (c) Section 162(m) Limitation. Subject to the provisions of Section 1l(a) relating to
adjustments upon changes in the Common Stock, no Employee shall be eligible to be granted
Options and other Stock Awards covering more than five million (5,000,000) shares of Common
Stock (with respect to Stock Awards payable in shares) or with a value in excess of five
million dollars ($5 million) (with respect to Stock Awards payable in cash) during any fiscal year;
provided that in connection with his or her initial service, an Employee may be granted
Options and other Stock Awards covering not more than an additional five million (5,000,000) shares of
Common Stock (with respect to Stock Awards payable in shares) or with a value in excess of
five millions dollars ($5 million) (with respect to Stock Awards payable in cash), which shall not
count against the limits first set forth above. Shares subject to Stock Awards that are canceled
shall continue to be counted against the limitations set forth in this Section 5(c). The repricing
of any Option resulting in a reduction of the exercise price, shall be deemed to be a cancellation of
the original Option and the grant of a substitute Option; in the event of such repricing, both the
original and the substituted Options shall be counted against the share limitations set forth
in this Section 5(c). This Section 5(c) shall not apply prior to such date required by Section 162(m)
of the Code and the rules and regulations promulgated thereunder.

     (d) Consultants.

          (i) Prior to the Listing Date, a Consultant shall not be eligible for
the grant of a Stock Award if, at the time of grant, either the offer or the sale
of the Company’s securities to such Consultant is not exempt under Rule 701 of
the Securities Act (“Rule 701”) unless the Company determines that such grant
need not comply with the requirements of Rule 701 and will satisfy another
exemption under the Securities Act, as well as comply with the securities laws of
all other relevant jurisdictions.

          (ii) From and after the Listing Date, a Consultant shall not be
eligible for the grant of a Stock Award if, at the time of grant, a Form S-8
Registration Statement under the Securities Act
(“Form S-8”) is not available to
register either the offer or the sale of the Company’s securities to such
Consultant because of the nature of the services that the Consultant is providing
to the Company, or because the Consultant is not a natural person, or as
otherwise provided by the rules governing the use of Form S-8, unless the Company
determines both (1) that such grant (A) shall be registered in another manner
under the Securities Act (e.g., on a Form S-3 Registration Statement) or (B) does
not require registration under the Securities Act in order to comply with the
requirements of the Securities Act, if applicable, and (2) that such grant
complies with the securities laws of all other relevant jurisdictions.

6. Option Provisions.

     Each Option shall be in such form and shall contain such terms and conditions as the
Board shall deem appropriate. All Options shall be separately designated Incentive Stock
Options or Nonstatutory Stock Options at the time of grant, and, if certificates are issued, a
separate certificate or certificates shall be issued for shares of Common Stock purchased on

10

 

exercise of each type of Option. Options and any shares acquired upon exercise of Options shall
be subject to the Applicable Stockholders Agreement that sets forth the rights and obligations of
an Optionholder and/or Company stockholder with respect to Options and Common Stock issued upon
any exercise of an Option. The provisions of separate Options need not be identical, but each
Option shall include (through incorporation of provisions hereof by reference in the Option or
otherwise) the substance of each of the following provisions:

     (a) Term. Subject to the provisions of Section 5(b) regarding Ten Percent
Stockholders, no Option shall be exercisable after the expiration of ten (10) years from the
date it was granted.

     (b) Exercise Price of an Incentive Stock Option. Subject to the provisions of Section
5(b) regarding Ten Percent Stockholders, the exercise price of each Incentive Stock Option
shall be not less than one hundred percent (100%) of the Fair Market Value of the Common Stock
subject to the Option on the date the Option is granted. Notwithstanding the foregoing, an
Incentive Stock Option may be granted with an exercise price lower than that set forth in the
preceding sentence if such Option is granted pursuant to an assumption or substitution for
another stock option in a manner satisfying the provisions of Section 424(a) and Section 409A of the
Code.

     (c) Exercise
Price of a Nonstatutory Stock Option. Subject to the provisions of Section 5(b) regarding Ten Percent Stockholders, the exercise price of each Nonstatutory Stock
Option shall be not less than one hundred percent (100%) of the Fair Market Value of the
Common Stock subject to the Option on the date the Option is granted. Notwithstanding the foregoing,
a Nonstatutory Stock Option may be granted with an exercise price lower than that set forth in
the preceding sentence if such Option is granted pursuant to an assumption or substitution for
another stock option in a manner satisfying the provisions of Section 424(a) and Section 409A of the
Code.

     (d) Consideration.

          (i) The purchase price of Common Stock acquired pursuant to an Option
shall be paid, to the extent permitted by Applicable Law, either (1) in cash or
by check at the time the Option is exercised, (2) at the discretion of the Board
(at the time of the grant of the Option to the extent required by Applicable
Law), (A) by delivery to the Company of other Common Stock (subject to any
requirements imposed by the Board in relation thereto), (B) in any other form of
legal consideration that may be acceptable to the Board or (C) by reduction of
the Company’s liability to the Optionholder, (3) if there is a public market for
the shares at such time, pursuant to a program developed under Regulation T as
promulgated by the Federal Reserve Board that, prior to the issuance of Common
Stock, results in either the receipt of cash (or check) by the Company or the
receipt of irrevocable instructions to pay the aggregate exercise price to the
Company from the sales proceeds, or (4) a combination of the above.

          (ii) Unless otherwise specifically provided in the Option
Agreement, the purchase price of Common Stock acquired pursuant to an
Option that is paid by delivery to the Company of other Common Stock
acquired directly or indirectly from the Company shall be paid only by shares of
the Common Stock of the Company that have been held for more than six (6)

11

 

months (or such longer or shorter period of time required to avoid a
supplemental charge to earnings for financial accounting purposes).

          (iii) Wherever a Participant is permitted to pay the exercise price of
an Option and/or taxes relating to the exercise of an Option by delivering
Common Stock, the Participant may, subject to procedures satisfactory to the
Board, satisfy such delivery requirement by presenting proof of beneficial
ownership of such Common Stock, in which case the Company shall treat the
Option as exercised without further payment and shall withhold such
number of shares of Common Stock from the Common Stock acquired by the exercise of the
Option. Where necessary to avoid a supplemental charge to earnings for
financial accounting purposes, any such withholding for tax purposes shall be
made at the statutory minimum rate of withholding.

     (e) Vesting Generally. The total number of shares of Common Stock subject to an
Option may, but need not, vest and therefore become exercisable in periodic installments that
may, but need not, be equal. The Option may be subject to such other terms and conditions on the
time or times when it may become vested and exercisable (which may be based on performance or other
criteria) as the Board may deem appropriate. The vesting provisions of individual Options may
vary. The provisions of this Section 6(e) are subject to any Option provisions governing the
minimum number of shares of Common Stock as to which an Option may be exercised.

     (f) Minimum Vesting Prior to the Listing Date. Notwithstanding the foregoing Section
6(e), to the extent that the following restrictions on vesting are required by Section
260.140.41 (f) of Title 10 of the California Code of Regulations or any successor thereto at the time of the
grant of the Option, then:

          (i) Options granted prior to the Listing Date to an Employee who is
not an Officer, Director or Consultant shall provide for vesting of the total
number of shares of Common Stock at a rate of at least twenty percent (20%) per
year over five (5) years from the date the Option was granted, subject to
reasonable conditions such as continued employment; and

          (ii) Options granted prior to the Listing Date to Officers, Directors
or Consultants may be made fully exercisable, subject to reasonable conditions
such as continued employment, at any time or during any period established by
the Company.

     (g) Termination of Unvested Options. Unless otherwise specified in the Optionholder’s
Option Agreement, any Option or portion thereof that is not vested at the time of termination
of Continuous Service shall lapse and terminate, and shall not be exercisable by the Optionee or
any other Person.

     (h) Termination of Continuous Service. In the event an Optionholder’s Continuous
Service is terminated other than by the Company or its Affiliates for Cause and other than as a
result of the Optionholder’s death or Disability, the Optionholder may exercise his or her Option
(to the extent that the Optionholder was entitled to exercise such Option as of the date of
termination or as otherwise permitted by the Company) but only within such period of time ending on
the earlier of (i) the date three (3) months following the termination of the Optionholder’s

12

 

Continuous Service (or such longer or shorter period specified in the Option Agreement or as
otherwise required by Applicable Law, which period shall not be less than thirty (30) days for
Options granted prior to the Listing Date), or (ii) the expiration of the term of the Option as
set forth in the Option Agreement. If the Optionholder does not exercise his or her Option within
the specified time, the Option shall terminate. Notwithstanding the foregoing, an Optionholder’s
Option Agreement may also provide that if the exercise of the Option following the termination of
the Optionholder’s Continuous Service (other than upon the Optionholder’s death or Disability or
for Cause) would be prohibited at any time solely because the issuance of shares of Common Stock
would violate the registration requirements under the Securities Act, or similar requirements of
the Applicable Laws of another jurisdiction to which the Option is subject, then the Option shall
terminate on the earlier of (i) the expiration of the term of the Option or (ii) the expiration of
a period of three (3) months after the termination of the Optionholder’s Continuous Service during
which the exercise of the Option would not be in violation of such registration requirements or
similar requirements.

     (i) Disability of Optionholder. In the event that an Optionholder’s Continuous
Service terminates as a result of the Optionholder’s Disability, the Optionholder may exercise his
or her Option (to the extent that the Optionholder .was entitled to exercise such Option as of the
date of termination), but only within such period of time ending on the earlier of (i) the date
twelve (12) months following such termination (or such longer or shorter period specified in the
Option Agreement or as otherwise required by Applicable Law, which period shall not be less than
six (6) months for Options granted prior to the Listing Date to the extent required by Applicable
Law) or (ii) the expiration of the term of the Option as set forth in the Option Agreement. If the
Optionholder does not exercise his or her Option within the specified time, the Option shall
terminate.

     (j) Death of Optionholder. In the event (i) an Optionholder’s Continuous
Service terminates as a result of the Optionholder’s death or (ii) the Optionholder dies within the
period (if any) specified in the Option Agreement after the termination of the Optionholder’s
Continuous Service for a reason other than death, then the Option may be exercised (to the extent
the Optionholder was entitled to exercise such Option as of the date of death or as otherwise
permitted by the Company) by the Optionholder’s estate, by a person who acquired the right to
exercise the Option by bequest or inheritance or by a person designated to exercise the Option upon
the Optionholder’s death, but only within the period ending on the earlier of (1) the date twelve
(12) months following the date of death (or such longer or shorter period specified in the Option
Agreement or as otherwise required by Applicable Law, which period shall not be less than six (6)
months for Options granted prior to the Listing Date to the extent required by Applicable Law) or
(2) the expiration of the term of such Option as set forth in the Option Agreement. If the Option
is not exercised within the specified time, the Option shall terminate.

     (k) Termination for Cause. Notwithstanding any other provision of the Plan to
the contrary, and except as otherwise expressly provided in an Option Agreement, if the
Optionholder’s Continuous Service is terminated by the Company for Cause, the Option shall
terminate and cease to be exercisable immediately upon such termination of Continuous Service (or
on such later date as otherwise required by Applicable Law).

     (l) Early Exercise. The Option may, but need not, include a provision whereby
the Optionholder may elect at any time before the Optionholder’s Continuous Service terminates to
exercise the Option as to any part or all of the shares of Common Stock subject to the Option prior

13

 

to the full vesting of the Option. Any shares of Common Stock so purchased may be subject to a
repurchase option in favor of the Company or to any other restriction the Board determines to be
appropriate. Provided that the “Repurchase Limitation” in Section 10(j) is not violated, the
Company will not exercise its repurchase option until at least six (6) months (or such longer or
shorter period of time required to avoid a supplemental charge to earnings for financial accounting
purposes) have elapsed following exercise of the Option unless the Board otherwise specifically
provides in the Option Agreement.

     (m) Loss of Tax Favored Status. If a Participant exercises an Incentive Stock
Option more than three months after termination of employment (or after such longer period in case
of death or Disability as permitted under the Code), such Option shall be treated as a Nonstatutory
Stock Option. In addition, in no event shall any member of the Board, the Company, the Initial
Investors or any of their respective Affiliates (including their
respective employees, officers, directors or agents) have any liability to any Participant (or any other Person) due to the
failure of an Option to qualify for any reason as an Incentive Stock Option, nor do any such
Persons make any representatives regarding the taxation consequences to any Participant resulting
from the grant, vesting or exercise of any Stock Award or from the sale of shares obtained pursuant
to any such Stock Award.

7. Provisions of Stock Awards other than Options.

     (a) Other Stock-Based Awards. The Committee, in its sole discretion, may grant
or sell an award of a Restricted Stock Purchase Award, Restricted Stock Unit, Performance Share
Unit, Performance Share Bonus, Phantom Stock Unit, or other stock-based award that is valued in
whole or in part by reference to, or is otherwise based on, the Fair Market Value of the Company’s
Common Stock (each, an “Other Stock-Based Award”). Each Other Stock-Based Award shall be subject to
a Stock Award Agreement which shall contain such terms and conditions as the Board shall deem
appropriate. The terms and conditions of Other Stock-Based Awards may change from time to time, and
the terms and conditions of separate Other Stock-Based Awards need not be identical, but each Other
Stock-Based Award shall be subject to the following provisions (either through incorporation of
provisions hereof by reference in the applicable Stock Award Agreement or otherwise):

          (i) Purchase Price. Other Stock-Based Awards may be granted
in consideration for past services actually rendered to the Company or an
Affiliate; notwithstanding the foregoing, to the extent required by Applicable
Law, a Participant shall pay the Common Stock’s “par value” solely in cash or by
check. The purchase price (if any) under each Other Stock-Based Award shall be
such amount as the Board shall determine and designate in the applicable Stock
Award Agreement. To the extent required by Applicable Law, the purchase price
shall not be less than one hundred percent (100%) of the Fair Market Value of the
Common Stock subject to the Other Stock-Based Award on the date such award is
made or at the time the purchase is consummated, as applicable.

          (ii) Consideration.

               (1) The purchase price (if any) of Common Stock acquired pursuant to Other Stock-Based
Awards shall be paid either: (A) in cash or by check, (B) as determined by

14

 

the Board (and to the extent required by Applicable Law, at the time of the grant): (I) by
delivery to the Company of other shares of Common Stock (subject to such requirements as may be
imposed by the Board), (II) reduction of the Company’s liability to the Participant, or (III) by
any other form of consideration permitted by law, (C) if there is a public market for the shares
at such time, pursuant to a program developed under Regulation T as promulgated by the Federal
Reserve Board that, prior to the issuance of Common Stock, results in either the receipt of cash
(or check) by the Company or the receipt of irrevocable instructions to pay the aggregate exercise
price to the Company from the sales proceeds, or (D) by some combination of the foregoing.

               (2) Unless otherwise specifically provided in the Stock Award
Agreement, the purchase price of Common Stock acquired pursuant to any Other Stock-Based Award that
is paid by delivery to the Company of other Common Stock, which Common Stock was acquired, directly
or indirectly from the Company, shall be paid only by shares of the Common Stock that have been
held for more than six (6) months (or such longer or shorter period of time required to avoid a
supplemental charge to earnings for financial accounting purposes).

               (3)
Whenever a Participant is permitted to pay the exercise price of any Other Stock-Based Award and/or taxes relating to the exercise thereof by delivering
Common Stock, the Participant may, subject to procedures satisfactory to the Board, satisfy
such delivery requirements by presenting proof of beneficial ownership of such Common Stock, in
which case the Company shall treat the Other Stock-Based Award as exercised or redeemed
without further payment and shall withhold such number of shares of Common Stock from the
Common Stock acquired under the Other Stock-Based Award. When necessary to avoid a
supplemental charge to earnings for financial accounting purposes, any such withholding for
tax purposes shall be made at the statutory minimum rate of withholding.

          (iii) Vesting. The total number of shares of Common Stock subject
to each Other Stock-Based Award may, but need not, vest and/or become redeemable
in periodic installments that may, but need not, be equal. The Board shall
determine the criteria under which shares of Common Stock under the each Other
Stock-Based Award may vest. The criteria may or may not include performance
criteria or Continuous Service. Shares of Common Stock acquired under each Other
Stock-Based Award may, but need not, be subject to a share repurchase right or
similar forfeiture feature in favor of the Company in accordance with a schedule
to be determined by the Board.

          (iv) Distributions. The distribution with respect to any Other
Stock-Based Award may be made in shares of Common Stock valued at Fair Market
Value on the redemption or exercise date, in cash, or partly in shares and partly
in cash, as the Board shall in its sole discretion deem appropriate at such time
as permitted or required under Applicable Law.

          (v)
Termination of Participant’s Continuous Service. In the
event a Participant’s Continuous Service terminates, the Company may
repurchase or reacquire, and/or the Participant shall forfeit (as applicable), any
or all of the shares of Common Stock held by the Participant that have not vested
as of the date of termination, and in the event of a termination for Cause,

15

 

such vested shares, on such terms and conditions as set forth in the Stock Award
Agreement.

          (vi) Transferability. Rights to acquire shares of Common Stock
under Other Stock-Based Award shall be transferable by the Participant only as
permitted under the Plan and upon such terms and conditions as are set forth in
the applicable Stock Award Agreement, as the Board shall determine in its
discretion. If the Stock Award Agreement does not provide for transferability,
then the Other Stock-Based Award, and the shares subject to Other Stock-Based
Award, shall not be transferable except by will or by the laws of descent and
distribution.

     (b) Stock Appreciation Rights. The Board also may grant (i) a Stock Appreciation
Right independent of an Option or (ii) a Stock Appreciation Right in connection with an Option, or
a portion thereof. A Stock Appreciation Right granted pursuant to clause (ii) of the preceding
sentence (A) may be granted at the time the related Option is granted or at any time prior to the
exercise or cancellation of the related Option, (B) shall cover the same number of shares of Common
Stock covered by an Option (or such lesser number of shares as the Board may determine) and (C)
shall be subject to the same terms and conditions as such Option except for such additional
limitations as are contemplated by this Section 7(b) (or such additional limitations as may be
included in a Stock Award Agreement) and as are required under Section 409A of the Code. Each
Stock Appreciation Right agreement shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. The terms and conditions of Stock Appreciation
Right agreements may change from time to time, and the terms and conditions of separate Stock
Appreciation Right agreements need not be identical, but each Stock Appreciation Right agreement
shall include (through incorporation of provisions thereof by reference in the agreement or
otherwise) the substance of each of the following provisions:

          (i) Terms. The exercise price per share of a Stock
Appreciation Right shall be an amount determined by the Board but in no event
shall such amount be less than the greater of (i) the Fair Market Value of a share
on the date the Stock Appreciation Right is granted or, in the case of a Stock
Appreciation Right granted in conjunction with an Option, or a portion thereof,
the exercise price of the related Option and (ii) the minimum amount permitted
by Applicable Law, rules, by-laws or policies of regulatory authorities or stock
exchanges. Each Stock Appreciation Right granted independent of an Option
shall entitle a Participant upon exercise to an amount equal to (i) the excess of
(A) the Fair Market Value on the exercise date of one share over (B) the
exercise price per share, times (ii) the number of shares covered by the Stock
Appreciation Right. Each Stock Appreciation Right granted in conjunction with
an Option, or a portion thereof, shall entitle a Participant to surrender to the
Company the unexercised Option, or any portion thereof, and to receive from
the Company in exchange therefore an amount equal to (i) the excess of (A) the
Fair Market Value on the exercise date of one share over (B) the option exercise
price per share, times (ii) the number of shares covered by the
Option, or portion thereof, which is surrendered. The date a notice of exercise is received
by the Company shall be the exercise date. Payment shall be made in shares of
Common Stock (any such shares valued at such Fair Market Value), all as shall

16

 

be determined by the Board. Stock Appreciation Rights may be exercised from time
to time upon actual receipt by the Company of written notice of exercise stating the number of shares with respect to which the Stock Appreciation Right is
being exercised. No fractional shares will be issued in payment for Stock
Appreciation Rights, but instead cash will be paid for a fraction or, if the Board
should so determine, the number of shares will be rounded downward to the next
whole share.

          (ii) Limitations. The Board may impose, in its discretion,
such conditions upon the exercisability or transferability of Stock Appreciation
Rights as it may deem fit.

8. Performance Awards.

     Notwithstanding anything to the contrary herein, any Stock Award granted under this Plan may,
but need not, be granted in a manner which may be deductible by the Company under Section 162(m) of
the Code and, as applicable, compliant with the requirements of Section 409A of the Code (such
awards, “Performance-Based Awards”). A Participant’s Performance-Based Award shall be determined
based on the attainment of written performance goals approved by the Committee for a performance
period established by the Committee, which goals are approved (x) while the outcome for that
performance period is substantially uncertain and (y) during such period of time as permitted by
Applicable Law. The performance goals, which must be objective, shall be based upon one or more of
the following criteria: (i) consolidated earnings before or after taxes (including earnings before
one or more of the following: interest, taxes, depreciation and amortization); (ii) net income
(before or after taxes); (iii) operating income or profit (net or gross); (iv) earnings per share;
(v) book value per share; (vi) return on stockholders’ equity; (vii) expense management; (viii)
return on investment; (ix) improvements in capital structure; (x) profitability of an identifiable
business unit or product; (xi) maintenance or improvement of profit margins; (xii) stock price
(including but not limited to growth measures and total shareholder return); (xiii) market share;
(xiv) revenues or sales; (xv) costs and/or cost reductions or savings; (xvi) cash flow; (xvii)
working capital; (xviii) return on invested capital or assets; (xix) consummations of acquisitions
or sales of certain Company assets, subsidiaries or other businesses; (xx) funds from operations;
(xxi) pre-tax income; (xxii) customer satisfaction and (xxiii) capital expenditures. The foregoing
criteria may relate to the Company, one or more of its Affiliates or one or more of its divisions
or units, or any combination of the foregoing, and may be applied on an absolute basis and/or be
relative to one or more peer group companies or indices, or any combination thereof, all as the
Committee shall determine. In addition, to the degree consistent with Section 162(m) of the Code
(or any successor section thereto) and/or Section 409A of the Code, the performance goals may be
calculated without regard to extraordinary items. The Committee shall determine whether, with
respect to a performance period, the applicable performance goals have been met with respect to a
given Participant and, if they have, to so certify and ascertain the amount of the applicable
Performance-Based Award. No Performance-Based Awards will be paid for such performance period until
such certification is made by the Committee. The amount of the Performance-Based Award actually
paid to a given Participant may be less than the amount determined by the applicable performance
goal formula, at the discretion of the Committee. The amount of the Performance-Based Award
determined by the Committee for a performance period shall be paid to the Participant at such time
as determined by the Committee in its sole discretion after the end of such performance

17

 

period; provided, however, that a Participant may, if and to the extent permitted by the
Committee and consistent with the provisions of Section 162(m) and/or Section 409A of the Code,
elect to defer payment of a Performance-Based Award.

9. Covenants of the Company.

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

     (b) Securities Law Compliance. The grant of Stock Awards and the issuance
of Common Stock pursuant to Stock Awards shall be subject to compliance with all Applicable
Laws with respect to such securities. Stock Awards may not be issued if the issuance of such
Stock Awards would constitute a violation of any Applicable Law. In addition, no Stock Award
may be exercised unless (i) a registration statement under the Securities Act shall at the
time of exercise of the Stock Award be in effect with respect to the shares issuable upon
exercise of the Stock Award or (ii) in the opinion of legal counsel to the Company, the
shares issuable upon exercise of the Stock Award may be issued in accordance with the terms
of an applicable exemption from the registration requirements of the Securities Act and/or
other Applicable Law. The inability of the Company to obtain from any regulatory body having
jurisdiction the authority, if any, deemed by the Company’s legal counsel to be necessary for
the lawful issuance and sale of any Stock Award or share of Common Stock hereunder shall
relieve the Company of any liability in respect of the failure to issue or sell such Stock
Award or Common Stock.

10. Miscellaneous.

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

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

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

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

18

 

     (e) Incentive Stock Option $100.000 Limitation. To the extent that the aggregate
Fair Market Value (determined at the time of grant) of Common Stock with respect to which
Incentive Stock Options are exercisable for the first time by any Optionholder during any
calendar year (under all plans of the Company and its Affiliates) exceeds one hundred
thousand dollars ($100,000), the Options or portions thereof which exceed such limit
(according to the order in which they were granted) shall be treated as Nonstatutory Stock
Options.

     (f) Investment Assurances. The Company may require a Participant, as a condition
of exercising or acquiring Common Stock under any Stock Award, (i) to give written
assurances satisfactory to the Company as to the Participant’s knowledge and experience in
financial and business matters and/or to employ a purchaser representative reasonably
satisfactory to the Company who is knowledgeable and experienced in financial and business
matters and that he or she is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the Stock Award or acquiring the Common
Stock; (ii) to give written assurances satisfactory to the Company stating that the
Participant is acquiring Common Stock subject to the Stock Award for the Participant’s own
account and not with any present intention of selling or otherwise distributing the Common
Stock; and (iii) to give such other written assurances as the Company may determine are
reasonable in order to comply with Applicable Law. The foregoing requirements, and any
assurances given pursuant to such requirements, shall be inoperative if (x) the issuance of
the shares of Common Stock upon the exercise or acquisition of Common Stock under the Stock
Award has been registered under a then currently effective registration statement under the
Securities Act or (y) as to any particular requirement, a determination is made by
counsel for the Company that such requirement need not be met in the circumstances under the
then Applicable Law. The Company may, upon advice of counsel to the Company, place legends
on stock certificates issued under the Plan as such counsel deems necessary or appropriate in
order to comply with applicable securities laws, including, but not limited to, legends
restricting the transfer of the Common Stock.

     (g) Withholding Obligations. To the extent provided by the terms of a Stock
Award Agreement, the Participant may satisfy any federal, state or local tax withholding obligation
relating to the exercise or acquisition of Common Stock under a Stock Award by any of the following
means (in addition to the Company’s right to withhold from any compensation paid to the Participant
by the Company) or by a combination of such means: (i) tendering a cash payment; (ii) authorizing
the Company to withhold shares of Common Stock from the shares of Common Stock otherwise issuable
to the Participant as a result of the exercise or acquisition of Common Stock under the Stock
Award, provided, however, that no shares of Common Stock are withheld with a value exceeding the
minimum amount of tax required to be withheld by law (where withholding in excess of the minimum
amount will result in a supplemental charge to earnings for financial accounting purposes); or
(iii) delivering to the Company owned and unencumbered shares of Common Stock; provided, however,
in the case of the tender of shares, that any such shares have been held by the Participant for not
less than six (6) months (or such other period as established from time to time by the Board in
order to avoid a supplemental charge to earnings for financial accounting purposes).

     (h) Non-Qualified Deferred Compensation. To the extent applicable and
notwithstanding any other provision of this Plan, this Plan and Stock Awards hereunder shall be
administered, operated and interpreted in accordance with Section 409A of the Code and Department
of Treasury regulations and other interpretive guidance issued thereunder, including

19

 

without limitation any such regulations or other guidance that may be issued after the Effective
Date. Notwithstanding any provision of the Plan to the contrary, in the event that the Board
determines that any amounts payable hereunder may be taxable to a Participant under Section 409 A
of the Code and related Department of Treasury guidance prior to the payment and/or delivery to
such Participant of such amount, the Company may (i) adopt such amendments to the Plan and related
Stock Award, and appropriate policies and procedures, including amendments and policies with
retroactive effect, that the Board determines necessary or appropriate to preserve the intended tax
treatment of the benefits provided by the Plan and Stock Awards hereunder and/or (ii) take such
other actions as the Board determines necessary or appropriate to comply with, or exempt the Plan
and/or Stock Awards from, the requirements of Section 409A of the Code and related Department of
Treasury guidance, including such Department of Treasury guidance and other interpretive materials
as may be issued after the Effective Date. The Company and its Affiliates make no guarantees to any
person regarding the tax treatment of Stock Awards or payments made under the Plan, and,
notwithstanding any agreement or understanding to the contrary, if any Stock Award, payments or
other amounts due to a Participant (or his or her beneficiaries, as applicable) results in, or
causes in any manner, the application of an accelerated or additional tax, fine or penalty under
Section 409A of the Code to be imposed, then the Participant (or his or her beneficiaries, as
applicable) shall be solely liable for the payment of, and the Company and its Affiliates shall
have no obligation or liability to pay or reimburse (either directly or otherwise) the Participant
(or his or her beneficiaries, as applicable) for, any such additional taxes, fines or penalties.

     (i) Information Obligation. Prior to the Listing Date, to the extent required
by Section 260.140.46 of Title 10 of the California Code of Regulations and Rule 701 or any
respective successor(s) thereto, the Company shall deliver financial statements and any other
required disclosure documents to Participants at least annually. Unless otherwise required under
Rule 701, this Section 10(i) shall not apply to key Employees whose duties in connection with the
Company assure them access to equivalent information.

     (j) Repurchase Limitation. The terms of any repurchase option applicable to the
unvested portion of a Stock Award or shares of Common Stock subject to the unvested portion of a
Stock Award may be at the original purchase price, the fair market value of the Common Stock at the
time of the repurchase, or such other price as determined in good faith by the Board consistent
with the terms of the Plan, the Applicable Stockholders Agreement and Applicable Law.
Notwithstanding any other provision of this Plan, to the extent required by Section 260.140.41 and
Section 260.140.42 of Title 10 of the California Code of Regulations, or any successor thereto, at
the time a Stock Award is made, any repurchase option applicable to a Stock Award or share of
Common Stock issued pursuant to a Stock Award granted prior to the Listing Date to a person who is
not an Officer, Director or Consultant shall be upon the following terms:

               (i) Repurchase at Fair Market Value.
If the
repurchase option gives the Company the right to repurchase the shares of Common
Stock upon termination of Continuous Service at not less than the Fair Market
Value of the shares of Common Stock to be purchased on the date of
termination, then the right to repurchase shall be exercised for cash or
cancellation of purchase money indebtedness for the shares of Common Stock
within ninety (90) days of termination of Continuous Service (or in the case of
shares of Common Stock issued upon exercise of Options after such date of

20

 

termination, within ninety (90) days after the date of the exercise) or such
longer period as may be agreed to by the Company and the Participant (for
example, for purposes of satisfying the requirements of Section 1202(c)(3) of
the Code regarding “qualified small business stock”).

               (ii) Repurchase at Original Purchase
Price. If
the repurchase option gives the Company the right to repurchase the shares of
Common Stock upon termination of Continuous Service at the original purchase
price, then (A) the right to repurchase at the original purchase price shall
lapse at the rate of at least twenty percent (20%) of the shares of Common Stock
per year over five (5) years from the date the Stock Award is granted (without
respect to the date the Stock Award was exercised or became exercisable) and (B)
the right to repurchase shall be exercised for cash or cancellation of purchase
money indebtedness for the shares of Common Stock within ninety (90) days of
termination of Continuous Service (or in the case of shares of Common Stock
issued upon exercise of Options after such date of termination, within ninety
(90) days after the date of the exercise) or such longer period as may be agreed
to by the Company and the Participant (for example, for purposes of satisfying
the requirements of Section 1202(c)(3) of the Code regarding “qualified small
business stock”).

11. Adjustments to Stock Awards.

     (a) Capitalization
Adjustments. Subject to Section 1l(b) and (c), in the event of any
change in the outstanding Common Stock subject to the Plan, or subject to or underlying any Stock
Award, by reason of any stock dividend, stock split, reverse stock split, reorganization,
recapitalization, merger, consolidation, spin-off, combination, exchange of shares of Common Stock
or other corporate exchange, or any extraordinary distribution or dividend to stockholders of
Common Stock (whether paid in cash or otherwise) or any transaction similar to the foregoing, the
Board in its sole discretion and without liability to any person shall make such substitution or
adjustment, if any, as it deems in its good faith judgment to be equitable and reasonably necessary
to preserve the original terms and conditions of the Plan and/or any outstanding Stock Award, to
(i) the type, class(es) and maximum number of securities or other property subject to the Plan
pursuant to the Share Reserve, the ISO Limit, and Section 5(c), (ii) the exercise price, base
price, redemption price or purchase price applicable to outstanding Stock Awards, (iii) the number
of shares of Common Stock subject to outstanding Stock Awards, or (iv) any other affected terms of
any outstanding Stock Awards. Any determination, substitution or adjustment made by the Board under
this Section 1l(a), shall be final, binding and conclusive on all persons. The conversion of any
convertible securities of the Company shall not be treated as a transaction that shall cause the
Board to make any determination, substitution or adjustment under this Section 1l(a).

     (b) Adjustments Upon A Change in Control.

          (i) In the event of a Change in Control, any surviving entity or
acquiring entity may assume or continue any Stock Awards outstanding under the
Plan or may substitute similar stock awards with substantially equivalent
economic value (including an award to acquire substantially the same
consideration paid to the stockholders in the transaction by which the Change in
Control occurs) for those Stock Awards outstanding under the Plan.

21

 

In the event any surviving entity or acquiring entity declines to assume or
continue such Stock Awards or to substitute similar stock awards for those
outstanding under the Plan, then with respect to Stock Awards held by
Participants whose Continuous Service has not terminated, the Board in its sole
discretion and without liability to any person may (1) provide for the payment
of a cash amount in exchange for the cancellation of a Stock Award equal to its
fair value (as determined in the good faith determination of the Board) which
shall equal the product of (x) the excess, if any, of the Fair Market Value per
share of Common Stock subject to such Stock Award at such time over the exercise
price, base price or redemption price, if any, times (y) the total
number of shares then subject to such Stock Award (including, at the discretion
of the Board, any unvested shares subject to such Stock Award), (2) continue the
Stock Awards upon such terms as the Board determines in its sole discretion, (3)
provide for the issuance of substitute Stock Awards that will substantially
preserve the otherwise applicable terms of any affected Stock Awards (including
any unrealized value immediately prior to the Change in Control) previously
granted hereunder, as determined by the Board in its sole discretion, or (4)
notify Participants holding certain Stock Awards that they must exercise or
redeem any portion of such Stock Award (including, at the discretion of the
Board, any unvested portion of such Stock Award) at or prior to the closing of
the transaction by which the Change in Control occurs and that the Stock Awards
shall terminate if not so exercised or redeemed at or prior to the closing of
the transaction by which the Change in Control occurs. With respect to any other
Stock Awards outstanding under the Plan, such Stock Awards shall terminate if
not exercised or redeemed with respect to the vested portion of the Stock Award
(and, at the discretion of the Committee, any unvested portion of such Stock
Award) at or prior to the closing of the transaction by which the Change of
Control occurs. In all cases, the Committee shall not be obligated to treat all
Stock Awards, even those that are of the same type, in the same manner.

          (ii) Notwithstanding the foregoing, in the event of the dissolution or
liquidation of the Company, unless the Board determines otherwise, all
outstanding Stock Awards will terminate immediately prior to the dissolution or
liquidation of the Company.

     (c) Other Written Agreements. A Stock Award held by any Participant whose
Continuous Service has not terminated prior to the effective time of a Change in Control may be
subject to additional acceleration of vesting and exercisability or other terms and conditions as
set forth in the Stock Award Agreement for such Stock Award or as set forth in any other written
agreement between the Company or any Affiliate and the Participant. In the event of any conflict
between written documents relating to the treatment of a Stock Award held by a Participant, such
additional acceleration provisions and other terms and conditions shall be controlling.

12. Limitations on Transfers

     (a) Transferability of Stock Awards. No Stock Award issued under this Plan may
be sold, exchanged, transferred (including, without limitation, any transfer to a nominee or agent
of a Participant), assigned, pledged, hypothecated or otherwise disposed of unless such sale,
exchange,

22

 

transfer or other disposition is (i) permitted under the terms of the Applicable Stockholders
Agreement, the Plan and the Stock Award Agreement and (ii) if applicable, is permitted by applying
the standard (as in effect at the time of the grant of the Stock Award) set forth in Section
260.140.41(d) of Title 10 of the California Code of Regulations (or any successor thereto). Any
unauthorized transfer of a Stock Award shall be void. If a Stock Award Agreement does not provide
for transferability, then the Stock Award shall not be transferable except by will or by the laws
of descent and distribution and only if such transfer is in compliance with the terms of the Plan,
the Applicable Stockholders Agreement and Applicable Law.

     (b) Special Rule Applicable to Incentive Stock Options. Notwithstanding
the provisions of Section 12(a), an Incentive Stock Option issued under this Plan shall
not be transferable except by will or by the laws of descent and distribution and shall
be exercisable during the lifetime of an Optionholder only by the Optionholder.

     (c) Designation of a Beneficiary. The Board may establish rules pertaining to
the designation by the Participant of a beneficiary who is to receive any shares of Common
Stock and/or any cash, or have the right to exercise or redeem that Participant’s Stock
Award, in the event of such Participant’s death.

     (d) Limited Transfers for the Benefit of Family Members. Notwithstanding any
other provision set forth in this Section 12, the Board, in its sole discretion, may permit a
Stock Award issued under this Plan to be assigned or transferred subject to the applicable
limitations, if any, set forth in Section 260.140.41(d) and Section 260.140.42(c) of Title 10
of the California Code of Regulations, Rule 701 under the Securities Act and the General
Instructions to Form S-8 Registration Statement under the Securities Act or any successor(s)
thereto.

     (e) Permitted Transferees. Any Permitted Transferee will be subject to all of the
terms and conditions applicable to a person transferring a Stock Award issued under this
Plan, including, but not limited to, the terms and conditions set forth in this Plan, the
applicable Stock Award Agreement and the Applicable Stockholders Agreement.

     (f) Market Standoff Provision. If required by the Company (or a representative of
the underwriter(s)) in connection with the first underwritten registration of the offering of
any equity securities of the Company under the Securities Act, or as otherwise required
pursuant to the terms of the Applicable Stockholders Agreement, for a specified period of
time, the Participant shall not sell, dispose of, transfer, make any short sale of, grant any
option for the purchase of, or enter into any hedging or similar transaction with the same
economic effect as a sale, any shares of the Common Stock acquired by the Participant
pursuant to a Stock Award or other securities of the Company held by the Participant, and
shall be subject to such other restrictions on transfer to the same extent as the Initial
Investors, and further shall execute and deliver such other agreements as may be reasonably
requested by the Company and/or the underwriter(s) that are consistent with the foregoing or
that are necessary to give further effect thereto. In order to enforce the
foregoing covenant, the Company may impose stop transfer instructions with respect to such
shares until the end of such period.

13. Section 12 of the Exchange Act

     Prior to an Initial Public Offering, in the event that the Company, in its sole discretion,
deems it necessary to ensure that the Company does not become subject to the registration

23

 

requirements set forth in Section 12(g) of the Exchange Act, the Company shall be entitled to
engage in the following actions (and any additional actions set forth in an individual’s Stock
Award Agreement):

     (a) Certain Amendments. It is expressly contemplated that the Board may at any
time, and from time to time, amend the Plan and/or any Stock Award issued under the Plan, in
any respect the Board deems necessary or advisable in order to ensure that the Company does
not become subject to the registration requirements set forth in Section 12(g) of the
Exchange Act.

     (b) Suspend Options. The Company may prevent the exercise of Options issued
under this Plan, in which case, such Options shall remain outstanding and become exercisable
at the time that the Company delivers a notice to affected Participants that such Options are
again exercisable, whereupon either (i) such Options shall become exercisable according to
their terms, or (ii) if an Option would no longer be exercisable according to its terms but
previously was or would have been exercisable under those terms, such Option shall remain
exercisable until the 30th day following the day that the Company delivers the
notice described above. Notwithstanding the other provisions of this Section 13(b), no Option
shall remain outstanding or exercisable after the expiration date of the Option as set forth
in the Stock Award Agreement documenting such Option.

     (c) Require Contribution to a Trust. The Company may require Participants
to contribute Stock Awards and any shares of Common Stock issued under this Plan to a
trust designated by the Company under the terms and conditions of a trust agreement approved
by the Company. The Company shall bear the expenses of maintaining the trust.

14. Stockholders Agreement and Escrow

     (a) Awards Subject to Plan and Stockholders Agreement. All Stock Awards
issued hereunder shall be subject to all the terms and conditions of the Plan, the Applicable
Stockholders Agreement and the Stock Award Agreement governing the Stock Award. The terms
and conditions of each of the Stockholders Agreement and Employee Stockholders Agreement, as
the case may be (including but not limited to the restrictions on transfer set forth in
Article IV thereof), are incorporated herein by reference into all Stock Awards issued
hereunder. As a condition of receiving Stock Awards hereunder, each Participant will be
obligated to execute such agreements and documents as the Board may require including,
without limitation, the Stockholders Agreement or the Employee Stockholders Agreement.

     (b) Escrow. To ensure that the shares of Common Stock issuable pursuant to
Stock Awards are not transferred in contravention of the terms of the Plan and the individual
Stock Award Agreements, to ensure that the Common Stock subject to a repurchase option
or reacquisition right will be available for repurchase or reacquisition, to ensure
enforceability of the rights of any parties relating to the shares of Common Stock as
provided for in the Applicable Stockholders Agreement, and to ensure compliance with other
provisions of the Plan, the Company may in its sole discretion require Participants to
deposit the certificates evidencing the shares of Common Stock issued under this Plan with an
escrow agent designated by the Company.

15. Amendment and Termination of the Plan and Stock Awards.

     (a) Amendment of the Plan and Stock Awards. The Board at any time, and from time
to time, may amend the Plan, subject to the approval of the Company’s stockholders to the extent

24

 

such approval is necessary under Applicable Law or is otherwise desirable as determined in the sole
discretion of the Board. The Board at any time, and from time to time, may amend the terms of one
or more Stock Awards. It is expressly contemplated that the Board may amend the Plan and Stock
Awards in any respect the Board deems necessary or advisable (i) to provide eligible Participants
with the maximum benefits provided or to be provided under the provisions of the Code and the
regulations promulgated thereunder relating to Incentive Stock Options and deferred compensation,
(ii) to bring the Plan and/or Stock Awards granted under the Plan into compliance with Applicable
Law, and/or (iii) to prevent unintended dilution or enlargement of the benefits or potential
benefits intended to be made available under the Plan.

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

     (c) No Material Impairment of Rights. Except as otherwise set forth in the Plan,
the amendment, suspension or termination of the Plan, and the amendment, termination or
cancellation of outstanding Stock Awards, shall not materially impair rights and obligations
under any Stock Award except with the written consent of the Participant.

16. Effective Date of Plan

     The Plan shall become effective immediately upon its adoption by the Board, subject to
approval by the stockholders of the Company, which approval shall be obtained within twelve (12)
months after the date the Plan is adopted by the Board.

17. Choice of Law

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

25

 

PLAN HISTORY

	 	 	 
	September 28, 2006

	 	Board adopts the Plan, with an initial reserve of
seven million, seven hundred thousand, five hundred
and fifty-two (7,700,552) shares.
	 
	 	 
	October 25, 2006

	 	Board amends and restates the Plan.
	 
	 	 
	November 16, 2006

	 	Board amends and restates the Plan, with a share
reserve of seven million, seven hundred sixty-one
thousand, nine hundred and fifty-eight (7,761,958)
shares.
	 
	 	 
	December
19, 2006

	 	Stockholders entitled to vote approve the amended
and restated Plan, with a share reserve of seven
million, seven hundred sixty-one thousand, nine
hundred and fifty-eight (7,761,958) shares.
	 
	November
2, 2007

	 	Board amends and restates the Plan, with a share reserve of seven million, nine hundred
sixty-one thousand, nine hundred and fifty-eight (7,961,958) shares.

26

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