Document:

exv10w27

 

Exhibit 10.27

ARCHEMIX CORP.

2007 EMPLOYEE STOCK PURCHASE PLAN

     The following constitute the provisions of the 2007 Employee Stock Purchase Plan (the “Plan”)
of Archemix Corp. (the “Company”).

     1. Purpose. The purpose of the Plan is to provide Employees of the Company and its
Designated Subsidiaries with an opportunity to purchase Common Stock of the Company. It is the
intention of the Company to have the Plan qualify as an “Employee Stock Purchase Plan” under
Section 423 of the Code. The provisions of the Plan shall, accordingly, be construed so as to
extend and limit participation in a manner consistent with the requirements of that section of the
Code.

     2. Definitions.

     (a) “Board” shall mean the Board of Directors of the Company, or a committee of the
Board of Directors named by the Board to administer the Plan.

     (b) “Code” shall mean the Internal Revenue Code of 1986, as amended.

     (c) “Common Stock” shall mean the common stock, $0.001 par value, of the Company.

     (d) “Company” shall mean Archemix Corp., a Delaware corporation.

     (e) “Compensation” shall mean all compensation that is taxable income for federal
income tax purposes, including, payments for overtime, shift premium, incentive compensation,
incentive payments, bonuses, commissions and other compensation received from the Company or a
Designated Subsidiary, but excludes relocation, expense reimbursements, tuition or other
reimbursements and income realized as a result of participation in any stock option, stock purchase
or similar plan of the Company or a Designated Subsidiary.

     (f) “Continuous Status as an Employee” shall mean the absence of any interruption or
termination of service as an Employee. Continuous Status as an Employee shall not be considered
interrupted in the case of a leave of absence agreed to in writing by the Company, provided that
such leave is for a period of not more than 90 days or reemployment upon the expiration of such
leave is guaranteed by contract or statute.

     (g) “Contributions” shall mean all amounts credited to the account of a participant
pursuant to the Plan.

     (h) “Designated Subsidiaries” shall mean the Subsidiaries which have been designated
by the Board from time to time in its sole discretion as eligible to participate in the Plan.

     (i) “Employee” shall mean any person who is employed by the Company or one of its
Designated Subsidiaries for tax purposes and who is customarily employed for at least 20 hours per
week and more than five months in a calendar year by the Company or one of its Designated
Subsidiaries.

     (j) “Exercise Date” shall mean the last business day of each Offering Period of the
Plan.

 

 

     (k) “Exercise Price” shall mean with respect to an Offering Period, an amount equal to
85% of the Fair Market Value (as defined in paragraph 7(b)) of a share of Common Stock on the
Offering Date or on the Exercise Date, whichever is lower.

     (l) “Offering Date” shall mean the first business day of each Offering Period of the
Plan.

     (m) “Offering Period” shall mean a period of six months commencing on January 2 and
July 1 of each calendar year.

     (n) “Plan” shall mean this Archemix Corp. 2007 Employee Stock Purchase Plan.

     (o) “Subsidiary” shall mean a corporation, domestic or foreign, of which not less than
50% of the voting shares are held by the Company or a Subsidiary, whether or not such corporation
now exists or is hereafter organized or acquired by the Company or a Subsidiary.

     3. Eligibility.

     (a) Any person who has been continuously employed as an Employee for three months as of the
Offering Date of a given Offering Period shall be eligible to participate in such Offering Period
under the Plan and further, subject to the requirements of paragraph 5(a) and the limitations
imposed by Section 423(b) of the Code.

     (b) Any provisions of the Plan to the contrary notwithstanding, no Employee shall be granted
an option under the Plan (i) if, immediately after the grant, such Employee (or any other person
whose stock would be attributed to such Employee pursuant to Section 424(d) of the Code) would own
stock and/or hold outstanding options to purchase stock possessing five percent (5%) or more of the
total combined voting power or value of all classes of stock of the Company or of any Subsidiary of
the Company, (ii) which permits his or her rights to purchase stock under all employee stock
purchase plans (described in Section 423 of the Code) of the Company and its Subsidiaries to accrue
at a rate which exceeds $25,000 of fair market value of such stock as defined in paragraph 7(b)
(determined at the time such option is granted) for each calendar year in which such option is
outstanding at any time, or (iii) to purchase more than 2,500 shares (subject to any adjustment
pursuant to paragraph 18) of Common Stock in any one Offering Period. Any option granted under the
Plan shall be deemed to be modified to the extent necessary to satisfy this paragraph 3(b).

     4. Offering Periods. The Plan shall be implemented by a series of Offering Periods,
with a new Offering Period commencing on January 2 and July 1 of each year or the first business
day thereafter (or at such other time or times as may be determined by the Board). The initial
Offering Period shall commence on July 1, 2008 unless otherwise determined by the Board prior to
such date.

     5. Participation.

     (a) An eligible Employee may become a participant in the Plan by completing an Enrollment Form
provided by the Company and filing it with the Company or its designee prior to the applicable
Offering Date, unless a later time for filing the Enrollment Form is set by the Board for all
eligible Employees with respect to a given Offering Period. The Enrollment Form and its submission
may be electronic as directed by the Company. The Enrollment Form shall set forth the percentage
of the participant’s Compensation (which shall be not less than 1% and not more than 10%) to be
paid as Contributions pursuant to the Plan.

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     (b) Payroll deductions shall commence with the first payroll following the Offering Date,
unless a later time is set by the Board with respect to a given Offering Period, and shall end on
the last payroll paid on or prior to the Exercise Date of the Offering Period to which the
Enrollment Form is applicable, unless sooner terminated as provided in paragraph 10.

     6. Method of Payment of Contributions.

     (a) Each participant shall elect to have payroll deductions made on each payroll during the
Offering Period in an amount not less than 1% and not more than 10% of such participant’s
Compensation on each such payroll; provided that the aggregate of such payroll deductions during
the Offering Period shall not exceed 10% of the participant’s aggregate Compensation during said
Offering Period (or such other percentage as the Board may establish from time to time before an
Offering Date). All payroll deductions made by a participant shall be credited to his or her
account under the Plan. A participant may not make any additional payments into such account.

     (b) A participant may discontinue his or her participation in the Plan as provided in
paragraph 10, or, on one occasion only during the Offering Period, may decrease, but may not
increase, the rate of his or her Contributions during the Offering Period by completing and filing
with the Company a new Enrollment Form authorizing a change in the deduction rate. The change in
rate shall be effective as of the beginning of the next payroll period following the date of filing
of the new Enrollment Form, if the Enrollment Form is completed at least ten business days prior to
such date, and, if not, as of the beginning of the next succeeding payroll period.

     (c) Notwithstanding the foregoing, to the extent necessary to comply with Section 423(b)(8) of
the Code and paragraph 3(b), a participant’s payroll deductions may be decreased to zero at such
time and for so long as the aggregate of all payroll deductions accumulated with respect to the
current Offering Period and any other Offering Period ending within the current calendar year
equals $21,250. Payroll deductions shall recommence at the rate provided in such participant’s
Enrollment Form at the beginning of the first Offering Period which is scheduled to end in the
following calendar year, unless terminated by the participant as provided in paragraph 10.

     7. Grant of Option.

     (a) On the Offering Date of each Offering Period, each eligible Employee participating in such
Offering Period shall be granted an option to purchase on the Exercise Date of such Offering Period
a number of shares of the Common Stock determined by dividing such Employee’s Contributions
accumulated prior to such Exercise Date and retained in the participant’s account as of the
Exercise Date by the applicable Exercise Price; provided however, that such purchase shall be
subject to the limitations set forth in paragraphs 3(b) and 12. The fair market value of a share
of the Common Stock shall be determined as provided in paragraph 7(b).

     (b) The fair market value of the Common Stock on a given date shall be determined by the Board
based on (i) if the Common Stock is listed on a national securities exchange or traded in the
over-the-counter market and sales prices are regularly reported for the Common Stock, the closing
or last sale price of the Common Stock for such date (or, in the event that the Common Stock is not
traded on such date, on the immediately preceding trading date), on the composite tape or other
comparable reporting system or (ii) if the Common Stock is not listed on a national securities
exchange and such price is not regularly reported, the mean between the bid and asked prices per
share of the Common Stock at the close of trading in the over-the-counter market.

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     8. Exercise of Option. Unless a participant withdraws from the Plan as provided in
paragraph 10, his or her option for the purchase of shares will be exercised automatically on the
Exercise Date of the Offering Period, and the maximum number of full shares subject to the option
will be purchased for him or her at the applicable Exercise Price with the accumulated
Contributions in his or her account. If a fractional number of shares results, then such number
shall be rounded down to the next whole number and any unapplied cash shall be carried forward to
the next Exercise Date, unless the participant requests a cash payment. The shares purchased upon
exercise of an option hereunder shall be deemed to be transferred to the participant on the
Exercise Date. During a participant’s lifetime, a participant’s option to purchase shares
hereunder is exercisable only by him or her.

     9. Delivery. Upon the written request of a participant, certificates representing the
shares purchased upon exercise of an option will be issued as promptly as practicable after the
Exercise Date of each Offering Period to participants who wish to hold their shares in certificate
form.

     10. Withdrawal; Termination of Employment.

     (a) A participant may withdraw all but not less than all the Contributions credited to his or
her account under the Plan at any time prior to the Exercise Date of the Offering Period by giving
written notice to the Company or its designee. All of the participant’s Contributions credited to
his or her account will be paid to him or her promptly after receipt of his or her notice of
withdrawal and his or her option for the current period will be automatically terminated, and no
further Contributions for the purchase of shares will be made during the Offering Period.

     (b) Upon termination of the participant’s Continuous Status as an Employee prior to the
Exercise Date of the Offering Period for any reason, including retirement or death, the
Contributions credited to his or her account will be returned to him or her or, in the case of his
or her death, to the person or persons entitled thereto under paragraph 14, and his or her option
will be automatically terminated.

     (c) In the event an Employee fails to remain in Continuous Status as an Employee for at least
20 hours per week during the Offering Period in which the Employee is a participant, he or she will
be deemed to have elected to withdraw from the Plan and the Contributions credited to his or her
account will be returned to him or her and his or her option terminated.

     (d) A participant’s withdrawal from an Offering Period will not have any effect upon his or
her eligibility to participate in a succeeding offering or in any similar plan which may hereafter
be adopted by the Company.

     11. Interest. No interest shall accrue on the Contributions of a participant in the
Plan.

     12. Stock.

     (a) The maximum number of shares of Common Stock which shall be made available for sale under
the Plan shall be 750,000 shares, plus an annual increase on the first day of each of the Company’s
fiscal years beginning in 2009, equal to the lesser of (i) 375,000 shares or (ii) such lesser
number of shares as is determined by the Board, subject to adjustment upon changes in
capitalization of the Company as provided in paragraph 18. If the total number of shares which
would otherwise be subject to options granted pursuant to paragraph 7(a) on the Offering Date of an
Offering Period exceeds the number of shares then available under the Plan (after deduction of all
shares for which options have been exercised), the Company shall make a pro rata allocation of the
shares remaining available for option grants in as uniform a manner as shall be practicable and as
it shall determine to be equitable. Any

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amounts remaining in an Employee’s account not applied to the purchase of shares pursuant to this
paragraph 12 shall be refunded on or promptly after the Exercise Date. In such event, the Company
shall give written notice of such reduction of the number of shares subject to the option to each
Employee affected thereby and shall similarly reduce the rate of Contributions, if necessary.

     (b) The participant will have no interest or voting right in shares covered by his or her
option until such option has been exercised.

     13. Administration. The Board shall supervise and administer the Plan and shall have
full power to adopt, amend and rescind any rules deemed desirable and appropriate for the
administration of the Plan and not inconsistent with the Plan, to construe and interpret the Plan,
and to make all other determinations necessary or advisable for the administration of the Plan.

     14. Designation of Beneficiary.

     (a) A participant may designate a beneficiary who is to receive any shares and cash, if any,
from the participant’s account under the Plan in the event of such participant’s death subsequent
to the end of the Offering Period but prior to delivery to him or her of such shares and cash. In
addition, a participant may designate a beneficiary who is to receive any cash from the
participant’s account under the Plan in the event of such participant’s death prior to the Exercise
Date of the Offering Period. If a participant is married and the designated beneficiary is not the
spouse, spousal consent shall be required for such designation to be effective. Beneficiary
designations shall be made either in writing or by electronic delivery as directed by the Company.

     (b) Such designation of beneficiary may be changed by the participant (and his or her spouse,
if any) at any time by submission of the required notice, which may be electronic. In the event of
the death of a participant and in the absence of a beneficiary validly designated under the Plan
who is living at the time of such participant’s death, the Company shall deliver such shares and/or
cash to the executor or administrator of the estate of the participant, or if no such executor or
administrator has been appointed (to the knowledge of the Company), the Company, in its discretion,
may deliver such shares and/or cash to the spouse or to any one or more dependents or relatives of
the participant, or if no spouse, dependent or relative is known to the Company, then to such other
person as the Company may designate.

     15. Transferability. Neither Contributions credited to a participant’s account nor
any rights with regard to the exercise of an option or to receive shares under the Plan may be
assigned, transferred, pledged or otherwise disposed of in any way (other than by will, the laws of
descent and distribution or as provided in paragraph 14) by the participant. Any such attempt at
assignment, transfer, pledge or other disposition shall be without effect, except that the Company
may treat such act as an election to withdraw funds in accordance with paragraph 10.

     16. Use of Funds. All Contributions received or held by the Company under the Plan
may be used by the Company for any corporate purpose, and the Company shall not be obligated to
segregate such Contributions.

     17. Reports. Individual accounts will be maintained for each participant in the Plan.
Statements of account will be given to participating Employees promptly following the Exercise
Date, which statements will set forth the amounts of Contributions, the per share purchase price,
the number of shares purchased and the remaining cash balance, if any.

     18. Adjustments Upon Changes in Capitalization. Subject to any required action by the
stockholders of the Company, the number of shares of Common Stock covered by unexercised options

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under the Plan, the number of shares of Common Stock which have been authorized for issuance under
the Plan pursuant to paragraph 12(a) but are not yet subject to options, including the yearly
increase set forth in paragraph 12(a)(i), the maximum number of Shares of Common Stock that may be
purchased by a participant in an Offering Period, as well as the price per share of Common Stock
covered by each unexercised option under the Plan, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting from a stock split,
reverse stock split, stock dividend, combination or reclassification of the Common Stock. Such
adjustment shall be made by the Board, whose determination in that respect shall be final, binding
and conclusive.

          In the event of the proposed dissolution or liquidation of the Company, an Offering Period
then in progress will terminate immediately prior to the consummation of such proposed action,
unless otherwise provided by the Board. In the event of a proposed sale of all or substantially
all of the assets of the Company, or the merger, consolidation or other capital reorganization of
the Company with or into another corporation, each option outstanding under the Plan shall be
assumed or an equivalent option shall be substituted by such successor corporation or a parent or
subsidiary of such successor corporation, unless the Board determines, in the exercise of its sole
discretion and in lieu of such assumption or substitution, to shorten the Offering Period then in
progress by setting a new Exercise Date (the “New Exercise Date”). If the Board shortens the
Offering Period then in progress in lieu of assumption or substitution in the event of a merger or
sale of assets, the Board shall notify each participant in writing, at least ten days prior to the
New Exercise Date, that the Exercise Date for his or her option has been changed to the New
Exercise Date and that his or her option will be exercised automatically on the New Exercise Date,
unless prior to such date he or she has withdrawn from the Offering Period as provided in paragraph
10. For purposes of this paragraph, an option granted under the Plan shall be deemed to be assumed
if, following the sale of assets, merger or other reorganization, the option confers the right to
purchase, for each share of Common Stock subject to the option immediately prior to the sale of
assets, merger or other reorganization, the consideration (whether stock, cash or other securities
or property) received in the sale of assets, merger or other reorganization by holders of Common
Stock for each share of Common Stock held on the effective date of such transaction (and if such
holders were offered a choice of consideration, the type of consideration chosen by the holders of
a majority of the outstanding shares of Common Stock); provided, however, that if such
consideration received in such transaction was not solely common stock of the successor corporation
or its parent (as defined in Section 424(e) of the Code), the Board may, with the consent of the
successor corporation, provide for the consideration to be received upon exercise of the option to
be solely common stock of the successor corporation or its parent equal in fair market value to the
per share consideration received by holders of Common Stock in the sale of assets, merger or other
reorganization.

          The Board may, if it so determines in the exercise of its sole discretion, also make provision
for adjustments to the number of shares set forth in the Plan, as well as the price per share of
Common Stock covered by each outstanding option, in the event that the Company effects one or more
reorganizations, recapitalizations, rights offerings or other increases or reductions of shares of
its outstanding Common Stock, and in the event of the Company being consolidated with or merged
into any other corporation.

     19. Amendment or Termination.

          (a) The Board may at any time terminate or amend the Plan. Except as provided in paragraph
18, no such termination may affect options previously granted, nor may an amendment make any change
in any option theretofore granted which adversely affects the rights of any participant provided
that an Offering Period may be terminated by the Board on an Exercise Date or by the Board’s
setting a new Exercise Date with respect to an Offering Period then in progress if the Board
determines that termination of the Offering Period is in the best interests of the Company and the
stockholders or if

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continuation of the Offering Period would cause the Company to incur adverse accounting charges in
the generally-accepted accounting rules applicable to the Plan. In addition, to the extent
necessary to comply with Section 423 of the Code (or any successor rule or provision or any
applicable law or regulation), the Company shall obtain stockholder approval in such a manner and
to such a degree as so required.

          (b) Without stockholder consent and without regard to whether any participant rights may be
considered to have been adversely affected, the Board shall be entitled to change the Offering
Periods, limit the frequency and/or number of changes in the amount withheld during an Offering
Period, establish the exchange ratio applicable to amounts withheld in a currency other than U.S.
dollars, permit payroll withholding in excess of the amount designated by a participant in order to
adjust for delays or mistakes in the Company’s processing of properly completed withholding
elections, establish reasonable waiting and adjustment periods and/or accounting and crediting
procedures to ensure that amounts applied toward the purchase of Common Stock for each participant
properly correspond with amounts withheld from the participant’s Compensation, and establish such
other limitations or procedures as the Board determines in its sole discretion advisable that are
consistent with the Plan.

     20. Notices. All notices or other communications by a participant to the Company
under or in connection with the Plan shall be deemed to have been duly given when received in the
form specified by the Company at the location, or by the person, designated by the Company for the
receipt thereof.

     21. Conditions Upon Issuance of Shares. Shares shall not be issued with respect to an
option unless the exercise of such option and the issuance and delivery of such shares pursuant
thereto shall comply with all applicable provisions of law, domestic or foreign, including, without
limitation, the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, the rules and regulations promulgated thereunder, and the requirements of any stock
exchange upon which the shares may then be listed, and shall be further subject to the approval of
counsel for the Company with respect to such compliance.

     As a condition to the exercise of an option, the Company may require the person exercising
such option to represent and warrant at the time of any such exercise that the shares are being
purchased only for investment and without any present intention to sell or distribute such shares
if, in the opinion of counsel for the Company, such a representation is required by any of the
aforementioned applicable provisions of law.

     22. Right to Terminate Employment. Nothing in the Plan or in any agreement entered
into pursuant to the Plan shall confer upon any Employee or other optionee the right to continue in
the employment of the Company or any Subsidiary, or affect any right which the Company or any
Subsidiary may have to terminate the employment of such Employee or other optionee.

     23. Rights as a Stockholder. Neither the granting of an option nor a deduction from
payroll shall constitute an Employee the owner of shares covered by an option. No optionee shall
have any right as a stockholder unless and until an option has been exercised, and the shares
underlying the option have been registered in the Company’s share register.

     24. Term of Plan. The Plan was adopted by the Board of Directors on September 19,
2007 and shall become effective on January 2, 2008. The Plan shall continue in effect until
December 31, 2017 unless sooner terminated under paragraph 19.

     25. Applicable Law. This Plan shall be governed in accordance with the laws of the
State of Delaware, applied without giving effect to any conflict-of-law principles.

7exv10w28

 

Exhibit 10.28

ARCHEMIX CORP.

2007 EMPLOYEE, DIRECTOR AND CONSULTANT STOCK PLAN

	1.	 	DEFINITIONS.
	 
	 	 	Unless otherwise specified or unless the context otherwise requires, the following terms, as
used in this Archemix Corp. 2007 Employee, Director and Consultant Stock Plan, have the
following meanings:

Administrator means the Board of Directors, unless it has delegated power to
act on its behalf to the Committee, in which case the Administrator means the
Committee.

Affiliate means a corporation which, for purposes of Section 424 of the
Code, is a parent or subsidiary of the Company, direct or indirect.

Agreement means an agreement between the Company and a Participant delivered
pursuant to the Plan, in such form as the Administrator shall approve.

Board of Directors means the Board of Directors of the Company.

Cause means dishonesty with respect to the Company or any Affiliate,
insubordination, substantial malfeasance or non-feasance of duty, unauthorized
disclosure of confidential information, breach by the Participant of any provision
of any employment, consulting, advisory, nondisclosure, non-competition or similar
agreement between the Participant and the Company, and conduct substantially
prejudicial to the business of the Company or any Affiliate; provided, however, that
any provision in an agreement between the Participant and the Company or an
Affiliate, which contains a conflicting definition of Cause for termination and
which is in effect at the time of such termination, shall supersede this definition
with respect to that Participant. The determination of the Administrator as to the
existence of Cause will be conclusive on the Participant and the Company.

Code means the United States Internal Revenue Code of 1986, as amended.

Committee means the committee of the Board of Directors to which the Board
of Directors has delegated power to act under or pursuant to the provisions of the
Plan.

Common Stock means shares of the Company’s common stock, $0.001 par value
per share.

 

 

Company means Archemix Corp., a Delaware corporation.

Disability or Disabled means permanent and total disability as
defined in Section 22(e)(3) of the Code.

Employee means any employee of the Company or of an Affiliate (including,
without limitation, an employee who is also serving as an officer or director of the
Company or of an Affiliate), designated by the Administrator to be eligible to be
granted one or more Stock Rights under the Plan.

Fair Market Value of a Share of Common Stock means:

(1) If the Common Stock is listed on a national securities exchange or traded in the
over-the-counter market and sales prices are regularly reported for the Common
Stock, the closing or, if not applicable, the last price of the Common Stock on the
composite tape or other comparable reporting system for the trading day on the
applicable date and if such applicable date is not a trading day, the last market
trading day prior to such date;

(2) If the Common Stock is not traded on a national securities exchange but is
traded on the over-the-counter market, if sales prices are not regularly reported
for the Common Stock for the trading day referred to in clause (1), and if bid and
asked prices for the Common Stock are regularly reported, the mean between the bid
and the asked price for the Common Stock at the close of trading in the
over-the-counter market for the trading day on which Common Stock was traded on the
applicable date and if such applicable date is not a trading day, the last market
trading day prior to such date; and

(3) If the Common Stock is neither listed on a national securities exchange nor
traded in the over-the-counter market, such value as the Administrator, in good
faith, shall determine.

ISO means an option meant to qualify as an incentive stock option under
Section 422 of the Code.

Non-Qualified Option means an option which is not intended to qualify as an
ISO.

Option means an ISO or Non-Qualified Option granted under the Plan.

Participant means an Employee, director or consultant of the Company or an
Affiliate to whom one or more Stock Rights are granted under the Plan. As
used herein, “Participant” shall include “Participant’s Survivors” where the context
requires.

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Plan means this Archemix Corp. 2007 Employee, Director and Consultant Stock
Plan.

Shares means shares of the Common Stock as to which Stock Rights have been
or may be granted under the Plan or any shares of capital stock into which the
Shares are changed or for which they are exchanged within the provisions of
Paragraph 3 of the Plan. The Shares issued under the Plan may be authorized and
unissued shares or shares held by the Company in its treasury, or both.

Stock-Based Award means a grant by the Company under the Plan of an equity
award or an equity based award which is not an Option or a Stock Grant.

Stock Grant means a grant by the Company of Shares under the Plan.

Stock Right means a right to Shares or the value of Shares of the Company
granted pursuant to the Plan — an ISO, a Non-Qualified Option, a Stock Grant or a
Stock-Based Award.

Survivor means a deceased Participant’s legal representatives and/or any
person or persons who acquired the Participant’s rights to a Stock Right by will or
by the laws of descent and distribution.

	2.	 	PURPOSES OF THE PLAN.

     The Plan is intended to encourage ownership of Shares by Employees and directors of and
certain consultants to the Company and its Affiliates in order to attract and retain such people,
to induce them to work for the benefit of the Company or of an Affiliate and to provide additional
incentive for them to promote the success of the Company or of an Affiliate. The Plan provides for
the granting of ISOs, Non-Qualified Options, Stock Grants and Stock-Based Awards.

	3.	 	SHARES SUBJECT TO THE PLAN.

     (a) The number of Shares which may be issued from time to time pursuant to this Plan shall be
Six Million (6,000,000) Shares, or the equivalent of such number of Shares after the
Administrator, in its sole discretion, has interpreted the effect of any future stock split, stock
dividend, combination, recapitalization or similar transaction in accordance with Paragraph 24 of
the Plan.

     (b) Notwithstanding Subparagraph (a) above, on the first day of each fiscal year of the
Company during the period beginning in fiscal year 2009, and ending on the second day of fiscal
year 2017, the number of Shares that may be issued from time to time pursuant to the Plan, shall be
increased by an amount equal to the lesser of (i) 1,000,000 Shares, (ii) 4% of the number

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of outstanding shares of Common Stock on such date; and (iii) an amount determined by the Board.

     (c) If an Option ceases to be “outstanding”, in whole or in part (other than by exercise), or
if the Company shall reacquire (at not more than its original issuance price) any Shares issued
pursuant to a Stock Grant or Stock-Based Award, or if any Stock Right expires or is forfeited,
cancelled, or otherwise terminated or results in any Shares not being issued, the unissued Shares
which were subject to such Stock Right shall again be available for issuance from time to time
pursuant to this Plan. Notwithstanding the foregoing, if a Stock Right is exercised, in whole or
in part, by tender of Shares or if the Company’s tax withholding obligation is satisfied by
withholding Shares, the number of Shares deemed to have been issued under the Plan for purposes of
the limitation set forth in Paragraph 3(a) above shall be the number of Shares that were subject to
the Stock Right or portion thereof, and not the net number of Shares actually issued.

	4.	 	ADMINISTRATION OF THE PLAN.

     The Administrator of the Plan will be the Board of Directors, except to the extent the Board
of Directors delegates its authority to the Committee, in which case the Committee shall be the
Administrator. Subject to the provisions of the Plan, the Administrator is authorized to:

	 	a.	 	Interpret the provisions of the Plan and all Stock Rights and to make all rules
and determinations which it deems necessary or advisable for the administration of the
Plan;
	 
	 	b.	 	Determine which Employees, directors and consultants shall be granted Stock
Rights;
	 
	 	c.	 	Determine the number of Shares for which a Stock Right or Stock Rights shall be
granted, provided, however, that in no event shall Stock Rights with respect to more
than One Million (1,000,000) Shares be granted to any Participant in any fiscal year;
	 
	 	d.	 	Specify the terms and conditions upon which a Stock Right or Stock Rights may
be granted;
	 
	 	e.	 	Make changes to any outstanding Stock Right, including, without limitation, to
reduce or increase the exercise price or purchase price, accelerate the vesting
schedule or extend the expiration date, provided that no such change shall impair the
rights of a Participant under any grant previously made without such Participant’s
consent;
	 
	 	f.	 	Buy out for a payment in cash or Shares, a Stock Right previously granted
and/or cancel any such Stock Right and grant in substitution therefor other Stock
Rights, covering the same or a different number of Shares and having an exercise price
or

4

 

	 	 	 	purchase price per share which may be lower or higher than the exercise price or
purchase price of the cancelled Stock Right, based on such terms and conditions as
the Administrator shall establish and the Participant shall accept; and
	 
	 	g.	 	Adopt any sub-plans applicable to residents of any specified jurisdiction as it
deems necessary or appropriate in order to comply with or take advantage of any tax or
other laws applicable to the Company or to Plan Participants or to otherwise facilitate
the administration of the Plan, which sub-plans may include additional restrictions or
conditions applicable to Stock Rights or Shares issuable pursuant to a Stock Right;

provided, however, that all such interpretations, rules, determinations, terms and conditions shall
be made and prescribed in the context of not causing any adverse tax consequences under Section
409A of the Code and preserving the tax status under Section 422 of the Code of those Options which
are designated as ISOs. Subject to the foregoing, the interpretation and construction by the
Administrator of any provisions of the Plan or of any Stock Right granted under it shall be final,
unless otherwise determined by the Board of Directors, if the Administrator is the Committee. In
addition, if the Administrator is the Committee, the Board of Directors may take any action under
the Plan that would otherwise be the responsibility of the Committee.

     To the extent permitted under applicable law, the Board of Directors or the Committee may
allocate all or any portion of its responsibilities and powers to any one or more of its members
and may delegate all or any portion of its responsibilities and powers to any other person selected
by it. The Board of Directors or the Committee may revoke any such allocation or delegation at any
time.

	5.	 	ELIGIBILITY FOR PARTICIPATION.

     The Administrator will, in its sole discretion, name the Participants in the Plan, provided,
however, that each Participant must be an Employee, director or consultant of the Company or of an
Affiliate at the time a Stock Right is granted. Notwithstanding the foregoing, the Administrator
may authorize the grant of a Stock Right to a person not then an Employee, director or consultant
of the Company or of an Affiliate; provided, however, that the actual grant of such Stock Right
shall be conditioned upon such person becoming eligible to become a Participant at or prior to the
time of the execution of the Agreement evidencing such Stock Right. ISOs may be granted only to
Employees. Non-Qualified Options, Stock Grants and Stock-Based Awards may be granted to any
Employee, director or consultant of the Company or an Affiliate. The granting of any Stock Right
to any individual shall neither entitle that individual to, nor disqualify him or her from,
participation in any other grant of Stock Rights.

5

 

	6.	 	TERMS AND CONDITIONS OF OPTIONS.

     Each Option shall be set forth in writing in an Option Agreement, duly executed by the Company
and, to the extent required by law or requested by the Company, by the Participant. The
Administrator may provide that Options be granted subject to such terms and conditions, consistent
with the terms and conditions specifically required under this Plan, as the Administrator may deem
appropriate including, without limitation, subsequent approval by the shareholders of the Company
of this Plan or any amendments thereto. The Option Agreements shall be subject to at least the
following terms and conditions:

	 	a.	 	Non-Qualified Options: Each Option intended to be a Non-Qualified
Option shall be subject to the terms and conditions which the
Administrator determines to be appropriate and in the best interest of
the Company, subject to the following minimum standards for any such
Non-Qualified Option:

	 	i.	 	Option Price: Each Option Agreement shall
state the option price (per share) of the
Shares covered by each Option, which option
price shall be determined by the
Administrator but shall not be less than the
Fair Market Value per share of Common Stock.
	 
	 	ii.	 	Number of Shares: Each Option Agreement
shall state the number of Shares to which it
pertains.
	 
	 	iii.	 	Option Periods: Each Option Agreement shall
state the date or dates on which it first is
exercisable and the date after which it may
no longer be exercised, and may provide that
the Option rights accrue or become
exercisable in installments over a period of
months or years, or upon the occurrence of
certain conditions or the attainment of
stated goals or events.
	 
	 	iv.	 	Option Conditions: Exercise of any Option
may be conditioned upon the Participant’s
execution of a Share purchase agreement in
form satisfactory to the Administrator
providing for certain protections for the
Company and its other shareholders,
including requirements that:

	 	A.	 	The Participant’s or the
Participant’s Survivors’ right to sell or
transfer the Shares may be restricted; and
	 
	 	B.	 	The Participant or the
Participant’s Survivors may be required to
execute letters of investment intent and
must also acknowledge that the Shares will
bear legends noting any applicable
restrictions.

	 	b.	 	ISOs: Each Option intended to be an ISO shall be issued only to an
Employee and be subject to the following terms and conditions, with
such additional restrictions or changes as the Administrator
determines are appropriate but not in conflict with Section 422 of the
Code and relevant regulations and rulings of the Internal Revenue
Service:

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	 	i.	 	Minimum standards: The ISO shall meet the
minimum standards required of Non-Qualified
Options, as described in Paragraph 6(a)
above, except clause (i) thereunder.
	 
	 	ii.	 	Option Price: Immediately before the ISO is
granted, if the Participant owns, directly
or by reason of the applicable attribution
rules in Section 424(d) of the Code:

	 	A.	 	10% or less of the total combined
voting power of all classes of stock of the
Company or an Affiliate, the Option price
per share of the Shares covered by each ISO
shall not be less than 100% of the Fair
Market Value per share of the Shares on the
date of the grant of the Option; or
	 
	 	B.	 	More than 10% of the total combined
voting power of all classes of stock of the
Company or an Affiliate, the Option price
per share of the Shares covered by each ISO
shall not be less than 110% of the Fair
Market Value on the date of grant.

	 	iii.	 	Term of Option: For Participants who own:

	 	A.	 	10% or less of the total combined
voting power of all classes of stock of the
Company or an Affiliate, each ISO shall
terminate not more than ten years from the
date of the grant or at such earlier time as
the Option Agreement may provide; or
	 
	 	B.	 	More than 10% of the total combined
voting power of all classes of stock of the
Company or an Affiliate, each ISO shall
terminate not more than five years from the
date of the grant or at such earlier time as
the Option Agreement may provide.

	 	iv.	 	Limitation on Yearly Exercise: The Option
Agreements shall restrict the amount of ISOs
which may become exercisable in any calendar
year (under this or any other ISO plan of
the Company or an Affiliate) so that the
aggregate Fair Market Value (determined at
the time each ISO is granted) of the stock
with respect to which ISOs are exercisable
for the first time by the Participant in any
calendar year does not exceed $100,000.

	7.	 	TERMS AND CONDITIONS OF STOCK GRANTS.

     Each offer of a Stock Grant to a Participant shall state the date prior to which the Stock
Grant must be accepted by the Participant, and the principal terms of each Stock Grant shall be set
forth in an Agreement, duly executed by the Company and, to the extent required by law or requested
by the Company, by the Participant. The Agreement shall be in a form approved by

7

 

the Administrator and shall contain terms and conditions which the Administrator determines to be
appropriate and in the best interest of the Company, subject to the following minimum standards:

	 	(a)	 	Each Agreement shall state the purchase price (per share), if any, of the
Shares covered by each Stock Grant, which purchase price shall be determined by the
Administrator but shall not be less than the minimum consideration required by the
Delaware General Corporation Law on the date of the grant of the Stock Grant;
	 
	 	(b)	 	Each Agreement shall state the number of Shares to which the Stock Grant
pertains; and
	 
	 	(c)	 	Each Agreement shall include the terms of any right of the Company to restrict
or reacquire the Shares subject to the Stock Grant, including the time and events upon
which such rights shall accrue and the purchase price therefor, if any.

	8.	 	TERMS AND CONDITIONS OF OTHER STOCK-BASED AWARDS.

     The Administrator shall have the right to grant other Stock-Based Awards based upon the Common
Stock having such terms and conditions as the Administrator may determine, including, without
limitation, the grant of Shares based upon certain conditions, the grant of securities convertible
into Shares and the grant of stock appreciation rights, phantom stock awards or stock units. The
principal terms of each Stock-Based Award shall be set forth in an Agreement, duly executed by the
Company and, to the extent required by law or requested by the Company, by the Participant. The
Agreement shall be in a form approved by the Administrator and shall contain terms and conditions
which the Administrator determines to be appropriate and in the best interest of the Company.

     The Company intends that the Plan and any Stock-Based Awards granted hereunder be exempt from
the application of Section 409A of the Code or meet the requirements of paragraphs (2), (3) and (4)
of subsection (a) of Section 409A of the Code (and any successor provisions of the Code) and the
regulations and other guidance issued thereunder (the “Requirements”), to the extent applicable,
and be operated in accordance with such Requirements so that any compensation deferred under any
Stock-Based Award (and applicable investment earnings) shall not be included in income under
Section 409A of the Code. Any ambiguities in the Plan shall be construed to effect the intent as
described in this Paragraph 8.

	9.	 	EXERCISE OF OPTIONS AND ISSUE OF SHARES.

     An Option (or any part or installment thereof) shall be exercised by giving written notice to
the Company or its designee, together with provision for payment of the full purchase price in
accordance with this Paragraph for the Shares as to which the Option is being exercised, and upon
compliance with any other condition(s) set forth in the Option Agreement. Such notice

8

 

shall be signed by the person exercising the Option, shall state the number of Shares with respect
to which the Option is being exercised and shall contain any representation required by the Plan or
the Option Agreement. Payment of the purchase price for the Shares as to which such Option is
being exercised shall be made (a) in United States dollars in cash or by check, or (b) at the
discretion of the Administrator, through delivery of shares of Common Stock having a Fair Market
Value equal as of the date of the exercise to the cash exercise price of the Option and held for at
least six months, or (c) at the discretion of the Administrator, by having the Company retain from
the shares otherwise issuable upon exercise of the Option, a number of shares having a Fair Market
Value equal as of the date of exercise to the exercise price of the Option, or (d) at the
discretion of the Administrator, in accordance with a cashless exercise program established with a
securities brokerage firm, and approved by the Administrator, or (e) at the discretion of the
Administrator, by any combination of (a), (b), (c) and (d) above or (f) at the discretion of the
Administrator, payment of such other lawful consideration as the Administrator may determine.
Notwithstanding the foregoing, the Administrator shall accept only such payment on exercise of an
ISO as is permitted by Section 422 of the Code.

     The Company shall then reasonably promptly deliver the Shares as to which such Option was
exercised to the Participant (or to the Participant’s Survivors, as the case may be). In
determining what constitutes “reasonably promptly,” it is expressly understood that the issuance
and delivery of the Shares may be delayed by the Company in order to comply with any law or
regulation (including, without limitation, state securities or “blue sky” laws) which requires the
Company to take any action with respect to the Shares prior to their issuance. The Shares shall,
upon delivery, be fully paid, non-assessable Shares.

     The Administrator shall have the right to accelerate the date of exercise of any installment
of any Option; provided that the Administrator shall not accelerate the exercise date of any
installment of any Option granted to an Employee as an ISO (and not previously converted into a
Non-Qualified Option pursuant to Paragraph 27) without the prior approval of the Employee if such
acceleration would violate the annual vesting limitation contained in Section 422(d) of the Code,
as described in Paragraph 6(b)(iv).

     The Administrator may, in its discretion, amend any term or condition of an outstanding Option
provided (i) such term or condition as amended is permitted by the Plan, (ii) any such amendment
shall be made only with the consent of the Participant to whom the Option was granted, or in the
event of the death of the Participant, the Participant’s Survivors, if the amendment is adverse to
the Participant, and (iii) any such amendment of any Option shall be made only after the
Administrator determines whether such amendment would constitute a “modification” of any Option
which is an ISO (as that term is defined in Section 424(h) of the Code) or would cause any adverse
tax consequences for the holder of any Option including, but not limited to, pursuant to Section
409A of the Code.

9

 

	10.	 	ACCEPTANCE OF STOCK GRANTS AND STOCK-BASED AWARDS AND ISSUE OF SHARES.

     A Stock Grant or Stock-Based Award (or any part or installment thereof) shall be accepted by
executing the applicable Agreement and delivering it to the Company or its designee, together with
provision for payment of the full purchase price, if any, in accordance with this Paragraph for the
Shares as to which such Stock Grant or Stock-Based Award is being accepted, and upon compliance
with any other conditions set forth in the applicable Agreement. Payment of the purchase price for
the Shares as to which such Stock Grant or Stock-Based Award is being accepted shall be made (a) in
United States dollars in cash or by check, or (b) at the discretion of the Administrator, through
delivery of shares of Common Stock held for at least six months and having a Fair Market Value
equal as of the date of acceptance of the Stock Grant or Stock Based-Award to the purchase price of
the Stock Grant or Stock-Based Award, or (c) at the discretion of the Administrator, by any
combination of (a) and (b) above; or (d) at the discretion of the Administrator, payment of such
other lawful consideration as the Administrator may determine.

     The Company shall then, if required by the applicable Agreement, reasonably promptly deliver
the Shares as to which such Stock Grant or Stock-Based Award was accepted to the Participant (or to
the Participant’s Survivors, as the case may be), subject to any escrow provision set forth in the
applicable Agreement. In determining what constitutes “reasonably promptly,” it is expressly
understood that the issuance and delivery of the Shares may be delayed by the Company in order to
comply with any law or regulation (including, without limitation, state securities or “blue sky”
laws) which requires the Company to take any action with respect to the Shares prior to their
issuance.

     The Administrator may, in its discretion, amend any term or condition of an outstanding Stock
Grant, Stock-Based Award or applicable Agreement provided (i) such term or condition as amended is
permitted by the Plan, (ii) any such amendment shall be made only with the consent of the
Participant to whom the Stock Grant or Stock-Based Award was made, if the amendment is adverse to
the Participant, and (iii) any such amendment shall be made only after the Administrator determines
whether such amendment would cause any adverse tax consequences to the Participant, including, but
not limited to, pursuant to Section 409A of the Code.

	11.	 	RIGHTS AS A SHAREHOLDER.

     No Participant to whom a Stock Right has been granted shall have rights as a shareholder with
respect to any Shares covered by such Stock Right, except after due exercise of the Option or
acceptance of the Stock Grant or as set forth in any Agreement, and tender of the full purchase
price, if any, for the Shares being purchased pursuant to such exercise or acceptance and
registration of the Shares in the Company’s share register in the name of the Participant.

10

 

	12.	 	ASSIGNABILITY AND TRANSFERABILITY OF STOCK RIGHTS.

     By its terms, a Stock Right granted to a Participant shall not be transferable by the
Participant other than (i) by will or by the laws of descent and distribution, or (ii) as approved
by the Administrator in its discretion and set forth in the applicable Agreement. Notwithstanding
the foregoing, an ISO transferred except in compliance with clause (i) above shall no longer
qualify as an ISO. The designation of a beneficiary of a Stock Right by a Participant, with the
prior approval of the Administrator and in such form as the Administrator shall prescribe, shall
not be deemed a transfer prohibited by this Paragraph. Except as provided above, a Stock Right
shall only be exercisable or may only be accepted, during the Participant’s lifetime, by such
Participant (or by his or her legal representative) and shall not be assigned, pledged or
hypothecated in any way (whether by operation of law or otherwise) and shall not be subject to
execution, attachment or similar process. Any attempted transfer, assignment, pledge,
hypothecation or other disposition of any Stock Right or of any rights granted thereunder contrary
to the provisions of this Plan, or the levy of any attachment or similar process upon a Stock
Right, shall be null and void.

	13.	 	EFFECT ON OPTIONS OF TERMINATION OF SERVICE OTHER THAN FOR CAUSE OR DEATH OR
DISABILITY.

     Except as otherwise provided in a Participant’s Option Agreement, in the event of a
termination of service (whether as an employee, director or consultant) with the Company or an
Affiliate before the Participant has exercised an Option, the following rules apply:

	 	a.	 	A Participant who ceases to be an employee, director or consultant of the
Company or of an Affiliate (for any reason other than termination for Cause,
Disability, or death for which events there are special rules in Paragraphs 14, 15, and
16, respectively), may exercise any Option granted to him or her to the extent that the
Option is exercisable on the date of such termination of service, but only within such
term as the Administrator has designated in a Participant’s Option Agreement.
	 
	 	b.	 	Except as provided in Subparagraph (c) below, or Paragraph 15 or 16, in no
event may an Option intended to be an ISO, be exercised later than three months after
the Participant’s termination of employment.
	 
	 	c.	 	The provisions of this Paragraph, and not the provisions of Paragraph 15 or 16,
shall apply to a Participant who subsequently becomes Disabled or dies after the
termination of employment, director status or consultancy; provided, however, in the
case of a Participant’s Disability or death within three months after the termination
of employment, director status or consultancy, the Participant or the Participant’s
Survivors may exercise the Option within one year after the date of the Participant’s
termination of service, but in no event after the date of expiration of the term of the
Option.

11

 

	 	d.	 	Notwithstanding anything herein to the contrary, if subsequent to a
Participant’s termination of employment, termination of director status or termination
of consultancy, but prior to the exercise of an Option, the Board of Directors
determines that, either prior or subsequent to the Participant’s termination, the
Participant engaged in conduct which would constitute Cause, then such Participant
shall forthwith cease to have any right to exercise any Option.
	 
	 	e.	 	A Participant to whom an Option has been granted under the Plan who is absent
from the Company or an Affiliate because of temporary disability (any disability other
than a Disability as defined in Paragraph 1 hereof), or who is on leave of absence for
any purpose, shall not, during the period of any such absence, be deemed, by virtue of
such absence alone, to have terminated such Participant’s employment, director status
or consultancy with the Company or with an Affiliate, except as the Administrator may
otherwise expressly provide; provided however that for ISOs any leave of absence
granted by the Administrator of greater than ninety days unless pursuant to a contract
or statute that guarantees the right to reemployment shall cause such ISO to become a
Non-Qualified Option.
	 
	 	f.	 	Except as required by law or as set forth in a Participant’s Option Agreement,
Options granted under the Plan shall not be affected by any change of a Participant’s
status within or among the Company and any Affiliates, so long as the Participant
continues to be an employee, director or consultant of the Company or any Affiliate.

	14.	 	EFFECT ON OPTIONS OF TERMINATION OF SERVICE FOR CAUSE.

     Except as otherwise provided in a Participant’s Option Agreement, the following rules apply if
the Participant’s service (whether as an employee, director or consultant) with the Company or an
Affiliate is terminated for Cause prior to the time that all his or her outstanding Options have
been exercised:

	 	a.	 	All outstanding and unexercised Options as of the time the Participant is
notified his or her service is terminated for Cause will immediately be forfeited.
	 
	 	b.	 	Cause is not limited to events which have occurred prior to a Participant’s
termination of service, nor is it necessary that the Administrator’s finding of Cause
occur prior to termination. If the Administrator determines, subsequent to a
Participant’s termination of service but prior to the exercise of an Option, that
either prior or subsequent to the Participant’s termination the Participant engaged in
conduct which would constitute Cause, then the right to exercise any Option is
forfeited.

12

 

	15.	 	EFFECT ON OPTIONS OF TERMINATION OF SERVICE FOR DISABILITY.

     Except as otherwise provided in a Participant’s Option Agreement:

	 	a.	 	A Participant who ceases to be an employee, director or consultant of the
Company or of an Affiliate by reason of Disability may exercise any Option granted to
such Participant:

     (i) To the extent that the Option has become exercisable but has not been
exercised on the date of Disability; and

     (ii) In the event rights to exercise the Option accrue periodically, to the
extent of a pro rata portion through the date of Disability of any additional
vesting rights that would have accrued on the next vesting date had the Participant
not become Disabled. The proration shall be based upon the number of days accrued
in the current vesting period prior to the date of Disability.

	 	b.	 	A Disabled Participant may exercise such rights only within the period ending
one year after the date of the Participant’s Disability, notwithstanding that the
Participant might have been able to exercise the Option as to some or all of the Shares
on a later date if the Participant had not become Disabled and had continued to be an
employee, director or consultant or, if earlier, within the originally prescribed term
of the Option.
	 
	 	c.	 	The Administrator shall make the determination both of whether Disability has
occurred and the date of its occurrence (unless a procedure for such determination is
set forth in another agreement between the Company and such Participant, in which case
such procedure shall be used for such determination). If requested, the Participant
shall be examined by a physician selected or approved by the Administrator, the cost of
which examination shall be paid for by the Company.

	16.	 	EFFECT ON OPTIONS OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT.

     Except as otherwise provided in a Participant’s Option Agreement:

	 	a.	 	In the event of the death of a Participant while the Participant is an
employee, director or consultant of the Company or of an Affiliate, such Option may be
exercised by the Participant’s Survivors:

     (i) To the extent that the Option has become exercisable but has not been
exercised on the date of death; and

     (ii) In the event rights to exercise the Option accrue periodically, to the
extent of a pro rata portion through the date of death of any additional vesting

13

 

rights that would have accrued on the next vesting date had the Participant not
died. The proration shall be based upon the number of days accrued in the current
vesting period prior to the Participant’s date of death.

	 	b.	 	If the Participant’s Survivors wish to exercise the Option, they must take all
necessary steps to exercise the Option within one year after the date of death of such
Participant, notwithstanding that the decedent might have been able to exercise the
Option as to some or all of the Shares on a later date if he or she had not died and
had continued to be an employee, director or consultant or, if earlier, within the
originally prescribed term of the Option.

	17.	 	EFFECT OF TERMINATION OF SERVICE ON UNACCEPTED STOCK GRANTS.

     In the event of a termination of service (whether as an employee, director or consultant) with
the Company or an Affiliate for any reason before the Participant has accepted a Stock Grant, such
offer shall terminate.

     For purposes of this Paragraph 17 and Paragraph 18 below, a Participant to whom a Stock Grant
has been offered and accepted under the Plan who is absent from work with the Company or with an
Affiliate because of temporary disability (any disability other than a Disability as defined in
Paragraph 1 hereof), or who is on leave of absence for any purpose, shall not, during the period of
any such absence, be deemed, by virtue of such absence alone, to have terminated such Participant’s
employment, director status or consultancy with the Company or with an Affiliate, except as the
Administrator may otherwise expressly provide.

     In addition, for purposes of this Paragraph 17 and Paragraph 18 below, any change of
employment or other service within or among the Company and any Affiliates shall not be treated as
a termination of employment, director status or consultancy so long as the Participant continues to
be an employee, director or consultant of the Company or any Affiliate.

	18.	 	EFFECT ON STOCK GRANTS OF TERMINATION OF SERVICE OTHER THAN FOR CAUSE OR DEATH OR
DISABILITY.

     Except as otherwise provided in a Participant’s Stock Grant Agreement, in the event of a
termination of service (whether as an employee, director or consultant), other than termination for
Cause, Disability, or death for which events there are special rules in Paragraphs 19, 20, and 21,
respectively, before all forfeiture provisions or Company rights of repurchase shall have lapsed,
then the Company shall have the right to cancel or repurchase that number of Shares subject to a
Stock Grant as to which the Company’s forfeiture or repurchase rights have not lapsed.

14

 

	19.	 	EFFECT ON STOCK GRANTS OF TERMINATION OF SERVICE FOR CAUSE.

     Except as otherwise provided in a Participant’s Stock Grant Agreement, the following rules
apply if the Participant’s service (whether as an employee, director or consultant) with the
Company or an Affiliate is terminated for Cause:

	 	a.	 	All Shares subject to any Stock Grant that remain subject to forfeiture
provisions or as to which the Company shall have a repurchase right shall be
immediately forfeited to the Company as of the time the Participant is notified his or
her service is terminated for Cause.
	 
	 	b.	 	Cause is not limited to events which have occurred prior to a Participant’s
termination of service, nor is it necessary that the Administrator’s finding of Cause
occur prior to termination. If the Administrator determines, subsequent to a
Participant’s termination of service, that either prior or subsequent to the
Participant’s termination the Participant engaged in conduct which would constitute
Cause, then the Company’s right to repurchase all of such Participant’s Shares shall
apply.

	20.	 	EFFECT ON STOCK GRANTS OF TERMINATION OF SERVICE FOR DISABILITY.

     Except as otherwise provided in a Participant’s Stock Grant Agreement, the following rules
apply if a Participant ceases to be an employee, director or consultant of the Company or of an
Affiliate by reason of Disability: to the extent the forfeiture provisions or the Company’s rights
of repurchase have not lapsed on the date of Disability, they shall be exercisable; provided,
however, that in the event such forfeiture provisions or rights of repurchase lapse periodically,
such provisions or rights shall lapse to the extent of a pro rata portion of the Shares subject to
such Stock Grant through the date of Disability as would have lapsed had the Participant not become
Disabled. The proration shall be based upon the number of days accrued prior to the date of
Disability.

     The Administrator shall make the determination both of whether Disability has occurred and the
date of its occurrence (unless a procedure for such determination is set forth in another agreement
between the Company and such Participant, in which case such procedure shall be used for such
determination). If requested, the Participant shall be examined by a physician selected or
approved by the Administrator, the cost of which examination shall be paid for by the Company.

	21.	 	EFFECT ON STOCK GRANTS OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT.

     Except as otherwise provided in a Participant’s Stock Grant Agreement, the following rules
apply in the event of the death of a Participant while the Participant is an employee,

15

 

director or consultant of the Company or of an Affiliate: to the extent the forfeiture provisions
or the Company’s rights of repurchase have not lapsed on the date of death, they shall be
exercisable; provided, however, that in the event such forfeiture provisions or rights of
repurchase lapse periodically, such provisions or rights shall lapse to the extent of a pro rata
portion of the Shares subject to such Stock Grant through the date of death as would have lapsed
had the Participant not died. The proration shall be based upon the number of days accrued prior
to the Participant’s death.

	22.	 	PURCHASE FOR INVESTMENT.

     Unless the offering and sale of the Shares to be issued upon the particular exercise or
acceptance of a Stock Right shall have been effectively registered under the Securities Act of
1933, as now in force or hereafter amended (the “1933 Act”), the Company shall be under no
obligation to issue the Shares covered by such exercise unless and until the following conditions
have been fulfilled:

	 	a.	 	The person(s) who exercise(s) or accept(s) such Stock Right shall warrant to
the Company, prior to the receipt of such Shares, that such person(s) are acquiring
such Shares for their own respective accounts, for investment, and not with a view to,
or for sale in connection with, the distribution of any such Shares, in which event the
person(s) acquiring such Shares shall be bound by the provisions of the following
legend which shall be endorsed upon the certificate(s) evidencing their Shares issued
pursuant to such exercise or such grant:

	 	 	 	“The shares represented by this certificate have been taken for investment
and they may not be sold or otherwise transferred by any person, including a
pledgee, unless (1) either (a) a Registration Statement with respect to such
shares shall be effective under the Securities Act of 1933, as amended, or
(b) the Company shall have received an opinion of counsel satisfactory to it
that an exemption from registration under such Act is then available, and
(2) there shall have been compliance with all applicable state securities
laws.”

	 	b.	 	At the discretion of the Administrator, the Company shall have received an
opinion of its counsel that the Shares may be issued upon such particular exercise or
acceptance in compliance with the 1933 Act without registration thereunder.

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	23.	 	DISSOLUTION OR LIQUIDATION OF THE COMPANY.

     Upon the dissolution or liquidation of the Company, all Options granted under this Plan which
as of such date shall not have been exercised and all Stock Grants and Stock-Based Awards which
have not been accepted will terminate and become null and void; provided, however, that if the
rights of a Participant or a Participant’s Survivors have not otherwise terminated and expired, the
Participant or the Participant’s Survivors will have the right immediately prior to such
dissolution or liquidation to exercise or accept any Stock Right to the extent that the Stock Right
is exercisable or subject to acceptance as of the date immediately prior to such dissolution or
liquidation. Upon the dissolution or liquidation of the Company, any outstanding Stock-Based
Awards shall immediately terminate unless otherwise determined by the Administrator or specifically
provided in the applicable Agreement.

	24.	 	ADJUSTMENTS.

     Upon the occurrence of any of the following events, a Participant’s rights with respect to any
Stock Right granted to him or her hereunder shall be adjusted as hereinafter provided, unless
otherwise specifically provided in a Participant’s Agreement:

     a. Stock Dividends and Stock Splits. If (i) the shares of Common Stock shall be
subdivided or combined into a greater or smaller number of shares or if the Company shall issue any
shares of Common Stock as a stock dividend on its outstanding Common Stock, or (ii) additional
shares or new or different shares or other securities of the Company or other non-cash assets are
distributed with respect to such shares of Common Stock, the number of shares of Common Stock
deliverable upon the exercise of an Option or acceptance of a Stock Grant shall be appropriately
increased or decreased proportionately, and appropriate adjustments shall be made including, in the
purchase price per share, to reflect such events. The number of Shares subject to the limitations
in Paragraphs 3 and 4(c) shall also be proportionately adjusted upon the occurrence of such events.

     b. Corporate Transactions. If the Company is to be consolidated with or acquired by
another entity in a merger, consolidation, or sale of all or substantially all of the Company’s
assets other than a transaction to merely change the state of incorporation (a “Corporate
Transaction”), the Administrator or the board of directors of any entity assuming the obligations
of the Company hereunder (the “Successor Board”), shall, as to outstanding Options, either (i) make
appropriate provision for the continuation of such Options by substituting on an equitable basis
for the Shares then subject to such Options either the consideration payable with respect to the
outstanding shares of Common Stock in connection with the Corporate Transaction or securities of
any successor or acquiring entity; or (ii) upon written notice to the Participants, provide that
such Options must be exercised (either (A) to the extent then exercisable or, (B) at the discretion
of the Administrator, any such Options being made fully exercisable for purposes of this
Subparagraph), within a specified number of days of the date of such notice, at the end of which
period such Options shall terminate; or (iii) terminate such Options in exchange for a cash payment
equal to the excess of the Fair Market Value of the Shares subject to such Options (either (A) to
the extent then exercisable or, (B) at the discretion of the Administrator, any such

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Options being made fully exercisable for purposes of this Subparagraph) over the exercise price
thereof.

     With respect to outstanding Stock Grants, the Administrator or the Successor Board, shall
either (i) make appropriate provisions for the continuation of such Stock Grants on the same terms
and conditions by substituting on an equitable basis for the Shares then subject to such Stock
Grants either the consideration payable with respect to the outstanding Shares of Common Stock in
connection with the Corporate Transaction or securities of any successor or acquiring entity; or
(ii) terminate such Stock Grants in exchange for a cash payment equal to the excess of the Fair
Market Value of the Shares subject to such Stock Grants over the purchase price thereof, if any.
In addition, in the event of a Corporate Transaction, the Administrator may waive any or all
Company forfeiture or repurchase rights with respect to outstanding Stock Grants.

     c. Recapitalization or Reorganization. In the event of a recapitalization or
reorganization of the Company other than a Corporate Transaction pursuant to which securities of
the Company or of another corporation are issued with respect to the outstanding shares of Common
Stock, a Participant upon exercising an Option or accepting a Stock Grant after the
recapitalization or reorganization shall be entitled to receive for the purchase price paid upon
such exercise or acceptance of the number of replacement securities which would have been received
if such Option had been exercised or Stock Grant accepted prior to such recapitalization or
reorganization.

     d. Adjustments to Stock-Based Awards. Upon the happening of any of the events
described in Subparagraphs a, b or c above, any outstanding Stock-Based Award shall be
appropriately adjusted to reflect the events described in such Subparagraphs. The Administrator or
the Successor Board shall determine the specific adjustments to be made under this Paragraph 24,
including, but not limited to the effect if any, of a Change of Control and, subject to Paragraph
4, its determination shall be conclusive.

     e. Modification of Options. Notwithstanding the foregoing, any adjustments made
pursuant to Subparagraph a, b or c above with respect to Options shall be made only after the
Administrator determines whether such adjustments would constitute a “modification” of any ISO (as
that term is defined in Section 424(h) of the Code) or would cause any adverse tax consequences for
the holders of such Options, including, but not limited to, pursuant to Section 409A of the Code.
If the Administrator determines that such adjustments made with respect to Options would constitute
a modification or other adverse tax consequence, it may refrain from making such adjustments,
unless the holder of an Option specifically agrees in writing that such adjustment be made and such
writing indicates that the holder has full knowledge of the consequences of such “modification” on
his or her income tax treatment with respect to the Option. This paragraph shall not apply to the
acceleration of the vesting of any ISO that would cause any portion of the ISO to violate the
annual vesting limitation contained in Section 422(d) of the Code, as described in Paragraph
6b(iv).

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	25.	 	ISSUANCES OF SECURITIES.

     Except as expressly provided herein, no issuance by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of shares subject to Stock
Rights. Except as expressly provided herein, no adjustments shall be made for dividends paid in
cash or in property (including without limitation, securities) of the Company prior to any issuance
of Shares pursuant to a Stock Right.

	26.	 	FRACTIONAL SHARES.

     No fractional shares shall be issued under the Plan and the person exercising a Stock Right
shall receive from the Company cash in lieu of such fractional shares equal to the Fair Market
Value thereof.

	27.	 	CONVERSION OF ISOs INTO NON-QUALIFIED OPTIONS; TERMINATION OF ISOs.

     The Administrator, at the written request of any Participant, may in its discretion take such
actions as may be necessary to convert such Participant’s ISOs (or any portions thereof) that have
not been exercised on the date of conversion into Non-Qualified Options at any time prior to the
expiration of such ISOs, regardless of whether the Participant is an employee of the Company or an
Affiliate at the time of such conversion. At the time of such conversion, the Administrator (with
the consent of the Participant) may impose such conditions on the exercise of the resulting
Non-Qualified Options as the Administrator in its discretion may determine, provided that such
conditions shall not be inconsistent with this Plan. Nothing in the Plan shall be deemed to give
any Participant the right to have such Participant’s ISOs converted into Non-Qualified Options, and
no such conversion shall occur until and unless the Administrator takes appropriate action. The
Administrator, with the consent of the Participant, may also terminate any portion of any ISO that
has not been exercised at the time of such conversion.

	28.	 	WITHHOLDING.

     In the event that any federal, state, or local income taxes, employment taxes, Federal
Insurance Contributions Act (“F.I.C.A.”) withholdings or other amounts are required by applicable
law or governmental regulation to be withheld from the Participant’s salary, wages or other
remuneration in connection with the exercise or acceptance of a Stock Right or in connection with a
Disqualifying Disposition (as defined in Paragraph 29) or upon the lapsing of any forfeiture
provision or right of repurchase or for any other reason required by law, the Company may withhold
from the Participant’s compensation, if any, or may require that the Participant advance in cash to
the Company, or to any Affiliate of the Company which employs or employed the Participant, the
statutory minimum amount of such withholdings unless a different withholding arrangement, including
the use of shares of the Company’s Common Stock

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or a promissory note, is authorized by the Administrator (and permitted by law). For purposes
hereof, the fair market value of the shares withheld for purposes of payroll withholding shall be
determined in the manner set forth under the definition of Fair Market Value provided in Paragraph
1 above, as of the most recent practicable date prior to the date of exercise. If the fair market
value of the shares withheld is less than the amount of payroll withholdings required, the
Participant may be required to advance the difference in cash to the Company or the Affiliate
employer. The Administrator in its discretion may condition the exercise of an Option for less
than the then Fair Market Value on the Participant’s payment of such additional withholding.

	29.	 	NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION.

     Each Employee who receives an ISO must agree to notify the Company in writing immediately
after the Employee makes a Disqualifying Disposition of any shares acquired pursuant to the
exercise of an ISO. A Disqualifying Disposition is defined in Section 424(c) of the Code and
includes any disposition (including any sale or gift) of such shares before the later of (a) two
years after the date the Employee was granted the ISO, or (b) one year after the date the Employee
acquired Shares by exercising the ISO, except as otherwise provided in Section 424(c) of the Code.
If the Employee has died before such stock is sold, these holding period requirements do not apply
and no Disqualifying Disposition can occur thereafter.

	30.	 	TERMINATION OF THE PLAN.

     The Plan will terminate on September 18, 2017, the date which is ten years from the earlier of
the date of its adoption by the Board of Directors and the date of its approval by the shareholders
of the Company. The Plan may be terminated at an earlier date by vote of the shareholders or the
Board of Directors of the Company; provided, however, that any such earlier termination shall not
affect any Agreements executed prior to the effective date of such termination.

	31.	 	AMENDMENT OF THE PLAN AND AGREEMENTS.

     The Plan may be amended by the shareholders of the Company. The Plan may also be amended by
the Administrator, including, without limitation, to the extent necessary to qualify any or all
outstanding Stock Rights granted under the Plan or Stock Rights to be granted under the Plan for
favorable federal income tax treatment as may be afforded incentive stock options under Section 422
of the Code (including deferral of taxation upon exercise), and to the extent necessary to qualify
the shares issuable upon exercise or acceptance of any outstanding Stock Rights granted, or Stock
Rights to be granted, under the Plan for listing on any national securities exchange or quotation
in any national automated quotation system of securities dealers. Any amendment approved by the
Administrator which the Administrator determines is of a scope that requires shareholder approval
shall be subject to obtaining such shareholder approval. Any modification or amendment of the Plan
shall not, without the consent of a Participant, adversely affect his or her rights under a Stock
Right previously granted to him or her. With the consent of

20

 

the Participant affected, the Administrator may amend outstanding Agreements in a manner which may
be adverse to the Participant but which is not inconsistent with the Plan. In the discretion of
the Administrator, outstanding Agreements may be amended by the Administrator in a manner which is
not adverse to the Participant.

	32.	 	EMPLOYMENT OR OTHER RELATIONSHIP.

     Nothing in this Plan or any Agreement shall be deemed to prevent the Company or an Affiliate
from terminating the employment, consultancy or director status of a Participant, nor to prevent a
Participant from terminating his or her own employment, consultancy or director status or to give
any Participant a right to be retained in employment or other service by the Company or any
Affiliate for any period of time.

	33.	 	GOVERNING LAW.

     This Plan shall be construed and enforced in accordance with the law of the State of Delaware.

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