Document:

Exhibit
10.1

 

2006
Non-Employee Director Compensation Program

(Effective May 17, 2006)

 

Annual
Cash Retainers

The non-executive chairman of the board of directors currently receives
an annual retainer of $80,000.  Each of
the other non-employee directors receives an annual retainer of $30,000.

 

The chairman of the
audit committee of the board of directors receives an annual retainer of
$15,000. The chairperson for each of the board’s other committees receives an
annual retainer of $7,500.

 

Board
and Committee Meeting Attendance Fees

The non-employee directors receive $2,000 per board meeting attended in
person and $2,000 per committee meeting attended in person, but only if the
committee meeting is not held on the same day as a board meeting.  Non-employee directors are also reimbursed
for expenses incurred in connection with attendance at board and committee
meetings.

 

The non-employee directors do not receive compensation for the first
four telephonic board and first four telephonic committee meetings that occur
during the year (the yearly period from one annual meeting to the next) and
receive $1,000 per telephonic board or committee meeting attended thereafter.

 

Periodic
Equity Awards

The board of directors periodically assesses potential equity awards to
non-employee directors in lieu of an annual automatic grant of stock options,
as contemplated under the Company’s Amended and Restated 2001 Equity Incentive
Plan (the “Plan”). The board of directors suspended the automatic grants in May
of 2004.

 

On May 17, 2006, the board of directors approved stock option grants to
each of the Company’s non-employee directors as follows:  (i) a grant of 12,442 stock options to the
non-executive chairman of the board (with a Black-Scholes value of
approximately $80,000 as of the grant date) and (ii) a grant of 9,331 stock
options to each of the Company’s other non-employee directors (with a
Black-Scholes value of approximately $60,000 as of the grant date). The stock
options vest upon the earlier of (x) immediately prior to the next annual
meeting of the Company’s stockholders in 2007, or (y) the one-year anniversary
of the grant date (May 17, 2007).  In
addition, the exercise price for the stock options is equal to the fair market
price of the Company’s common stock as of the grant date in accordance with the
Plan and have a ten-year term.Exhibit
10.2

 

Form of
Non-Employee Director Stock Option Agreement

 

	
   

  	
   

  	
  QUIDEL CORPORATION

  
	
   

  	
   

  	
  ID: 94-2573850

  
	
  Notice of Grant of Stock Options

  	
   

  	
  10165 McKellar Court

  
	
  and Option Agreement

  	
   

  	
  San Diego, CA 92121

  

 

 

	
  [Recipient]

  	
   

  	
  Option Number:

  
	
  [Address]

  	
   

  	
  Plan:

  	
  2001

  
	
   

  	
   

  	
  ID:

  

 

Effective                     ,
you have been granted a(n) Non-Qualified Stock Option to buy                 
shares of QUIDEL CORPORATION (the “Company”) stock at $          
per share.

 

The total option price of the shares granted is $                        .

 

Shares in each period will become fully vested on
the date shown.  Once vested, the stock
options granted hereunder will remain exercisable until expiration of the full
term of such options, notwithstanding any termination of service on the
Company’s board of directors.

 

	
  Shares

  	
   

  	
  Vest Type

  	
   

  	
  Full Vest

  	
   

  	
  Expiration

  	
   

  
	
   

  	
   

  	
  On Vest Date

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

By your signature and the Company's signature
below, you and the Company agree that these options are granted under and
governed by the terms and conditions of the Company's Stock Option Plan as amended
and the Option Agreement, all of which are attached and made a part of this
document.

 

 

	
   

  	
   

  	
   

  	
   

  
	
  QUIDEL CORPORATION

  	
   

  	
   

  	
  Date

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Thomas Brown

  	
   

  	
   

  	
  Date

  

 

	
   

  	
  Date:

  	
  5/23/2006

  
	
   

  	
  Time:

  	
  10:21:11AMExhibit 10.1

 

FIRST AMENDMENT TO
PURCHASE AND SALE AGREEMENT

 

THIS FIRST AMENDMENT TO PURCHASE AND SALE
AGREEMENT (this “Amendment”) is made as of May 18, 2006, by and between CATALYTICA
ENERGY SYSTEMS, INC., a Delaware corporation (“Seller”), and WILSHIRE
PROPERTY COMPANY, LLC, a California limited liability company (“Buyer”).

 

RECITALS:

 

A.            Seller
and Buyer entered into the Purchase and Sale Agreement dated April 18, 2006,
with respect to the sale and purchase of the real property (the “Property”)
located at 1388 North Tech Boulevard, Gilbert, Arizona (the “Purchase
Agreement”).

 

B.            All
capitalized terms used in this Amendment shall have the meanings given to them
in the Purchase Agreement, as amended hereby, unless otherwise defined herein.

 

C.            Seller and
Buyer desire to amend the Purchase Agreement on the terms and conditions set
forth in this Amendment.

 

AGREEMENT:

 

NOW,
THEREFORE, in consideration of the premises and the mutual covenants herein
contained, the parties hereby amend the Purchase Agreement on the terms set
forth in this Amendment, notwithstanding anything to the contrary contained
therein.

 

1.             The Closing Date.
The “Closing” and “Closing Date” as
contemplated in Section 2 of the Purchase Agreement shall be July 21, 2006.

 

2.             Purchase
Price. Section 5 is deleted in its entirety and replaced with the following
language:

 

Purchase Price. The total purchase price (the “Purchase
Price”) to be paid for the Property shall be FOUR MILLION SEVEN HUNDRED
SEVENTY-FIVE THOUSAND AND NO/100 DOLLARS ($4,775,000.00) and shall be payable
to Seller at the Closing in cash. All Earnest Money shall be applied against
the Purchase Price at the Closing.

 

3.             Condition Precedent. The phrase “It shall be a condition
precedent to Seller’s obligations to consummate the transaction contemplated by
this Agreement that Seller obtain a full and complete release and discharge
from the Loan and Loan Documents, all in a manner acceptable to Seller, and” contained in Section 10 of the Purchase
Agreement is hereby deleted from the Purchase Agreement.

 

4.             Additional Cash Payment.
Section 18(f) of the Purchase Agreement is deleted in its entirety and replaced
with the following language:

 

“At the Closing, Buyer
shall pay to Seller, in addition to the Purchase Price, an amount equal to $40,000.00
(the “Additional Cash Payment”).

 

1

 

5.             The
Feasibility
Period. The Feasibility Period described in Section 9 shall be deemed ended
and the earnest money deposit is nonrefundable. Subsection 28(a) of the
Purchase Agreement is deleted in its entirety.

 

6.             Purchase
of Personal Property. Pursuant to Section 28(c) of the Purchase Agreement,
Buyer hereby elects to purchase Seller’s personal property located on the
Property “AS IS” for an amount equal to $25,000.00.

 

7.             New Lease. The commencement date for the New Lease shall be the Closing Date.

 

8.             No
Breach or Default. To Seller’s and Buyer’s actual knowledge and belief,
neither Seller nor Buyer is in default and neither has breached any of Buyer’s
or Seller’s respective duties and obligations under the Purchase Agreement.

 

9.             Ratified
and Confirmed. Except as modified by this Amendment, the Purchase Agreement
and all the terms, covenants, conditions and agreements thereof are hereby in
all respects ratified, confirmed and approved, and shall remain unchanged and
shall continue in full force and effect.

 

10.           Entire
Understanding. This Amendment contains the entire understanding between the
parties with respect to the matters contained herein.

 

11.           Counterparts.
This Amendment may be executed in any number of counterparts, each of which
shall be deemed to be an original and all, when taken together, shall
constitute one and the same instrument. A facsimile or similar transmission of
a counterpart signed by a party hereto shall be regarded as signed by such
party for purposes hereof.

 

IN
WITNESS WHEREOF, Seller and Buyer have executed and delivered this Amendment as
of the date and year first above written.

 

	
  SELLER:

  	
   

  	
  BUYER:

  
	
   

  	
   

  	
   

  
	
  CATALYTICA
  ENERGY SYSTEMS, INC., a 

  	
   

  	
  WILSHIRE
  PROPERTY COMPANY, LLC, a 

  
	
  Delaware
  corporation

  	
   

  	
  California
  limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Rob Zack

  	
   

  	
   

  	
  By:

  	
  /s/
  John Ghiselli

  	
   

  
	
  Name:
  

  	
  Rob
  Zack

  	
   

  	
   

  	
  Name:

  	
  John Ghiselli  

  	
   

  
	
  Title:
  

  	
  CEO

  	
   

  	
   

  	
  Title:

  	
  Managing
  Member

  	
   

  
														

 

2EXHIBIT 10.1

 

MONACO COACH CORPORATION

 

1993 STOCK PLAN

 

(formerly known as the 1993 Incentive Stock Option Plan)

(as amended and restated through May 17, 2006)

 

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

 

•              to attract and retain the best available
personnel for positions of substantial responsibility,

 

•              to provide additional incentive to Employees,
Directors and Consultants, and

 

•              to promote the success of the Company’s
business.

 

The Plan permits the grant
of Incentive Stock Options, Nonstatutory Stock Options, Restricted Stock,
Restricted Stock Units, Stock Appreciation Rights, Performance Units,
Performance Shares, Dividend Equivalents and other stock awards as the
Administrator may determine.

 

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

 

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

 

(b)           “Affiliate” means any corporation or
any other entity (including, but not limited to, partnerships and joint
ventures) controlling, controlled by, or under common control with the Company.

 

(c)           “Annual
Retainer” means the
amount which an Outside Director will be entitled to receive for serving as a
Director during a Fiscal Year, but will not include reimbursement for expenses
or fees with respect to any other services provided to the Company.

 

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

 

(e)           “Award” means, individually or
collectively, a grant under the Plan of Options, Restricted Stock, Restricted
Stock Units, Stock Appreciation Rights, Performance Units, Performance Shares,
Dividend Equivalents and other stock awards as the Administrator may determine.

 

(f)            “Award Agreement” means the written or
electronic agreement setting forth the terms and provisions applicable to each
Award granted under the Plan, including an Option Agreement and Restricted
Stock Unit Agreement. The Award Agreement is subject to the terms and
conditions of the Plan.

 

 

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

 

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

 

(i)            Any “person” (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner”
(as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of
securities of the Company representing fifty percent (50%) or more of the total
voting power represented by the Company’s then outstanding voting securities;
or

 

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

 

(iii)          A change in the composition of the Board
occurring within a two-year period, as a result of which fewer than a majority
of the directors are Incumbent Directors. “Incumbent Directors” means directors
who either (A) are Directors as of the effective date of the Plan, or
(B) are elected, or nominated for election, to the Board with the
affirmative votes of at least a majority of the Incumbent Directors at the time
of such election or nomination (but will not include an individual whose
election or nomination is in connection with an actual or threatened proxy
contest relating to the election of directors to the Company); or

 

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

 

(i)            “Code” means the Internal Revenue Code
of 1986, as amended. Any reference to a section of the Code herein will be a
reference to any successor or amended section of the Code.

 

(j)            “Committee” means a committee of
Directors or of other individuals satisfying Applicable Laws appointed by the
Board in accordance with Section 4 of the Plan.

 

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

 

(l)            “Company” means Monaco Coach Corporation,
a Delaware corporation.

 

(m)          “Consultant” means any natural person,
including an advisor, engaged by the Company or its Affiliates to render
services to such entity.

 

(n)           “Determination Date” means the latest
possible date that will not jeopardize the qualification of an Award granted
under the Plan as “performance-based compensation” under Section 162(m) of
the Code.

 

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

 

(p)           “Disability” means total and permanent
disability as defined in Section 22(e)(3) of the Code.

 

2

 

(q)           “Dividend Equivalent” means a credit,
payable in cash, made at the discretion of the Administrator, to the account of
a Participant in an amount equal to the cash dividends paid on one Share for
each Share represented by an Award held by such Participant. The Dividend
Equivalent for each Share subject to an Award shall only be paid to a
Participant on the vesting date for such Share.

 

(r)            “Employee” means any person, including
Officers and Directors, employed by the Company or its Affiliates. A Service
Provider shall not cease to be an Employee in the case of (i) any leave of
absence approved by the Company or (ii) transfers between locations of the
Company or between the Company, its Affiliates, or any successor. Neither
service as a Director nor payment of a director’s fee by the Company shall be
sufficient to constitute “employment” by the Company.

 

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

 

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

 

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

 

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

 

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

 

(u)           “Fiscal Year” means the fiscal year of
the Company.

 

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

 

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

 

(x)            “Nonstatutory Stock Option” means an
Option that by its terms does not qualify or is not intended to qualify as an
Incentive Stock Option.

 

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

 

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

 

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

 

3

 

(bb)         “Option Agreement” means an agreement
between the Company and a Participant evidencing the terms and conditions of an
individual Option grant. The Option Agreement is subject to the terms and
conditions of the Plan.

 

(cc)         “Optionee”
means the holder of an outstanding Option or Restricted Stock Unit granted
under the Plan.

 

(dd)         “Outside
Director” means a Director who is not an Employee.

 

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

 

(ff)           “Participant” means the holder of an
outstanding Award, including an Optionee.

 

(gg)         “Performance Period” means any Fiscal
Year of the Company or such other period as determined by the Administrator in
its sole discretion.

 

(hh)         “Performance Share” means an Award
denominated in Shares which may be earned in whole or in part upon attainment
of Performance Goals or other vesting criteria as the Administrator may
determine pursuant to Section 10.

 

(ii)           “Performance Unit” means a bookkeeping
entry representing an amount equal to the Fair Market Value of one Share, which
may be earned in whole or in part upon attainment of Performance Goals or other
vesting criteria as the Administrator may determine and which may be settled
for cash, Shares or other securities or a combination of the foregoing pursuant
to Section 10.

 

(jj)           “Period of Restriction” means the
period during which the transfer of Shares of Restricted Stock are subject to
restrictions and therefore, the Shares are subject to a substantial risk of
forfeiture. Such restrictions may be based on the passage of time, the
achievement of target levels of performance, or the occurrence of other events
as determined by the Administrator.

 

(kk)         “Plan” means this 1993 Incentive Stock
Option Plan.

 

(ll)           “Restricted Stock” means Shares issued
pursuant to a Restricted Stock award under Section 7 of the Plan, or
issued pursuant to the early exercise of an Option.

 

(mm)       “Restricted Stock Unit” means a
bookkeeping entry representing an amount equal to the Fair Market Value of one
Share, granted pursuant to Section 8. Each Restricted Stock Unit represents
an unfunded and unsecured obligation of the Company.

 

(nn)         “Restricted Stock Unit Agreement”
means a written or electronic agreement between the Company and the Optionee
evidencing the terms and restrictions applying to an award of Restricted Stock Units.
The Restricted Stock Unit Agreement is subject to the terms and conditions of
the Plan and the Notice of Grant.

 

(oo)         “Retirement” means a Service Provider
who retires from the Company on or after age sixty-two (62) and such Service
Provider has at least five (5) years of service with the Company at the date of
retirement; provided, that, the Administrator, notwithstanding the foregoing,
has the discretion to determine when a Service Provider retires so long as such
determination is not less favorable than provided for in the foregoing
definition.

 

4

 

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

 

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

 

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

 

(ss)         “Share” means a share of the Common
Stock, as adjusted in accordance with Section 15 of the Plan.

 

(tt)           “Stock Appreciation Right” means an
Award, granted alone or in connection with an Option, that pursuant to
Section 9 is designated as a Stock Appreciation Right.

 

(uu)         “Subsidiary” means a “subsidiary
corporation”, whether now or hereafter existing, as defined in Section 424(f)
of the Code.

 

3.             Stock Subject to the
Plan.

 

(a)           Stock Subject to the Plan. Subject to the provisions of Section 15 of the Plan, the maximum aggregate
number of Shares that may be awarded and sold under the Plan is 5,457,813 Shares plus any Shares
which have been reserved under the Company’s 1993 Director Plan, but that, as
of the date of stockholder approval of this Plan, have not been issued pursuant
to any awards granted thereunder and are not subject to any outstanding awards
granted thereunder. The Shares may be authorized, but unissued, or reacquired
Common Stock.

 

(b)           Lapsed Awards. If an Award expires or becomes
unexercisable without having been exercised in full, or, with respect to
Restricted Stock, Restricted Stock Units, Performance Shares or Performance
Units, is forfeited to or repurchased by the Company, the unpurchased Shares
(or for Awards other than Options and Stock Appreciation Rights, the forfeited
or repurchased Shares) which were subject thereto will become available for future
grant or sale under the Plan (unless the Plan has terminated). With respect to
Stock Appreciation Rights, Shares actually issued pursuant to a Stock
Appreciation Right as well as the Shares that represent payment of the exercise
price shall cease to be available under the Plan. However, Shares that have
actually been issued under the Plan under any Award will not be returned to the
Plan and will not become available for future distribution under the Plan;
provided, however, that if unvested Shares of Restricted Stock, Restricted
Stock Units, Performance Shares or Performance Units are repurchased by the
Company or are forfeited to the Company, such Shares will become available for
future grant under the Plan. Shares used to pay the tax and exercise price of
an Award will not become available for future grant or sale under the Plan. To
the extent an Award under the Plan is paid out in cash rather than Shares, such
cash payment will not result in reducing the number of Shares available for
issuance under the Plan. Notwithstanding the foregoing and, subject to
adjustment provided in Section 15, the maximum number of Shares that may
be issued upon the exercise of Incentive Stock Options shall equal the
aggregate Share number stated in Section 3(a), plus, to the extent
allowable under Section 422 of the Code, any Shares that become available
for issuance under the Plan under this Section 3(c).

 

4.             Administration of the
Plan.

 

(a)           Procedure.

 

(i)            Multiple Administrative Bodies. Different Committees with respect to
different groups of Service Providers may administer the Plan.

 

5

 

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

 

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

 

(iv)          Discretionary Grants to Outside Directors. Discretionary grants made to Outside
Directors shall be administered by a Committee comprised of “independent
directors” as such term is defined by the rules of the New York Stock Exchange.

 

(v)           Other Administration. Other than as provided above, the Plan
shall be administered by (A) the Board or (B) a Committee, which committee
shall be constituted to satisfy Applicable Laws.

 

(b)           Powers of the Administrator. Subject to the provisions of the Plan, and
in the case of a Committee, subject to the specific duties delegated by the
Board to such Committee, the Administrator shall have the authority, in its
discretion:

 

(i)            to determine the Fair Market Value;

 

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

 

(iii)          to determine terms and conditions, not
inconsistent with the terms of the Plan, of any Award granted hereunder;

 

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

 

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

 

(vi)          to construe and interpret the terms of the
Plan and Awards granted pursuant to the Plan;

 

(vii)         to prescribe, amend and rescind rules and
regulations relating to the Plan, including rules and regulations relating to
sub-plans established for the purpose of satisfying applicable foreign laws;

 

(viii)        to modify or amend each Award (subject to Section 20(c) of the Plan), including the
discretionary authority to extend the post-termination exercisability period of
Options and Stock Purchase Rights longer than is otherwise provided for in the
Plan. Notwithstanding the previous sentence, the Administrator may not modify
or amend an Option or Stock Appreciation Right to reduce the exercise price of
such Option or Stock Appreciation Right after it has been granted (except for
adjustments made pursuant to Section 15) nor may the Administrator cancel any
outstanding Option or Stock Appreciation Right and 

 

6

 

replace it with a new Option or Stock Appreciation
Right with a lower exercise price, unless, in either case, such action is
approved by the Company’s stockholders;

 

(ix)           to determine whether Dividend Equivalents will be
granted in connection with an Award;

 

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

 

(xi)           to grant in addition to the incentives
described in Sections 6, 7, 8, 9 and 10 below, other incentives payable in cash
or Shares under the Plan as determined by the Administrator to be in the best
interests of the Company and subject to any terms and conditions the
Administrator deems advisable; and

 

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

 

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

 

5.             Eligibility. Nonstatutory Stock
Options, Restricted Stock, Restricted Stock Units, Stock Appreciation Rights,
Performance Units, Performance Shares, Dividend Equivalents and such stock
awards as the Administrator determines may be granted to Service Providers. Incentive
Stock Options may be granted only to employees of the Company or any Parent or
Subsidiary of the Company.

 

6.             Options.

 

(a)           Limitations.

 

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

 

(ii)           The following limitations shall apply to
grants of Options:

 

(1)           No Service Provider shall be granted, in any
Fiscal Year of the Company, Options to purchase more than 750,000 Shares;
provided, however, that in connection with a Participant’s initial service as
an Employee, an Employee may be granted Options to purchase an aggregate of up
to an additional 1,000,000 Shares.

 

(2)           The foregoing limitations shall be adjusted
proportionately in connection with any change in the Company’s capitalization
as described in Section 15.

 

(3)           If an Option is cancelled in the same Fiscal
Year of the Company in which it was granted (other than in connection with a
transaction described in Section 15),
the cancelled 

 

7

 

Option will be counted against the limits set forth
in subsections (i) and (ii) above. For this purpose, if the exercise price of
an Option is reduced, the transaction will be treated as a cancellation of the
Option and the grant of a new Option.

 

(b)           Term of Option. The term of each Option shall be stated in
the Award Agreement; provided, however, that the term will be no more than
ten (10) years from the date of grant thereof. Moreover, in the case of an
Incentive Stock Option granted to a Participant who, at the time the Incentive
Stock Option is granted, owns stock representing more than ten percent (10%) of
the total combined voting power of all classes of stock of the Company or any
Parent or Subsidiary, the term of the Incentive Stock Option shall be five (5)
years from the date of grant or such shorter term as may be provided in the
Award Agreement.

 

(c)           Option Exercise Price and Consideration.

 

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

 

(1)           In the case of an Incentive Stock Option

 

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

 

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

 

(2)           In the case of a Nonstatutory Stock Option,
the per Share exercise price shall not be less than 100% of the Fair Market
Value per Share on the date of grant. In the case of a Nonstatutory Stock
Option intended to qualify as “performance-based compensation” within the
meaning of Section 162(m) of the Code, the per Share exercise price shall
be no less than 100% of the Fair Market Value per Share on the date of grant.

 

(3)           Notwithstanding the foregoing, Options may be
granted with a per Share exercise price of less than 100% of the Fair Market
Value per Share on the date of grant pursuant to a transaction described in,
and in a manner consistent with, Section 424(a) of the Code.

 

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

 

(iii)          Form of Consideration. The Administrator shall determine the
acceptable form of consideration for exercising an Option, including the method
of payment. In the case of an Incentive Stock Option, the Administrator shall
determine the acceptable form of consideration at the time of grant. Such
consideration may consist entirely of (without limitation):

 

(1)           cash;

 

(2)           check;

 

8

 

(3)           other Shares which, in the case of Shares
acquired directly or indirectly from the Company, (A) have been owned by
the Participant and have not been subject to a substantial risk of forfeiture
for more than six (6) months on the date of surrender, and (B) have a
Fair Market Value on the date of surrender equal to the aggregate exercise
price of the Shares as to which said Option shall be exercised;

 

(4)           consideration received by the Company under a
cashless exercise program implemented by the Company in connection with the
Plan;

 

(5)           a reduction in the amount of any Company
liability to the Participant, including any liability attributable to the
Participant’s participation in any Company-sponsored deferred compensation
program or arrangement;

 

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

 

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

 

(d)           Exercise of Option.

 

(i)    Procedure for Exercise; Rights as a
Stockholder. Any Option
granted hereunder shall be exercisable according to the terms of the Plan and
at such times and under such conditions as determined by the Administrator and
set forth in the Award Agreement. Unless the Administrator provides otherwise,
vesting of Options granted hereunder shall be suspended during any unpaid leave
of absence. An Option may not be exercised for a fraction of a Share.

 

An
Option shall be deemed exercised when the Company receives: (i) written or
electronic notice of exercise (in accordance with the Award Agreement) from the
person entitled to exercise the Option, and (ii) full payment for the
Shares with respect to which the Option is exercised together with any
applicable withholding taxes. Full payment may consist of any consideration and
method of payment authorized by the Administrator and permitted by the Award
Agreement and the Plan. Shares issued upon exercise of an Option shall be
issued in the name of the Participant or, if requested by the Participant, in
the name of the Participant and his or her spouse. Until the Shares are issued
(as evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company), no right to vote or receive
dividends or any other rights as a stockholder shall exist with respect to the
Shares subject to an Option, notwithstanding the exercise of the Option. The
Company shall issue (or cause to be issued) such Shares promptly after the
Option is exercised. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the Shares are issued, except as
provided in Section 15 of the Plan.

 

Exercising
an Option in any manner shall decrease the number of Shares thereafter
available, both for purposes of the Plan and for sale under the Option, by the number
of Shares as to which the Option is exercised.

 

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

 

9

 

portion of the Option shall revert to the Plan. If,
after termination, the Participant does not exercise his or her Option within
the time specified by the Administrator, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan.

 

(iii)          Disability of Participant. If a Participant ceases to be a Service
Provider as a result of the Participant’s Disability, the Option granted
hereunder to such Participant shall become vested and exercisable for the full
number of Shares covered by the Option. The Participant may exercise his or her
Option at any time within twelve (12) months from the date of such termination
(but in no event later than the expiration of the term of such Option as set
forth in the Notice of Grant). If, after termination, the Participant does not
exercise his or her Option within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.

 

(iv)          Death of Participant. If a Participant dies while a Service
Provider, the Option shall become vested and exercisable for the full number of
Shares covered by the Option. The Option held by the Participant at the time of
death may be exercised at any time within twelve (12) months following the date
of death of Participant by the Participant’s designated beneficiary, provided
such beneficiary has been designated prior to Participant’s death in a form
acceptable to the Administrator. In no event shall an Option be exercised later
than the expiration of the term of the Option, as set forth in the Award
Agreement. If no such beneficiary has been designated by the Participant, then
such Option may be exercised by the personal representative of the Participant’s
estate or by the person(s) to whom the Option is transferred pursuant to the
Participant’s will or in accordance with the laws of descent and distribution. If
the Option is not so exercised within the time specified herein, the Option
shall terminate, and the Shares covered by such Option shall revert to the
Plan.

 

(v)           Retirement of Participant. In the event of a Participant’s Retirement
while a Service Provider, the Option shall become vested and exercisable for
the full number of Shares covered by the Option. The Option held by the
Participant at the time of Retirement may be exercised at any time within
twelve (12) months following the date of Retirement; provided, however, that
(i) this Section 6(d)(v) shall not apply to grants made on or before May 16,
2002, and (ii) this Section 6(d)(v) shall apply to grants made on or after May
17, 2002. In no event shall an Option be exercised later than the expiration of
the term of the Option, as set forth in the Award Agreement. If the Option is
not so exercised within the time specified herein, the Option shall terminate,
and the Shares covered by such Option shall revert to the Plan.

 

7.             Restricted Stock.

 

(a)           Grant of Restricted Stock. Subject to the terms and provisions of the
Plan, the Administrator, at any time and from time to time, may grant Awards of
Restricted Stock to Service Providers in such amounts as the Administrator, in
its sole discretion, will determine.

 

(b)           Restricted Stock Agreement. Each Award of Restricted Stock will be
evidenced by an Award Agreement that will specify the Period of Restriction,
the number of Shares granted, and such other terms and conditions as the
Administrator, in its sole discretion, will determine. Notwithstanding the
foregoing, during any Fiscal Year no Participant will receive more than an
aggregate of 200,000 Shares of Restricted Stock; provided, however, that in
connection with a Participant’s initial service as an Employee, an Employee may
be granted an aggregate of up to an additional 300,000 Shares of Restricted
Stock. Unless the Administrator determines otherwise, Shares of Restricted
Stock will be held by the Company as escrow agent until the restrictions on
such Shares have lapsed.

 

10

 

(c)           Transferability. Except as provided in this Section 7,
Shares of Restricted Stock may not be sold, transferred, pledged, assigned, or
otherwise alienated or hypothecated until the end of the applicable Period of
Restriction.

 

(d)           Other Restrictions. The Administrator, in its sole discretion,
may impose such other restrictions on Shares of Restricted Stock as it may deem
advisable or appropriate.

 

(e)           Vesting Requirements. Except as otherwise provided in this
Section 7, Shares of Restricted Stock covered by each Restricted Stock grant
made under the Plan will be released from escrow as soon as practicable after
the last day of the Period of Restriction. The restrictions will lapse at a
rate determined by the Administrator; provided, however, that, except with respect
to Awards granted pursuant to Section 14 or as otherwise provided in Section
15(c), Shares of Restricted Stock will not vest more rapidly than one-third
(1/3rd) of the total number of Shares of Restricted Stock subject to
an Award each year from the date of grant (or, if applicable, the date a
Participant begins providing services to the Company or any Parent or
Subsidiary of the Company), unless the Administrator determines that the Award
is to vest upon the achievement of performance criteria and the period for
measuring such performance will cover at least twelve (12) months. Notwithstanding
the foregoing sentence, the Administrator, in its sole discretion, may provide
at the time of or following the date of grant for accelerated vesting for an Award
of Restricted Stock upon or in connection with a Change in Control or upon or
in connection with a Participant’s termination of service, including, without
limitation, due to death, Disability or Retirement.

 

(f)            Voting Rights. During the Period of Restriction, Service
Providers holding Shares of Restricted Stock granted hereunder may exercise
full voting rights with respect to those Shares, unless the Administrator
determines otherwise.

 

(g)           Dividends and Other Distributions. During the Period of Restriction, Service
Providers holding Shares of Restricted Stock will be entitled to receive all
dividends and other distributions paid with respect to such Shares unless the
Administrator determines otherwise. If any such dividends or distributions are
paid in Shares, the Shares will be subject to the same restrictions on
transferability and forfeitability as the Shares of Restricted Stock with
respect to which they were paid.

 

(h)           Return of Restricted Stock to Company. On the date set forth in the Award Agreement,
the Restricted Stock for which restrictions have not lapsed will revert to the
Company and again will become available for grant under the Plan.

 

(i)            Section 162(m) Performance Restrictions. For purposes of qualifying grants of
Restricted Stock as “performance-based compensation” under Section 162(m)
of the Code, the Administrator, in its discretion, may set restrictions based
upon the achievement of Performance Goals. The Performance Goals will be set by
the Administrator on or before the Determination Date. In granting Restricted
Stock which is intended to qualify under Section 162(m) of the Code, the
Administrator will follow any procedures determined by it from time to time to
be necessary or appropriate to ensure qualification of the Award under Section 162(m)
of the Code (e.g., in determining the Performance Goals).

 

8.             Restricted Stock Units.

 

(a)           Grant of Restricted Stock Units. Subject to the terms and provisions of the
Plan, the Administrator, at any time and from time to time, may grant Awards of
Restricted Stock Units to Service Providers in such amounts as the
Administrator, in its sole discretion, will determine.

 

11

 

(b)           Restricted Stock Unit Agreement. Each Award of Restricted Stock Units will
be evidenced by an Award Agreement that will specify the number of Restricted
Stock Units granted and such other terms and conditions as the Administrator,
in its sole discretion, will determine. Notwithstanding the foregoing, during
any Fiscal Year no Participant will receive more than an aggregate of 200,000
Restricted Stock Units; provided, however, that in connection with a
Participant’s initial service as an Employee, an Employee may be granted an
aggregate of up to an additional 300,000 Restricted Stock Units.

 

(c)           Other Restrictions. The Administrator, in its sole discretion,
may impose such other restrictions on Restricted Stock Units as it may deem
advisable or appropriate.

 

(d)           Vesting Criteria and
Other Terms. The Administrator will set vesting criteria in its discretion, which,
depending on the extent to which the criteria are met, will determine the
number of Restricted Stock Units that will be paid out to the Participant ; provided, however, that, except with
respect to Awards granted pursuant to Section 14 or as otherwise provided in
Section 15(c), an Award of Restricted Stock Units
will not vest more rapidly than one-third (1/3rd) of the total
number of Restricted Stock Units subject to an Award each year from the date of
grant (or, if applicable, the date a Participant begins providing services to
the Company or any Parent or Subsidiary of the Company), unless the
Administrator determines that the Award is to vest upon the achievement of
performance criteria and the period for measuring such performance will cover
at least twelve (12) months. Notwithstanding the foregoing sentence, the
Administrator, in its sole discretion, may provide at the time of or following
the date of grant for accelerated vesting for an Award of Restricted Stock
Units upon or in connection with a Change in Control or upon or in connection
with a Participant’s termination of service, including, without limitation, due
to death, Disability or Retirement. The Administrator may set vesting criteria
based upon the achievement of Company-wide, business unit, or individual goals
(including, but not limited to, continued employment), or any other basis
determined by the Administrator in its discretion.

 

(e)           Earning Restricted
Stock Units. Upon meeting the applicable vesting criteria, the Participant will be
entitled to receive a payout as specified in the Award Agreement.

 

(f)            Form and Timing of
Payment. Payment of earned Restricted Stock Units will be made as soon as
practicable after the date(s) set forth in the Award Agreement. The
Administrator, in its sole discretion, may pay earned Restricted Stock Units in
cash, Shares, or a combination thereof. Shares represented by Restricted Stock
Units that are fully paid in cash again will be available for grant under the
Plan.

 

(g)           Cancellation. On the date set
forth in the Award Agreement, all unearned Restricted Stock Units will be
forfeited to the Company.

 

(h)           Section 162(m) Performance Restrictions. For purposes of qualifying grants of
Restricted Stock Units as “performance-based compensation” under
Section 162(m) of the Code, the Administrator, in its discretion, may set
restrictions based upon the achievement of Performance Goals. The Performance
Goals will be set by the Administrator on or before the Determination Date. In
granting Restricted Stock Units which are intended to qualify under
Section 162(m) of the Code, the Administrator will follow any procedures
determined by it from time to time to be necessary or appropriate to ensure
qualification of the Award under Section 162(m) of the Code (e.g., in
determining the Performance Goals).

 

9.             Stock Appreciation
Rights.

 

12

 

(a)           Grant of Stock Appreciation Rights. Subject to the terms and conditions of the
Plan, a Stock Appreciation Right may be granted to Service Providers at any
time and from time to time as will be determined by the Administrator, in its
sole discretion.

 

(b)           Number of Shares. The Administrator will have complete
discretion to determine the number of Stock Appreciation Rights granted to any
Participant, provided that during any Fiscal Year, no Participant will be
granted Stock Appreciation Rights covering more than 750,000 Shares. Notwithstanding
the foregoing limitation, in connection with a Participant’s initial service as
an Employee, an Employee may be granted Stock Appreciation Rights covering up
to an additional 1,000,000 Shares.

 

(c)           Exercise Price and Other Terms. The Administrator, subject to the
provisions of the Plan, will have complete discretion to determine the terms
and conditions of Stock Appreciation Rights granted under the Plan. In the case
of a freestanding Stock Appreciation Right, the exercise price will be not less
than 100% of the Fair Market Value of a Share on the date of grant. The
exercise price of a tandem or affiliated Stock Appreciation Rights will equal
the exercise price of the related Option. In addition, the Administrator, in
its sole discretion, may reduce or waive any restrictions relating to a Stock
Appreciation Right following its date of grant.

 

(d)           Stock Appreciation Right Agreement. Each Stock Appreciation Right grant will be
evidenced by an Award Agreement that will specify the exercise price, the term
of the Stock Appreciation Right, the conditions of exercise, and such other
terms and conditions as the Administrator, in its sole discretion, will
determine.

 

(e)           Expiration of Stock Appreciation Rights. A Stock Appreciation Right granted under
the Plan will expire upon the date determined by the Administrator, in its sole
discretion, and set forth in the Award Agreement; provided, however, that the
term will be no more than ten (10) years from the date of grant thereof. Notwithstanding
the foregoing, the rules of Section 6(d) also will apply to Stock
Appreciation Rights.

 

(f)            Payment of Stock Appreciation Right Amount. Upon exercise of a Stock Appreciation
Right, a Participant will be entitled to receive payment from the Company in an
amount determined by multiplying:

 

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

 

(ii)   The number of Shares with respect to which
the Stock Appreciation Right is exercised.

 

At
the discretion of the Administrator, the payment upon Stock Appreciation Right
exercise may be in cash, in Shares of equivalent value, or in some combination
thereof.

 

10.           Performance Units and
Performance Shares.

 

(a)           Grant of Performance Units/Shares. Performance Units and Performance Shares
may be granted to Service Providers at any time and from time to time, as will
be determined by the Administrator, in its sole discretion. The Administrator
will have complete discretion in determining the number of Performance
Units/Shares granted to each Participant provided that during any Fiscal Year,
no Participant will receive more than 200,000 Performance Units or Performance
Shares. Notwithstanding the foregoing limitation, in connection with a
Participant’s initial service as an Employee, an Employee may be granted up 

 

13

 

to an additional 300,000 Performance Units or
Performance Shares.

 

(b)           Value of Performance Units/Shares. Each Performance Unit and each Performance
Share will have an initial value equal to the Fair Market Value of a Share on
the date of grant.

 

(c)           Performance Objectives and Other Terms. The Administrator will set performance
objectives or other vesting provisions; provided, however, that, except with
respect to Awards granted pursuant to Section 14 or as otherwise provided in
Section 15(c), Performance Shares/Units will not vest more rapidly than
one-third (1/3rd) of the total number of Performance Shares/Units
subject to an Award each year from the date of grant (or, if applicable, the
date a Participant begins providing services to the Company or any Parent or
Subsidiary of the Company), unless the Administrator determines that the Award
is to vest upon the achievement of performance criteria and the period for
measuring such performance will cover at least twelve (12) months. Notwithstanding
the foregoing sentence, the Administrator, in its sole discretion, may provide
at the time of or following the date of grant for accelerated vesting for an
Award of Performance Shares/Units upon or in connection with a Change in
Control or upon or in connection with a Participant’s termination of service,
including, without limitation, due to death, Disability or Retirement. The Administrator may
set vesting criteria based upon the achievement of Company-wide, business unit,
or individual goals (including, but not limited to, continued employment), or
any other basis determined by the Administrator in its discretion.

 

(d)           Earning of Performance Units/Shares. After the applicable Performance Period has
ended, the holder of Performance Units/Shares will be entitled to receive a
payout of the number of Performance Units/Shares earned by the Participant over
the Performance Period, to be determined as a function of the extent to which
the corresponding performance objectives or other vesting provisions have been
achieved.

 

(e)           Form and Timing of Payment of Performance
Units/Shares. Payment of
earned Performance Units/Shares will be made as soon as practicable after the
expiration of the applicable Performance Period. The Administrator, in its sole
discretion, may pay earned Performance Units/Shares in the form of cash, in
Shares (which have an aggregate Fair Market Value equal to the value of the
earned Performance Units/Shares at the close of the applicable Performance
Period) or in a combination thereof.

 

(f)            Cancellation of Performance Units/Shares. On the date set forth in the Award
Agreement, all unearned or unvested Performance Units/Shares will be forfeited
to the Company, and again will be available for grant under the Plan.

 

11.           Other Stock Awards. In addition to the
incentives described in Sections 6, 7, 8, 9 and 10 above, the Administrator may
grant other incentives payable in Shares under the Plan as it determines to be
in the best interests of the Company and subject to such other terms and
conditions as it deems appropriate.

 

12.           Performance Goals. The granting and/or
vesting of Awards of Restricted Stock, Restricted Stock Units, Performance
Shares and Performance Units and other incentives under the Plan may be made
subject to the attainment of performance goals relating to one or more business
criteria within the meaning of Section 162(m) of the Code and may provide for a
targeted level or levels of achievement (“Performance Goals”) including
cash position;
earnings before interest and taxes; earnings before interest, taxes,
depreciation and amortization; earnings
per Share; net income; operating cash flow; operating income; return on assets;
return on equity; return on net assets; return on sales; revenue and total
shareholder return. Any Performance Goals may be used to measure the
performance of the Company as a whole or a business unit of the Company and may
be measured relative to a peer group or index. The Performance Goals for a
Participant will be determined by the Administrator based on the Company’s
tactical and strategic business 

 

14

 

objectives, which may differ
from Participant to Participant and from Award to Award. Prior to the
Determination Date, the Administrator will determine whether to make any
adjustments to the calculation of any Performance Goal with respect to any
Participant for any significant or extraordinary events affecting the Company. In
all other respects, Performance Goals will be calculated in accordance with the
Company’s financial statements, generally accepted accounting principles, or
under a methodology established by the Administrator prior to the issuance of
an Award.

 

13.           Transferability of
Awards.
Unless determined otherwise by the Administrator, an Award may not be sold,
pledged, assigned, hypothecated, transferred, or disposed of in any manner
other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Participant, only by the Participant. With
the approval of the Administrator, a Participant may, in a manner specified by
the Administrator, (a) transfer an Award to a Participant’s spouse, former
spouse or dependent pursuant to
a court-approved domestic relations order which relates to the provision of
child support, alimony payments or marital property rights, and
(b) transfer an Award by bona fide gift and not for any consideration, to
(i) a member or members of the Participant’s immediate family, (ii) a
trust established for the exclusive benefit of the Participant and/or member(s)
of the Participant’s immediate family, (iii) a partnership, limited
liability company of other entity whose only partners or members are the
Participant and/or member(s) of the Participant’s immediate family, or
(iv) a foundation in which the Participant is an/or member(s) of the
Participant’s immediate family control the management of the foundation’s
assets. For purposes of this Section 13, “immediate family” means the
Participant’s spouse, former spouse, children, grandchildren, parents, grandparents,
siblings, nieces, nephews, parents-in-law, sons-in-law, daughters-in-law,
brothers-in-law, sisters-in-law, including adoptive or step relationships and
any person sharing the employee’s household (other than as a tenant or
employee).

 

14.           Election to Receive
Annual Retainer in Restricted Stock/Restricted Stock Units.

 

(a)           Compensation
Alternatives. Each Outside
Director who, in any Fiscal Year of the Company, delivers to the Company
written notice of an irrevocable election concerning the Annual Retainer to be
earned in the next Fiscal Year of the Company, will be entitled to select one
of the following alternative means of payment for the value of his or her
Annual Retainer in the next Fiscal Year of the Company:

 

(i)    An amount between ten percent (10%) and fifty
percent (50%) of the value of his or her Annual Retainer (in increments of ten
percent (10%) of the Annual Retainer) in the form of Common Stock (a “Common
Stock Payment”) and the balance in cash (a “Cash Payment”); or

 

(ii)   An amount between ten percent (10%) and fifty
percent (50%) of the value of his or her Annual Retainer (in increments of ten
percent (10%) of the Annual Retainer) in the form of Restricted
Stock/Restricted Stock Units (a “Retainer Grant”) and the balance in a
Cash Payment.

 

(iii)  If any Outside Director fails to notify the
Secretary of the Company in writing prior to the beginning of the next Fiscal
Year of the Company of his or her desired means to receive payment of the
Annual Retainer for the next Fiscal Year, then he or she will be deemed to have
elected the entire value of the Annual Retainer in cash.

 

(b)           Common Stock Payment.

 

(i)    The Shares constituting any Common Stock
Payment will be issued automatically on the first business day following the
last day of each fiscal quarter for the applicable year (a “Common Stock
Grant Date”). Each Award of a Common Stock Payment will be evidenced by an
agreement 

 

15

 

which will reflect the terms and conditions of the
Common Stock Payment and such additional terms and conditions as may be
determined by the Administrator.

 

(ii)   The total number of Shares included in each
Common Stock Payment will be determined by dividing (A) the amount of the
quarterly installment of the Annual Retainer that is to be paid in stock by
(B) the Fair Market Value of one Share on the applicable Common Stock
Grant Date.

 

(iii)  Any payment for a fractional Share
automatically will be paid in cash based upon the Fair Market Value on the
Common Stock Grant Date of such fractional Share.

 

(c)           Retainer Grant.

 

(i)    The Retainer Grant will be granted
automatically on the first business day of the applicable Fiscal Year in which
an Outside Director has elected to receive a Retainer Grant (the “Restricted
Stock/Restricted Stock Unit Grant Date”).

 

(ii)   The number of Shares to be subject to any
Retainer Grant granted will be equal to that portion of the Annual Retainer
that the Outside Director elected to receive in the form of Restricted
Stock/Restricted Stock Units divided by the Restricted Stock/Restricted Stock
Unit value on the Restricted Stock/Restricted Stock Unit Grant Date.

 

(d)           Awards of Restricted Stock/Restricted Stock
Units granted pursuant to this Section 14, will not be subject to the
vesting provisions set forth in Sections 7(e), 8(d) and 10(c). 

 

15.           Adjustments Upon Changes
in Capitalization, Merger or Change in Control.

 

(a)           Changes in Capitalization. Subject to any required action by the
stockholders of the Company, the number of shares of Common Stock that have
been authorized for issuance under the Plan but as to which no Awards have yet
been granted or which have been returned to the Plan upon cancellation or
expiration of an Award and the number of shares of Common Stock as well as the
price per share of Common Stock covered by each such outstanding Award, shall
be proportionately adjusted for any change in or increase or decrease in the
number of issued shares of Common Stock resulting from a stock split, reverse
stock split, stock dividend, combination or reclassification of the Common
Stock, or any other change or increase or decrease in the number of issued
shares of Common Stock effected without receipt of consideration by the
Company; provided, however, that conversion of any convertible securities of
the Company shall not be deemed to have been “effected without receipt of
consideration.”  Such adjustment shall be
made by the Board, whose determination in that respect shall be final, binding
and conclusive. Except as expressly provided herein, no issuance by the Company
of shares of stock of any class, or securities convertible into shares of stock
of any class, shall affect, and no adjustment by reason thereof shall be made
with respect to, the number or price of shares of Common Stock subject to an
Award.

 

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

 

16

 

(c)           Merger or Change in Control. In the event of a merger of the Company
with or into another corporation, or a Change in Control, each outstanding
Award (including any related Dividend Equivalent) shall be assumed or an
equivalent option or right substituted by the successor corporation or a Parent
or Subsidiary of the successor corporation. In the event that the successor
corporation refuses to assume or substitute for the Award, the Participant
shall fully vest in and have the right to exercise all of his or her
outstanding Options and Stock Appreciation Rights, including Shares as to which
such Awards would not otherwise be vested or exercisable, all restrictions on
Restricted Stock will lapse, and, with respect to Restricted Stock Units,
Performance Shares and Performance Units, all Performance Goals or other
vesting criteria will be deemed achieved at maximum performance levels and
under the terms of the Award all other terms and conditions met. In addition,
if an Option or Stock Appreciation Right becomes fully vested and exercisable
in lieu of assumption or substitution in the event of a merger or sale of assets,
the Administrator shall notify the Participant in writing or electronically
that the Option or Stock Appreciation Right shall be fully vested and
exercisable for a period of time from the date of such notice as determined by
the Administrator, and the Option or Stock Appreciation Right shall terminate
upon the expiration of such period.

 

For the purposes of this subsection (c), an Award
shall be considered assumed if, following the merger or Change in Control, the
Award confers the right to purchase or receive, for each Share subject to the
Award immediately prior to the merger or Change in Control, the fair market
value of consideration (whether stock, cash, or other securities or property)
or, in the case of a Stock Appreciation Right upon the exercise of which the
Administrator determines to pay cash or a Restricted Stock Unit, Performance
Share or Performance Unit which the Administrator can determine to pay in cash,
received in the merger or Change in Control by holders of Common Stock for each
Share held on the effective date of the transaction (and if holders were
offered a choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding Shares); provided, however, that if
such consideration received in the merger or Change in Control is not solely
common stock of the successor corporation or its Parent, the Administrator may,
with the consent of the successor corporation, provide for the consideration to
be received upon the exercise of an Option or Stock Appreciation Right or upon
the payout of a Restricted Stock Unit, Performance Unit or Performance Share,
for each Share subject to the Award (or in the case of Restricted Stock Units
or Performance Units, the number of implied shares determined by dividing the
value of the Restricted Stock Units or Performance Units by the per share
consideration received by holders of Common Stock in the merger or Change in
Control), 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 merger or Change in Control.

 

Notwithstanding anything in this Section 15(c) to
the contrary, an Award that vests, is earned or paid-out upon the satisfaction
of one or more Performance Goals will not be considered assumed if the Company
or its successor modifies any of such Performance Goals without the Participant’s
consent; provided, however, a modification to such Performance Goals only to
reflect the successor corporation’s post-Change in Control corporate structure
will not be deemed to invalidate an otherwise valid Award assumption.

 

16.           Leaves of Absence. Unless the
Administrator provides otherwise, vesting of Awards granted hereunder will be
suspended during any unpaid leave of absence. A Service Provider will not cease
to be an Employee in the case of (i) any leave of absence approved by the
Company or (ii) transfers between locations of the Company or between the
Company, its Parent, or any Subsidiary. For purposes of Incentive Stock
Options, no such leave may exceed ninety (90) days, unless reemployment upon
expiration of such leave is guaranteed by statute or contract. If reemployment
upon expiration of a leave of absence approved by the Company is not so
guaranteed, then three (3) months following the ninety-first (91st) day of such
leave any Incentive Stock Option held by the Participant will cease to be
treated as an Incentive Stock Option and will be treated for tax purposes as a
Nonstatutory Stock Option.

 

17

 

17.           No Effect on Employment
or Service. Neither the Plan nor any Award will confer upon a Participant any right
with respect to continuing the Participant’s relationship as a Service Provider
with the Company, nor will they interfere in any way with the Participant’s
right or the Company’s right to terminate such relationship at any time, with
or without cause, to the extent permitted by Applicable Laws.

 

18.           Date of Grant. The date of grant of
an Award shall be, for all purposes, the date on which the Administrator makes
the determination granting such Award, or such other later date as is
determined by the Administrator. Notice of the determination shall be provided
to each Participant within a reasonable time after the date of such grant.

 

19.           Tax Withholding.

 

(a)           Withholding Requirements. Prior to the delivery of any Shares or cash
pursuant to an Award (or exercise thereof), the Company will have the power and
the right to deduct or withhold, or require a Participant to remit to the
Company, an amount sufficient to satisfy federal, state, local, foreign or
other taxes (including the Participant’s FICA obligation) required to be
withheld with respect to such Award (or exercise thereof).

 

(b)           Withholding Arrangements. The Administrator, in its sole discretion
and pursuant to such procedures as it may specify from time to time, may permit
a Participant to satisfy such tax withholding obligation, in whole or in part
(without limitation) by (i) paying cash, (ii) electing to have the Company
withhold otherwise deliverable cash or Shares having a Fair Market Value equal
to the amount required to be withheld, (iii) delivering to the Company
already-owned Shares having a Fair Market Value equal to the amount required to
be withheld, or (iv) selling a sufficient number of Shares otherwise
deliverable to the Participant through such means as the Administrator may
determine in its sole discretion (whether through a broker or otherwise) equal
to the amount required to be withheld. The amount of the withholding
requirement will be deemed to include any amount which the Administrator agrees
may be withheld at the time the election is made, not to exceed the amount
determined by using the maximum federal, state or local marginal income tax
rates applicable to the Participant with respect to the Award on the date that
the amount of tax to be withheld is to be determined. The Fair Market Value of
the Shares to be withheld or delivered will be determined as of the date that
the taxes are required to be withheld.

 

20.           Amendment and
Termination of the Plan.

 

(a)           Amendment and Termination. The Board may at any time amend, alter,
suspend or terminate the Plan.

 

(b)           Stockholder Approval. The Company shall obtain stockholder
approval of any Plan amendment to the extent necessary and desirable to comply
with Applicable Laws. Notwithstanding the foregoing, the Company shall obtain
stockholder approval of a Plan amendment that would (i) increase the number of
securities that may be issued under the Plan, (ii) materially modify the
requirements for participation in the plan other than amendment that narrows
the class of persons eligible to participate in the Plan and (iii) materially
increase the benefits accruing to participants in the Plan.

 

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

 

18

 

21.           Term of Plan. At the Company’s
annual meeting in 2002, the Company’s stockholders approved an extension of the
Plan’s term until March 2012, not to extend beyond the date ten (10) years from
the date the Board approved the amendment and restatement of the Plan, as
approved by the Company’s stockholders at such annual meeting.

 

22.           Conditions Upon Issuance
of Shares.

 

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

 

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

 

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

 

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

 

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

 

19

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