Document:

exhibit10_32.htm

    EXHIBIT
10.32

     

    

    EXECUTIVE EMPLOYMENT AGREEMENT

     

    This
Employment Agreement (“Agreement”) is entered into as of December 8, 2008 by and
between Ashoka Achuthan, a natural person (“Executive”), and ATC Technology
Corporation, a Delaware corporation (“ATC”).  As used herein, the
“Company” refers to ATC and/or any direct or indirect subsidiary of
ATC.  The parties hereto agree as follows:

     

    1.         Employment and
Term.

     

    (a)         Full Time and Best
Efforts.  Subject to the terms set forth herein, the Company
agrees to employ Executive in a management capacity and Executive hereby accepts
such employment.  During the term of employment, Executive will devote
Executive’s full time, best efforts and attention to the performance of
Executive’s duties hereunder and to the business and affairs of the
Company.

     

    (b)         Duties.  Executive
shall perform such duties for the Company as are customarily associated with a
management position, consistent with the Bylaws of the Company and as required
by the officer or officers to whom Executive reports.

     

    (c)         Company
Policies.  The employment relationship between the parties
shall be governed by the general employment policies and practices of the
Company, except that when the terms of this Agreement differ from or are in
conflict with such employment policies and practices, this Agreement shall
control.

     

    (d)         Term.  The
initial term of employment of Executive under this Agreement shall begin as of
the date hereof and end on the third anniversary the date hereof, subject to the
provisions for termination contained in Section 5 and renewal contained in
Section 1(e).

     

    (e)         Renewal.  Unless
the Company shall have given Executive notice that this Agreement shall not be
renewed at least 30 days prior to the end of the initial term referred to in
Section 1(d), the term of this Agreement shall be automatically extended for a
period of one year, such procedure to be followed in each such successive
period.

     

    2.         Compensation and
Benefits.

     

    (a)         Salary.  Executive
shall receive for services to be rendered hereunder an annual base salary of
$315,000, payable on the Company’s regular payroll dates, subject to increase at
the discretion of the Company, and subject to standard withholdings for taxes
and social security and the like.  The Company shall review
Executive’s salary on a periodic basis and may, in its sole discretion, increase
Executive’s salary.

     

    (b)         Incentive
Plans.  During the term hereof, Executive shall be eligible to
participate in any annual incentive bonus plan and long-term incentive plan
(including, without limitation, any stock incentive plan) of the Company
generally available to Company employees of a level comparable to
Executive.  Such participation shall be subject to and on a basis
consistent with the terms, conditions and administration of any such
plan.  Executive understands that (i) the Company shall have
discretion to determine Executive’s level of participation in any such plan,
and (ii)
any such plan may be modified or eliminated in the Company’s sole discretion in
accordance with applicable law and the terms of such plan.

     

    
      
        
        

      

      
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    (c)         Participation in Benefit
Plans.  During the term hereof, Executive shall be entitled to
participate in any group insurance, hospitalization, medical, dental, health and
accident, disability, retirement income or similar plan or program of the
Company to the extent that Executive is eligible under the general provisions
thereof.  The Company may, in its discretion and from time to time,
establish additional management benefit programs as it deems
appropriate.  Executive understands that any such plans may be
modified or eliminated in the Company’s discretion in accordance with applicable
law.

     

    (d)         Vacation.  Executive
shall be entitled to a period of annual paid vacation time equal to the period
provided to employees of a comparable level by the Company’s policies and
procedures.  The days selected for Executive’s vacation must be
mutually agreeable to the Company and Executive.

     

    3.         Perquisites.

     

    (a)         Financial Planning/Club Dues
Allowance.  Executive will receive an annual financial
planning/club dues allowance equal to 2.0% of Executive’s base salary paid
during such year, which may be increased based on the Company’s policies and
procedures.  Such allowance shall be paid in substantially equal
installments per the Company’s regular payroll dates and shall be subject to
applicable withholding.

     

    (b)         Automobile.  Executive
shall be entitled to either (i) a monthly automobile allowance, subject to
applicable withholding, or (ii) the use of a Company automobile, as the Company
shall decide.

     

    4.         Business
Expenses.  Executive shall
be reimbursed for documented and reasonable business expenses in connection with
the performance of duties hereunder.

     

    5.         Termination
of Employment.  The date on which
Executive’s employment by the Company ceases, under any of the following
circumstances, shall be defined herein as the “Termination Date.”  All
capitalized terms used in this Section 5 without definition will have the
meanings set forth in Section 5(j).

     

    (a)         Termination for
Cause.  The Company may terminate Executive’s employment at any
time for Cause immediately upon written notice to Executive of the circumstances
leading to such termination for Cause.  If Executive’s employment is
terminated for Cause, Executive shall receive payment for all accrued salary
through the Termination Date (which in this event shall be the date upon which
notice of termination is given) and the Earned Benefits.  The Company
shall have no obligation to pay severance of any kind nor to make any payment in
lieu of notice if Executive is terminated for Cause.

     

    (b)         Voluntary
Termination.  Executive may voluntarily terminate employment
with the Company at any time upon 30 days’ prior written
notice.  Within ten days after the Termination Date, Executive shall
receive payment for all accrued salary through the Termination Date and the
Earned Benefits, after which no further compensation of any kind or severance
payment will be payable under this Agreement.

    
      
         

      

      
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    (c)         Termination Upon
Disability.  The Company may terminate Executive’s employment
in the event Executive suffers a disability that renders Executive unable to
perform the essential functions of Executive’s position, even with reasonable
accommodation in compliance with the Americans with Disabilities Act, for three
consecutive months within any six-month period.  Within ten days after
the Termination Date, which in this event shall be the date upon which notice of
termination is given, Executive shall receive payment for all accrued salary
through the Termination Date and the Earned Benefits, after which no further
compensation will be payable under this Agreement.  The foregoing
shall not affect any rights that Executive may have under applicable workers’
compensation laws or any disability plan of the Company.

     

    (d)         Termination Without
Cause.  The Company may terminate Executive’s employment
without Cause at any time upon 30 days’ prior written
notice.  Executive will be deemed to have been terminated without
Cause if the Company elects not to renew this Agreement pursuant to Section
1(e).  Within ten days after the Termination Date, Executive shall
receive payment for all accrued salary through the Termination Date and the
Earned Benefits.  In addition

     

    (i)           During
the Termination Benefits Period, the Company will offer continued
medical-related insurance coverage (including, as applicable, health, dental,
vision and/or cancer) to Executive at the levels and at the rates applicable
from time to time to comparable active employees of the
Company.  COBRA continuation coverage eligibility shall commence as of
the day following the Termination Benefits Period.  Notwithstanding
the above, coverage under the Company’s group medical plan shall cease on the
date (A) Executive fails to pay the required premium on time, (B) Executive
becomes eligible for coverage under Medicare or the group health plan of any
other employer, or (C) the Company terminates its group medical plan as to all
its employees.

     

    (ii)          The
Company shall pay Executive as severance the following:

     

    (A)  If the Termination Date
occurs other than within 18 months after a Change in Control, an amount equal to
150% of the sum of (x) Executive’s annual base salary as in effect
immediately prior to the Termination Date plus (y) Executive’s target bonus
under the IC Plan for the Termination Year.  The severance shall be
paid in equal installments on each of the Company’s regular payroll dates during
the 18-month period commencing on the first such payroll date following the
Termination Date (subject to Section 5(h)).

     

    (B)  If the Termination Date
occurs within 18 months after a Change in Control, an amount equal to the sum of
(x) 200% of the sum of (1) Executive’s annual base salary as in effect
immediately prior to the Termination Date plus (2) Executive’s target bonus
under the IC Plan for the Termination Year, plus (y) the Pro Forma
Bonus.  The severance shall be paid in a single lump sum within ten
days after the Termination Date; provided, however, that if the Change in
Control is not also a “change in control event” (as defined in Treasury
Regulation §1.409A-3(i)(5)) with respect to ATC, the Company will pay the
severance described in this Section 5(d)(ii)(B) in substantially equal
installments during
the 24-month period immediately following the Termination Date in accordance
with the Company’s regular payroll practices.

    
      
         

      

      
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    (iii)         The
Company will pay up to $25,000 of the cost of an executive level individualized
career transition program through a professional outplacement firm selected by
the Company if such program is initiated within 30 days after the Termination
Date.

     

    If
Executive dies after the Termination Date, the payment or payments due
thereafter under Section 5(d)(ii)(A) or (B) shall be made to
Executive’s Beneficiary but the benefits provided in Sections 5(d)(i) and
(iii) shall terminate as of the date of death.  As a condition to
receiving the payments and benefits provided by this Section 5(d) (other than
payment for all accrued salary through the Termination Date and the Earned
Benefits, which shall be payable in any case), Executive shall execute and
deliver to the Company, within 21 days after the Termination Date, a general
release in the form attached hereto as Exhibit A.

     

    (e)         Good
Reason.  If the Company (i) materially diminishes Executive’s
duties, authority, responsibility or base salary without performance
justification, or (ii) materially breaches this Agreement (any such event being
a “Good Reason Event”), Executive may terminate employment if (A) Executive has
given written notice to the Company of the existence of the Good Reason Event no
later than 90 days after its initial existence, (B) the Company has not remedied
such Good Reason Event in all material respects within 30 days after its receipt
of such written notice, and (C) Executive terminated employment within one year
following the initial existence of such Good Reason Event.  A
termination in such circumstances shall be treated as a Company termination
without Cause and Executive shall be entitled to the payments and benefits
provided in Section 5(d).

     

    (f)         No Other Payments or
Benefits.  Except as otherwise expressly provided in this
Agreement, (i) after the Termination Date Executive will not be entitled to any
payments from the Company and (ii) on the Termination Date Executive’s
participation in and coverage under the Company’s benefit programs (including
the ATC Retirement Savings Plan (i.e., the 401(k) plan) and the Company’s group
life and disability insurance plans) shall cease; provided that Executive shall
retain any right to convert to individual coverage as permitted under these
insurance plans and to any vested benefits under the 401(k) plan and the
Company’s stock incentive plans.

     

    (g)         Withholding.  Any
amounts payable under this Section 5 shall be subject to standard withholdings
for taxes and social security and the like.

     

    (h)         Payments to a
Specified Employee.  If Executive is a “specified
employee” of the Company (as defined in Treasury Regulation Section 1.409A-1(i))
and

     

    (i)           if
amounts payable under this Section 5 are on account of an “involuntary
separation from service” (as defined in Treasury Regulation Section 1.409A-1(m))
and if all amounts payable under this Section 5 will not be paid on or before
March 15th of the year immediately following the Termination Date, then the
amounts payable during the six-month period immediately following the
Termination Date shall equal the lesser of (A) the amount otherwise payable
under this Section 5 for such six-month period or (B) two 

     

    
      
         

      

      
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    times the
compensation limit in effect under IRC Section 401(a)(17) for the calendar year
in which the Termination Date occurs, and any amounts that otherwise would have
been payable under this Section 5 during such six-month period shall be paid on
the first regular payroll date following the end of such six-month period;
or

     

    (ii)          if
the Company reasonably determines that such termination is not an “involuntary
separation from service” (as defined in Treasury Regulation Section
1.409A-1(m)), amounts that would otherwise have been paid during the six-month
period immediately following the Termination Date (including any lump sum
payments) shall be paid on the first regular payroll date immediately following
the end of such six-month period.

     

    (i)         IRC Section
409A.  Notwithstanding anything in this Agreement to the
contrary, in the event that any amounts payable (or benefits provided) under
this Agreement are subject to the provisions of IRC Section 409A, to the extent
determined necessary, the parties agree to amend this Agreement in the least
restrictive manner necessary to avoid imposition of any additional tax or income
recognition on Executive under IRC Section 409A and the Treasury Regulations and
Internal Revenue Service guidance thereunder.

     

    (j)         Definitions.

     

    (i)           “Beneficiary” means a person,
trust or other entity (or any combination thereof) designated from time to time
by Executive in writing to receive compensation payable hereunder following
Executive’s death.  In the event Executive does not designate a
Beneficiary or there is no surviving Beneficiary, then Executive’s estate will
be the Beneficiary.

     

    (ii)          “Cause”
means the occurrence or existence of any of the following with respect to
Executive, as determined by the Company in its sole discretion:

     

    (A)  a material breach by
Executive of (x) Executive’s duty not to engage in any transaction that
represents, directly or indirectly, self-dealing with the Company or any of its
affiliates that has not been approved by the Company, or (y) the terms of
Executive’s employment, if in any such case such material breach remains uncured
after the lapse of 30 days following the date that the Company has given
Executive written notice thereof;

     

    (B)  the material breach by
Executive of any duty referred to in clause (A) above as to which at least one
written notice has been given pursuant to clause (A);

     

    (C)  any act of
misappropriation, embezzlement, fraud, material dishonesty or similar conduct
involving the Company or any of its affiliates;

     

    (D)  the conviction or the
plea of nolo contendere or the equivalent in respect of a felony involving moral
turpitude;

     

    (E)  any intentional damage of
a material nature to any property of the Company or any of its
affiliates;

     

    
      
         

      

      
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    (F)  the repeated
non-prescription use of any controlled substance or the repeated use of alcohol
or any other non-controlled substance that, in the reasonable determination of
the Company, renders Executive unfit to serve as an employee of the Company;
or

     

    (G)  material failure to
perform Executive’s duties in a reasonably satisfactory manner where such
failure has continued for 30 days following written notice thereof; provided,
however, that this Section 5(j)(ii)(G) shall cease to be of effect upon and
after a Change in Control.

     

    (iii)         “Change
in Control” means the first to occur of the following:

     

    (A)  any sale or transfer or
other conveyance, whether direct or indirect, of all or substantially all of the
assets of ATC, on a consolidated basis, in one transaction or a series of
related transactions, unless, immediately after giving effect to such
transaction, at least 85% of the total voting power normally entitled to vote in
the election of directors, managers or trustees, as applicable, of the
transferee is “beneficially owned” by persons who, immediately prior to the
transaction, beneficially owned 100% of the total voting power normally entitled
to vote in the election of directors of ATC;

     

    (B)  any Person or Group is or
becomes the “beneficial owner,” directly or indirectly, of more than 35% of the
total voting power in the aggregate of all classes of capital stock of ATC then
outstanding normally entitled to vote in elections of directors;

     

    (C)  during any period of 12
consecutive months, individuals who at the beginning of such 12-month period
constituted ATC’s Board of Directors (together with any new directors whose
election by such Board or whose nomination for election by the shareholders of
ATC was approved by a vote of a majority of the directors then still in office
who were either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of ATC’s Board of Directors then in office;
or

     

    (D)  a reorganization, merger
or consolidation of ATC the consummation of which results in the outstanding
securities of any class of ATC’s capital stock being exchanged for or converted
into cash, property and/or a different kind of securities, unless, immediately
after giving effect to such transaction, at least 85% of the total voting power
normally entitled to vote in the election of directors, managers or trustees, as
applicable, of the entity surviving or resulting from such reorganization,
merger or consolidation is “beneficially owned” by persons who, immediately
prior to the transaction, beneficially owned 100% of the total voting power
normally entitled to vote in the election of directors of ATC.

     

    (iv)         “Earned
Benefits” means any (A) bonus that is payable to Executive under the IC Plan
with respect to the calendar year preceding the Termination Year but that has
not been paid prior to the Termination Date, (B) vacation time that has accrued
as of the Termination Date, and (C) other entitlements to cash payments that
have accrued as of the Termination Date.

    
      
         

      

      
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    (v)          “IC
Plan” means any of the Company’s annual incentive compensation plans (or similar
plans instituted in place of the annual incentive compensation
plans).

     

    (vi)         “IRC”
means the Internal Revenue Code.

     

    (vii)        “LTIP”
means any of the Company’s long-term incentive plans (or similar plans
instituted in place of the long-term incentive plans) that are in effect as of
the Termination Date, and “LTIP Period” means, with respect to any LTIP, the
period of time over which such LTIP is measured (e.g., the three years ending
December 31, 2010 in the case of the 2008-2010 LTIP).

     

    (viii)       “Person”
and “Group” have the meanings used for purposes of Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, whether or not such sections apply to the
transaction in question.

     

    (ix)          “Pro
Forma Bonus” means the sum of

     

    (A)  the product of
(x) the greater of (1) Executive’s bonus that would be payable under
the IC Plan for the Termination Year based on the Company’s projected
performance for the Termination Year, such projection to be calculated from the
Company’s performance for the portion of the Termination Year that is completed
prior to the Termination Date, or (2) Executive’s target bonus under the IC
Plan for the Termination Year, multiplied by (y) a fraction (1) the
numerator of which is the number of days that have elapsed in the Termination
Year through the Termination Date and (2) the denominator of which is 365,
plus

     

    (B)  the product of
(x) the greater of (1) Executive’s cash award component that would be
payable under each LTIP based on the Company’s projected performance for the
LTIP Period, such projection to be calculated from the Company’s performance for
the portion of the LTIP Period that is completed prior to the Termination Date,
or (2) Executive’s target bonus under each LTIP, multiplied by (y) a
fraction (1) the numerator of which is the number of days starting
January 1 of the first year of each LTIP Period (e.g., January 1, 2008
in the case of the 2008-2010 LTIP) through the Termination Date and (2) the
denominator of which is 1,095.

     

    (x)           
“Termination Benefits Period” means the period ending on the first anniversary
of the Termination Date, unless the Termination Date occurs with 18 months after
a Change in Control, in which case it means the period ending 18 months after
the Termination Date.

     

    (xi)           
“Termination Year” means the calendar year in which the Termination Date
occurs.

     

    6.         Proprietary
Information Obligations.  Prior to and/or
during the term of employment under this Agreement, Executive has had and/or
will have access to and has become and/or will become acquainted with the
confidential and proprietary information of the Business (as defined in Section
8) and the Company and its affiliates and customers, including but not limited
to confidential and proprietary information or plans regarding customer
relationships; personnel; sales, marketing, and financial operations and
methods; trade secrets; formulas; 

     

    
      
         

      

      
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    devices; secret
inventions; processes and other compilations of information, records, and
specifications (collectively “Proprietary Information”).  Executive
shall not disclose any of the Proprietary Information directly or indirectly, or
use it in any way, either during the term of this Agreement, or at any time
thereafter, except as required in the course of employment hereunder or as
authorized in writing by the Company.  All files, records, documents,
computer-recorded information, drawings, specifications, equipment and similar
items relating to the Business or the Company or its affiliates, whether
prepared by Executive or otherwise coming into Executive’s possession prior to
or during the term of this Agreement, shall remain the exclusive property of the
Company or such affiliate or customer and shall not be removed from the premises
of the Company or its affiliate under any circumstances whatsoever without the
prior written consent of the Company, except when (and only for the period)
necessary to carry out Executive’s duties hereunder, and if removed shall be
immediately returned upon any termination of Executive’s employment and no
copies thereof shall be kept by Executive.

     

    7.         Noninterference.  While employed by
the Company and for a period of 36 months thereafter, Executive shall not,
without the prior written consent of the Company, interfere with the Company by
directly or indirectly soliciting, attempting to solicit, inducing, or otherwise
causing or assisting any person who is then employed by the Company to terminate
such employment in order to become an employee, consultant or independent
contractor to or for any employer other than the Company.

     

    8.         Noncompetition.  Executive agrees
that during the term of this Agreement and for a period of 18 months after the
termination hereof, Executive will not, without the prior consent of the
Company, directly or indirectly, have an interest in, be employed by, be
connected with, or have an interest in (as an employee (whether full-time,
part-time or temporary), consultant, officer, director, partner, stockholder,
joint venturer, promoter or lender), any person or entity owning, managing,
controlling, operating or otherwise participating or assisting in any business
that is either (a) similar to the Business (or any portion thereof) and would
benefit from the disclosure of the Company’s trade secrets or (b) in competition
with the Business (or any portion thereof) in any of the 50 states in the United
States of America; provided, however, that the foregoing shall not prevent
Executive from being a stockholder of less than 1% of the issued and outstanding
securities of any class of a corporation listed on a national securities
exchange or designated as national market system securities on an interdealer
quotation system by the National Association of Securities Dealers,
Inc.  Without limiting the generality of the foregoing, a business
will be deemed to be in competition with the Business at a given point in time
if any of the customers of such business were customers of the Business at any
time during the 18 months preceding the time in question.  As used
herein, “Business” means the Company’s businesses of remanufacturing and
distributing drive train and electronic products used in the repair of vehicles,
and providing value-added warehouse, distribution and order fulfillment
services, return material reclamation and disposition services, and electronic
equipment testing and refurbishment and repair services.

     

    9.         Remedies.  Executive
acknowledges that a breach or threatened breach by Executive of any the
provisions of Sections 6, 7 or 8 will result in the Business and the Company and
its affiliates suffering irreparable harm that cannot be calculated or fully or
adequately compensated by recovery of damages alone.  Accordingly,
Executive agrees that the Company 

    
      
         

      

      
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    shall be
entitled to interim, interlocutory and permanent injunctive relief, specific
performance and other equitable remedies, in addition to any other relief to
which the Company may become entitled should there be such a breach or
threatened breach.

     

    10.         Miscellaneous.

     

    (a)         Notices.  Any
notices provided hereunder must be in writing and shall be deemed effective upon
the earlier of (i) personal delivery (including personal delivery by telecopy,
if a copy is sent by mail or overnight delivery), (ii) the business day
following being sent through an overnight delivery service, or (iii) the third
business day after mailing by first class mail to the recipient at the address
indicated below:

     

    
      	
               
      

            	
              To
      the Company:

            

    

     

    ATC
Technology Corporation

    1400 Opus
Place, Suite 600

    Downers
Grove, IL 6515

    Attention:    Chief
Executive Officer

    Facsimile:     (630)
663-8210

     

    
      	
               
      

            	
              To
      Executive:

            

    

     

    Ashoka
Achuthan

    4467
North Lake Drive

    Shorewood,
Wisconsin  53211

     

    or to
such other address or to the attention of such other person as the recipient
party will have specified by prior written notice to the sending
party.

     

    (b)         Severability.  The
provisions of this Agreement are severable and, if any court of competent
jurisdiction determines that any provision contained in this Agreement shall,
for any reason, be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
of this Agreement, and this Agreement shall be reformed and construed so that
such invalid or illegal or unenforceable provision would be valid, legal and
enforceable to the maximum extent possible.

     

    (c)         Entire
Agreement.  This Agreement constitutes the full and complete
understanding and agreement of the parties with respect to the subject matter
hereof and supersedes all prior oral and written and contemporaneous oral
understandings and agreements with respect to the subject matter
hereof.

     

    (d)         Counterparts.  This
Agreement may be executed on separate counterparts, any one of which need not
contain signatures of more than one party, but all of which taken together will
constitute one and the same agreement.

     

    (e)         Successors and
Assigns.  This Agreement shall bind and inure to the benefit of
and be enforceable by Executive and the Company, and their respective successors
and assigns, except that Executive may neither delegate any of Executive’s
duties hereunder nor assign any of Executive’s rights hereunder without the
prior written consent of the Company.

     

    
      
         

      

      
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    (f)         Attorney’s
Fees.  If any legal proceeding is necessary to enforce or
interpret the terms of this Agreement, or to recover damages for breach
therefore, the prevailing party shall be entitled to reasonable attorney’s fees,
as well as costs and disbursements, in addition to any other relief to which
such party may be entitled.

     

    (g)         Amendments; No
Waivers.  Any provision of this Agreement may be amended or
waived if such amendment or waiver is in writing and signed, in the case of an
amendment, by all parties hereto, and in the case of a waiver, by the party
against whom the waiver is to be effective.  No waiver by a party of
any breach of this Agreement shall be deemed to extend to any prior or
subsequent breach or affect in any way any rights arising by virtue of any prior
or subsequent breach.  No failure or delay by a party in exercising
any right, power or privilege hereunder shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or
privilege.  The rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies provided by
law.

     

    (h)         Governing Law and
Venue.  This Agreement shall be governed by and construed and
enforced in accordance with the internal laws (without reference to choice or
conflict of laws) of the State of Illinois.  The parties to this
Agreement hereby irrevocably consent to the exclusive venue and jurisdiction of
the state and federal courts sitting in the State of Illinois for any matter or
controversy concerning either the existence or enforcement of this Agreement and
hereby waive any contention that Illinois is an improper or inconvenient
forum.

     

    (i)         Construction.  The
captions herein are included for convenience of reference only and shall be
ignored in the construction or interpretation hereof.  Neither party
hereto, nor its respective counsel, shall be deemed the drafter of this
Agreement, and all provisions of this Agreement shall be construed in accordance
with their fair meaning, and not strictly for or against either party
hereto.

     

    IN
WITNESS WHEREOF, the parties have executed this Agreement effective as of the
date first above written.

     

    
      	
               
      

            	
               

              /s/
      Ashoka Achuthan

            
	 
      	
              Ashoka
      Achuthan

            
	 	 
	 
      	
              ATC
      TECHNOLOGY CORPORATION

            
	
               

              By:

            	
              /s/
      Donald T. Johnson, Jr.

            
	 
      	 
      	
              Donald
      T. Johnson, Jr.

              Chief
      Executive Officer

            

    

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    EXHIBIT
A

     

    GENERAL
RELEASE

     

    THIS
GENERAL RELEASE is entered into by the undersigned (“Employee”) as of the date
appearing next to Employee’s signature hereto.  Employee agrees as
follows:

     

    1.         Termination
of Employment.  Employee’s
employment with ATC Technology Corporation and/or one of its subsidiaries (ATC
and its subsidiaries being referred to collectively as the “Company”) is being
terminated and the Company will provide Employee with certain benefits upon the
termination of employment provided that, among other things, Employee executes
and delivers this General Release.

     

    2.         General
Release.  Employee
hereby

     

    (a)         releases
and discharges the Company and its officers, directors, employees, benefit plan
administrators and trustees, and agents (collectively, the “Released Parties”)
from any and all claims, liabilities, demands and causes of action, whether
known or unknown, fixed or contingent, that Employee may have or claim to have
against any of the Released Parties relating to, or arising out of, Employee’s
employment with the Company or the termination thereof, and

     

    (b)         covenants
not to initiate or participate in (except pursuant to a lawful subpoena) any
lawsuit or other legal proceeding asserting any such claims, liabilities,
demands or causes of action.

     

    This
General Release shall be broadly construed to include, but not be limited to,
all claims under any federal, state, or local laws, statutes, regulations, or
ordinances (including those prohibiting employment discrimination, such as the
federal Age Discrimination in Employment Act), and all claims in contract or
tort including, but not limited to, claims for breach of contract, negligence,
defamation, and wrongful or retaliatory discharge.  This General
Release does not include any claim Employee may have based upon facts occurring
after the date that Employee executes this General Release.

     

    3.         Knowing and
Voluntary.  Employee acknowledges and agrees that: (a) Employee
has read and understands this General Release in its entirety; (b) Employee has
been advised in writing to consult with an attorney concerning this General
Release before signing it; (c) Employee has 21 calendar days after receipt of
this General Release to consider its terms before signing it; (d) Employee has
the right to revoke this General Release in full within seven calendar days of
signing it and that none of the terms and provisions of this General Release
shall become effective or be enforceable until such revocation period has
expired; (e) nothing contained in this General Release waives any claim that may
arise after the date of its execution; and (f) Employee is executing this
General Release knowingly and voluntarily, without duress or reservation of any
kind, and after giving the matter full and careful consideration.

     

    IN
WITNESS WHEREOF, the undersigned has executed this General Release as of the
date set forth below.

     

    
      	
               

               

              Executed:  _______________,
      20__

            	
              EMPLOYEE:

               

            
	
              [NAME]exv10w25

Exhibit 10.25

SOLEXA, INC.

AMENDED AND RESTATED 2005 EQUITY INCENTIVE PLAN

TERMINATION DATE: JUNE 2, 2015

1. PURPOSES.

     (a)     Eligible Stock Award Recipients. The persons eligible to receive Stock Awards are
Employees, Directors and Consultants.

     (b)     Available Stock Awards. The Plan provides for the grant of the following Stock Awards:
(i) Incentive Stock Options, (ii) Nonstatutory Stock Options, (iii) Stock Purchase Awards, (iv)
Stock Bonus Awards, (v) Stock Appreciation Rights, (vi) Stock Unit Awards and (vii) Other Stock
Awards.

     (c)     General Purpose. The Company, by means of the Plan, seeks to secure and retain the
services of the group of persons eligible to receive Stock Awards, to provide incentives for such
persons to exert maximum efforts for the success of the Company and its Affiliates and to provide a
means by which such eligible recipients may be given an opportunity to benefit from increases in
value of the Common Stock through the granting of Stock Awards.

2. DEFINITIONS.

     (a)     “Affiliate” means any parent corporation or subsidiary corporation of the Company, as of
the day of determination, as those terms are defined in Sections 424(e) and (f), respectively, of
the Code.

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

     (c)     “Capitalization Adjustment” has the meaning ascribed to that term in Section 11(a).

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

               (i)     any Exchange Act Person becomes the Owner, directly or indirectly, of securities of the
Company representing more than fifty percent (50%) of the combined voting power of the Company’s
then outstanding securities other than by virtue of a merger, consolidation or similar transaction.
Notwithstanding the foregoing, a Change in Control shall not be deemed to occur (A) on account of
the acquisition of securities of the Company by an investor, any affiliate thereof or any other
Exchange Act Person from the Company in a transaction or series of related transactions the primary
purpose of which is to obtain financing for the Company through the issuance of equity securities,
or (B) solely because the level of Ownership held by any Exchange Act Person (the “Subject Person”)
exceeds the designated percentage threshold of the outstanding voting securities as a result of a
repurchase or other acquisition of voting securities by the Company reducing the number of shares
outstanding, provided that if a Change in Control would occur (but for the operation of this
sentence) as a

1

 

result of the acquisition of voting securities by the Company, and after such share
acquisition, the Subject Person becomes the Owner of any additional voting securities that,
assuming the repurchase or other acquisition had not occurred, increases the percentage of the then
outstanding voting securities Owned by the Subject Person over the designated percentage threshold,
then a Change in Control shall be deemed to occur;

               (ii)     there is consummated a merger, consolidation or similar transaction involving (directly
or indirectly) the Company and, immediately after the consummation of such merger, consolidation or
similar transaction, the stockholders of the Company immediately prior thereto do not Own, directly
or indirectly, either (A) outstanding voting securities representing more than fifty percent (50%)
of the combined outstanding voting power of the surviving Entity in such merger, consolidation or
similar transaction or (B) more than fifty percent (50%) of the combined outstanding voting power
of the parent of the surviving Entity in such merger, consolidation or similar transaction, in each
case in substantially the same proportions as their Ownership of the outstanding voting securities
of the Company immediately prior to such transaction;

               (iii)     the stockholders of the Company approve or the Board approves a plan of complete
dissolution or liquidation of the Company, or a complete dissolution or liquidation of the Company
shall otherwise occur; or

               (iv)     there is consummated a sale, lease, license or other disposition of all or substantially
all of the consolidated assets of the Company and its Subsidiaries, other than a sale, lease,
license or other disposition of all or substantially all of the consolidated assets of the Company
and its Subsidiaries to an Entity, more than fifty percent (50%) of the combined voting power of
the voting securities of which are Owned by stockholders of the Company in substantially the same
proportions as their Ownership of the outstanding voting securities of the Company immediately
prior to such sale, lease, license or other disposition.

     The term Change in Control shall not include a sale of assets, merger or other transaction
effected exclusively for the purpose of changing the domicile of the Company.

     Notwithstanding the foregoing or any other provision of this Plan, the definition of Change in
Control (or any analogous term) in an individual written agreement between the Company or any
Affiliate and the Participant shall supersede the foregoing definition with respect to Stock Awards
subject to such agreement (it being understood, however, that if no definition of Change in Control
or any analogous term is set forth in such an individual written agreement, the foregoing
definition shall apply).

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

     (f)     “Committee” means a committee of one (1) or more members of the Board appointed by the
Board in accordance with Section 3(c).

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

     (h)     “Company” means Solexa, Inc., a Delaware corporation.

2

 

     (i)     “Consultant” means any person, including an advisor, who (i) is engaged by the Company or
an Affiliate to render consulting or advisory services and is compensated for such services or (ii)
is serving as a member of the Board of Directors of an Affiliate and is compensated for such
services. However, service solely as a Director, or payment of a fee for such service, shall not
cause a Director to be considered a “Consultant” for purposes of the Plan.

     (j)     “Continuous Service” means that the Participant’s service with the Company or an
Affiliate, whether as an Employee, Director or Consultant, is not interrupted or terminated. A
change in the capacity in which the Participant renders service to the Company or an Affiliate as
an Employee, Consultant or Director or a change in the entity for which the Participant renders
such service, provided that there is no interruption or termination of the Participant’s service
with the Company or an Affiliate, shall not terminate a Participant’s Continuous Service. For
example, a change in status from an employee of the Company to a consultant of an Affiliate or to a
Director shall not constitute an interruption of Continuous Service. The Board or the chief
executive officer of the Company, in that party’s sole discretion, may determine whether Continuous
Service shall be considered interrupted in the case of any leave of absence approved by that party,
including sick leave, military leave or any other personal leave. Notwithstanding the foregoing, a
leave of absence shall be treated as Continuous Service for purposes of vesting in a Stock Award
only to such extent as may be provided in the Company’s leave of absence policy or in the written
terms of the Participant’s leave of absence.

     (k)     “Corporate Transaction” means the occurrence, in a single transaction or in a series of
related transactions, of any one or more of the following events:

               (i)     a sale or other disposition of all or substantially all, as determined by the Board in its
sole discretion, of the consolidated assets of the Company and its Subsidiaries;

               (ii)     a sale or other disposition of at least fifty percent (50%) of the outstanding securities
of the Company;

               (iii)     a merger, consolidation or similar transaction following which the Company is not the
surviving corporation; or

               (iv)     a merger, consolidation or similar transaction following which the Company is the
surviving corporation but the shares of Common Stock outstanding immediately preceding the merger,
consolidation or similar transaction are converted or exchanged by virtue of the merger,
consolidation or similar transaction into other property, whether in the form of securities, cash
or otherwise.

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

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

     (n)     “Disability” means the permanent and total disability of a person within the meaning of
Section 22(e)(3) of the Code.

3

 

     (o)     “Employee” means any person employed by the Company or an Affiliate. However, service
solely as a Director, or payment of a fee for such service, shall not cause a Director to be
considered an “Employee” for purposes of the Plan.

     (p)     “Entity” means a corporation, partnership or other entity.

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

     (r)     “Exchange Act Person” means any natural person, Entity or “group” (within the meaning of
Section 13(d) or 14(d) of the Exchange Act), except that “Exchange Act Person” shall not include
(i) the Company or any Subsidiary of the Company, (ii) any employee benefit plan of the Company or
any Subsidiary of the Company or any trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any Subsidiary of the Company, (iii) an underwriter
temporarily holding securities pursuant to an offering of such securities, or (iv) an Entity Owned,
directly or indirectly, by the stockholders of the Company in substantially the same proportions as
their Ownership of stock of the Company; or (v) any natural person, Entity or “group” (within the
meaning of Section 13(d) or 14(d) of the Exchange Act) that, as of the effective date of the Plan
as set forth in Section 14, is the Owner, directly or indirectly, of securities of the Company
representing more than fifty percent (50%) of the combined voting power of the Company’s then
outstanding securities.

     (s)     “Fair Market Value” means, as of any date, the value of the Common Stock determined as
follows and, if applicable, in a manner consistent with Section 260.140.50 of Title 10 of the
California Code of Regulations:

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

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

     (t)     “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.

     (u)     “Non-Employee Director” means a Director who either (i) is not a current employee or
officer of the Company or an Affiliate, does not receive compensation, either directly or
indirectly, from the Company or an Affiliate for services rendered as a consultant or in any
capacity other than as a Director (except for an amount as to which disclosure would not be
required under Item 404(a) of Regulation S-K promulgated pursuant to the Securities Act
(“Regulation S-K”)), does not possess an interest in any other transaction for which disclosure
would be required under Item 404(a) of Regulation S-K, and is not engaged in a business

4

 

relationship for which disclosure would be required pursuant to Item 404(b) of Regulation S-K;
or (ii) is otherwise considered a “non-employee director” for purposes of Rule 16b-3.

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

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

     (x)     “Option” means a stock option to purchase shares of Common Stock granted pursuant to the
Plan.

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

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

     (aa)     “Other Stock Award” means an award based in whole or in part by reference to the Common
Stock which is granted pursuant to the terms and conditions of Section 7(e).

     (bb)     “Other Stock Award Agreement” means a written agreement between the Company and a holder
of an Other Stock Award evidencing the terms and conditions of an Other Stock Award grant. Each
Other Stock Award Agreement shall be subject to the terms and conditions of the Plan.

     (cc)     “Outside Director” means a Director who either (i) is not a current employee of the
Company or an “affiliated corporation” (within the meaning of Treasury Regulations promulgated
under Section 162(m) of the Code), is not a former employee of the Company or an “affiliated
corporation” who receives compensation for prior services (other than benefits under a
tax-qualified retirement plan) during the taxable year, has not been an officer of the Company or
an “affiliated corporation,” and does not receive remuneration from the Company or an “affiliated
corporation,” either directly or indirectly, in any capacity other than as a Director or (ii) is
otherwise considered an “outside director” for purposes of Section 162(m) of the Code.

     (dd)     “Own,” “Owned,” “Owner,” “Ownership” A person or Entity shall be deemed to “Own,” to have
“Owned,” to be the “Owner” of, or to have acquired “Ownership” of securities if such person or
Entity, directly or indirectly, through any contract, arrangement, understanding, relationship or
otherwise, has or shares voting power, which includes the power to vote or to direct the voting,
with respect to such securities.

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

     (ff)     “Plan” means this Solexa, Inc. 2005 Equity Incentive Plan.

5

 

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

     (hh)     “Securities Act” means the Securities Act of 1933, as amended.

     (ii)     “Stock Appreciation Right” means a right to receive the appreciation on Common Stock that
is granted pursuant to the terms and conditions of Section 7(d).

     (jj)     “Stock Appreciation Right Agreement” means a written agreement between the Company and a
holder of a Stock Appreciation Right evidencing the terms and conditions of a Stock Appreciation
Right grant. Each Stock Appreciation Right Agreement shall be subject to the terms and conditions
of the Plan.

     (kk)     “Stock Award” means any right granted under the Plan, including an Option, a Stock
Purchase Award, Stock Bonus Award, a Stock Appreciation Right, a Stock Unit Award or any Other
Stock Award.

     (ll)     “Stock Award Agreement” means a written agreement between the Company and a Participant
evidencing the terms and conditions of a Stock Award grant. Each Stock Award Agreement shall be
subject to the terms and conditions of the Plan.

     (mm)     “Stock Bonus Award” means an award of shares of Common Stock which is granted pursuant to
the terms and conditions of Section 7(b).

     (nn)     “Stock Bonus Award Agreement” means a written agreement between the Company and a holder
of a Stock Bonus Award evidencing the terms and conditions of a Stock Bonus Award grant. Each
Stock Bonus Award Agreement shall be subject to the terms and conditions of the Plan.

     (oo)     “Stock Purchase Award” means an award of shares of Common Stock which is granted pursuant
to the terms and conditions of Section 7(a).

     (pp)     “Stock Purchase Award Agreement” means a written agreement between the Company and a
holder of a Stock Purchase Award evidencing the terms and conditions of a Stock Purchase Award
grant. Each Stock Purchase Award Agreement shall be subject to the terms and conditions of the
Plan.

     (qq)     “Stock Unit Award” means a right to receive shares of Common Stock which is granted
pursuant to the terms and conditions of Section 7(c).

     (rr)     “Stock Unit Award Agreement” means a written agreement between the Company and a holder
of a Stock Unit Award evidencing the terms and conditions of a Stock Unit Award grant. Each Stock
Unit Award Agreement shall be subject to the terms and conditions of the Plan.

     (ss)     “Subsidiary” means, with respect to the Company, (i) any corporation of which more than
fifty percent (50%) of the outstanding capital stock having ordinary voting power to elect a
majority of the board of directors of such corporation (irrespective of whether, at the time,

6

 

stock of any other class or classes of such corporation shall have or might have voting power
by reason of the happening of any contingency) is at the time, directly or indirectly, Owned by the
Company, and (ii) any partnership in which the Company has a direct or indirect interest (whether
in the form of voting or participation in profits or capital contribution) of more than fifty
percent (50%).

     (tt)     “Ten Percent Stockholder” means a person who Owns (or is deemed to Own pursuant to
Section 424(d) of the Code) stock possessing more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company or of any of its Affiliates.

3. ADMINISTRATION.

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

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

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

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

               (iii)     To amend the Plan or a Stock Award as provided in Section 12.

               (iv)     To terminate or suspend the Plan as provided in Section 13.

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

               (vi)     To adopt such procedures and sub-plans as are necessary or appropriate to permit
participation in the Plan by Employees who are foreign nationals or employed outside the United
States.

     (c)     Delegation to Committee.

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

7

 

administration is delegated to a Committee, the Committee shall have, in connection with the
administration of the Plan, the powers theretofore possessed by the Board that have been delegated
to the Committee, including the power to delegate to a subcommittee any of the administrative
powers the Committee is authorized to exercise (and references in this Plan to the Board shall
thereafter be to the Committee or subcommittee), subject, however, to such resolutions, not
inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board.
The Board may retain the authority to concurrently administer the Plan with the Committee and may,
at any time, revest in the Board some or all of the powers previously delegated.

               (ii)     Section 162(m) and Rule 16b-3 Compliance. In the sole discretion of the Board, the
Committee may consist solely of two or more Outside Directors, in accordance with Section 162(m) of
the Code, and/or solely of two or more Non-Employee Directors, in accordance with Rule 16b-3. In
addition, the Board or the Committee, in its sole discretion, may (1) delegate to a committee of
one or more members of the Board who need not be Outside Directors the authority to grant Stock
Awards to eligible persons who are either (a) not then Covered Employees and are not expected to be
Covered Employees at the time of recognition of income resulting from such Stock Award, or (b) not
persons with respect to whom the Company wishes to comply with Section 162(m) of the Code, and/or
(2) delegate to a committee of one or more members of the Board who need not be Non-Employee
Directors the authority to grant Stock Awards to eligible persons who are not then subject to
Section 16 of the Exchange Act.

     (d)     Delegation to an Officer. The Board may delegate to one or more Officers of the Company
the authority to do one or both of the following (i) designate Officers and Employees of the
Company or any of its Subsidiaries to be recipients of Stock Awards and (ii) determine the number
of shares of Common Stock to be subject to such Stock Awards granted to such Officers and Employees
of the Company; provided, however, that the Board resolutions regarding such delegation shall
specify the total number of shares of Common Stock that may be subject to the Stock Awards granted
by such Officer and that such Officer may not grant a Stock Award to himself or herself.
Notwithstanding anything to the contrary in this Section 3(d), the Board may not delegate to an
Officer authority to determine the Fair Market Value of the Common Stock pursuant to Section
2(s)(ii) above.

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

4. SHARES SUBJECT TO THE PLAN.

     (a)     Initial Share Reserve. Subject to the provisions of Section 11(a) relating to
Capitalization Adjustments, the Common Stock that may be issued pursuant to Stock Awards shall not
exceed in the aggregate one million nine hundred seventy-eight thousand seven hundred sixty-seven
(1,978,767) shares of Common Stock (which includes a total of one hundred seventy-eight thousand
seven hundred sixty-seven (178,767) shares of Common Stock that were previously held in reserve
under the Lynx Therapeutics, Inc. 1992 Stock Option Plan, but which were unused, and which have
been transferred to this Plan). Additionally, if any outstanding stock options granted under the
Lynx Therapeutics, Inc. 1992 Stock Option Plan shall for any

8

 

reason expire or otherwise terminate, in whole or in part, without having been exercised in
full, the shares of Common Stock that are not acquired under any such stock options shall revert
to, and become available for issuance under this Plan. The maximum aggregate number of additional
shares of Common Stock that may revert to this Plan under this provision is one million one hundred
seventy-one thousand seven hundred thirty-seven (1,171,737) shares.

     (b)     Reversion of Shares to the Share Reserve. If any Stock Award under this Plan shall for
any reason expire or otherwise terminate, in whole or in part, without having been exercised in
full, or if any shares of Common Stock issued to a Participant pursuant to a Stock Award are
forfeited to or repurchased by the Company, including, but not limited to, any repurchase or
forfeiture caused by the failure to meet a contingency or condition required for the vesting of
such shares, then the shares of Common Stock not issued under such Stock Award, or forfeited to or
repurchased by the Company, shall revert to and again become available for issuance under the Plan.
If any shares subject to a Stock Award are not delivered to a Participant because such shares are
withheld for the payment of taxes or the Stock Award is exercised through a reduction of shares
subject to the Stock Award (i.e., “net exercised”), the number of shares that are not delivered to
the Participant shall remain available for issuance under the Plan. If the exercise price of any
Stock Award is satisfied by tendering shares of Common Stock held by the Participant (either by
actual delivery or attestation), then the number of shares so tendered shall remain available for
issuance under the Plan. Notwithstanding anything to the contrary in this Section 4(b), subject to
the provisions of Section 11 (a) relating to Capitalization Adjustments, the aggregate maximum
number of shares of Common Stock that may be issued pursuant to the exercise of Incentive Stock
Options shall be three million one hundred fifty thousand five hundred four (3,150,504) shares of
Common Stock (which includes a total of one million one hundred seventy-one thousand seven hundred
thirty-seven (1,171,737) shares of Common Stock that may revert to this Plan under Section 4(a)).

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

     (d)     Share Reserve Limitation. Notwithstanding Section 4(a), to the extent required by Section
260.140.45 of Title 10 of the California Code of Regulations, the total number of shares of Common
Stock issuable upon exercise of all outstanding Options and the total number of shares of Common
Stock provided for under any stock bonus or similar plan of the Company shall not exceed the
applicable percentage as calculated in accordance with the conditions and exclusions of Section
260.140.45 of Title 10 of the California Code of Regulations, based on the shares of Common Stock
of the Company that are outstanding at the time the calculation is made.

5. ELIGIBILITY.

     (a)     Eligibility for Specific Stock Awards. Incentive Stock Options may be granted only to
Employees. Stock Awards other than Incentive Stock Options may be granted to Employees, Directors
and Consultants.

9

 

     (b)     Ten Percent Stockholders.

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

               (ii)     To the extent Section 260.140.41 of Title 10 of the California Code of Regulations is
applicable, a Ten Percent Stockholder shall not be granted a Nonstatutory Stock Option unless the
exercise price of the Option is at least (a) one hundred ten percent (110%) of the Fair Market
Value of the Common Stock on the date of grant, or (b) such lower percentage of the Fair Market
Value of the Common Stock on the date of grant as is permitted by Section 260.140.41 of Title 10 of
the California Code of Regulations at the time of the grant of the Option.

               (iii)     To the extent Section 260.140.42 of Title 10 of the California Code of Regulations is
applicable, a Ten Percent Stockholder shall not be granted a Stock Purchase Award, Stock
Appreciation Right (if such award could be settled in shares of Common Stock), or a Stock Unit
Award (if such award could be settled in shares of Common Stock), unless the purchase price of the
stock is at least (i) one hundred percent (100%) of the Fair Market Value of the Common Stock on
the date of grant, or (ii) such lower percentage of the Fair Market Value of the Common Stock on
the date of grant as is permitted by Section 260.140.42 of Title 10 of the California Code of
Regulations at the time of the grant of the award.

     (c)     Section 162(m) Limitation on Annual Grants. Subject to the provisions of Section 11(a)
relating to Capitalization Adjustments, no Employee shall be eligible to be granted Options or
Stock Appreciation Rights covering more than one million five hundred thousand (1,500,000) shares
of Common Stock during any calendar year.

     (d)     Consultants. A Consultant shall not be eligible for the grant of a Stock Award if, at the
time of grant, a Form S-8 Registration Statement under the Securities Act (“Form S-8”) is not
available to register either the offer or the sale of the Company’s securities to such Consultant
because of the nature of the services that the Consultant is providing to the Company, because the
Consultant is not a natural person, or because of any other rule governing the use of Form S-8.

6. OPTION PROVISIONS.

     Each Option shall be in such form and shall contain such terms and conditions as the Board
shall deem appropriate. All Options shall be separately designated Incentive Stock Options or
Nonstatutory Stock Options at the time of grant, and, if certificates are issued, a separate
certificate or certificates shall be issued for shares of Common Stock purchased on exercise of
each type of Option. The provisions of separate Options need not be identical, provided, however,
that each Option Agreement shall include (through incorporation of provisions hereof by reference
in the Option or otherwise) the substance of each of the following provisions:

10

 

     (a)     Term. The Board shall determine the term of an Option; provided, however, that subject to
the provisions of Section 5 (b) regarding Ten Percent Stockholders, no Incentive Stock Option shall
be exercisable after the expiration of ten (10) years from the date on which it was granted.

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

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

     (d)     Consideration. The purchase price of Common Stock acquired pursuant to an Option shall be
paid, to the extent permitted by applicable statutes and regulations, either (i) in cash at the
time the Option is exercised or (ii) at the sole discretion of the Board at the time of the grant
of the Option (or subsequently in the case of a Nonstatutory Stock Option) (1) by delivery to the
Company (either by actual delivery or attestation) of other Common Stock at the time the Option is
exercised, (2) by a “net exercise” of the Option (as further described below), (3) pursuant to a
program developed under Regulation T as promulgated by the Federal Reserve Board that, prior to the
issuance of Common Stock, results in either the receipt of cash (or check) by the Company or the
receipt of irrevocable instructions to pay the aggregate exercise price to the Company from the
sales proceeds, or (4) in any other form of legal consideration that may be acceptable to the
Board. Unless otherwise specifically provided in the Option, the purchase price of Common Stock
acquired pursuant to an Option that is paid by delivery to the Company of other Common Stock
acquired, directly or indirectly from the Company, shall be paid only by shares of the Common Stock
of the Company that have been held for more than six (6) months (or such longer or shorter period
of time required to avoid a charge to earnings for financial accounting purposes). At any time
that the Company is incorporated in Delaware, payment of the Common Stock’s “par value,” as defined
in the Delaware General Corporation Law, shall not be made by deferred payment.

     In the case of a “net exercise” of an Option, the Company will not require a payment of the
exercise price of the Option from the Participant but will reduce the number of shares of Common
Stock issued upon the exercise by the largest number of whole shares that has a Fair Market Value
that does not exceed the aggregate exercise price. With respect to any remaining balance of the
aggregate exercise price, the Company shall accept a cash payment from the

11

 

Participant. Shares of Common Stock will no longer be outstanding under an Option (and will
therefore not thereafter be exercisable) following the exercise of such Option to the extent of (i)
shares used to pay the exercise price of an Option under the “net exercise,” (ii) shares actually
delivered to the Participant as a result of such exercise and (iii) shares withheld for purposes of
tax withholding.

     (e) Transferability of an Incentive Stock Option. An Incentive Stock Option shall not be
transferable except by will or by the laws of descent and distribution and shall be exercisable
during the lifetime of the Optionholder only by the Optionholder. Notwithstanding the foregoing,
the Optionholder may, by delivering written notice to the Company, in a form provided by or
otherwise satisfactory to the Company, designate a third party who, in the event of the death of
the Optionholder, shall thereafter be entitled to exercise the Option.

     (f) Transferability of a Nonstatutory Stock Option. A Nonstatutory Stock Option shall be
transferable pursuant to a domestic relations order and to such further extent provided in the
Option Agreement; provided, however, if the Nonstatutory Stock Option does not provide for
transferability, then the Nonstatutory Stock Option shall not be transferable except by will or by
the laws of descent and distribution and shall be exercisable during the lifetime of the
Optionholder only by the Optionholder. Notwithstanding the foregoing, the Optionholder may, by
delivering written notice to the Company, in a form provided by or otherwise satisfactory to the
Company, designate a third party who, in the event of the death of the Optionholder, shall
thereafter be entitled to exercise the Option. Notwithstanding the above, to the extent Section
260.140.41(d) of Title 10 of the California Code of Regulations is applicable at the time of grant
of the Nonstatutory Stock Option, the Option shall not be transferable except by will or by the
laws of descent and distribution or as otherwise permitted by Section 260.141.41(d) and shall be
exercisable during the lifetime of the Optionholder only by the Optionholder.

     (g) Vesting Generally. The total number of shares of Common Stock subject to an Option may
vest and therefore become exercisable in periodic installments that may be equal. The Option may
be subject to such other terms and conditions on the time or times when it may be exercised (which
may be based on performance or other criteria) as the Board may deem appropriate. The vesting
provisions of individual Options may vary. The provisions of this Section 6(g) are subject to any
Option provisions governing the minimum number of shares of Common Stock as to which an Option may
be exercised.

     (h) Minimum Vesting. Notwithstanding the foregoing Section 6(g), to the extent that the
following restrictions on vesting are required by Section 260.140.41(f) of Title 10 of the
California Code of Regulations at the time of the grant of the Option, then:

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

12

 

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

     (i) Termination of Continuous Service. In the event that an Optionholder’s Continuous Service
terminates (other than upon the Optionholder’s death or Disability), the Optionholder may exercise
his or her Option (to the extent that the Optionholder was entitled to exercise such Option as of
the date of termination of Continuous Service) but only within such period of time ending on the
earlier of (i) the expiration of the term of the Option as set forth in the Option Agreement, or
(ii) the date three (3) months following the termination of the Optionholder’s Continuous Service
(or such longer or shorter period specified in the Option Agreement, which period shall not be less
than thirty (30) days in the case of an Option subject to Section 260.140.41(g) of Title 10 of the
California Code of Regulations, unless such termination is for cause). If, after termination of
Continuous Service, the Optionholder does not exercise his or her Option within the time specified
herein or in the Option Agreement (as applicable), the Option shall terminate.

     (j) Extension of Termination Date. An Optionholder’s Option Agreement may provide that if the
exercise of the Option following the termination of the Optionholder’s Continuous Service (other
than upon the Optionholder’s death or Disability) would be prohibited at any time solely because
the issuance of shares of Common Stock would violate the registration requirements under the
Securities Act, then the Option shall terminate on the earlier of (i) the expiration of the term of
the Option set forth in the Option Agreement or (ii) the expiration of a period of three (3) months
after the termination of the Optionholder’s Continuous Service during which the exercise of the
Option would not be in violation of such registration requirements.

     (k) Disability of Optionholder. In the event that an Optionholder’s Continuous Service
terminates as a result of the Optionholder’s Disability, the Optionholder may exercise his or her
Option (to the extent that the Optionholder was entitled to exercise such Option as of the date of
termination of Continuous Service), but only within such period of time ending on the earlier of
(i) the expiration of the term of the Option as set forth in the Option Agreement, or (ii) the date
twelve (12) months following such termination of Continuous Service (or such longer or shorter
period specified in the Option Agreement, which period shall not be less than six (6) months in the
case of an Option subject to Section 260.140.41(g) of Title 10 of the California Code of
Regulations). If, after termination of Continuous Service, the Optionholder does not exercise his
or her Option within the time specified herein or in the Option Agreement (as applicable), the
Option shall terminate.

     (l) Death of Optionholder. In the event that (i) an Optionholder’s Continuous Service
terminates as a result of the Optionholder’s death, or (ii) the Optionholder dies within the period
(if any) specified in the Option Agreement after the termination of the Optionholder’s Continuous
Service, then the Option may be exercised (to the extent the Optionholder was entitled to exercise
such Option as of the date of death) by the Optionholder’s estate, by a person who acquired the
right to exercise the Option by bequest or inheritance or by a person designated to exercise the
option upon the Optionholder’s death pursuant to Sections 6(e) or 6(f), but only within the period
ending on the earlier of (i) the expiration of the term of such Option as set forth

13

 

in the Option Agreement or (ii) the date eighteen (18) months following the date of death (or
such longer or shorter period specified in the Option Agreement, which period shall not be less
than six (6) months in the case of an Option subject to Section 260.140.41(g) of Title 10 of the
California Code of Regulations). If, after the Optionholder’s death, the Option is not exercised
within the time specified herein or in the Option Agreement (as applicable), the Option shall
terminate.

     (m) Early Exercise. The Option may include a provision whereby the Optionholder may elect at
any time before the Optionholder’s Continuous Service terminates to exercise the Option as to any
part or all of the shares of Common Stock subject to the Option prior to the full vesting of the
Option.

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

     (n) 
[Deleted and Reserved]

     (o) Right of First Refusal. The Option may, but need not, include a provision whereby the
Company may elect to exercise a right of first refusal following receipt of notice from the
Optionholder of the intent to transfer all or any part of the shares of Common Stock received upon
the exercise of the Option. Except as expressly provided in this Section 6(n) or in the Stock
Award Agreement for the Option, such right of first refusal shall otherwise comply with any
applicable provisions of the Bylaws of the Company. The Company will not exercise its right of
first refusal until at least six (6) months (or such longer or shorter period of time required to
avoid a charge to earnings for financial accounting purposes) have elapsed following exercise of
the Option unless otherwise specifically provided in the Option.

7.    PROVISIONS OF STOCK AWARDS OTHER THAN OPTIONS.

     (a) Stock Purchase Awards. Each Stock Purchase Award Agreement shall be in such form and
shall contain such terms and conditions as the Board shall deem appropriate. At the Board’s
election, shares of Common Stock may be (i) held in book entry form subject to the Company’s
instructions until any restrictions relating to the Stock Purchase Award lapse, or (ii) evidenced
by a certificate, which certificate shall be held in such form and manner as determined by the
Board. The terms and conditions of Stock Purchase Award Agreements may change from time to time,
and the terms and conditions of separate Stock Purchase Award Agreements need not be identical,
provided, however, that each Stock Purchase Award Agreement shall include (through incorporation of
the provisions hereof by reference in the agreement or otherwise) the substance of each of the
following provisions:

          (i) Purchase Price. At the time of the grant of a Stock Purchase Award, the Board will
determine the price to be paid by the Participant for each share subject to the Stock Purchase
Award. To the extent required by applicable law, the price to be paid by the Participant for each
share of the Stock Purchase Award will not be less than the par value of a share of Common Stock.

          (ii) Consideration. At the time of the grant of a Stock Purchase Award, the Board will
determine the consideration permissible for the payment of the purchase price of the Stock Purchase
Award. The purchase price of Common Stock acquired pursuant to the Stock Purchase Award shall be
paid either: (i) in cash at the time of purchase, or (ii) in any other form of legal consideration
that may be acceptable to the Board in its sole discretion and permissible under applicable law.

14

 

          (iii) Vesting.
Subject to the “Repurchase Limitation” in
Section 10(i), shares of Common Stock acquired under a Stock Purchase Award may be subject to
a share repurchase right or option in favor of the Company in accordance with a vesting schedule to
be determined by the Board.

          (iv) Termination
of Participant’s Continuous Service. Subject to the
“Repurchase Limitation” in Section 10(i), in the event that a Participant’s
Continuous Service terminates, the Company shall have the right, but not the obligation, to
repurchase or otherwise reacquire, any or all of the shares of Common Stock held by the Participant
that have not vested as of the date of termination under the terms of the Stock Purchase Award
Agreement. At the Board’s election, the repurchase right may be the lesser of: (i) the Fair
Market Value on the relevant date, or (ii) the
Participant’s original cost. Provided that the “Repurchase
Limitation” in Section 10(i) is not violated, the Company shall not
be required to exercise its repurchase option until at least six (6) months (or such longer or
shorter period of time required to avoid a charge to earnings for financial accounting purposes)
have elapsed following the purchase of the restricted stock unless otherwise determined by the
Board or provided in the Stock Purchase Award Agreement.

          (v) Transferability. Rights to purchase or receive shares of Common Stock granted under a
Stock Purchase Award shall be transferable by the Participant only upon such terms and conditions
as are set forth in the Stock Purchase Award Agreement, as the Board shall determine in its sole
discretion, and so long as Common Stock awarded under the Stock Purchase Award remains subject to
the terms of the Stock Purchase Award Agreement.

     (b) Stock Bonus Awards. Each Stock Bonus Award Agreement shall be in such form and shall
contain such terms and conditions as the Board shall deem appropriate. At the Board’s election,
shares of Common Stock may be (i) held in book entry form subject to the Company’s instructions
until any restrictions relating to the Stock Bonus Award lapse; or evidenced by a certificate,
which certificate shall be held in such form and manner as determined by the Board. The terms and
conditions of Stock Bonus Award Agreements may change from time to time, and the terms and
conditions of separate Stock Bonus Award Agreements need not be identical, provided, however, that
each Stock Bonus Award Agreement shall include (through incorporation of provisions hereof by
reference in the agreement or otherwise) the substance of each of the following provisions:

          (i) Consideration. A Stock Bonus Award may be awarded in consideration for (i) past services
actually rendered to the Company or an Affiliate or (ii) any other form of legal consideration that
may be acceptable to the Board in its sole discretion and permissible under applicable law.

          (ii) Vesting.
Subject to the “Repurchase Limitation” in
Section 10(i), shares of Common Stock awarded under the Stock Bonus Award Agreement may be
subject to forfeiture to the Company in accordance with a vesting schedule to be determined by the
Board.

          (iii) Termination
of Participant’s Continuous Service. Subject to the
“Repurchase Limitation” in Section 10(i), in the event a Participant’s
Continuous Service terminates, the Company may receive via a forfeiture condition, any or all of
the shares of Common Stock held by the Participant which have not vested as of the date of
termination of Continuous Service under the terms of the Stock Bonus Award Agreement.

15

 

          (iv) Transferability. Rights to acquire shares of Common Stock under the Stock Bonus Award
Agreement shall be transferable by the Participant only upon such terms and conditions as are set
forth in the Stock Bonus Award Agreement, as the Board shall determine in its sole discretion, so
long as Common Stock awarded under the Stock Bonus Award Agreement remains subject to the terms of
the Stock Bonus Award Agreement.

     (c) Stock Unit Awards. Each Stock Unit Award Agreement shall be in such form and shall
contain such terms and conditions as the Board shall deem appropriate. The terms and conditions of
Stock Unit Award Agreements may change from time to time, and the terms and conditions of separate
Stock Unit Award Agreements need not be identical, provided, however, that each Stock Unit Award
Agreement shall include (through incorporation of the provisions hereof by reference in the
agreement or otherwise) the substance of each of the following provisions:

          (i) Consideration. At the time of grant of a Stock Unit Award, the Board will determine the
consideration, if any, to be paid by the Participant upon delivery of each share of Common Stock
subject to the Stock Unit Award. The consideration to be paid (if any) by the Participant for each
share of Common Stock subject to a Stock Unit Award may be paid in any form of legal consideration
that may be acceptable to the Board in its sole discretion and permissible under applicable law.

          (ii) Vesting. At the time of the grant of a Stock Unit Award, the Board may impose such
restrictions or conditions to the vesting of the Stock Unit Award as it, in its sole discretion,
deems appropriate; provided, however, that a Stock Unit Award that
could be settled in shares of Common Stock shall be subject to the
provisions of section 10 (i).

          (iii) Payment. A Stock Unit Award may be settled by the delivery of shares of Common Stock,
their cash equivalent, any combination thereof or in any other form of consideration as determined
by the Board and contained in the Stock Unit Award Agreement.

          (iv) Additional Restrictions. At the time of the grant of a Stock Unit Award, the Board, as
it deems appropriate, may impose such restrictions or conditions that delay the delivery of the
shares of Common Stock (or their cash equivalent) subject to a Stock Unit Award after the vesting
of such Stock Unit Award.

          (v) Dividend Equivalents. Dividend equivalents may be credited in respect of shares of Common
Stock covered by a Stock Unit Award, as determined by the Board and contained in the Stock Unit
Award Agreement. At the sole discretion of the Board, such dividend equivalents may be converted
into additional shares of Common Stock covered by the Stock Unit Award in such manner as determined
by the Board. Any additional shares covered by the Stock Unit Award credited by reason of such
dividend equivalents will be subject to all the terms and conditions of the underlying Stock Unit
Award Agreement to which they relate.

          (vi) Termination of Participant’s Continuous Service. Except as otherwise provided in the
applicable Stock Unit Award Agreement, such portion of the Stock Unit Award that has not vested
will be forfeited upon the Participant’s termination of Continuous Service.

     (d) Stock Appreciation Rights. Each Stock Appreciation Right Agreement shall be in such form
and shall contain such terms and conditions as the Board shall deem appropriate.

16

 

The terms and conditions of Stock Appreciation Right Agreements may change from time to time,
and the terms and conditions of separate Stock Appreciation Right Agreements need not be identical,
provided, however, that each Stock Appreciation Right Agreement shall include (through
incorporation of the provisions hereof by reference in the agreement or otherwise) the substance of
each of the following provisions:

          (i) Strike Price and Calculation of Appreciation. Each Stock Appreciation Right will be
denominated in share of Common Stock equivalents. The appreciation distribution payable on the
exercise of a Stock Appreciation Right will be not greater than an amount equal to the excess of
(A) the aggregate Fair Market Value (on the date of the exercise of the Stock Appreciation Right)
of a number of shares of Common Stock equal to the number of share of Common Stock equivalents in
which the Participant is vested under such Stock Appreciation Right, and with respect to which the
Participant is exercising the Stock Appreciation Right on such date, over (B) an amount (the strike
price) that will be determined by the Board at the time of grant of the Stock Appreciation Right.

          (ii) Vesting. At the time of the grant of a Stock Appreciation Right, the Board may impose
such restrictions or conditions to the vesting of such Stock
Appreciation Right as it, in its sole discretion, deems
appropriate; provided, however, that a Stock Appreciation Right that could be settled in shares of Common Stock shall be subject to the provision of Section 10 (i).

          (iii) Exercise. To exercise any outstanding Stock Appreciation Right, the Participant must
provide written notice of exercise to the Company in compliance with the provisions of the Stock
Appreciation Right Agreement evidencing such Stock Appreciation Right.

          (iv) Payment. The appreciation distribution in respect to a Stock Appreciation Right may be
paid in Common Stock, in cash, in any combination of the two or in any other form of consideration
as determined by the Board and contained in the Stock Appreciation Right Agreement evidencing such
Stock Appreciation Right.

          (v) Termination of Continuous Service. In the event that a Participant’s Continuous Service
terminates, the Participant may exercise his or her Stock Appreciation Right (to the extent that
the Participant was entitled to exercise such Stock Appreciation Right as of the date of
termination) but only within such period of time ending on the earlier of (i) the date three (3)
months following the termination of the Participant’s Continuous Service (or such longer or shorter
period specified in the Stock Appreciation Right Agreement) or (ii) the expiration of the term of
the Stock Appreciation Right as set forth in the Stock Appreciation Right Agreement. If, after
termination, the Participant does not exercise his or her Stock Appreciation Right within the time
specified herein or in the Stock Appreciation Right Agreement (as applicable), the Stock
Appreciation Right shall terminate.

     (e) Other Stock Awards. Other forms of Stock Awards valued in whole or in part by reference
to, or otherwise based on, Common Stock may be granted either alone or in addition to Stock Awards
provided for under Section 6 and the preceding provisions of this Section 7. Subject to the
provisions of the Plan, the Board shall have sole and complete authority to determine the persons
to whom and the time or times at which such Other Stock Awards will be granted, the number of
shares of Common Stock (or the cash equivalent thereof) to be granted

17

 

pursuant to such Other Stock Awards and all other terms and conditions of such Other Stock
Awards.

8.    COVENANTS OF THE COMPANY.

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

     (b) Securities Law Compliance. The Company shall seek to obtain from each regulatory
commission or agency having jurisdiction over the Plan such authority as may be required to grant
Stock Awards and to issue and sell shares of Common Stock upon exercise of the Stock Awards;
provided, however, that this undertaking shall not require the Company to register under the
Securities Act the Plan, any Stock Award or any Common Stock issued or issuable pursuant to any
such Stock Award. If, after reasonable efforts, the Company is unable to obtain from any such
regulatory commission or agency the authority which counsel for the Company deems necessary for the
lawful issuance and sale of Common Stock under the Plan, the Company shall be relieved from any
liability for failure to issue and sell Common Stock upon exercise of such Stock Awards unless and
until such authority is obtained.

9.    USE OF PROCEEDS FROM STOCK.

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

10.  MISCELLANEOUS.

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

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

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

18

 

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

     (e) Investment Assurances. The Company may require a Participant, as a condition of
exercising or acquiring Common Stock under any Stock Award, (i) to give written assurances
satisfactory to the Company as to the Participant’s knowledge and experience in financial and
business matters and/or to employ a purchaser representative reasonably satisfactory to the Company
who is knowledgeable and experienced in financial and business matters and that he or she is
capable of evaluating, alone or together with the purchaser representative, the merits and risks of
exercising the Stock Award; and (ii) to give written assurances satisfactory to the Company stating
that the Participant is acquiring Common Stock subject to the Stock Award for the Participant’s own
account and not with any present intention of selling or otherwise distributing the Common Stock.
The foregoing requirements, and any assurances given pursuant to such requirements, shall be
inoperative if (1) the issuance of the shares of Common Stock upon the exercise or acquisition of
Common Stock under the Stock Award has been registered under a then currently effective
registration statement under the Securities Act or (2) as to any particular requirement, a
determination is made by counsel for the Company that such requirement need not be met in the
circumstances under the then applicable securities laws. The Company may, upon advice of counsel
to the Company, place legends on stock certificates issued under the Plan as such counsel deems
necessary or appropriate in order to comply with applicable securities laws, including, but not
limited to, legends restricting the transfer of the Common Stock.

     (f) Withholding Obligations. To the extent provided by the terms of a Stock Award Agreement,
the Company may in its sole discretion, satisfy any federal, state or local tax withholding
obligation relating to a Stock Award by any of the following means (in addition to the Company’s
right to withhold from any compensation paid to the Participant by the Company) or by a combination
of such means: (i) causing the Participant to tender a cash payment; (ii) withholding shares of
Common Stock from the shares of Common Stock issued or otherwise issuable to the Participant in
connection with the Stock Award; or (iii) by such other method as may be set forth in the Stock
Award Agreement.

     (g) Electronic Delivery. Any reference herein to a “written” agreement or document shall
include any agreement or document delivered electronically or posted on the Company’s intranet.

     (h) Information Obligation. To the extent required by Section 260.140.46 of Title 10 of the
California Code of Regulations, the Company shall deliver financial statements to Participants at
least annually. This Section 10(h) shall not apply to key Employees whose duties in connection
with the Company assure them access to equivalent information.

     (i) [Deleted and Reserved]

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11.  ADJUSTMENTS UPON CHANGES IN STOCK.

     (a) Capitalization Adjustments. If any change is made in, or other event occurs with respect
to, the Common Stock subject to the Plan or subject to any Stock Award without the receipt of
consideration by the Company (through merger, consolidation, reorganization, recapitalization,
reincorporation, stock dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares, change in corporate structure or other
transaction not involving the receipt of consideration by the Company (each a “Capitalization
Adjustment”), the Plan will be appropriately adjusted in the class(es) and maximum number of
securities subject to the Plan pursuant to Sections 4(a) and 4(b) and the maximum number of
securities subject to award to any person pursuant to Section 5(c), and the outstanding Stock
Awards will be appropriately adjusted in the class(es) and number of securities and price per share
of Common Stock subject to such outstanding Stock Awards. The Board shall make such adjustments,
and its determination shall be final, binding and conclusive. (Notwithstanding the foregoing, the
conversion of any convertible securities of the Company shall not be treated as a transaction
“without receipt of consideration” by the Company.)

     (b) Dissolution or Liquidation. In the event of a dissolution or liquidation of the Company,
all outstanding Stock Awards (other than Stock Awards consisting of vested and outstanding shares
of Common Stock not subject to the Company’s right of repurchase) shall terminate immediately prior
to the completion of such dissolution or liquidation, and the shares of Common Stock subject to the
Company’s repurchase option may be repurchased by the Company notwithstanding the fact that the
holder of such Stock Award is providing Continuous Service, provided, however, that the Board may,
in its sole discretion, cause some or all Stock Awards to become fully vested, exercisable and/or
no longer subject to repurchase or forfeiture (to the extent such Stock Awards have not previously
expired or terminated) before the dissolution or liquidation is completed but contingent on its
completion.

     (c) Corporate Transaction. In the event of a Corporate Transaction, any surviving corporation
or acquiring corporation may assume or continue any or all Stock Awards outstanding under the Plan
or may substitute similar stock awards for Stock Awards outstanding under the Plan (including but
not limited to, awards to acquire the same consideration paid to the stockholders of the Company,
as the case may be, pursuant to the Corporate Transaction), and any reacquisition or repurchase
rights held by the Company in respect of Common Stock issued pursuant to Stock Awards may be
assigned by the Company to the successor of the Company (or the successor’s parent company), if
any, in connection with such Corporate Transaction. A surviving corporation or acquiring
corporation may not choose to assume or continue only a portion of a Stock Award or substitute a
similar stock award for only a portion of a Stock Award. The terms of any assumption, continuation
or substitution shall be set by the Board in accordance with the provisions of Section 3. In the
event that any surviving corporation or acquiring corporation does not assume or continue all such
outstanding Stock Awards or substitute similar stock awards for all such outstanding Stock Awards,
then with respect to Stock Awards that have been not assumed, continued or substituted and that are
held by Participants whose Continuous Service has not terminated prior to the effective time of the
Corporate Transaction, the vesting of such Stock Awards (and, if applicable, the time at which such
Stock Awards may be exercised) shall (contingent upon the effectiveness of the Corporate
Transaction) be accelerated in full to a date prior to the effective time of such Corporate
Transaction as the Board shall determine (or, if

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the Board shall not determine such a date, to the date that is five (5) days prior to the
effective time of the Corporate Transaction), and such Stock Awards shall terminate if not
exercised (if applicable) at or prior to such effective time, and any reacquisition or repurchase
rights held by the Company with respect to such Stock Awards shall (contingent upon the
effectiveness of the Corporate Transaction) lapse. With respect to any other Stock Awards
outstanding under the Plan that have not been assumed, continued or substituted, the vesting of
such Stock Awards (and, if applicable, the time at which such Stock Award may be exercised) shall
not be accelerated, unless otherwise provided in a written agreement between the Company or any
Affiliate and the holder of such Stock Award, and such Stock Awards (other than Stock Awards
consisting of vested and outstanding shares of Common Stock not subject to the Company’s right of
repurchase) shall terminate if not exercised (if applicable) prior to the effective time of the
Corporate Transaction.

     (d) Change in Control. A Stock Award may be subject to additional acceleration of vesting and
exercisability upon or after a Change in Control as may be provided in the Stock Award Agreement
for such Stock Award or as may be provided in any other written agreement between the Company or
any Affiliate and the Participant, but in the absence of such provision, no such acceleration shall
occur.

12.  AMENDMENT OF THE PLAN AND STOCK AWARDS.

     (a) Amendment of Plan. Subject to the limitations, if any, of applicable law, the Board at
any time, and from time to time, may amend the Plan. However, except as provided in Section 11(a)
relating to Capitalization Adjustments, no amendment shall be effective unless approved by the
stockholders of the Company to the extent stockholder approval is necessary to satisfy applicable
law.

     (b) Stockholder Approval. The Board, in its sole discretion, may submit any other amendment
to the Plan for stockholder approval, including, but not limited to, amendments to the Plan
intended to satisfy the requirements of Section 162(m) of the Code and the regulations thereunder
regarding the exclusion of performance-based compensation from the limit on corporate deductibility
of compensation paid to Covered Employees.

     (c) Contemplated Amendments. It is expressly contemplated that the Board may amend the Plan
in any respect the Board deems necessary or advisable to provide eligible Employees with the
maximum benefits provided or to be provided under the provisions of the Code and the regulations
promulgated thereunder relating to Incentive Stock Options and/or to bring the Plan and/or
Incentive Stock Options granted under it into compliance therewith.

     (d) No Impairment of Rights. Rights under any Stock Award granted before amendment of the
Plan shall not be impaired by any amendment of the Plan unless (i) the Company requests the consent
of the Participant and (ii) the Participant consents in writing.

     (e) Amendment of Stock Awards. The Board at any time, and from time to time, may amend the
terms of any one or more Stock Awards, including, but not limited to, amendments to provide terms
more favorable than previously provided in the agreement evidencing a Stock Award, subject to any
specified limits in the Plan that are not subject to

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Board discretion; provided, however, that the rights under any Stock Award shall not be
impaired by any such amendment unless (i) the Company requests the consent of the Participant and
(ii) the Participant consents in writing.

13.  TERMINATION OR SUSPENSION OF THE PLAN.

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

     (b) No Impairment of Rights. Suspension or termination of the Plan shall not impair rights
and obligations under any Stock Award granted while the Plan is in effect except with the written
consent of the Participant.

14.  EFFECTIVE DATE OF PLAN.

     The Plan shall become effective on June 3, 2005, but no Stock Award shall be exercised (or, in
the case of a stock bonus, shall be granted) unless and until the Plan has been approved by the
stockholders of the Company, which approval shall be within twelve (12) months before or after the
date the Plan is adopted by the Board.

15.  CHOICE OF LAW.

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

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