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Non-employee Director Stock Option Plan. Some of our non-employee directors hold stock options awarded
pursuant to the Company's 1993 Non-employee Director Stock Option Plan (the "Non-employee Director Plan").
Options granted pursuant to the Nonemployee Director Plan become exercisable (i) with respect to 50% of
the total number of shares subject thereto, on the first anniversary of the date of grant and (ii) with respect to the
remaining shares subject thereto, in installments of 25% of such shares on the second and third anniversaries of
the date of grant. The exercise price of options granted pursuant to the Non-employee Director Plan is the fair
market value of the Common Stock on the date of grant. Such exercise price must be paid in full in cash at the
time an option is exercised. Options granted under the Non-employee Director Plan expire on the earliest of
(i) ten years from the date of grant, (ii) one year after the optionee ceases to be a director by reason of death or
(iii) three months after the optionee ceases to be a director for any reason other than death. The Non-employee
Director Plan provides that the Board of Directors may make certain adjustments to the exercise price and
number of shares subject to options granted thereunder in the event of a stock split, stock dividend, combination,
reclassification or certain other corporate transactions. The Board of Directors is responsible for the
administration of the Non-employee Director Plan.
The Board of Directors and the stockholders of the Company approved the Non-employee Director Plan. On
May 21, 2008, upon stockholder approval of the 2008 Incentive Plan, the Non-Employee Director Plan was
terminated. The terms of the Non-Employee Director Plan will continue to govern outstanding grants made under
such plan prior to its termination.
2008 Incentive Plan. Pursuant to the 2008 Incentive Plan as initially adopted, each outside director of the
Company who did not elect to decline to participate in the 2008 Incentive Plan was automatically granted
non-qualified stock options as follows: (1) each individual who first became an outside director would have
automatically been granted a one-time grant of non-qualified stock options to purchase 5,000 shares of Common
Stock; and (2) on January 1st of each year (other than the calendar year in which the individual first becomes an
outside director), each outside director was automatically granted non-qualified stock options to purchase 6,000
shares of Common Stock, so long as such outside director had continuously served as a director of the Company
at all times prior to such date of grant and after his or her appointment as an outside director. Notwithstanding the
foregoing, any automatic outside director grants were permitted to be made only if the number of shares subject
to future grants was sufficient to make all automatic grants required to be made on such date of grant.
Non-qualified stock options granted to outside directors vest and become exercisable as follows: (i) 50% of
the total number of shares of Common Stock subject to a non-qualified stock option vest and become exercisable
on the first anniversary of the date of grant, provided the outside director is providing services to the Company or
a subsidiary on that date; (ii) an additional 25% of the total number of shares of Common Stock subject to a
non-qualified stock option vest and become exercisable on the second anniversary of the date of grant, provided
the outside director is providing services to the Company or a subsidiary on that date; and (iii) the remaining
25% of the total number of shares of Common Stock subject to a non-qualified stock option vest and become
exercisable on the third anniversary of the date of grant, provided the outside director is providing services to the
Company or a subsidiary on that date. Notwithstanding the foregoing, in the event of an outside director's
termination of service due to his or her death, all unvested non-qualified stock options will immediately become
100% vested and exercisable. Subject to certain limitations, the exercise price of non-qualified stock options
granted pursuant to the 2008 Incentive Plan is the fair market value of the Common Stock on the date of the
grant. Such exercise price must be paid in full in cash at the time an option is exercised. Non-qualified stock
options granted under the 2008 Incentive Plan expire on the earliest of (i) the date immediately preceding the
tenth anniversary of the date of grant, (ii) termination of service for any reason other than death, to the extent
such non-qualified stock options are unvested on such date and (iii) to the extent such non-qualified stock options
are vested, one year from the date of termination of service for any reason other than death.
Based upon the recommendation of Frederic W. Cooke & Co., Inc., the Compensation Committee's
compensation consultant ("FWC"), effective January 1, 2010, the Board of Directors terminated its practice of
granting non-qualified stock options. Effective January 1, 2010, each outside director of the Company who does
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