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Table of Contents
12. EQUITY INCENTIVE PLANS
1997 Equity Incentive Plan
Under the terms of the Company's 1997 Equity Incentive Plan, adopted in 1997 and amended and restated in 1999 (the "1997 Plan"), options to
purchase shares of the Company's common stock may be granted to employees and other individuals at a price equal to the fair market value of the common
stock at the date of grant. The options granted to new hires typically vest 25% after the first year of service, and the remaining 75% vest ratably over the next
36 months. The vesting periods for options granted to continuing employees vary, but typically vest ratably over a 48 month period. Options expire 10 years
after the grant date, based on continued employment. If the optionee's employment terminates, options expire 90 days from the date of termination except
under certain circumstances such as death or disability. The terms of the 1997 Plan allowed individuals to exercise his or her options prior to full vesting. In
the event that the individual terminates his or her employment or service to the Company before becoming fully vested, the Company has the right to
repurchase the unvested shares at the original option price. The number of shares authorized for option grants under the 1997 Plan is 4,000,000. As of
January 31, 2006, 475,430 shares of the total authorized remain available for future grants. As of January 31, 2006, options to purchase 58,657 shares of
common stock are outstanding and exercisable under the 1997 Plan.
1999 Equity Incentive Plan
In April 1999, the Company's stockholders approved the 1999 Equity Incentive Plan (the "1999 Plan"). Amendments to the 1999 Plan were adopted in
July 1999. The 1999 Plan allows the grant of options to purchase shares of the Company's common stock to employees and other individuals at a price equal
to the fair market value of the common stock at the date of grant. The options granted to new employees typically vest 25% after the first year of service, and
the remaining 75% vest ratably over the next 36 months. The vesting period for options granted to continuing employees may vary, but typically vest ratably
over a 48 month period. Options expire 10 years after the grant date, based on continued employment. If the optionee's employment terminates, options expire
90 days from the date of termination except under certain circumstances such as death or disability. The terms of the 1999 Plan allow individuals to early
exercise options granted prior to August 8, 2001 from the date of grant, prior to full vesting. For options granted subsequent to August 8, 2001, options are
exercisable only as the options vest. In the event that the individual terminates his or her employment or service to the Company before becoming fully
vested, the Company has the right to repurchase any exercised, unvested shares at the original option price. As of January 31, 2006, the number of shares
authorized for option grants under the 1999 Plan is 38,363,130, which includes the annual increase of 6,112,893 shares, which was effective December 31,
2005. The number of shares authorized for option grants is subject to an annual increase of the greater of 7% of outstanding shares or 4,000,000 shares, up to
a maximum of 40,000,000 shares. As of January 31, 2006, 17,506,390 shares of the total authorized remain available for future stock option grants. As of
January 31, 2006, options to purchase 16,651,931 shares of common stock are outstanding under the 1999 Plan of which 7,653,234 are exercisable.
1999 Non-Employee Directors' Stock Option Plan
In July 1999, the Company adopted the 1999 Non-Employee Directors' Stock Option Plan (the "Directors' Plan"). The Directors' Plan provides for the
automatic grant of options to purchase shares of the Company's common stock to non-employee directors at a price equal to the fair market value of the stock
at the date of the grant. Initial options granted to new directors vest monthly over two years from the date of grant. Annual options granted to existing
directors vest upon grant. The option term is ten years after the grant date, based on continued director service. If the director's service terminates, options
expire 90 days from the date the director's service terminated. The number of shares authorized for option grants under the Directors' Plan is 1,000,000,
subject to an annual increase of 100,000 shares. The annual increase of 100,000 shares authorized for grant under the Directors' Plan was made December 31,
2005. As of January 31, 2006, 618,333 shares of the total authorized remain available for future grants. As of January 31, 2006, options to purchase 560,000
shares of common stock are outstanding, of which 275,000 are exercisable under the Directors' Plan.
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