Exhibit 10.1

 

AMENDED AND RESTATED

QUIDEL CORPORATION
2001 EQUITY INCENTIVE PLAN

 

ARTICLE I
PURPOSE OF PLAN

 

The Company has adopted this Plan to promote the interests of the Company and
its stockholders by using investment interests in the Company to attract, retain
and motivate its management and other persons, to encourage and reward their
contributions to the performance of the Company, and to align their interests
with the interests of the Company’s stockholders.  Capitalized terms not
otherwise defined herein have the meanings ascribed to them in Article IX.

 

ARTICLE II
EFFECTIVE DATE AND TERM OF PLAN

 

2.1                               TERM OF PLAN.

 

This Plan became effective as of the Effective Date and will continue in effect
until the earlier of (a) the Expiration Date, or (b) the date of any Plan
termination pursuant to the provisions in Section 8.1, at which time this Plan
will automatically terminate.

 

2.2                               EFFECT ON AWARDS.

 

Awards may be granted only during the Plan Term, but each Award properly granted
during the Plan Term will remain in effect after the Expiration Date until such
Award has been exercised, terminated or expired in accordance with its terms and
the terms of this Plan.

 

ARTICLE III
SHARES SUBJECT TO PLAN

 

3.1                               NUMBER OF SHARES.

 

The maximum number of shares of Common Stock that may be issued pursuant to
Awards under this Plan is 4,700,000, subject to adjustment as set forth in
Section 3.4.

 

3.2                               SOURCE OF SHARES.

 

The Common Stock to be issued under this Plan will be made available, at the
discretion of the Administrator, either from authorized but unissued shares of
Common Stock or from previously issued shares of Common Stock reacquired by the
Company, including without limitation shares purchased on the open market.

 

3.3                               AVAILABILITY OF UNUSED SHARES.

 

Shares of Common Stock subject to unexercised portions of any Award that expire,
terminate or are canceled, and shares of Common Stock issued pursuant to an
Award that are reacquired by the Company pursuant to this Plan or the terms of
the Award under which such shares were issued, will again become available for
the grant of further Awards under this Plan as part of the shares available
under Section 3.1.  However, if the exercise price of, or withholding taxes
incurred in connection with, an Award is paid with shares of Common Stock, or if
shares of Common Stock otherwise issuable pursuant to Awards are

 

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withheld by the Company in satisfaction of an exercise price or the withholding
taxes incurred in connection with any exercise or vesting of an Award, then the
number of shares of Common Stock available for issuance under the Plan will be
reduced by the gross number of shares for which the Award is exercised or for
which it vests, as applicable, and not by the net number of shares of Common
Stock issued to the holder of such Award.

 

3.4                               ADJUSTMENT PROVISIONS.

 

(a)                                  Adjustments.  If the Company consummates
any Reorganization in which holders of shares of Common Stock are entitled to
receive in respect of such shares any additional shares or new or different
shares or securities, cash or other consideration (including, without
limitation, a different number of shares of Common Stock), or if the outstanding
shares of Common Stock are increased, decreased or exchanged for a different
number or kind of shares or other securities through merger, consolidation, sale
or exchange of assets of the Company, reorganization, recapitalization,
reclassification, combination, stock dividend, stock split, reverse stock split,
spin-off, or similar transaction then, subject to Section 8.1, an appropriate
and proportionate adjustment shall be made by the Administrator in its
discretion in:  (i) the maximum number and kind of shares subject to this Plan
as provided in Section 3.1; (ii) the number and kind of shares or other
securities subject to then outstanding Awards; (iii) the price for each share or
other unit of any other securities subject to, or measurement criteria
applicable to, then outstanding Awards; and/or (iv) the number and kind of
shares or other securities to be issued as Non-Employee Director Options.

 

(b)                                 No Fractional Interests.  No fractional
interests will be issued under the Plan resulting from any adjustments.

 

(c)                                  Adjustments Related to Company Stock.  To
the extent any adjustments relate to stock or securities of the Company, such
adjustments will be made by the Administrator, whose determination in that
respect will be final, binding and conclusive.

 

(d)                                 Right to Make Adjustment.  The grant of an
Award will not affect in any way the right or power of the Company to make
adjustments, reclassifications, reorganizations or changes of its capital or
business structure or to merge or to consolidate or to dissolve, liquidate or
sell, or transfer all or any part of its business or assets.

 

(e)                                  Limitations.  No adjustment to the terms of
an Incentive Stock Option may be made unless such adjustment either:  (i) would
not cause the Option to lose its status as an Incentive Stock Option; or (ii) is
agreed to in writing by the Administrator and the Recipient.

 

3.5                               RESERVATION OF SHARES.

 

The Company will at all times reserve and keep available shares of Common Stock
equaling at least the total number of shares of Common Stock issuable pursuant
to all outstanding Awards.

 

ARTICLE IV
ADMINISTRATION OF PLAN

 

4.1                               ADMINISTRATOR.

 

(a)                                  Plan Administration.  Subject to the
provisions of Section 4.1(b), this Plan will be administered by the Board and
may also be administered by a Committee of the Board appointed pursuant to
Section 4.1(b).

 

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(b)                                 Administration by Committee.  The Board in
its sole discretion may from time to time appoint a Committee of not less than
two (2) Board members with authority to administer this Plan in whole or part
and, subject to applicable law, to exercise any or all of the powers, authority
and discretion of the Board under this Plan.  As long as the Company has a class
of equity securities registered under Section 12 of the Exchange Act, this Plan
will be administered by a Committee of not less than two (2) Board members
appointed by the Board in its sole discretion from time to time, each of whom is
(i) a Non-Employee Director, and (ii) an “Outside Director” as defined in the
regulations adopted under Section 162(m) of the IRC.  The Board may from time to
time increase or decrease (but not below two (2)) the number of members of the
Committee, remove from membership on the Committee all or any portion of its
members, and/or appoint such person or persons as it desires to fill any vacancy
existing on the Committee, whether caused by removal, resignation or otherwise. 
Unless otherwise required by this Section 4.1(b), the Board may disband the
Committee at any time.

 

4.2                               AUTHORITY OF ADMINISTRATOR.

 

(a)                                  Authority to Interpret Plan.  Subject to
the express provisions of this Plan, the Administrator will have the power to
implement, interpret and construe this Plan and any Awards and Award Documents
or other documents defining the rights and obligations of the Company and
Recipients hereunder and thereunder, to determine all questions arising
hereunder and thereunder, and to adopt and amend such rules and regulations for
the administration hereof and thereof as it may deem desirable.  The
interpretation and construction by the Administrator of any provisions of this
Plan or of any Award or Award Document, and any action taken by, or inaction of,
the Administrator relating to this Plan or any Award or Award Document, will be
within the discretion of the Administrator and will be conclusive and binding
upon all persons.  Subject only to compliance with the express provisions
hereof, the Administrator may act in its discretion in matters related to this
Plan and any and all Awards and Award Documents.

 

(b)                                 Authority to Grant Awards.  Subject to the
express provisions of this Plan, the Administrator may from time to time in its
discretion select the Eligible Persons to whom, and the time or times at which,
Awards will be granted or sold, the nature of each Award, the number of shares
of Common Stock or the number of rights that make up or underlie each Award, the
exercise price and period (if applicable) for the exercise of each Award, and
such other terms and conditions applicable to each individual Award as the
Administrator may determine.  Any and all terms and conditions of Awards may be
established by the Administrator without regard to existing Awards or other
grants and without incurring any obligation of the Company in respect of
subsequent Awards.  The Administrator may grant at any time new Awards to an
Eligible Person who has previously received Awards or other grants (including
other stock options) regardless of the status of such other Awards or grants. 
The Administrator may grant Awards singly or in combination or in tandem with
other Awards as it determines in its discretion.

 

(c)                                  Procedures.  Subject to the Company’s
charter or bylaws or any Board resolution conferring authority on the Committee,
any action of the Administrator with respect to the administration of this Plan
must be taken pursuant to a majority vote of the authorized number of members of
the Administrator or by the unanimous written consent of its members; provided,
however, that (i) if the Administrator is the Committee and consists of two
(2) members, then actions of the Administrator must be unanimous, and
(ii) actions taken by the Board will be valid if approved in accordance with
applicable law.

 

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4.3                               NO LIABILITY.

 

No member of the Board or the Committee or any designee thereof will be liable
for any action or inaction with respect to this Plan or any Award or any
transaction arising under this Plan or any Award except in circumstances
constituting bad faith of such member.

 

4.4                               AMENDMENTS.

 

(a)                                  Plan Amendments.  The Administrator may at
any time and from time to time in its discretion, insofar as permitted by
applicable law, rule or regulation and subject to Section 4.4(c), suspend or
discontinue this Plan or revise or amend it in any respect whatsoever, and this
Plan as so revised or amended will govern all Awards, including those granted
before such revision or amendment.  Without limiting the generality of the
foregoing, the Administrator is authorized to amend this Plan to comply with or
take advantage of amendments to applicable laws, rules or regulations, including
the Securities Act, the Exchange Act, the IRC, or the rules of any exchange or
market system upon which the Common Stock is listed or trades, or any rules or
regulations promulgated thereunder.  No stockholder approval of any amendment or
revision will be required unless such approval is required by applicable law,
rule or regulation.

 

(b)                                 Award Amendments.  The Administrator may at
any time and from time to time in its discretion, but subject to
Section 4.4(c) and compliance with applicable statutory or administrative
requirements, accelerate or extend the vesting or exercise period of any Award
as a whole or in part, and make such other modifications in the terms and
conditions of an Award as it deems advisable, provided, however, that the
Administrator may reduce the exercise price of a Stock Option (either by
cancellation of such Stock Option and the granting of a new Stock Option at such
modified exercise price or by amending the terms of the Stock Option to reflect
such a modified exercise price) only with stockholder approval.

 

(c)                                  Limitation.  Except as otherwise provided
in this Plan or in the applicable Award Document, no amendment, revision,
suspension or termination of this Plan or an outstanding Award that would cause
an Incentive Stock Option to cease to qualify as such or that would alter,
impair or diminish in any material respect any rights or obligations under any
Award theretofore granted under this Plan may be effected without the written
consent of the Recipient to whom such Award was granted.

 

4.5                               OTHER COMPENSATION PLANS.

 

On the Effective Date of this Plan, the Company’s 1998 Stock Incentive Plan and
the Company’s 1996 Non-Employee Directors Stock Option Plan, as amended, will be
terminated, but the adoption of this Plan will not affect any other stock
option, incentive or other compensation plans in effect from time to time for
the Company, and this Plan will not preclude the Company from establishing any
other forms of incentive or other compensation for employees, directors,
advisors or consultants of the Company, whether or not approved by
stockholders.  Notwithstanding the fact that this Plan replaces the Company’s
1998 Stock Incentive Plan and the Company’s 1996 Non-Employee Directors Stock
Option Plan, as amended, this Plan does not affect in any way any outstanding
award grants made under such plans and awards granted under such plans will
continue to be governed by the terms and conditions of such plans.

 

4.6                               PLAN BINDING ON SUCCESSORS.

 

This Plan will be binding upon the successors and assigns of the Company.

 

4.7                               REFERENCES TO SUCCESSOR STATUTES, REGULATIONS
AND RULES.

 

Any reference in this Plan to a particular statute, regulation or rule will also
refer to any successor provision of such statute, regulation or rule.

 

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4.8                               INVALID PROVISIONS.

 

In the event that any provision of this Plan is found to be invalid or otherwise
unenforceable under any applicable law, such invalidity or unenforceability is
not to be construed as rendering any other provisions contained herein invalid
or unenforceable, and all such other provisions are to be given full force and
effect to the same extent as though the invalid and unenforceable provision were
not contained herein.

 

4.9                               GOVERNING LAW.

 

This Plan will be governed by and interpreted in accordance with the internal
laws of the State of Delaware, without giving effect to the principles of the
conflicts of laws thereof.

 

4.10                        INTERPRETATION.

 

Headings herein are for convenience of reference only, do not constitute a part
of this Plan, and will not affect the meaning or interpretation of this Plan. 
References herein to Sections or Articles are references to the referenced
Section or Article hereof, unless otherwise specified.

 

ARTICLE V
GENERAL AWARD PROVISIONS

 

5.1                               PARTICIPATION IN PLAN.

 

(a)                                  Eligibility to Receive Awards.  A person is
eligible to receive grants of Awards if, at the time of the grant of the Award,
such person is an Eligible Person or has received an offer of employment from
the Company, provided, however, that only Non-Employee Directors are eligible to
receive Non-Employee Director Options, and provided further, that Awards granted
to a person who has received an offer of employment will terminate and be
forfeited without consideration if the employment offer is not accepted within
such time as may be specified by the Company.  Status as an Eligible Person will
not be construed as a commitment that any Award will be granted under this Plan
to an Eligible Person or to Eligible Persons generally.

 

(b)                                 Eligibility to Receive Incentive Stock
Options.  Incentive Stock Options may be granted only to Eligible Persons
meeting the employment requirements of Section 422 of the IRC.

 

(c)                                  Awards to Foreign Nationals. 
Notwithstanding anything to the contrary herein, the Administrator may, in order
to fulfill the purposes of this Plan, modify grants of Awards to Recipients who
are foreign nationals or employed outside of the United States to recognize
differences in applicable law, tax policy or local custom.

 

5.2                               AWARD DOCUMENTS.

 

Each Award must be evidenced by an agreement duly executed on behalf of the
Company and by the Recipient or, in the Administrator’s discretion, a confirming
memorandum issued by the Company to the Recipient, setting forth such terms and
conditions applicable to the Award as the Administrator may in its discretion
determine.  Awards will not be deemed made or binding upon the Company, and
Recipients will have no rights thereto, until such an agreement is entered into
between the Company and the Recipient or such a memorandum is delivered by the
Company to the Recipient, but an Award may have an effective date prior to the
date of such an agreement or memorandum.  Award Documents may be (but need not
be) identical and must comply with and be subject to the terms and conditions of
this Plan, a copy of which will be provided to each Recipient and incorporated
by reference into each Award Document.  Any Award Document may contain such
other terms, provisions and conditions not inconsistent with this Plan as may be
determined by the Administrator.  In case of any conflict between this Plan and
any Award Document, this Plan shall control.

 

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5.3                               PAYMENT FOR AWARDS.

 

(a)                                  Payment of Exercise Price.  The exercise
price or other payment for an Award is payable upon the exercise of a Stock
Option or upon other purchase of shares pursuant to an Award granted hereunder
by delivery of legal tender of the United States or payment of such other
consideration as the Administrator may from time to time deem acceptable in any
particular instance; provided, however, that the Administrator may, in the
exercise of its discretion, allow exercise of an Award in a broker-assisted or
similar transaction in which the exercise price is not received by the Company
until promptly after exercise.

 

(b)                                 [Reserved]

 

(c)                                  Cashless Exercise.  If permitted in any
case by the Administrator in its discretion, the exercise price for Awards may
be paid by capital stock of the Company delivered in transfer to the Company by
or on behalf of the person exercising the Award and duly endorsed in blank or
accompanied by stock powers duly endorsed in blank, with signatures guaranteed
in accordance with the Exchange Act if required by the Administrator; or
retained by the Company from the stock otherwise issuable upon exercise or
surrender of vested and/or exercisable Awards or other equity awards previously
granted to the Recipient and being exercised (if applicable) (in either case
valued at Fair Market Value as of the exercise date); or such other
consideration as the Administrator may from time to time in the exercise of its
discretion deem acceptable in any particular instance.

 

(d)                                 No Precedent.  Recipients will have no
rights to the exercise techniques described in Section 5.3(c), and the Company
may offer or permit such techniques on an ad hoc basis to any Recipient without
incurring any obligation to offer or permit such techniques on other occasions
or to other Recipients.

 

5.4                               NO EMPLOYMENT RIGHTS.

 

Nothing contained in this Plan (or in Award Documents or in any other documents
related to this Plan or to Awards) will confer upon any Eligible Person or
Recipient any right to continue in the employ of or engagement by the Company or
any Affiliated Entity or constitute any contract or agreement of employment or
engagement, or interfere in any way with the right of the Company or any
Affiliated Entity to reduce such person’s compensation or other benefits or to
terminate the employment or engagement of such Eligible Person or Recipient,
with or without cause.  Except as expressly provided in this Plan or in any
statement evidencing the grant of an Award, the Company has the right to deal
with each Recipient in the same manner as if this Plan and any such statement
evidencing the grant of an Award did not exist, including, without limitation,
with respect to all matters related to the hiring, discharge, compensation and
conditions of the employment or engagement of the Recipient.  Unless otherwise
set forth in a written agreement binding upon the Company or an Affiliated
Entity, all employees of the Company or an Affiliated Entity are “at will”
employees whose employment may be terminated by the Company or the Affiliated
Entity at any time for any reason or no reason, without payment or penalty of
any kind.  Any question(s) as to whether and when there has been a termination
of a Recipient’s employment or engagement, the reason (if any) for such
termination, and/or the consequences thereof under the terms of this Plan or any
statement evidencing the grant of an Award pursuant to this Plan will be
determined by the Administrator and the Administrator’s determination thereof
will be final and binding.

 

5.5                               RESTRICTIONS UNDER APPLICABLE LAWS AND
REGULATIONS.

 

(a)                                  Government Approvals.  All Awards will be
subject to the requirement that, if at any time the Company determines, in its
discretion, that the listing, registration or qualification of the

 

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securities subject to Awards granted under this Plan upon any securities
exchange or interdealer quotation system or under any federal, state or foreign
law, or the consent or approval of any government or regulatory body, is
necessary or desirable as a condition of, or in connection with, the granting of
such an Award or the issuance, if any, or purchase of shares in connection
therewith, such Award may not be exercised as a whole or in part unless and
until such listing, registration, qualification, consent or approval has been
effected or obtained free of any conditions not acceptable to the Company. 
During the term of this Plan, the Company will use its reasonable efforts to
seek to obtain from the appropriate governmental and regulatory agencies any
requisite qualifications, consents, approvals or authorizations in order to
issue and sell such number of shares of its Common Stock as is sufficient to
satisfy the requirements of this Plan.  The inability of the Company to obtain
any such qualifications, consents, approvals or authorizations will relieve the
Company of any liability in respect of the nonissuance or sale of such stock as
to which such qualifications, consents, approvals or authorizations pertain.

 

(b)                                 No Registration Obligation; Recipient
Representations.  The Company will be under no obligation to register or qualify
the issuance of Awards or underlying securities under the Securities Act or
applicable state securities laws.  Unless the issuance of Awards and underlying
securities have been registered under the Securities Act and qualified or
registered under applicable state securities laws, the Company shall be under no
obligation to issue any Awards or underlying securities unless the Awards and
underlying securities may be issued pursuant to applicable exemptions from such
registration or qualification requirements.  In connection with any such exempt
issuance, the Administrator may require the Recipient to provide a written
representation and undertaking to the Company, satisfactory in form and scope to
the Company, that such Recipient is acquiring such Awards and underlying
securities for such Recipient’s own account as an investment and not with a view
to, or for sale in connection with, the distribution of any such securities, and
that such person will make no transfer of the same except in compliance with any
rules and regulations in force at the time of such transfer under the Securities
Act and other applicable law, and that if securities are issued without
registration, a legend to this effect (together with any other legends deemed
appropriate by the Administrator) may be endorsed upon the securities so issued,
and to the effect of any additional representations that are appropriate in
light of applicable securities laws and rules.  The Company may also order its
transfer agent to stop transfers of such shares.  The Administrator may also
require the Recipient to provide the Company such information and other
documents as the Administrator may request in order to satisfy the Administrator
as to the investment sophistication and experience of the Recipient and as to
any other conditions for compliance with any such exemptions from registration
or qualification.

 

5.6                               ADDITIONAL CONDITIONS.

 

Any Award may be subject to such provisions (whether or not applicable to any
other Award or Recipient) as the Administrator deems appropriate, including
without limitation provisions for the forfeiture of or restrictions on resale or
other disposition of securities of the Company acquired under this Plan,
provisions giving the Company the right to repurchase securities of the Company
acquired under this Plan in the event the Recipient leaves the Company for any
reason or elects to effect any disposition thereof, and provisions to comply
with federal and state securities laws.

 

5.7                               NO PRIVILEGES RE STOCK OWNERSHIP OR SPECIFIC
ASSETS.

 

Except as otherwise set forth herein, a Recipient or a permitted transferee of
an Award will have no rights as a stockholder with respect to any shares
issuable or issued in connection with the Award until the Recipient has
delivered to the Company all amounts payable and performed all obligations
required to be performed in connection with exercise of the Award and the
Company has issued such shares.  No person will have any right, title or
interest in any fund or in any specific asset (including shares of capital
stock) of the Company by reason of any Award granted hereunder.  Neither this
Plan (or any documents related hereto) nor any action taken pursuant hereto is
to be construed to create a trust of any kind or a fiduciary relationship
between the Company and any person.  To the extent that any person acquires a
right to

 

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receive an Award hereunder, such right shall be no greater than the right of any
unsecured general creditor of the Company.

 

5.8                               NONASSIGNABILITY.

 

No Award is assignable or transferable except:  (a) by will or by the laws of
descent and distribution; or (b) subject to the final sentence of this
Section 5.8, upon dissolution of marriage pursuant to a qualified domestic
relations order or, in the discretion of the Administrator on a case-by-case
basis and under circumstances that would not adversely affect the interests of
the Company, transfers for estate planning purposes or pursuant to a nominal
transfer that does not result in a change in beneficial ownership.  Subject to
the final sentence of this Section 5.8, during the lifetime of a Recipient, an
Award granted to such person will be exercisable only by the Recipient (or the
Recipient’s permitted transferee) or such person’s guardian or legal
representative.  Notwithstanding the foregoing, Stock Options intended to be
treated as Incentive Stock Options (or other Awards subject to transfer
restrictions under the IRC) (i) may not be assigned or transferred in violation
of Section 422(b)(5) of the IRC or the regulations thereunder, and nothing
herein is intended to allow such assignment or transfer; and (ii) will be
exercisable during a Recipient’s lifetime only by the Recipient.

 

5.9                               INFORMATION TO RECIPIENTS.

 

(a)                                  Provision of Information.  The
Administrator in its sole discretion may determine what, if any, financial and
other information is to be provided to Recipients and when such financial and
other information is to be provided after giving consideration to applicable
federal and state laws, rules and regulations, including, without limitation,
applicable federal and state securities laws, rules and regulations.

 

(b)                                 Confidentiality.  The furnishing of
financial and other information that is confidential to the Company is subject
to the Recipient’s agreement to maintain the confidentiality of such financial
and other information, and not to use the information for any purpose other than
evaluating the Recipient’s position under this Plan.  The Administrator may
impose other restrictions on the access to and use of such confidential
information and may require a Recipient to acknowledge the Recipient’s
obligations under this Section 5.9(b) (which acknowledgment is not to be a
condition to Recipient’s obligations under this Section 5.9(b)).

 

5.10                        WITHHOLDING TAXES.

 

Whenever the granting, vesting or exercise of any Award, or the issuance of any
Common Stock or other securities upon exercise of any Award or transfer thereof,
gives rise to tax or tax withholding liabilities or obligations, the
Administrator will have the right as a condition thereto to require the
Recipient to remit to the Company an amount sufficient to satisfy any federal,
state and local withholding tax requirements arising in connection therewith. 
The Administrator may, in the exercise of its discretion, allow satisfaction of
tax withholding requirements by accepting delivery of stock of the Company or by
withholding a portion of the stock otherwise issuable in connection with an
Award, in each case valued at Fair Market Value as of the date of such delivery
or withholding, as the case may be.

 

5.11                        LEGENDS ON AWARDS AND STOCK CERTIFICATES.

 

Each Award Document and each certificate representing securities acquired upon
vesting or exercise of an Award must be endorsed with all legends, if any,
required by applicable federal and state securities and other laws to be placed
on the Award Document and/or the certificate.  The determination of which
legends, if any, will be placed upon Award Documents or the certificates will be
made by the Administrator in its discretion and such decision will be final and
binding.

 

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5.12                        EFFECT OF TERMINATION OF EMPLOYMENT ON AWARDS.

 

(a)                                  Termination of Vesting.  Notwithstanding
anything to the contrary herein, but subject to Section 5.12(b) Awards will be
exercisable by a Recipient (or the Recipient’s successor in interest) following
such Recipient’s termination of employment or service only to the extent that
installments thereof had become exercisable on or prior to the date of such
termination.

 

(b)                                 Alteration of Vesting and Exercise Periods.
 Notwithstanding anything to the contrary herein, the Administrator may in its
discretion (i) designate shorter or longer periods following a Recipient’s
termination of employment or service during which Awards may vest or be
exercised; provided, however, that any shorter periods determined by the
Administrator will be effective only if provided for in this Plan or the
instrument that evidences the grant to the Recipient of the affected Award or if
such shorter period is agreed to in writing by the Recipient, and
(ii) accelerate the vesting of all or any portion of any Awards by increasing
the number of shares purchasable at any time.

 

(c)                                  Leave of Absence.  In the case of any
employee on an approved leave of absence, the Administrator may make such
provision respecting continuance of Awards granted to such employee as the
Administrator in its discretion deems appropriate, except that in no event will
an Award be exercisable after the date such Award would expire in accordance
with its terms had the Recipient remained continuously employed.

 

(d)                                 General Cessation.  Except as otherwise set
forth in this Plan or an Award Document or as determined by the Administrator in
its discretion, all Awards granted to a Recipient, and all of such Recipient’s
rights thereunder, will terminate upon termination for any reason of such
Recipient’s employment or service with the Company or any Affiliated Entity (or
cessation of any other service relationship between the Recipient and the
Company or any Affiliated Entity in place as of the date the Award was granted).

 

5.13                        LOCK-UP AGREEMENTS.

 

Each Recipient agrees as a condition to receipt of an Award that, in connection
with any public offering by the Company of its equity securities and upon the
request of the Company and the principal underwriter (if any) in such public
offering, any shares of Common Stock acquired or that may be acquired upon
exercise or vesting of an Award may not be sold, offered for sale, encumbered,
or otherwise disposed of or subjected to any transaction that will involve any
sales of securities of the Company, without the prior written consent of the
Company or such underwriter, as the case may be, for a period of not more than
365 days after the effective date of the registration statement for such public
offering.  Each Recipient will, if requested by the Company or the principal
underwriter, enter into a separate agreement to the effect of this Section 5.13.

 

5.14                        RESTRICTIONS ON COMMON STOCK AND OTHER SECURITIES.

 

Common Stock or other securities of the Company issued or issuable in connection
with any Award will be subject to all of the restrictions imposed under this
Plan upon Common Stock issuable or issued upon exercise of Stock Options, except
as otherwise determined by the Administrator.

 

5.15                        LIMITS ON AWARDS TO ELIGIBLE PERSONS.

 

Notwithstanding any other provision of this Plan, no one Eligible Person shall
be granted Awards with respect to more than 1,800,000 shares of Common Stock in
any one calendar year, provided, however, that this limitation shall not apply
if it is not required in order for the compensation attributable to Awards
hereunder to qualify as Performance-Based Compensation. The limitation set forth
in this Section 5.15 will be subject to adjustment as provided in Section 3.4 or
under Article VIII, but only to the extent such

 

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adjustment would not affect the status of compensation attributable to Awards as
Performance-Based Compensation.

 

ARTICLE VI
AWARDS

 

6.1                               STOCK OPTIONS.

 

(a)                                  Nature of Stock Options.  Stock Options may
be Incentive Stock Options or Nonqualified Stock Options.

 

(b)                                 Option Exercise Price.  The exercise price
for each Stock Option will be determined by the Administrator as of the date
such Stock Option is granted.

 

(c)                                  Option Period and Vesting.  Stock Options
granted hereunder will vest and may be exercised as determined by the
Administrator, except that exercise of Stock Options after termination of the
Recipient’s employment or service shall be subject to Section 5.12 and
Section 6.1(e).  Each Stock Option granted hereunder and all rights or
obligations thereunder shall expire on such date as may be determined by the
Administrator, but not later than ten (10) years after the date the Stock Option
is granted and may be subject to earlier termination as provided herein or in
the Award Document.  Except as otherwise provided herein, a Stock Option will
become exercisable, as a whole or in part, on the date or dates specified by the
Administrator and thereafter will remain exercisable until the exercise,
expiration or earlier termination of the Stock Option.

 

(d)                                 Exercise of Stock Options.  The exercise
price for Stock Options will be paid as set forth in Section 5.3.  No Stock
Option will be exercisable except in respect of whole shares, and fractional
share interests shall be disregarded.  Not fewer than 100 shares of Common Stock
(or such other amount as may be set forth in the applicable Award Document) may
be purchased at one time and Stock Options must be exercised in multiples of 100
unless the number purchased is the total number of shares for which the Stock
Option is exercisable at the time of exercise.  A Stock Option will be deemed to
be exercised when the Secretary or other designated official of the Company
receives written notice of such exercise from the Recipient in the form of
Exhibit A hereto or such other form as the Company may specify from time to
time, together with payment of the exercise price in accordance with Section 5.3
and any amounts required under Section 5.10 or, with permission of the
Administrator, arrangement for such payment.  Notwithstanding any other
provision of this Plan, the Administrator may impose, by rule and/or in Award
Documents, such conditions upon the exercise of Stock Options (including,
without limitation, conditions limiting the time of exercise to specified
periods) as may be required to satisfy applicable regulatory requirements,
including, without limitation, Rule 16b-3 and Rule 10b-5 under the Exchange Act,
and any amounts required under Section 5.10, or any applicable section of or
regulation under the IRC.

 

(e)                                  Termination of Employment.

 

(i)                                     Termination for Just Cause.  Subject to
Section 5.12 and except as otherwise provided in a written agreement between the
Company or an Affiliated Entity and the Recipient, which may be entered into at
any time before or after termination of employment or service, in the event of a
Just Cause Dismissal of a Recipient all of the Recipient’s unexercised Stock
Options, whether or not vested, will expire and become unexercisable as of the
date of such Just Cause Dismissal.

 

(ii)                                  Termination Other Than for Just Cause. 
Subject to Section 5.12 and except as otherwise provided in a written agreement
between the Company or an Affiliated Entity and the

 

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Recipient, which may be entered into at any time before or after termination of
employment or service, if a Recipient’s employment or service with the Company
or any Affiliated Entity terminates for:

 

(A)                              any reason other than for Just Cause Dismissal,
death, or Permanent Disability, the Recipient’s Stock Options, whether or not
vested, will expire and become unexercisable as of the earlier of:  (1) the date
such Stock Options would expire in accordance with their terms had the Recipient
remained employed; and (2) 90 days after the date of termination of employment
or service.

 

(B)                                death or Permanent Disability, the
Recipient’s unexercised Stock Options will, whether or not vested, expire and
become unexercisable as of the earlier of:  (1) the date such Stock Options
would expire in accordance with their terms had the Recipient remained employed;
and (2) one year after the date of termination of employment or service.

 

(f)                                    Special Provisions Regarding Incentive
Stock Options.  Notwithstanding anything herein to the contrary,

 

(i)                                     The exercise price and vesting period of
any Stock Option intended to be treated as an Incentive Stock Option must comply
with the provisions of Section 422 of the IRC and the regulations thereunder. 
As of the Effective Date, such provisions require, among other matters, that: 
(A) the exercise price must not be less than the Fair Market Value of the
underlying stock as of the date the Incentive Stock Option is granted, and not
less than 110% of the Fair Market Value as of such date in the case of a grant
to a Significant Stockholder; and (B) that the Incentive Stock Option not be
exercisable after the expiration of ten (10) years from the date of grant or the
expiration of five (5) years from the date of grant in the case of an Incentive
Stock Option granted to a Significant Stockholder.

 

(ii)                                  The aggregate Fair Market Value
(determined as of the respective date or dates of grant) of the Common Stock for
which one or more Stock Options granted to any Recipient under this Plan (or any
other option plan of the Company or of any Parent Corporation or Subsidiary
Corporation) may for the first time become exercisable as Incentive Stock
Options under the federal tax laws during any one calendar year may not exceed
$100,000.

 

(iii)                               Any Stock Options granted as Incentive Stock
Options pursuant to this Plan that for any reason fail or cease to qualify as
such will be treated as Nonqualified Stock Options.  If the limit described in
Section 6.1(f)(ii) is exceeded, the earliest granted Stock Options will be
treated as Incentive Stock Options, up to such limit.

 

(g)                                 Non-Employee Director Options.  Article VII
will govern Non-Employee Director Options to the extent inconsistent with this
Section 6.1.

 

6.2                               PERFORMANCE AWARDS.

 

(a)                                  Grant of Performance Award.  The
Administrator will determine in its discretion the preestablished, objective
performance goals (which need not be identical and may be established on an
individual or group basis) governing Performance Awards, the terms thereof, and
the form and time of payment of Performance Awards.

 

(b)                                 Payment of Award.  Upon satisfaction of the
conditions applicable to a Performance Award, payment will be made to the
Recipient in cash, in shares of Common Stock valued at Fair Market Value as of
the date payment is due, or in a combination of Common Stock and cash, as the
Administrator in its discretion may determine.

 

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(c)                                  Maximum Amount of Compensation.  The
maximum amount payable pursuant to that portion of a Performance Award granted
for any calendar year to any Recipient that is intended to satisfy the
requirements for Performance-Based Compensation shall not exceed $1,000,000.

 

6.3                               RESTRICTED STOCK.

 

(a)                                  Award of Restricted Stock.  The
Administrator will determine the Purchase Price (if any), the terms of payment
of the Purchase Price, the restrictions upon the Restricted Stock, and when such
restrictions will lapse.

 

(b)                                 Requirements of Restricted Stock.  All
shares of Restricted Stock granted or sold pursuant to this Plan will be subject
to the following conditions:

 

(i)                                     No Transfer.  The shares may not be
sold, assigned, transferred, pledged, hypothecated or otherwise disposed of,
alienated or encumbered until the restrictions are removed or expire;

 

(ii)                                  Certificates.  The Administrator may
require that the certificates representing Restricted Stock granted or sold to a
Recipient remain in the physical custody of an escrow holder or the Company
until all restrictions are removed or expire;

 

(iii)                               Restrictive Legends.  Each certificate
representing Restricted Stock granted or sold to a Recipient pursuant to this
Plan will bear such legend or legends making reference to the restrictions
imposed upon such Restricted Stock as the Administrator in its discretion deems
necessary or appropriate to enforce such restrictions; and

 

(iv)                              Other Restrictions.  The Administrator may
impose such other conditions on Restricted Stock as the Administrator may deem
advisable, including, without limitation, restrictions under the Securities Act,
under the Exchange Act, under the requirements of any stock exchange or
interdealer quotation system upon which such Restricted Stock or other
securities of the Company are then listed or traded and under any blue sky or
other securities laws applicable to such shares.

 

(c)                                  Lapse of Restrictions.  The restrictions
imposed upon Restricted Stock will lapse in accordance with such terms or other
conditions as are determined by the Administrator.

 

(d)                                 Rights of Recipient.  Subject to the
provisions of Section 6.3(b) and any restrictions imposed upon the Restricted
Stock, the Recipient will have all rights of a stockholder with respect to the
Restricted Stock granted or sold to such Recipient under this Plan, including,
without limitation, the right to vote the shares and receive all dividends and
other distributions paid or made with respect thereto.

 

(e)                                  Termination of Employment.  Unless the
Administrator in its discretion determines otherwise, if a Recipient’s
employment or service with the Company or any Affiliated Entity terminates for
any reason, all of the Recipient’s Restricted Stock remaining subject to
restrictions on the date of such termination of employment or service will be
repurchased by the Company at the Purchase Price (if any) paid by the Recipient
to the Company, without interest or premium, and otherwise returned to the
Company without consideration.

 

6.4                               STOCK APPRECIATION RIGHTS.

 

(a)                                  Granting of Stock Appreciation Rights.  The
Administrator may at any time and from time to time approve the grant to
Eligible Persons of Stock Appreciation Rights, related or unrelated to Stock
Options.

 

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(b)                                 SARs Related to Options.

 

(i)                                     A Stock Appreciation Right related to a
Stock Option will entitle the holder of the related Stock Option, upon exercise
of the Stock Appreciation Right, to surrender such Stock Option, or any portion
thereof to the extent previously vested but unexercised, with respect to the
number of shares as to which such Stock Appreciation Right is exercised, and to
receive payment of an amount computed pursuant to Section 6.4(b)(iii).  Such
Stock Option will, to the extent surrendered, then cease to be exercisable.

 

(ii)                                  A Stock Appreciation Right related to a
Stock Option hereunder will be exercisable at such time or times, and only to
the extent that, the related Stock Option is exercisable, and will not be
transferable except to the extent that such related Stock Option may be
transferable (and under the same conditions), will expire no later than the
expiration of the related Stock Option, and may be exercised only when the
market price of the Common Stock subject to the related Stock Option exceeds the
exercise price of the Stock Option.

 

(iii)                               Upon the exercise of a Stock Appreciation
Right related to a Stock Option, the Recipient will be entitled to receive
payment of an amount determined by multiplying: (A) the difference obtained by
subtracting the exercise price of a share of Common Stock specified in the
related Stock Option from the Fair Market Value of a share of Common Stock on
the date of exercise of such Stock Appreciation Right (or as of such other date
or as of the occurrence of such event as may have been specified in the
instrument evidencing the grant of the Stock Appreciation Right), by (B) the
number of shares as to which such Stock Appreciation Right is exercised.

 

(c)                                  SARs Unrelated to Options.  The
Administrator may grant Stock Appreciation Rights unrelated to Stock Options. 
Section 6.4(b)(iii) will govern the amount payable at exercise under such Stock
Appreciation Right, except that in lieu of an option exercise price the initial
base amount specified in the Award shall be used.

 

(d)                                 Limits.  Notwithstanding the foregoing, the
Administrator, in its discretion, may place a dollar limitation on the maximum
amount that will be payable upon the exercise of a Stock Appreciation Right.

 

(e)                                  Payments.  Payment of the amount determined
under the foregoing provisions may be made solely in whole shares of Common
Stock valued at their Fair Market Value on the date of exercise of the Stock
Appreciation Right or, alternatively, at the discretion of the Administrator, in
cash or in a combination of cash and shares of Common Stock as the Administrator
deems advisable.  The Administrator has full discretion to determine the form in
which payment of a Stock Appreciation Right will be made and to consent to or
disapprove the election of a Recipient to receive cash in full or partial
settlement of a Stock Appreciation Right.  If the Administrator decides to make
full payment in shares of Common Stock, and the amount payable results in a
fractional share, payment for the fractional share will be made in cash.

 

6.5                               STOCK PAYMENTS.

 

The Administrator may approve Stock Payments to any Eligible Person on such
terms and conditions as the Administrator may determine.  Stock Payments will
replace cash compensation at the Fair Market Value of the Common Stock on the
date payment is due.

 

6.6                               DIVIDEND EQUIVALENTS.

 

The Administrator may grant Dividend Equivalents to any Recipient who has
received a Stock Option, SAR or other Award denominated in shares of Common
Stock.  Dividend Equivalents may be paid in

 

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cash, Common Stock or other Awards; the amount of Dividend Equivalents paid
other than in cash will be determined by the Administrator by application of
such formula as the Administrator may deem appropriate to translate the cash
value of dividends paid to the alternative form of payment of the Dividend
Equivalent.  Dividend Equivalents will be computed as of each dividend record
date and will be payable to recipients thereof at such time as the Administrator
may determine.  Notwithstanding the foregoing, if it is intended that an Award
qualify as Performance-Based Compensation, and the amount of compensation the
Recipient could receive under the Award is based solely on an increase in value
of the underlying stock after the date of the grant or award, then the payment
of any Dividend Equivalents related to the Award shall not be made contingent on
the exercise of the Award.

 

6.7                               STOCK BONUSES.

 

The Administrator may issue Stock Bonuses to Eligible Persons on such terms and
conditions as the Administrator may determine.

 

6.8                               STOCK SALES.

 

The Administrator may sell to Eligible Persons shares of Common Stock on such
terms and conditions as the Administrator may determine.

 

6.9                               PHANTOM STOCK.

 

The Administrator may grant Awards of Phantom Stock to Eligible Persons. 
Phantom Stock is a cash payment measured by the Fair Market Value of a specified
number of shares of Common Stock on a specified date, or measured by the excess
of such Fair Market Value over a specified minimum, which may but need not
include a Dividend Equivalent.

 

6.10                        OTHER STOCK-BASED BENEFITS.

 

The Administrator is authorized to grant Other Stock-Based Benefits.  Other
Stock-Based Benefits are any arrangements granted under this Plan not otherwise
described above that:  (a) by their terms might involve the issuance or sale of
Common Stock or other securities of the Company; or (b) involve a benefit that
is measured, as a whole or in part, by the value, appreciation, dividend yield
or other features attributable to a specified number of shares of Common Stock
or other securities of the Company.

 

ARTICLE VII
NON-EMPLOYEE DIRECTOR OPTIONS

 

7.1                               GRANTS OF STOCK OPTIONS.

 

Immediately following each annual meeting of stockholders of the Company, each
Non-Employee Director who has served as a director since his or her election or
appointment and has been re-elected as a director at such annual meeting shall
automatically receive an option to purchase up to 10,000 shares of the Company’s
Common Stock.  Each Non-Employee Director who is appointed or elected other than
at an annual meeting of stockholders of the Company (whether by replacing a
director who retires, resigns or otherwise terminates his or her service as a
director prior to the expiration of his or her term or otherwise) shall
automatically receive an option to purchase shares of the Company’s Common Stock
as of the date of such appointment or election, consisting of a number of shares
of Company Common Stock determined by multiplying 10,000 by a fraction, the
numerator of which is the number of days from the date of grant to the date of
the next scheduled annual meeting of stockholders of the Company and the
denominator of which is 365 (exclusive of fractional shares).  The exercise
price for all grants of options granted under this Section 7.1 shall be equal to
the Fair Market Value of the Company’s Common Stock on the date of grant,
subject to: (a) vesting as set forth in Section 7.2 and (b) adjustment as set
forth in this Plan.

 

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7.2                               VESTING.

 

All grants of options granted under Section 7.1 shall vest and become
exercisable 100% on the day prior to the date of the next annual meeting of
stockholders following the grant date if the Recipient has remained a director
for the entire period from the date of grant to such vesting date. 
Notwithstanding the foregoing, however, all grants of options granted under
Section 7.1 that have not vested and become exercisable at the time the
Recipient ceases to be a director shall terminate.

 

7.3                               EXERCISE.

 

Non-Employee Director Options will be exercisable, and the exercise price
therefor shall be paid, in the same manner as provided herein for other Stock
Options.

 

7.4                               TERM OF OPTIONS AND EFFECT OF TERMINATION.

 

Notwithstanding any other provision of the Plan, no Non-Employee Director Option
granted under the Plan shall be exercisable after the expiration of ten years
from the effective date of its grant.  In the event that the Recipient of any
Non-Employee Director Options granted under the Plan shall cease to be a
director of the Company, all grants of options granted under Section 7.1 of this
Plan to such Recipient shall be exercisable, to the extent already exercisable
at the date such Recipient ceases to be a director and regardless of the reason
the Recipient ceases to be a director, for a period of 365 days after that date
(or, if sooner, until the expiration of the option according to its terms), and
shall then terminate.  In the event of the death of a Recipient while such
Recipient is a director of the Company or within the period after termination of
such status during which he or she is permitted to exercise an option, such
option may be exercised by any person or persons designated by the Recipient on
a beneficiary designation form adopted by the Plan administrator for such
purpose or, if there is no effective beneficiary designation form on file with
the Company, by the executors or administrators of the Recipient’s estate or by
any person or persons who shall have acquired the option directly from the
Recipient by his or her will or the applicable laws of descent and distribution.

 

7.5                               AMENDMENT; SUSPENSION.

 

The Administrator may at any time and from time to time in its discretion
(a) change the number of shares or vesting periods associated with the
Non-Employee Director Options, and (b) suspend and reactivate this Article VII.

 

ARTICLE VIII
CHANGE IN CONTROL

 

8.1                               PROVISION FOR AWARDS UPON CHANGE IN CONTROL.

 

Unless otherwise set forth in an Award Document or in this Section 8.1, as of
the effective time and date of any Change in Control, this Plan and any then
outstanding Awards (whether or not vested) will automatically terminate unless: 
(a) provision is made in writing in connection with such transaction for the
continuance of this Plan and for the assumption of such Awards, or for the
substitution for such Awards of new awards covering the securities of a
successor entity or an affiliate thereof, with appropriate adjustments as to the
number and kind of securities and exercise prices or other measurement criteria,
in which event this Plan and such outstanding Awards will continue or be
replaced, as the case may be, in the manner and under the terms so provided; or
(b) the Board otherwise provides in writing for such adjustments as it deems
appropriate in the terms and conditions of the then-outstanding Awards (whether
or not vested), including, without limitation, (i) accelerating the vesting of
outstanding Awards, and/or (ii) providing for the cancellation of Awards and
their automatic conversion into the right to receive the securities, cash or
other consideration that a holder of the shares underlying such Awards would
have been entitled to receive upon consummation of such Change in Control had
such shares been issued and outstanding immediately prior to the effective date
and time of the Change in Control (net of the appropriate option exercise
prices).  If, pursuant to the foregoing provisions of this Section 8.1, this

 

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Plan and the Awards terminate by reason of the occurrence of a Change in Control
without provision for any of the action(s) described in clause (a) or
(b) hereof, then subject to Section 5.12 and Section 6.1(e), any Recipient
holding outstanding Awards will have the right, at such time prior to the
consummation of the Change in Control as the Board designates, to exercise or
receive the full benefit of the Recipient’s Awards to the full extent not
theretofore exercised, including any installments which have not yet become
vested.  Notwithstanding anything to the contrary in this Section 8.1, the
vesting provisions of Section 7.2 or any other provision in the Plan, all
Non-Employee Director Options granted under the Plan shall automatically vest
and become exercisable immediately prior to any Change in Control if the
optionee is a director of the Company at that time.

 

ARTICLE IX
DEFINITIONS

 

Capitalized terms used in this Plan and not otherwise defined have the meanings
set forth below:

 

“Administrator” means the Board as long as no Committee has been appointed and
is in effect and also means the Committee to the extent that the Board has
delegated authority thereto.

 

“Affiliated Entity” means any Parent Corporation of the Company or Subsidiary
Corporation of the Company or any other entity controlling, controlled by, or
under common control with the Company.

 

“Applicable Dividend Period” means (i) the period between the date a Dividend
Equivalent is granted and the date the related Stock Option, SAR, or other Award
is exercised, terminates, or is converted to Common Stock, or (ii) such other
time as the Administrator may specify in the written instrument evidencing the
grant of the Dividend Equivalent.

 

“Award” means any Stock Option, Performance Award, Restricted Stock, Stock
Appreciation Right, Stock Payment, Stock Bonus, Stock Sale, Phantom Stock,
Dividend Equivalent, or Other Stock-Based Benefit granted or sold to an Eligible
Person under this Plan, or any similar award granted by the Company prior to the
Effective Date and outstanding as of the Effective Date that is governed by this
Plan.

 

“Award Document” means the agreement or confirming memorandum setting forth the
terms and conditions of an Award.

 

“Board” means the Board of Directors of the Company.

 

“Change in Control” means the following and shall be deemed to occur if any of
the following events occurs:

 

(i)                                        Any Person becomes the beneficial
owner (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of
fifty percent (50%) or more of either the then outstanding shares of Common
Stock or the combined voting power of the Company’s then outstanding securities
entitled to vote generally in the election of directors; or

 

(ii)                                     Individuals who, as of the effective
date hereof, constitute the Board (the “Incumbent Board”) cease for any reason
to constitute at least a majority of the Board, provided, however, that any
individual who becomes a director after the effective date hereof whose
election, or nomination for election by the Company’s stockholders, is approved
by a vote of at least a majority of the directors then comprising the Incumbent
Board shall be considered to be a member of the Incumbent Board unless that
individual was nominated or elected by any person, entity or group (as defined
above) having the power to exercise, through beneficial ownership,

 

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voting agreement and/or proxy, twenty percent (20%) or more of either the
outstanding shares of Common Stock or the combined voting power of the Company’s
then outstanding voting securities entitled to vote generally in the election of
directors, in which case that individual shall not be considered to be a member
of the Incumbent Board unless such individual’s election or nomination for
election by the Company’s stockholders is approved by a vote of at least
two-thirds of the directors then comprising the Incumbent Board; or

 

(iii)                                  Consummation by the Company of the sale
or other disposition by the Company of all or substantially all of the Company’s
assets or a Reorganization of the Company with any other person, corporation or
other entity, other than

 

(A)                           a Reorganization that would result in the voting
securities of the Company outstanding immediately prior thereto (or, in the case
of a Reorganization that is preceded or accomplished by an acquisition or series
of related acquisitions by any Person, by tender or exchange offer or otherwise,
of voting securities representing 5% or more of the combined voting power of all
securities of the Company, immediately prior to such acquisition or the first
acquisition in such series of acquisitions) continuing to represent, either by
remaining outstanding or by being converted into voting securities of another
entity, more than 50% of the combined voting power of the voting securities of
the Company or such other entity outstanding immediately after such
Reorganization (or series of related transactions involving such a
Reorganization), or

 

(B)                             a Reorganization effected to implement a
recapitalization or reincorporation of the Company (or similar transaction) that
does not result in a material change in beneficial ownership of the voting
securities of the Company or its successor; or

 

(iv)                                 Approval by the stockholders of the Company
or an order by a court of competent jurisdiction of a plan of liquidation of the
Company.

 

“Committee” means any committee appointed by the Board to administer this Plan
pursuant to Section 4.1.

 

“Common Stock” means the common stock of the Company, $0.001 par value per
share, as constituted on the Effective Date, and as thereafter adjusted under
Section 3.4.

 

“Company” means Quidel Corporation, a Delaware corporation.

 

“Dividend Equivalent” means a right granted by the Company under Section 6.6 to
a holder of a Stock Option, Stock Appreciation Right or other Award denominated
in shares of Common Stock to receive from the Company during the Applicable
Dividend Period payments equivalent to the amount of dividends payable to
holders of the number of shares of Common Stock underlying such Stock Option,
Stock Appreciation Right, or other Award.

 

“Effective Date” means May 23, 2001, the date this Plan was approved and adopted
by the Company’s stockholders.

 

“Eligible Person” includes directors, including Non-Employee Directors,
officers, employees, consultants and advisors of the Company or of any
Affiliated Entity; provided, however, that in order to be Eligible Persons,
consultants and advisors must render bona fide services to the Company or any
Affiliated Entity that are not in connection with capital-raising.

 

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

 

“Expiration Date” means the tenth (10th) anniversary of the Effective Date.

 

“Fair Market Value” of a share of the Company’s capital stock as of a particular
date means: (i) if the stock is listed on an established stock exchange or
exchanges (including for this purpose, the Nasdaq National Market), the closing
sale price of the stock for such date on the primary exchange upon which the
stock trades, as measured by volume, as published in The Wall Street Journal,
or, if no sale price was quoted for such date, then as of the next preceding
date on which such a sale price was quoted; or (ii) if the stock is not then
listed on an exchange or the Nasdaq National Market, the average of the closing
bid and asked prices per share for the stock in the over-the-counter market on
such date (in the case of (i) or (ii), subject to adjustment as and if necessary
and appropriate to set an exercise price not less than 100% of the fair market
value of the stock on the date an Award is granted); or (iii) if the stock is
not then listed on an exchange or quoted in the over-the-counter market, an
amount determined in good faith by the Administrator, provided, however, that
(A) when appropriate, the Administrator in determining Fair Market Value of
capital stock of the Company may take into account such other factors as it may
deem appropriate under the circumstances, and (B) if the stock is traded on the
Nasdaq SmallCap Market and both sales prices and bid and asked prices are quoted
or available, the Administrator may elect to determine Fair Market Value under
either clause (i) or (ii) above.  Notwithstanding the foregoing, the Fair Market
Value of capital stock for purposes of grants of Incentive Stock Options must be
determined in compliance with applicable provisions of the IRC.  The Fair Market
Value of rights or property other than capital stock of the Company means the
fair market value thereof as determined by the Administrator on the basis of
such factors as it may deem appropriate.

 

“Incentive Stock Option” means a Stock Option that qualifies as an incentive
stock option under Section 422 of the IRC.

 

“IRC” means the Internal Revenue Code of 1986, as amended.

 

“Just Cause Dismissal” means a termination of a Recipient’s employment for any
of the following reasons:  (i) the Recipient violates any reasonable rule or
regulation of the Board, the Company’s President or Chief Executive Officer or
the Recipient’s superiors that results in damage to the Company or any
Affiliated Entity or which, after written notice to do so, the Recipient fails
to correct within a reasonable time not exceeding 15 days; (ii) any willful
misconduct or gross negligence by the Recipient in the responsibilities assigned
to the Recipient; (iii) any willful failure to perform the Recipient’s job as
required to meet the objectives of the Company or any Affiliated Entity;
(iv) any wrongful conduct of a Recipient which has an adverse impact on the
Company or any Affiliated Entity or which constitutes a misappropriation of
assets of the Company or any Affiliated Entity; (v) the Recipient’s performing
services for any other person or entity that competes with the Company while the
Recipient is employed by the Company without the written approval of the Chief
Executive Officer of the Company; or (vi) any other conduct that the
Administrator reasonably determines constitutes Just Cause for Dismissal;
provided, however, that if a Recipient is party to an employment agreement with
the Company or any Affiliated Entity providing for just cause dismissal (or some
comparable concept) of Recipient from Recipient’s employment with the Company or
any Affiliated Entity, “Just Cause Dismissal” for purposes of this Plan will
have the same meaning as ascribed thereto or to such comparable concept in such
employment agreement.

 

“Non-Employee Director” means a director of the Company who qualifies as a
“Non-Employee Director” under Rule 16b-3 under the Exchange Act.

 

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“Non-Employee Director Option” means a right to purchase stock of the Company
granted under Section 7.1 of this Plan.

 

“Nonqualified Stock Option” means a Stock Option that is not an Incentive Stock
Option.

 

“Other Stock-Based Benefits” means an Award granted under Section 6.10.

 

“Parent Corporation” means any Parent Corporation as defined in
Section 424(e) of the IRC.

 

“Performance Award” means an Award under Section 6.2, payable in cash, Common
Stock or a combination thereof, that vests and becomes payable over a period of
time upon attainment of preestablished, objective performance goals established
in connection with the grant of the Award.  For this purpose, a preestablished,
objective performance goal may include one or more of the following performance
criteria:  (a) cash flow, (b) earnings per share (including earnings before
interest, taxes, and amortization), (c) return on equity, (d) total Shareholder
return, (e) return on capital, (f) return on assets or net assets, (g) income or
net income, (h) operating income or net operating income, (i) operating margin,
(j) return on operating revenue, and (k) any other similar performance criteria.

 

“Performance-Based Compensation” means performance-based compensation as
described in Section 162(m) of the IRC and the regulations issued thereunder. 
If the amount of compensation an Eligible Person will receive under any Award is
not based solely on an increase in the value of Common Stock after the date of
grant or award, the Administrator, in order to qualify an Award as
performance-based compensation under Section 162(m) of the IRC, can condition
the grant, award, vesting, or exercisability of such an Award on the attainment
of a preestablished, objective performance goal including, but not limited to,
those preestablished, objective performance goals described in the definition of
Performance Award above.

 

“Permanent Disability” means that the Recipient becomes physically or mentally
incapacitated or disabled so that the Recipient is unable to perform
substantially the same services as the Recipient performed prior to incurring
such incapacity or disability (the Company, at its option and expense, being
entitled to retain a physician to confirm the existence of such incapacity or
disability, and the determination of such physician to be binding upon the
Company and the Recipient), and such incapacity or disability continues for a
period of three consecutive months or six months in any 12-month period or such
other period(s) as may be determined by the Administrator with respect to any
Award, provided, however, that for purposes of determining the period during
which an Incentive Stock Option may be exercised pursuant to Section 6.1(e),
Permanent Disability shall mean “permanent and total disability” as defined in
Section 22(e) of the IRC.

 

“Person” means any person, entity or group, within the meaning of
Section 13(d) or 14(d) of the Exchange Act, but excluding (i) the Company and
its subsidiaries, (ii) any employee stock ownership or other employee benefit
plan maintained by the Company and (iii) an underwriter or underwriting
syndicate that has acquired the Company’s securities solely in connection with a
public offering thereof.

 

“Phantom Stock” means an Award granted under Section 6.9.

 

“Plan” means this 2001 Equity Incentive Plan of the Company.

 

“Plan Term” means the period during which this Plan remains in effect
(commencing the Effective Date and ending on the Expiration Date).

 

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“Purchase Price” means the purchase price (if any) to be paid by a Recipient for
Restricted Stock as determined by the Administrator (which price shall be at
least equal to the minimum price required under applicable laws and regulations
for the issuance of Common Stock which is nontransferable and subject to a
substantial risk of forfeiture until specific conditions are met).

 

“Recipient” means a person who has received an Award.

 

“Reorganization” means any merger, consolidation or other reorganization.

 

“Restricted Stock” means Common Stock that is the subject of an Award made under
Section 6.3 and that is nontransferable and subject to a substantial risk of
forfeiture until specific conditions are met, as set forth in this Plan and in
any statement evidencing the grant of such Award.

 

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

 

“Significant Stockholder” is an individual who, at the time a Stock Option is
granted to such individual under this Plan, owns more than ten percent (10%) of
the total combined voting power of all classes of stock of the Company or of any
Parent Corporation or Subsidiary Corporation (after application of the
attribution rules set forth in Section 424(d) of the IRC).

 

“Stock Appreciation Right” or “SAR” means a right granted under Section 6.4 to
receive a payment that is measured with reference to the amount by which the
Fair Market Value of a specified number of shares of Common Stock appreciates
from a specified date, such as the date of grant of the SAR, to the date of
exercise.

 

“Stock Bonus” means an issuance or delivery of unrestricted or restricted shares
of Common Stock under Section 6.7 as a bonus for services rendered or for any
other valid consideration under applicable law.

 

“Stock Payment” means a payment in shares of the Company’s Common Stock under
Section 6.5 to replace all or any portion of the compensation or other payment
(other than base salary) that would otherwise become payable to the Recipient in
cash.

 

“Stock Option” means a right to purchase stock of the Company granted under
Section 6.1 or Section 7.1 of this Plan.

 

“Stock Sale” means a sale of Common Stock to an Eligible Person under
Section 6.8.

 

“Subsidiary Corporation” means any Subsidiary Corporation as defined in
Section 424(f) of the IRC.

 

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