EXHIBIT 10.7
THE 2003 INCENTIVE AWARD PLAN
OF
GEN-PROBE INCORPORATED
Originally Adopted by the Board of Directors on March 3, 2003
Amendment Adopted by Board of Directors on May 13, 2003
Originally Approved by the Stockholders on May 29, 2003
Amendment and Restatement Adopted by Board of Directors on February 9, 2006
Amendment and Restatement Approved by the Stockholders on May 17, 2006
Second Amendment and Restatement Adopted by Board of Directors on November 16,
2006
Third Amendment and Restatement Adopted by Board of Directors on February 8,
2007
     Gen-Probe Incorporated, a Delaware corporation, has adopted The 2003
Incentive Award Plan of Gen-Probe Incorporated (the “Plan”) for the benefit of
its eligible Employees, Consultants and Directors.
     The purposes of the Plan are as follows:
     (1) To provide an additional incentive for Directors, Employees and
Consultants (as such terms are defined below) to further the growth, development
and financial success of the Company by personally benefiting through the
ownership of Company stock and/or rights which recognize such growth,
development and financial success.
     (2) To enable the Company to obtain and retain the services of Directors,
Employees and Consultants considered essential to the long range success of the
Company by offering them an opportunity to own stock in the Company and/or
rights which will reflect the growth, development and financial success of the
Company.
ARTICLE I.
DEFINITIONS
     1.1. General. Whenever the following terms are used in the Plan they shall
have the meanings specified below, unless the context clearly indicates
otherwise.
     1.2. Administrator. “Administrator” shall mean the entity that conducts the
general administration of the Plan as provided herein. With reference to the
administration of the Plan with respect to Options and shares of Restricted
Stock granted to Independent Directors, the term “Administrator” shall refer to
the Board. With reference to the administration of the Plan with respect to any
other Awards, the term “Administrator”

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shall refer to the Committee, except to the extent the Board has assumed the
authority for administration of the Plan as provided in Section 9.2.
     1.3. Award. “Award” shall mean an Option, a Restricted Stock award or a
Stock Appreciation Right which may be awarded or granted under the Plan
(collectively, “Awards”).
     1.4. Award Agreement. “Award Agreement” shall mean a written agreement
executed by an authorized officer of the Company and the Holder, which shall
contain such terms and conditions with respect to an Award, as the Administrator
shall determine, consistent with the Plan.
     1.5. Award Limit. “Award Limit” shall mean Five Hundred Thousand (500,000)
shares of Common Stock, as adjusted pursuant to Section 10.3 of the Plan.
     1.6. Board. “Board” shall mean the Board of Directors of the Company.
     1.7. Change in Control. “Change in Control” shall mean a change in
ownership or control of the Company effected through any of the following
transactions:
     (a) any person or related group of persons (other than the Company or a
person that, prior to such transaction, directly or indirectly controls, is
controlled by, or is under common control with, the Company) directly or
indirectly acquires beneficial ownership (within the meaning of Rule 13d-3 under
the Exchange Act) of securities possessing more than fifty percent (50%) of the
total combined voting power of the Company’s outstanding securities pursuant to
a tender or exchange offer for securities of the Company;
     (b) there is a change in the composition of the Board over a period of
thirty-six (36) consecutive months (or less) such that a majority of the Board
members (rounded up to the nearest whole number) ceases, by reason of one or
more proxy contests for the election of Board members, to be comprised of
individuals who either (i) have been Board members continuously since the
beginning of such period or (ii) have been elected or nominated for election as
Board members during such period by at least a majority of the Board members
described in clause (i) who were still in office at the time such election or
nomination was approved by the Board;
     (c) a merger or consolidation of the Company with any other corporation (or
other entity), other than a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity or another entity) more than
662/3% of the combined voting power of the voting securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation; provided, however, that a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction) in which no
person acquires more than 25% of the combined voting

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power of the Company’s then outstanding voting securities shall not constitute a
Change in Control; or
     (d) a plan of complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or substantially all of the Company’s
assets.
     1.8. Code. “Code” shall mean the Internal Revenue Code of 1986, as amended
from time to time.
     1.9. Committee. “Committee” shall mean the Board, or Compensation Committee
of the Board, or another committee or subcommittee of the Board, appointed as
provided in Section 9.1.
     1.10. Common Stock. “Common Stock” shall mean the Common Stock of the
Company, par value $0.0001 per share.
     1.11. Company. “Company” shall mean Gen-Probe Incorporated, a Delaware
corporation.
     1.12. Consultant. “Consultant” shall mean any consultant or adviser (other
than an Employee) if:
     (a) the consultant or adviser renders bona fide services to the Company;
     (b) the services rendered by the consultant or adviser are not in
connection with the offer or sale of securities in a capital-raising transaction
and do not directly or indirectly promote or maintain a market for the Company’s
securities; and
     (c) the consultant or adviser is a natural person who has contracted
directly with the Company to render such services.
     1.13. Director. “Director” shall mean a member of the Board, whether such
Director is an Employee or an Independent Director.
     1.14. DRO. “DRO” shall mean a domestic relations order as defined by the
Code or Title I of the Employee Retirement Income Security Act of 1974, as
amended, or the rules thereunder.
     1.15. Employee. “Employee” shall mean any officer or other employee (as
defined in accordance with Section 3401(c) of the Code) of the Company, or of
any corporation which is a Subsidiary.
     1.16. Equity Restructuring. “Equity Restructuring” shall mean a
non-reciprocal transaction between the Company and its stockholders, such as a
stock dividend, stock split, spin-off, rights offering or recapitalization
through a large, nonrecurring cash dividend, that affects the shares of Common
Stock (or other securities of the Company)

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or the share price of Common Stock (or other securities) and causes a change in
the per share value of the Common Stock underlying outstanding Awards.
     1.17. Exchange Act. “Exchange Act” shall mean the Securities Exchange Act
of 1934, as amended.
     1.18. Fair Market Value. “Fair Market Value” shall mean, as of any date,
the value of the Common Stock determined as follows:
     (a) If the Common Stock is listed on any established stock exchange or a
national market system, 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 system (or the exchange or system with
the greatest volume of trading in the Common Stock) for such date, or if no bids
or sales were reported for such date, then the closing sales price (or the
closing bid, if no sales were reported) on the trading date immediately prior to
such date during which a bid or sale occurred, in each case, as reported by The
Nasdaq Stock Market or such other source as the Board deems reliable.
     (b) In the absence of such markets for the Common Stock, the Fair Market
Value shall be determined in good faith by the Board.
     1.19. Holder. “Holder” shall mean a person who has been granted or awarded
an Award.
     1.20. Incentive Stock Option. “Incentive Stock Option” shall mean an Option
which conforms to the applicable provisions of Section 422 of the Code and which
is designated as an Incentive Stock Option by the Administrator.
     1.21. Independent Director. “Independent Director” shall mean a member of
the Board who is not an Employee.
     1.22. Non-Qualified Stock Option. “Non-Qualified Stock Option” shall mean
an Option not intended to qualify as an incentive stock option within the
meaning of Section 422 of the Code and the regulations promulgated thereunder.
     1.23. Option. “Option” shall mean a stock option granted under Article IV
of the Plan. An Option granted under the Plan shall, as determined by the
Administrator, be either a Non-Qualified Stock Option or an Incentive Stock
Option; provided, however, that Options granted to Independent Directors and
Consultants shall be Non-Qualified Stock Options.
     1.24. Performance Criteria. “Performance Criteria” shall mean the following
business criteria with respect to the Company, any Subsidiary or any division or
operating unit: (a) net income, (b) pre-tax income, (c) operating income,
(d) cash flow, (e) earnings per share, (f) return on equity, (g) return on
invested capital or assets, (h) cost reductions or savings, (i) funds from
operations, (j) appreciation in the Fair Market

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Value of Common Stock and (k) earnings before any one or more of the following
items: interest, taxes, depreciation or amortization.
     1.25. Plan. “Plan” shall mean The 2003 Incentive Award Plan of Gen-Probe
Incorporated.
     1.26. Restricted Stock. “Restricted Stock” shall mean Common Stock awarded
under Article VII of the Plan.
     1.27. Rule 16b-3. “Rule 16b-3” shall mean that certain Rule 16b-3 under the
Exchange Act, as such Rule may be amended from time to time.
     1.28. Section 162(m) Employee. “Section 162(m) Employee” shall mean any
Employee designated by the Administrator as an Employee whose compensation for
the fiscal year in which the Employee is so designated or a future fiscal year
may be subject to the limit on deductible compensation imposed by Section 162(m)
of the Code.
     1.29. Securities Act. “Securities Act” shall mean the Securities Act of
1933, as amended.
     1.30. Stock Appreciation Right. “Stock Appreciation Right” shall mean a
stock appreciation right granted under Article VIII of the Plan.
     1.31. Subsidiary. “Subsidiary” shall mean any corporation in an unbroken
chain of corporations beginning with the Company if each of the corporations
other than the last corporation in the unbroken chain then owns stock possessing
fifty percent (50%) or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
     1.32. Substitute Award. “Substitute Award” shall mean an Option granted
under the Plan upon the assumption of, or in substitution for, outstanding
equity awards previously granted by another company or entity in connection with
a corporate or similar transaction, such as a merger, combination, consolidation
or acquisition of property or stock; provided, however, that in no event shall
the term “Substitute Award” be construed to refer to an option granted in
connection with the cancellation and repricing of an Option.
     1.33. Termination of Consultancy. “Termination of Consultancy” shall mean
the time when the engagement of a Holder as a Consultant to the Company or a
Subsidiary is terminated for any reason, with or without cause, including, but
not by way of limitation, by resignation, discharge, death, disability or
retirement; but excluding terminations where there is a simultaneous engagement
by or commencement of employment with the Company or any Subsidiary or a parent
corporation thereof (within the meaning of Section 422 of the Code). The
Administrator, in its absolute discretion, shall determine the effect of all
matters and questions relating to Termination of Consultancy, including, but not
by way of limitation, the question of whether a Termination of Consultancy
resulted from a discharge for cause, and all questions of whether a particular
leave of

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absence constitutes a Termination of Consultancy. Notwithstanding any other
provision of the Plan, the Company or any Subsidiary has an absolute and
unrestricted right to terminate a Consultant’s service at any time for any
reason whatsoever, with or without cause, except to the extent expressly
provided otherwise in writing.
     1.34. Termination of Directorship. “Termination of Directorship” shall mean
the time when a Holder who is an Independent Director ceases to be a Director
for any reason, including, but not by way of limitation, a termination by
resignation, removal, failure to be re-elected, death, disability or retirement.
The Board, in its sole and absolute discretion, shall determine the effect of
all matters and questions relating to Termination of Directorship with respect
to Independent Directors.
     1.35. Termination of Employment. “Termination of Employment” shall mean the
time when the employee-employer relationship between a Holder and the Company or
any Subsidiary is terminated for any reason, with or without cause, including,
but not by way of limitation, a termination by resignation, discharge, death,
disability or retirement; but excluding (a) terminations where there is a
simultaneous reemployment or continuing employment of a Holder by the Company or
any Subsidiary or a parent corporation thereof (within the meaning of
Section 422 of the Code), (b) at the discretion of the Administrator,
terminations which result in a temporary severance of the employee-employer
relationship, and (c) at the discretion of the Administrator, terminations which
are followed by the simultaneous establishment of a consulting relationship by
the Company or a Subsidiary with the former employee, until the consultancy
terminates and (d) terminations of employment due to retirement which are
followed by the continuing service of the Holder as a Director of the Company,
until such service as a director terminates. The Administrator, in its absolute
discretion, shall determine the effect of all matters and questions relating to
Termination of Employment, including, but not by way of limitation, the question
of whether a Termination of Employment resulted from a discharge for cause, and
all questions of whether a particular leave of absence constitutes a Termination
of Employment; provided, however, that, with respect to Incentive Stock Options,
unless otherwise determined by the Administrator in its discretion, a leave of
absence, change in status from an employee to an independent contractor or other
change in the employee-employer relationship shall constitute a Termination of
Employment if, and to the extent that, such leave of absence, change in status
or other change interrupts employment for the purposes of Section 422(a)(2) of
the Code and the then applicable regulations and revenue rulings under said
Section.
ARTICLE II.
SHARES SUBJECT TO PLAN
     2.1. Shares Subject to Plan.
     (a) The shares of stock subject to Awards shall be Common Stock, subject to
Section 10.3 of the Plan. The aggregate number of such shares which may be
issued upon

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exercise of such Options or rights or upon any such Awards under the Plan shall
not exceed Eight Million (8,000,000) shares. No additional shares may be
authorized for issuance under the Plan without stockholder approval (subject to
adjustment as set forth in Section 10.3). The shares of Common Stock issuable
upon exercise of such Options or rights or upon any such Awards may be either
previously authorized but unissued shares or treasury shares.
     (b) Subject to Section 2.2, the number of shares available for issuance
under the Plan shall be reduced by: (i) one (1) share for each share of stock
issued pursuant to (A) an Option granted under Article IV, (B) an award of
Restricted Stock under Article VII granted prior to May 17, 2006 and (C) a Stock
Appreciation Right granted under Article VIII with respect to which the strike
price is at least one hundred percent (100%) of the Fair Market Value of the
underlying Common Stock on the date of grant; and (ii) two (2.0) shares for each
share of Common Stock issued pursuant to an award of Restricted Stock under
Article VII granted after May 17, 2006.
     (c) The maximum number of shares of Common Stock which may be subject to
Awards granted under the Plan to any individual in any calendar year shall not
exceed the Award Limit. To the extent required by Section 162(m) of the Code,
shares subject to Options that are canceled continue to be counted against the
Award Limit.
     2.2. Add-Back of Options and Other Rights. If any Option or other right to
acquire shares of Common Stock under any other Award under the Plan expires or
is canceled without having been fully exercised, or is exercised in whole or in
part for cash as permitted by the Plan, then the number of shares of Common
Stock subject to such Option or other right but as to which such Option or other
right was not exercised prior to its expiration or cancellation may again be
optioned, granted or awarded hereunder, subject to the limitations of
Section 2.1; provided that to the extent there is issued a share of Common Stock
pursuant to an Award that counted as two (2.0) shares against the number of
shares available for issuance under the Plan pursuant to Section 2.1(b) and such
share of Common Stock again becomes available for issuance under the Plan
pursuant to this Section 2.2, then the number of shares of Common Stock
available for issuance under the Plan shall increase by two (2.0) shares.
Furthermore, any shares subject to Awards which are adjusted pursuant to
Section 10.3 and become exercisable with respect to shares of stock of another
corporation shall be considered cancelled and may again be optioned, granted or
awarded hereunder, subject to the limitations of Section 2.1. Shares of Common
Stock which are delivered by the Holder or withheld by the Company upon the
exercise of any Award under the Plan, in payment of the exercise price thereof
or tax withholding thereon, may not again be optioned, granted or awarded
hereunder, subject to the limitations of Section 2.1. If any shares of
Restricted Stock are surrendered by the Holder or repurchased by the Company
pursuant to Section 7.4 or 7.5 hereof, such shares may again be optioned,
granted or awarded hereunder, subject to the provisions of Section 2.1.
Notwithstanding the provisions of this Section 2.2, no shares of Common Stock
may again be optioned, granted or awarded if such action would cause an
Incentive Stock Option to fail to qualify as an “incentive stock option” under
Section 422 of the Code.

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ARTICLE III.
GRANTING OF AWARDS
     3.1. Award Agreement. Each Award shall be evidenced by an Award Agreement.
Award Agreements evidencing Awards intended to qualify as performance-based
compensation as described in Section 162(m)(4)(C) of the Code shall contain such
terms and conditions as may be necessary to meet the applicable provisions of
Section 162(m) of the Code. Award Agreements evidencing Incentive Stock Options
shall contain such terms and conditions as may be necessary to meet the
applicable provisions of Section 422 of the Code.
3.2. Provisions Applicable to Section 162(m) Employees.
     (a) The Committee, in its discretion, may determine whether an Award is to
qualify as performance-based compensation as described in Section 162(m)(4)(C)
of the Code.
     (b) Notwithstanding anything in the Plan to the contrary, the Committee may
grant any Award to a Section 162(m) Employee that vests or becomes exercisable
or payable upon the attainment of performance goals which are related to one or
more of the Performance Criteria, including Restricted Stock the restrictions to
which lapse upon the obtainment of performance goals which are related to one or
more of the Performance Criteria.
     (c) To the extent necessary to comply with the performance-based
compensation requirements of Section 162(m)(4)(C) of the Code, with respect to
any Award granted under Article VII which may be granted to one or more Section
162(m) Employees, no later than ninety (90) days following the commencement of
any fiscal year in question or any other designated fiscal period or period of
service (or such other time as may be required or permitted by Section 162(m) of
the Code), the Committee shall, in writing, (i) designate one or more Section
162(m) Employees, (ii) select the Performance Criteria applicable to the fiscal
year or other designated fiscal period or period of service, (iii) establish the
various performance targets, in terms of an objective formula or standard, and
amounts of such Awards, as applicable, which may be earned for such fiscal year
or other designated fiscal period or period of service, and (iv) specify the
relationship between Performance Criteria and the performance targets and the
amounts of such Awards, as applicable, to be earned by each Section 162(m)
Employee for such fiscal year or other designated fiscal period or period of
service. Following the completion of each fiscal year or other designated fiscal
period or period of service, the Committee shall certify in writing whether the
applicable performance targets have been achieved for such fiscal year or other
designated fiscal period or period of service. In determining the amount earned
by a Section 162(m) Employee, the Committee shall have the right to reduce (but
not to increase) the amount payable at a given level of performance to take into
account additional factors that the Committee may deem relevant to the
assessment of individual or corporate performance for the fiscal year or other
designated fiscal period or period of service.

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     (d) Furthermore, notwithstanding any other provision of the Plan, any Award
that is granted to a Section 162(m) Employee and is intended to qualify as
performance-based compensation as described in Section 162(m)(4)(C) of the Code
shall be subject to any additional limitations set forth in Section 162(m) of
the Code (including any amendment to Section 162(m) of the Code) or any
regulations or rulings issued thereunder that are requirements for qualification
as performance-based compensation as described in Section 162(m)(4)(C) of the
Code, and the Plan and such Awards shall be deemed amended to the extent
necessary to conform to such requirements.
     3.3. Limitations Applicable to Section 16 Persons. Notwithstanding any
other provision of the Plan, the Plan, and any Award granted or awarded to any
individual who is then subject to Section 16 of the Exchange Act, shall be
subject to any additional limitations set forth in any applicable exemptive rule
under Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of
the Exchange Act) that are requirements for the application of such exemptive
rule. To the extent permitted by applicable law, the Plan and Awards granted or
awarded hereunder shall be deemed amended to the extent necessary to conform to
such applicable exemptive rule.
     3.4. At-Will Employment. Nothing in the Plan or in any Award Agreement
hereunder shall confer upon any Holder any right to continue in the employ of,
or as a Consultant for, the Company or any Subsidiary, or as a Director of the
Company, or shall interfere with or restrict in any way the rights of the
Company and any Subsidiary, which are hereby expressly reserved, to discharge
any Holder at any time for any reason whatsoever, with or without cause, except
to the extent expressly provided otherwise in a written employment or consulting
agreement between the Holder and the Company and any Subsidiary.
ARTICLE IV.
GRANTING OF OPTIONS TO EMPLOYEES,
CONSULTANTS AND INDEPENDENT DIRECTORS
     4.1. Eligibility. Any Employee or Consultant selected by the Committee
pursuant to Section 4.4(a)(i) shall be eligible to be granted an Option. Any
Independent Director selected by the Board pursuant to Section 4.5(a)(i) shall
be eligible to be granted an Option. All grants shall be made at the discretion
of the Committee or the Board, as the case may be, and no person shall be
entitled to a grant of an Option as a matter of right.
     4.2. Disqualification for Stock Ownership. No person may be granted an
Incentive Stock Option under the Plan if such person, at the time the Incentive
Stock Option is granted, owns stock possessing more than ten percent (10%) of
the total combined voting power of all classes of stock of the Company or any
then existing Subsidiary or parent corporation (within the meaning of Section
422 of the Code) unless such Incentive Stock Option conforms to the applicable
provisions of Section 422 of the Code.

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     4.3. Qualification of Incentive Stock Options. No Incentive Stock Option
shall be granted to any person who is not an Employee.
     4.4. Granting of Options to Employees and Consultants.
     (a) The Committee shall from time to time, in its absolute discretion, and
subject to applicable limitations of the Plan:
     (i) Select from among the Employees or Consultants (including Employees or
Consultants who have previously been granted Awards under the Plan) such of them
as in its opinion should be granted Options;
     (ii) Subject to the Award Limit, determine the number of shares of Common
Stock to be subject to such Options granted to the selected Employees or
Consultants;
     (iii) Subject to Section 4.3, determine whether such Options are to be
Incentive Stock Options or Non-Qualified Stock Options and whether such Options
are to qualify as performance-based compensation as described in
Section 162(m)(4)(C) of the Code; and
     (iv) Determine the terms and conditions of such Options, consistent with
the Plan; provided, however, that the terms and conditions of Options intended
to qualify as performance-based compensation as described in
Section 162(m)(4)(C) of the Code shall include, but not be limited to, such
terms and conditions as may be necessary to meet the applicable provisions of
Section 162(m) of the Code.
     (b) Upon the selection of an Employee or Consultant to be granted an
Option, the Committee shall instruct the Secretary of the Company to issue the
Option and may impose such conditions on the grant of the Option as it deems
appropriate, and the Committee shall authorize one or more of the officers of
the Company to prepare, execute and deliver the Award Agreement with respect to
such Option.
     (c) Any Incentive Stock Option granted under the Plan may be modified by
the Committee, with the consent of the Holder, to disqualify such Option from
treatment as an “incentive stock option” under Section 422 of the Code.
     4.5. Granting of Options to Independent Directors.
     (a) Subject to Section 4.5(b), the Board shall from time to time, in its
absolute discretion, and subject to applicable limitations of the Plan:
     (i) Determine whether to grant Options to Independent Directors, and, in
the event Options are so granted, select from among the Independent Directors
(including Independent Directors who have previously been granted Awards under
the Plan) such of them as in its opinion should be granted Options;

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     (ii) Subject to the Award Limit, determine the number of shares of Common
Stock to be subject to such Options granted to the selected Independent
Directors; and
     (iii) Determine the terms and conditions of such Options, consistent with
the Plan.
     (b) Upon the selection of an Independent Director to be granted an Option,
and the grant of an Option to an Independent Director, the Board shall instruct
the Secretary of the Company to issue the Option and may impose such conditions
on the grant of the Option as it deems appropriate, and the Board shall
authorize one or more officers of the Company to prepare, execute and deliver
the Award Agreement with respect to such Option.
     4.6. Options in Lieu of Cash Compensation. Options may be granted under the
Plan to Employees and Consultants in lieu of cash bonuses that would otherwise
be payable to such Employees and Consultants and to Independent Directors in
lieu of directors’ fees that would otherwise be payable to such Independent
Directors, pursuant to such policies that may be adopted by the Administrator
from time to time.
ARTICLE V.
TERMS OF OPTIONS
     5.1. Option Price. The price per share of the shares of Common Stock
subject to each Option granted to Employees and Consultants shall be set by the
Committee; provided, however, that such price shall be no less than 100% of the
Fair Market Value of a share of Common Stock on the date the Option is granted,
and:
     (a) in the case of Incentive Stock Options, such price shall not be less
than 100% of the Fair Market Value of a share of Common Stock on the date the
Option is modified, extended or renewed for purposes of Section 424(h) of the
Code; and
     (b) in the case of Incentive Stock Options granted to an individual then
owning (within the meaning of Section 424(d) of the Code) more than 10% of the
total combined voting power of all classes of stock of the Company or any
Subsidiary or parent corporation thereof (within the meaning of Section 422 of
the Code), such price shall not be less than 110% of the Fair Market Value of a
share of Common Stock on the date the Option is granted (or the date the Option
is modified, extended or renewed for purposes of Section 424(h) of the Code).
     5.2. Option Term. The term of an Option granted to an Employee or
Consultant shall be set by the Committee in its absolute discretion; provided,
however, that the term shall not be more than ten (10) years from the date the
Option is granted; provided, further, however, that the term of any Option
granted after May 17, 2006 shall not be more than seven (7) years from the date
the Option is granted; and, provided, further, that, in the case of Incentive
Stock Options, the term shall not be more than five (5) years from the date the
Incentive Stock Option is granted if the Incentive Stock Option is

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granted to an individual then owning (within the meaning of Section 424(d) of
the Code) more than 10% of the total combined voting power of all classes of
stock of the Company or any Subsidiary or parent corporation thereof (within the
meaning of Section 422 of the Code). Except as limited by requirements of
Section 422 of the Code and regulations and rulings thereunder applicable to
Incentive Stock Options, the Committee may extend the term of any outstanding
Option in connection with any Termination of Employment or Termination of
Consultancy of the Holder, or amend any other term or condition of such Option
relating to such a termination; provided, however, that any extended term shall
not be more than seven (7) years from the date the Option is granted.
     5.3. Option Vesting
     (a) The period during which the right to exercise, in whole or in part, an
Option granted to an Employee or a Consultant vests in the Holder shall be set
by the Committee and the Committee may determine that an Option may not be
exercised in whole or in part for a specified period after it is granted;
provided, however, that except for Options that vest based upon the satisfaction
of performance targets, which shall vest over a period of not less than one
(1) year, and except as provided in Sections 10.3 and 10.4, no Option granted to
an Employee or a Consultant shall vest at a rate more favorable to the Holder
than on a monthly pro-rata basis over a three (3)-year period measured from the
date of grant. Subject to the provisions of the prior sentence, at any time
after grant of an Option, the Committee may, in its absolute discretion and
subject to whatever terms and conditions it selects, accelerate the period
during which an Option granted to an Employee or Consultant vests and becomes
exercisable.
     (b) No portion of an Option granted to an Employee or Consultant which is
unexercisable at Termination of Employment or Termination of Consultancy, as
applicable, shall thereafter become exercisable, except as may be otherwise
provided by the Committee either in the Award Agreement or by action of the
Committee following the grant of the Option.
     (c) To the extent that the aggregate Fair Market Value of stock with
respect to which “incentive stock options” (within the meaning of Section 422 of
the Code, but without regard to Section 422(d) of the Code) are exercisable for
the first time by a Holder during any calendar year (under the Plan and all
other incentive stock option plans of the Company and any parent or subsidiary
corporation (within the meaning of Section 422 of the Code) of the Company),
exceeds $100,000, such Options or other options shall be treated as
non-qualified stock options to the extent required by Section 422 of the Code.
The rule set forth in the preceding sentence shall be applied by taking Options
or other options into account in the order in which they were granted. For
purposes of this Section 5.3(c), the Fair Market Value of stock shall be
determined as of the time the Option or other options with respect to such stock
is granted.
     5.4. Terms of Options Granted to Independent Directors. The price per share
of the shares subject to each Option granted to an Independent Director shall
equal 100% of the Fair Market Value of a share of Common Stock on the date the
Option is granted. The

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period during which the right to exercise, in whole or in part, an Option
granted to an Independent Director vests in the Holder shall be set by the
Administrator and the Administrator may determine that an Option may not be
exercised in whole or in part for a specified period after it is granted. The
term of each Option granted to an Independent Director shall be determined by
the Administrator and shall be no greater than ten(10) years from the date the
Option is granted; provided, however, that the term of any Option granted after
May 17, 2006 shall not be more than seven (7) years from the date the Option is
granted. No portion of an Option which is unexercisable at Termination of
Directorship shall thereafter become exercisable. Options granted to Independent
Directors under Section 4.5 shall be subject to such other terms and conditions
as are determined by the Administrator.
     5.5. Substitute Awards. Notwithstanding the foregoing provisions of this
Article V to the contrary, in the case of an Option that is a Substitute Award,
the price per share of the shares subject to such Option may be less than the
Fair Market Value per share on the date of grant, provided, that the excess of:
     (a) the aggregate Fair Market Value (as of the date such Substitute Award
is granted) of the shares subject to the Substitute Award; over
     (b) the aggregate exercise price thereof; does not exceed the excess of;
     (c) the aggregate fair market value (as of the time immediately preceding
the transaction giving rise to the Substitute Award, such fair market value to
be determined by the Administrator) of the shares of the predecessor entity that
were subject to the grant assumed or substituted for by the Company; over
     (d) the aggregate exercise price of such shares.

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     5.6. Restrictions on Common Stock.
     The Administrator may, in its sole discretion, provide under the terms of
an Option that shares of Common Stock purchased upon exercise of such Option
shall be subject to repurchase from the Holder by the Company, or shall be
subject to such restrictions as the Administrator shall provide, which
restrictions may include, without limitation, restrictions concerning voting
rights and transferability and restrictions based on duration of employment with
the Company and the Subsidiaries, Company performance and individual
performance; provided, however, that with respect to Employees or Consultants,
except for Common Stock issued upon the exercise of Options that vest based upon
the satisfaction of performance targets, under which such repurchase right shall
lapse over a period of not less than one (1) year, and except as provided in
Sections 10.3 and 10.4, such repurchase right shall lapse at a rate no more
favorable to the Holder than on a monthly pro-rata basis over a three (3)-year
period measured from the date of grant; provided further, however, that, by
action taken before or after the Common Stock is purchased upon exercise of the
Option, the Administrator may, on such terms and conditions as it may determine
to be appropriate, terminate the Company’s repurchase right or remove any or all
of the restrictions imposed by the terms of the Award Agreement. The Company’s
right to repurchase the Common Stock from the Holder then subject to the right
shall provide that immediately upon a Termination of Employment, a Termination
of Consultancy, or a Termination of Directorship, as applicable, and for such
period as the Administrator shall determine, the Company shall have the right to
purchase the Common Stock at a price per share equal to the price paid by the
Holder for such Common Stock, or such other price as is determined by the
Administrator; provided, however, that, in the event of a Change in Control,
such right of repurchase shall terminate immediately prior to the effective date
of such Change in Control. Shares of Common Stock purchased upon the exercise of
an Option may not be sold, transferred or encumbered until any repurchase right
and any and all restrictions are terminated or expire. The Secretary of the
Company or such other escrow holder as the Administrator may appoint shall
retain physical custody of each certificate representing such shares of Common
Stock until the repurchase right and any and all of the restrictions imposed
under the Award Agreement with respect to the shares evidenced by such
certificate terminate, expire or shall have been removed. In order to enforce
the restrictions imposed upon shares of Common Stock hereunder, the
Administrator shall cause a legend or legends to be placed on certificates
representing all shares of Common Stock that are still subject to any repurchase
right or restrictions under Award Agreements, which legend or legends shall make
appropriate reference to the conditions imposed thereby. If a Holder makes an
election under Section 83(b) of the Code, or any successor section thereto, to
be taxed with respect to the Common Stock as of the date of transfer of the
Common Stock rather than as of the date or dates upon which the Holder would
otherwise be taxable under Section 83(a) of the Code, the Holder shall deliver a
copy of such election to the Company immediately after filing such election with
the Internal Revenue Service.

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ARTICLE VI.
EXERCISE OF OPTIONS
     6.1. Partial Exercise. An exercisable Option may be exercised in whole or
in part. However, an Option shall not be exercisable with respect to fractional
shares and the Administrator may require that, by the terms of the Option, a
partial exercise be with respect to a minimum number of shares.
     6.2. Manner of Exercise. All or a portion of an exercisable Option shall be
deemed exercised upon delivery of all of the following to the Secretary of the
Company or his office:
     (a) A written notice complying with the applicable rules established by the
Administrator stating that the Option, or a portion thereof, is exercised. The
notice shall be signed by the Holder or other person then entitled to exercise
the Option or such portion of the Option;
     (b) Such representations and documents as the Administrator, in its
absolute discretion, deems necessary or advisable to effect compliance with all
applicable provisions of the Securities Act and any other federal or state
securities laws or regulations. The Administrator may, in its absolute
discretion, also take whatever additional actions it deems appropriate to effect
such compliance including, without limitation, placing legends on share
certificates and issuing stop-transfer notices to agents and registrars;
     (c) In the event that the Option shall be exercised pursuant to
Section 10.1 by any person or persons other than the Holder, appropriate proof
of the right of such person or persons to exercise the Option; and
     (d) Full cash payment to the Secretary of the Company for the shares with
respect to which the Option, or portion thereof, is exercised. However, the
Administrator, may in its sole and absolute discretion (i) allow a delay in
payment up to thirty (30) days from the date the Option, or portion thereof, is
exercised; (ii) allow payment, in whole or in part, through the delivery of
shares of Common Stock which have been owned by the Holder for at least six
months, duly endorsed for transfer to the Company with a Fair Market Value on
the date of delivery equal to the aggregate exercise price of the Option or
exercised portion thereof; (iii) allow payment, in whole or in part, through the
surrender of shares of Common Stock then issuable upon exercise of the Option
having a Fair Market Value on the date of Option exercise equal to the aggregate
exercise price of the Option or exercised portion thereof; (iv) allow payment,
in whole or in part, through the delivery of a notice that the Holder has placed
a market sell order with a broker with respect to shares of Common Stock then
issuable upon exercise of the Option, and that the broker has been directed to
pay a sufficient portion of the net proceeds of the sale to the Company in
satisfaction of the Option exercise price, provided that payment of such
proceeds is then made to the Company upon

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settlement of such sale; or (v) allow payment through any combination of the
consideration provided in the foregoing subparagraphs (ii), (iii) and (iv).
     6.3. Conditions to Issuance of Stock Certificates. The Company shall not be
required to issue or deliver any certificate or certificates for shares of stock
purchased upon the exercise of any Option or portion thereof prior to
fulfillment of all of the following conditions:
     (a) The admission of such shares to listing on all stock exchanges on which
such class of stock is then listed;
     (b) The completion of any registration or other qualification of such
shares under any state or federal law, or under the rulings or regulations of
the Securities and Exchange Commission or any other governmental regulatory body
which the Administrator shall, in its absolute discretion, deem necessary or
advisable;
     (c) The obtaining of any approval or other clearance from any state or
federal governmental agency which the Administrator shall, in its absolute
discretion, determine to be necessary or advisable;
     (d) The lapse of such reasonable period of time following the exercise of
the Option as the Administrator may establish from time to time for reasons of
administrative convenience; and
     (e) The receipt by the Company of full payment for such shares, including
payment of any applicable withholding tax, which in the discretion of the
Administrator may be in the form of consideration used by the Holder to pay for
such shares under Section 6.2(d).
     6.4. Rights as Stockholders. Holders shall not be, nor have any of the
rights or privileges of, stockholders of the Company in respect of any shares
purchasable upon the exercise of any part of an Option unless and until
certificates representing such shares have been issued by the Company to such
Holders.
     6.5. Ownership and Transfer Restrictions. The Administrator, in its
absolute discretion, may impose such restrictions on the ownership and
transferability of the shares purchasable upon the exercise of an Option as it
deems appropriate. Any such restriction shall be set forth in the respective
Award Agreement and may be referred to on the certificates evidencing such
shares. The Holder shall give the Company prompt notice of any disposition of
shares of Common Stock acquired by exercise of an Incentive Stock Option within
(a) two years from the date of granting (including the date the Option is
modified, extended or renewed for purposes of Section 424(h) of the Code) such
Option to such Holder or (b) one year after the transfer of such shares to such
Holder.

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     6.6. Limitations on Exercise of Options Granted to Independent Directors.
No Option granted to an Independent Director may be exercised to any extent by
anyone after the first to occur of the following events:
     (a) The expiration of 12 months from the date of the Holder’s death;
     (b) The expiration of 12 months from the date of the Holder’s Termination
of Directorship by reason of his or her permanent and total disability (within
the meaning of Section 22(e)(3) of the Code); or
     (c) Except as otherwise provided in any Award Agreement, the expiration of
three months from the date of the Holder’s Termination of Directorship for any
reason other than such Holder’s death or his or her permanent and total
disability, unless the Holder dies within said three-month period.
     6.7. Additional Limitations on Exercise of Options. Holders may be required
to comply with any timing or other restrictions with respect to the settlement
or exercise of an Option, including a window-period limitation, as may be
imposed in the discretion of the Administrator.
ARTICLE VII.
AWARD OF RESTRICTED STOCK
     7.1. Eligibility. Subject to the Award Limit, Restricted Stock may be
awarded to any Employee or Consultant who the Committee determines should
receive such an Award.
     7.2. Award of Restricted Stock.
     (a) The Committee may from time to time, in its absolute discretion:
     (i) Select from among the Employees or Consultants (including Employees or
Consultants who have previously been granted other Awards under the Plan) such
of them as in its opinion should be awarded Restricted Stock; and
     (ii) Determine the purchase price, if any, and other terms and conditions
applicable to such Restricted Stock, consistent with the Plan.
     (b) The Committee shall establish the purchase price, if any, and form of
payment for Restricted Stock; provided, however, that such purchase price shall
be no less than the par value of the Common Stock to be purchased, unless
otherwise permitted by applicable state law. In all cases, legal consideration
shall be required for each issuance of Restricted Stock.
     (c) Upon the selection of an Employee or Consultant to be awarded
Restricted Stock, the Committee shall instruct the Secretary of the Company to
issue such Restricted Stock

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and may impose such conditions on the issuance of such Restricted Stock as it
deems appropriate, and the Committee shall authorize one or more officers of the
Company to prepare, execute and deliver the Award Agreement with respect to such
Restricted Stock.
     7.3. Rights as Stockholders. Subject to Section 7.4, upon delivery of the
shares of Restricted Stock to the escrow holder pursuant to Section 7.6, the
Holder shall have, unless otherwise provided by the Committee, all the rights of
a stockholder with respect to said shares, subject to the restrictions in his
Award Agreement, including the right to receive all dividends and other
distributions paid or made with respect to the shares; provided, however, that
in the discretion of the Committee, any extraordinary distributions with respect
to the Common Stock shall be subject to the restrictions set forth in
Section 7.4.
     7.4. Restriction. All shares of Restricted Stock issued under the Plan
(including any shares received by holders thereof with respect to shares of
Restricted Stock as a result of stock dividends, stock splits or any other form
of recapitalization) shall, in the terms of each individual Award Agreement, be
subject to such restrictions as the Committee shall provide, if any, which
restrictions may include, without limitation, restrictions concerning voting
rights and transferability and restrictions based on duration of employment with
the Company, Company performance and individual performance; provided, however,
that with respect to shares of Restricted Stock granted to Employees or
Consultants, except for shares of Restricted Stock that vest based upon the
satisfaction of performance targets, under which such restrictions shall lapse
over a period of not less than one (1) year, and except in the event of the
Holder’s death or disability and except as provided in Sections 10.3 and 10.4,
such restrictions shall lapse at a rate no more favorable to the Holder than on
a monthly pro-rata basis over a three (3)-year period measured from the date of
grant; provided further, however, that, except with respect to shares of
Restricted Stock granted to Section 162(m) Employees, by action taken after the
Restricted Stock is issued, the Committee may, on such terms and conditions as
it may determine to be appropriate, remove any or all of the restrictions
imposed by the terms of the Award Agreement subject to the limitations contained
herein. Restricted Stock may not be sold or encumbered until all restrictions
are terminated or expire. If no consideration was paid by the Holder upon
issuance, a Holder’s rights in unvested Restricted Stock shall lapse, and such
Restricted Stock shall be surrendered to the Company without consideration, upon
Termination of Employment or, if applicable, upon Termination of Consultancy
with the Company; provided, however, that the Committee in its sole and absolute
discretion may provide that such rights shall not lapse in the event of a
Termination of Employment because of the Holder’s death or disability.
     7.5. Repurchase of Restricted Stock. The Committee shall provide in the
terms of each individual Award Agreement that the Company shall have the right
to repurchase from the Holder the Restricted Stock then subject to restrictions
under the Award Agreement immediately upon a Termination of Employment or, if
applicable, upon a Termination of Consultancy between the Holder and the
Company, at a cash price per share equal to the price paid by the Holder for
such Restricted Stock; provided, however, that the Committee in its sole and
absolute discretion may provide that no such right of

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repurchase shall exist in the event of a Termination of Employment following a
“change of ownership or control” (within the meaning of Treasury
Regulation Section 1.162-27(e)(2)(v) or any successor regulation thereto) of the
Company or because of the Holder’s death or disability; provided, further, that,
except with respect to shares of Restricted Stock granted to Section 162(m)
Employees, the Committee in its sole and absolute discretion may provide that no
such right of repurchase shall exist in the event of a Termination of Employment
or a Termination of Consultancy without cause or following any Change in Control
of the Company or because of the Holder’s retirement, or otherwise.
     7.6. Escrow. The Secretary of the Company or such other escrow holder as
the Committee may appoint shall retain physical custody of each certificate
representing Restricted Stock until all of the restrictions imposed under the
Award Agreement with respect to the shares evidenced by such certificate expire
or shall have been removed.
     7.7. Legend. In order to enforce the restrictions imposed upon shares of
Restricted Stock hereunder, the Committee shall cause a legend or legends to be
placed on certificates representing all shares of Restricted Stock that are
still subject to restrictions under Award Agreements, which legend or legends
shall make appropriate reference to the conditions imposed thereby.
     7.8. Section 83(b) Election. If a Holder makes an election under Section
83(b) of the Code, or any successor section thereto, to be taxed with respect to
the Restricted Stock as of the date of transfer of the Restricted Stock rather
than as of the date or dates upon which the Holder would otherwise be taxable
under Section 83(a) of the Code, the Holder shall deliver a copy of such
election to the Company immediately after filing such election with the Internal
Revenue Service.
     7.9. Restricted Stock in Lieu of Cash Compensation. Notwithstanding
anything herein to the contrary, shares of Restricted Stock may be granted to
Independent Directors in lieu of directors’ fees which would otherwise be
payable to such Independent Directors pursuant to such policies as may be
adopted by the Administrator from time to time.
ARTICLE VIII.
STOCK APPRECIATION RIGHTS
     8.1. Grant of Stock Appreciation Rights. A Stock Appreciation Right may be
granted to any Employee or Consultant selected by the Committee. A Stock
Appreciation Right may be granted (a) in connection and simultaneously with the
grant of an Option, (b) with respect to a previously granted Option, or
(c) independent of an Option. A Stock Appreciation Right shall be subject to
such terms and conditions not inconsistent with the Plan as the Committee shall
impose and shall be evidenced by an Award Agreement.

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     8.2. Coupled Stock Appreciation Rights.
     (a) A Coupled Stock Appreciation Right (“CSAR”) shall be related to a
particular Option and shall be exercisable only when and to the extent the
related Option is exercisable.
     (b) A CSAR may be granted to the Holder for no more than the number of
shares subject to the simultaneously or previously granted Option to which it is
coupled.
     (c) A CSAR shall entitle the Holder (or other person entitled to exercise
the Option pursuant to the Plan) to surrender to the Company unexercised a
portion of the Option to which the CSAR relates (to the extent then exercisable
pursuant to its terms) and to receive from the Company in exchange therefor an
amount determined by multiplying the difference obtained by subtracting the
Option exercise price from the Fair Market Value of a share of Common Stock on
the date of exercise of the CSAR by the number of shares of Common Stock with
respect to which the CSAR shall have been exercised, subject to any limitations
the Committee may impose.
     8.3. Independent Stock Appreciation Rights.
     (a) An Independent Stock Appreciation Right (“ISAR”) shall be unrelated to
any Option and shall have a term set by the Committee; provided, however, that
the term shall not be more than seven (7) years from the date the ISAR is
granted. An ISAR shall be exercisable in such installments as the Committee may
determine; provided, however, that except for ISARs that vest based upon the
satisfaction of performance targets, which shall vest over a period of not less
than one (1) year, and except as provided in Sections 10.3 and 10.4, no ISAR
shall become exercisable at a rate more favorable to the Holder than on a
monthly pro-rata basis over a three (3)-year period measured from the date of
grant. Subject to the provisions of the prior sentence, at any time after grant
of an ISAR, the Committee may, in its absolute discretion and subject to
whatever terms and conditions it selects, accelerate the period during which an
Option granted to an Employee or Consultant vests and becomes exercisable. An
ISAR shall cover such number of shares of Common Stock as the Committee may
determine. The exercise price per share of Common Stock subject to each ISAR
shall be set by the Committee. An ISAR is exercisable only while the Holder is
an Employee or Consultant; provided that the Committee may determine that the
ISAR may be exercised subsequent to Termination of Employment or Termination of
Consultancy without cause, or following a Change in Control of the Company, or
because of the Holder’s retirement, death or disability, or otherwise.
     (b) An ISAR shall entitle the Holder (or other person entitled to exercise
the ISAR pursuant to the Plan) to exercise all or a specified portion of the
ISAR (to the extent then exercisable pursuant to its terms) and to receive from
the Company an amount determined by multiplying the difference obtained by
subtracting the exercise price per share of the ISAR from the Fair Market Value
of a share of Common Stock on the date of exercise of the ISAR by the number of
shares of Common Stock with respect to which

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the ISAR shall have been exercised, subject to any limitations the Committee may
impose.
     8.4. Payment and Limitations on Exercise.
     (a) Payment of the amounts determined under Section 8.2(c) and 8.3(b) above
shall be in cash, in Common Stock (based on its Fair Market Value as of the date
the Stock Appreciation Right is exercised) or a combination of both, as
determined by the Committee. To the extent such payment is effected in Common
Stock it shall be made subject to satisfaction of all provisions of Section 6.3
above pertaining to Options.
     (b) Holders of Stock Appreciation Rights may be required to comply with any
timing or other restrictions with respect to the settlement or exercise of a
Stock Appreciation Right, including a window-period limitation, as may be
imposed in the discretion of the Committee.
ARTICLE IX.
ADMINISTRATION
     9.1. Committee. The Committee shall be the Compensation Committee of the
Board, unless the Board specifically assumes the functions of the Committee or
appoints another committee to assume such functions.
     9.2. Duties and Powers of Committee. It shall be the duty of the Committee
to conduct the general administration of the Plan in accordance with its
provisions. The Committee shall have the power to interpret the Plan and the
Award Agreements, and to adopt such rules for the administration,
interpretation, and application of the Plan as are consistent therewith, to
interpret, amend or revoke any such rules and to amend any Award Agreement
provided that the rights or obligations of the Holder of the Award that is the
subject of any such Award Agreement are not affected adversely. Any such
interpretations and rules with respect to Incentive Stock Options shall be
consistent with the provisions of Section 422 of the Code. In its absolute
discretion, the Board may at any time and from time to time assume any and all
rights and duties of the Committee under the Plan, except with respect to
matters which under Rule 16b-3 or Section 162(m) of the Code, or any regulations
or rules issued thereunder, are required to be determined in the sole discretion
of the Committee. Notwithstanding the foregoing, the full Board, acting by a
majority of its members in office, shall conduct the general administration of
the Plan with respect to Options granted to Independent Directors.
     9.3. Majority Rule; Unanimous Written Consent. The Committee shall act by a
majority of its members in attendance at a meeting at which a quorum is present
or by a memorandum or other written instrument signed by all members of the
Committee.
     9.4. Compensation; Professional Assistance; Good Faith Actions. Members of
the Committee shall receive such compensation, if any, for their services as
members as may

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be determined by the Board. All expenses and liabilities which members of the
Committee incur in connection with the administration of the Plan shall be borne
by the Company. The Committee may, with the approval of the Board, employ
attorneys, consultants, accountants, appraisers, brokers, or other persons. The
Committee, the Company and the Company’s officers and Directors shall be
entitled to rely upon the advice, opinions or valuations of any such persons.
All actions taken and all interpretations and determinations made by the
Committee or the Board in good faith shall be final and binding upon all
Holders, the Company and all other interested persons. No members of the
Committee or Board shall be personally liable for any action, determination or
interpretation made in good faith with respect to the Plan or Awards, and all
members of the Committee and the Board shall be fully protected by the Company
in respect of any such action, determination or interpretation.

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ARTICLE X.
MISCELLANEOUS PROVISIONS
     10.1. Not Transferable. No Award under the Plan may be sold, pledged,
assigned or transferred in any manner other than by will or the laws of descent
and distribution or, subject to the consent of the Administrator, pursuant to a
DRO, unless and until such Award has been exercised, or the shares underlying
such Award have been issued, and all restrictions applicable to such shares have
lapsed. No Award or interest or right therein shall be liable for the debts,
contracts or engagements of the Holder or his successors in interest or shall be
subject to disposition by transfer, alienation, anticipation, pledge,
encumbrance, assignment or any other means whether such disposition be voluntary
or involuntary or by operation of law by judgment, levy, attachment, garnishment
or any other legal or equitable proceedings (including bankruptcy), and any
attempted disposition thereof shall be null and void and of no effect, except to
the extent that such disposition is permitted by the preceding sentence.
     During the lifetime of the Holder, only he may exercise an Option or other
Award (or any portion thereof) granted to him under the Plan, unless it has been
disposed of with the consent of the Administrator pursuant to a DRO. After the
death of the Holder, any exercisable portion of an Option or other Award may,
prior to the time when such portion becomes unexercisable under the Plan or the
applicable Award Agreement, be exercised by his personal representative or by
any person empowered to do so under the deceased Holder’s will or under the then
applicable laws of descent and distribution.
     Notwithstanding the foregoing provisions of this Section 10.1, the
Administrator, in its sole discretion, may determine to grant a Non-Qualified
Stock Option which, by its terms as set forth in the applicable Award Agreement,
may be transferred by the Holder, in writing and with prior written notice to
the Administrator, to any one or more Permitted Transferees (as defined below),
subject to the following terms and conditions: (a) a Non-Qualified Stock Option
transferred to a Permitted Transferee shall not be assignable or transferable by
the Permitted Transferee other than by will or the laws of descent and
distribution; (b) any Non-Qualified Stock Option which is transferred to a
Permitted Transferee shall continue to be subject to all the terms and
conditions of the Non-Qualified Stock Option as applicable to the original
Holder (other than the ability to further transfer the Non-Qualified Stock
Option); and (c) the Holder and the Permitted Transferee shall execute any and
all documents requested by the Administrator, including, without limitation,
documents to: (i) confirm the status of the transferee as a Permitted
Transferee, (ii) satisfy any requirements for an exemption for the transfer
under applicable federal and state securities laws and (iii) evidence the
transfer. For purposes of this Section, “Permitted Transferee” shall mean, with
respect to a Holder, any child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law,
father-in-law, daughter-in-law, brother-in-law, or sister-in-law, including
adoptive relationships, any person sharing the Holder’s household (other than a
tenant or employee), a trust in which these persons (or the Holder) control the
management of assets, and any other entity in which these persons (or the
Holder) owns more than fifty percent (50%) of the voting interests, or any other
transferee specifically

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approved by the Administrator after taking into account any state or federal tax
or securities laws applicable to transferable Non-Qualified Stock Options.
     10.2. Amendment, Suspension or Termination of the Plan.
     (a) Except as otherwise provided in this Section 10.2, the Plan may be
wholly or partially amended or otherwise modified, suspended or terminated at
any time or from time to time by the Board. However, without approval of the
Company’s stockholders given within twelve months before or after the action by
the Board, no action of the Board may, except as provided in Section 10.3,
increase the limits imposed in Section 2.1 on the maximum number of shares that
may be issued under the Plan.
     (b) No amendment, suspension or termination of the Plan shall, without the
consent of the Holder alter or impair any rights or obligations under any Award
theretofore granted or awarded, unless the Award itself otherwise expressly so
provides. No amendment of the Plan shall have application to any Award granted
or awarded prior to the approval of such amendment, unless such amendment is
expressly and particularly stated to apply to prior awards.
     (c) No Awards may be granted or awarded during any period of suspension or
after termination of the Plan, and in no event may any Option be granted under
the Plan after the first to occur of the following events:
     (i) The expiration of ten years from the date the Plan is adopted by the
Board; or
     (ii) The expiration of ten years from the date the Plan is approved by the
Company’s stockholders under Section 10.5.
     (d) To the extent required by applicable law or listing requirements,
stockholder approval shall be required for any amendment of the Plan that either
(i) materially expands the class of individuals eligible to receive Awards under
the Plan, (ii) materially increases the benefits accruing to Employees and
Consultants under the Plan or materially reduces the price at which shares may
be issued or purchased under the Plan, (iii) materially extends the term of the
Plan, or (iv) expands the types of Awards available for issuance under the Plan.
     10.3. Changes in Common Stock or Assets of the Company, Acquisition or
Liquidation of the Company and Other Corporate Events.
     (a) Subject to Section 10.3(e), in the event that the Administrator
determines that other than an Equity Restructuring any dividend or other
distribution (whether in the form of cash, Common Stock, other securities, or
other property), reorganization, merger, consolidation, combination, repurchase,
liquidation, dissolution, or sale, transfer, exchange or other disposition of
all or substantially all of the assets of the Company, or exchange of Common
Stock or other securities of the Company, issuance of warrants or other rights
to purchase Common Stock or other securities of the Company, or other similar
corporate transaction or event, in the Administrator’s sole discretion, affects
the Common Stock such that an adjustment is determined by the Administrator to
be appropriate in order to prevent dilution or enlargement of the benefits or
potential

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benefits intended to be made available under the Plan or with respect to an
Award, then the Administrator shall, in such manner as it may deem equitable,
adjust any or all of:
     (i) the number and kind of shares of Common Stock (or other securities or
property) with respect to which Awards may be granted or awarded (including, but
not limited to, adjustments of the limitations in Section 2.1 on the maximum
number and kind of shares which may be issued and adjustments of the Award
Limit);
     (ii) the number and kind of shares of Common Stock (or other securities or
property) subject to outstanding Awards; and
     (iii) the grant or the exercise price with respect to any Award.
     (b) Subject to Sections 10.3(e) and 10.4, in the event of any transaction
or event described in Section 10.3(a), any Equity Restructuring or any unusual
or nonrecurring transactions or events affecting the Company, any affiliate of
the Company, or the financial statements of the Company or any affiliate, or of
changes in applicable laws, regulations, or accounting principles, the
Administrator, in its sole and absolute discretion, and on such terms and
conditions as it deems appropriate, either by the terms of the Award or by
action taken prior to the occurrence of such transaction or event (any such
action applied to Employees and former Employees to be applied uniformly) and
either automatically or upon the Holder’s request, is hereby authorized to take
any one or more of the following actions whenever the Administrator determines
that such action is appropriate in order to prevent dilution or enlargement of
the benefits or potential benefits intended to be made available under the Plan
or with respect to any Award under the Plan, to facilitate such transactions or
events or to give effect to such changes in laws, regulations or principles:
     (i) to provide for either the cancellation of any such Award for an amount
of cash equal to the amount that could have been attained upon the exercise of
such Award or realization of the Holder’s rights had such Award been currently
exercisable or payable or fully vested, or the replacement of such Award with
other rights or property selected by the Administrator in its sole discretion;
     (ii) to provide that the Award cannot vest, be exercised or become payable
after such event;
     (iii) to provide that such Award shall be exercisable as to all shares
covered thereby, notwithstanding anything to the contrary in Section 5.3 or 5.4
or the provisions of such Award;
     (iv) to provide that such Award be assumed by the successor or survivor
corporation, or a parent or subsidiary thereof, or shall be substituted for by
similar options, rights or awards covering the stock of the successor or
survivor corporation, or a parent or subsidiary thereof, with appropriate
adjustments as to the number and kind of shares and prices;

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     (v) to make adjustments in the number and type of shares of Common Stock
(or other securities or property) subject to outstanding Awards, and in the
number and kind of outstanding Restricted Stock, and/or in the terms and
conditions of (including the grant or exercise price), and the criteria included
in, outstanding Awards and Awards which may be granted in the future; and
     (vi) to provide that, for a specified period of time prior to such event,
the restrictions imposed under an Award Agreement upon some or all shares of
Restricted Stock or Common Stock may be terminated and some or all shares of
such Restricted Stock or Common Stock may cease to be subject to repurchase
after such event.
     (c) In connection with the occurrence of any Equity Restructuring, and
notwithstanding anything to the contrary in Section 10.3(a) and 10.3(b):
     (i) The number and type of securities subject to each outstanding Award and
the exercise price or grant price thereof, if applicable, will be
proportionately adjusted. The adjustments provided under this Section 10.3(c)(i)
shall be nondiscretionary and shall be final and binding on the affected Holder
and the Company.
     (ii) The Administrator shall make such proportionate adjustments, if any,
as the Administrator in its discretion may deem appropriate to reflect such
Equity Restructuring with respect to the aggregate number and kind of shares
that may be issued under the Plan (including, but not limited to, adjustments of
the limitations in Section 2 and the Award Limit).
     (iii) Notwithstanding anything in this Section 10.3(c) to the contrary,
this Section 10.3(c) shall not apply to, and instead Section 10.3(a) of the Plan
shall apply to, any Award to which the application of this Section 10.3(c) would
(A) result in a penalty tax under Section 409A of the Code and the Department of
Treasury proposed and final regulations and guidance thereunder or (B) cause any
Incentive Stock Option to fail to qualify as an “incentive stock option” under
Section 422 of the Code.
     (d) Subject to Sections 10.3(e), 3.2 and 3.3, the Administrator may, in its
discretion, include such further provisions and limitations in any Award, Award
Agreement or certificate, as it may deem equitable and in the best interests of
the Company.
     (e) With respect to Awards that are granted to Section 162(m) Employees and
are intended to qualify as performance-based compensation under
Section 162(m)(4)(C), no adjustment or action described in this Section 10.3 or
in any other provision of the Plan shall be authorized to the extent that such
adjustment or action would cause such Award to fail to so qualify under Section
162(m)(4)(C) or any successor provisions thereto. No adjustment or action
described in this Section 10.3 or in any other provision of the Plan shall be
authorized to the extent that such adjustment or action would cause the Plan to
violate Section 422(b)(1) of the Code. Furthermore, no such adjustment or action
shall be authorized to the extent such adjustment or action would result in
short-swing profits

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liability under Section 16 or violate the exemptive conditions of Rule 16b-3
unless the Administrator determines that the Award is not to comply with such
exemptive conditions. The number of shares of Common Stock subject to any Award
shall always be rounded to the next whole number.
     (f) The existence of the Plan, any Award Agreement and the Awards granted
hereunder shall not affect or restrict in any way the right or power of the
Company or the stockholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company’s capital
structure or its business, any merger or consolidation of the Company, any issue
of stock or of options, warrants or rights to purchase stock or of bonds,
debentures, preferred or prior preference stocks whose rights are superior to or
affect the Common Stock or the rights thereof or which are convertible into or
exchangeable for Common Stock, or the dissolution or liquidation of the Company,
or any sale or transfer of all or any part of its assets or business, or any
other corporate act or proceeding, whether of a similar character or otherwise.
     10.4. Change in Control. Notwithstanding any other provision of the Plan,
in the event of a Change in Control, each outstanding Award shall, immediately
prior to the effective date of the Change in Control, automatically become fully
exercisable for all of the shares of Common Stock at the time subject to such
Award and may be exercised for any or all of those shares as fully-vested shares
of Common Stock.
     10.5. Approval of Plan by Stockholders. The Plan shall be submitted for the
approval of the Company’s stockholders within twelve months after the date of
the Board’s initial adoption of the Plan. Awards may be granted or awarded prior
to such stockholder approval; provided, however, that such Awards shall not be
exercisable nor shall such Awards vest prior to the time when the Plan is
approved by the stockholders; and provided, further, that if such approval has
not been obtained at the end of said twelve-month period, all Awards previously
granted or awarded under the Plan shall thereupon be canceled and become null
and void. In addition, if the Board determines that Awards other than Options or
Stock Appreciation Rights which may be granted to Section 162(m) Employees
should continue to be eligible to qualify as performance-based compensation
under Section 162(m)(4)(C) of the Code, the Performance Criteria must be
disclosed to and approved by the Company’s stockholders no later than the first
stockholder meeting that occurs in the fifth year following the year in which
the Company’s stockholders previously approved the Performance Criteria.
     10.6. Tax Withholding. The Company shall be entitled to require payment in
cash or deduction from other compensation payable to each Holder of any sums
required by federal, state or local tax law to be withheld with respect to the
issuance, vesting, exercise or payment of any Award. The Administrator may in
its discretion and in satisfaction of the foregoing requirement allow such
Holder to elect to have the Company withhold shares of Common Stock otherwise
issuable under such Award (or allow the return of shares of Common Stock) having
a Fair Market Value equal to the sums required to be withheld. Notwithstanding
any other provision of the Plan, the number of shares of Common Stock which may
be withheld with respect to the issuance, vesting, exercise or

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payment of any Award (or which may be repurchased from the Holder of such Award
within six months after such shares of Common Stock were acquired by the Holder
from the Company) in order to satisfy the Holder’s federal and state income and
payroll tax liabilities with respect to the issuance, vesting, exercise or
payment of the Award shall be limited to the number of shares which have a Fair
Market Value on the date of withholding or repurchase equal to the aggregate
amount of such liabilities based on the minimum statutory withholding rates for
federal and state tax income and payroll tax purposes that are applicable to
such supplemental taxable income.
     10.7. Forfeiture Provisions. Subject to the limitations of applicable law,
pursuant to its general authority to determine the terms and conditions
applicable to Awards under the Plan, the Administrator shall have the right to
provide, in the terms of Awards made under the Plan, or to require a Holder to
agree by separate written instrument, that if (a)(i) the Holder at any time, or
during a specified time period, engages in any activity in competition with the
Company, or which is inimical, contrary or harmful to the interests of the
Company, as further defined by the Administrator or (ii) the Holder incurs a
Termination of Employment, Termination of Consultancy or Termination of
Directorship for cause, then (b) (i) any proceeds, gains or other economic
benefit actually or constructively received by the Holder upon any exercise of
the Award, or upon the receipt or resale of any Common Stock underlying any
Award, must be paid to the Company, and (ii) the Award shall terminate and any
unexercised portion of the Award (whether or not vested) shall be forfeited.
     10.8. Effect of Plan upon Options and Compensation Plans. The adoption of
the Plan shall not affect any other compensation or incentive plans in effect
for the Company or any Subsidiary. Nothing in the Plan shall be construed to
limit the right of the Company (a) to establish any other forms of incentives or
compensation for Employees, Directors or Consultants of the Company or any
Subsidiary or (b) to grant or assume options or other rights or awards otherwise
than under the Plan in connection with any proper corporate purpose including
but not by way of limitation, the grant or assumption of options in connection
with the acquisition by purchase, lease, merger, consolidation or otherwise, of
the business, stock or assets of any corporation, partnership, limited liability
company, firm or association.
     10.9. Compliance with Laws. The Plan, the granting and vesting of Awards
under the Plan and the issuance and delivery of shares of Common Stock and the
payment of money under the Plan or under Awards granted or awarded hereunder are
subject to compliance with all applicable federal and state laws, rules and
regulations (including but not limited to state and federal securities law and
federal margin requirements) and to such approvals by any listing, regulatory or
governmental authority as may, in the opinion of counsel for the Company, be
necessary or advisable in connection therewith. Any securities delivered under
the Plan shall be subject to such restrictions, and the person acquiring such
securities shall, if requested by the Company, provide such assurances and
representations to the Company as the Company may deem necessary or desirable to
assure compliance with all applicable legal requirements. To the extent
permitted by applicable law, the Plan and Awards granted or awarded hereunder
shall be deemed amended to the extent necessary to conform to such laws, rules
and regulations.

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     10.10. Inability to Obtain Authority. The inability of the Company to
obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company’s counsel to be necessary to the lawful issuance and
sale of share of Common Stock hereunder, shall relieve the Company of any
liability in respect of the failure to issue or sell such shares of Common Stock
as to which such requisite authority shall not have been obtained.
     10.11. Reservation of Shares. The Company, during the term of this Plan,
shall at all times reserve and keep available such number of shares of Common
Stock as shall be sufficient to satisfy the requirements of the Plan.
     10.12. Titles. Titles are provided herein for convenience only and are not
to serve as a basis for interpretation or construction of the Plan.
     10.13. Governing Law. The Plan and any agreements hereunder shall be
administered, interpreted and enforced under the internal laws of the State of
California without regard to conflicts of laws thereof.
     10.14. Cancellation and Re-Grant of Awards. Neither the Administrator, the
Board nor the Committee shall have the authority to: (i) reprice any outstanding
Awards under the Plan, or (ii) cancel and re-grant any outstanding Awards under
the Plan, unless the stockholders of the Company have approved such an action.
* * *
     I hereby certify that the foregoing Plan was duly adopted by the Board of
Directors of Gen-Probe Incorporated on March 3rd, 2003, adopted as initially
amended and restated on February 9, 2006, adopted as amended a second time and
restated on November 16, 2006, and adopted as amended a third time and restated
on February 8, 2007.
     Executed on this 9th day of February 2007.

                  /s/ R. William Bowen       R. William Bowen      Secretary   
 

* * *
     I hereby certify that the foregoing Plan was duly approved by the
stockholders of Gen-Probe Incorporated on May 29, 2003 and approved as initially
amended and restated on May 17, 2006. The Plan as amended and restated on
November 16, 2006 and February 8, 2007 does not require additional stockholder
approval.
     Executed on this 9th day of February 2007.

                  /s/ R. William Bowen       R. William Bowen      Secretary   
 

29.