Exhibit 10.1

 

 BIOSITE INCORPORATED

 

2002 NONQUALIFIED

 

STOCK INCENTIVE PLAN

ARTICLE 1            INTRODUCTION.

The Plan was adopted by the Board on November 7, 2002, to be effective on that
date.

The purpose of the Plan is to promote the long-term success of the Company and
the creation of stockholder value by (a) encouraging Participants to focus on
critical long-range objectives, (b) encouraging the attraction and retention of
Participants with exceptional qualifications and (c) linking Participants
directly to stockholder interests through increased stock ownership.  The Plan
seeks to achieve this purpose by providing for Awards in the form of Restricted
Shares, Stock Units, Options (which shall only include nonstatutory stock
options) or stock appreciation rights.

The Plan shall be governed by, and construed in accordance with, the laws of the
State of California.

ARTICLE 2            ADMINISTRATION.

2.1           COMMITTEE COMPOSITION.  THE PLAN SHALL BE ADMINISTERED BY THE
COMMITTEE.  EXCEPT AS PROVIDED BELOW, THE COMMITTEE SHALL CONSIST EXCLUSIVELY OF
DIRECTORS OF THE COMPANY, WHO SHALL BE APPOINTED BY THE BOARD.  IN ADDITION, THE
COMPOSITION OF THE COMMITTEE SHALL SATISFY:

(A)         SUCH REQUIREMENTS, IF ANY, AS THE SECURITIES AND EXCHANGE COMMISSION
MAY ESTABLISH FOR ADMINISTRATORS ACTING UNDER PLANS INTENDED TO QUALIFY FOR
EXEMPTION UNDER RULE 16B–3 (OR ITS SUCCESSOR) UNDER THE EXCHANGE ACT; AND

(B)         SUCH REQUIREMENTS AS THE INTERNAL REVENUE SERVICE MAY ESTABLISH FOR
OUTSIDE DIRECTORS ACTING UNDER PLANS INTENDED TO QUALIFY FOR EXEMPTION UNDER
SECTION 162(M)(4)(C) OF THE CODE.

The Board may act on its own behalf with respect to Outside Directors and may
also appoint one or more separate committees composed of one or more officers of
the Company who need not be directors of the Company and who need not satisfy
the foregoing requirements, who may administer the Plan with respect to
Participants who are not “covered employees” under section 162(m)(3) of the Code
and who are not required to report pursuant to § 16(a) of the Exchange Act.

2.2           COMMITTEE RESPONSIBILITIES.  THE COMMITTEE SHALL (A) SELECT THE
PARTICIPANTS WHO ARE TO RECEIVE AWARDS UNDER THE PLAN, (B) DETERMINE THE TYPE,
NUMBER, VESTING REQUIREMENTS AND OTHER FEATURES AND CONDITIONS OF SUCH AWARDS,
(C) INTERPRET THE PLAN AND (D) MAKE ALL OTHER DECISIONS RELATING TO THE
OPERATION OF THE PLAN.  THE COMMITTEE MAY ADOPT SUCH RULES OR GUIDELINES AS IT
DEEMS APPROPRIATE TO IMPLEMENT THE PLAN.  THE COMMITTEE’S DETERMINATIONS UNDER
THE PLAN SHALL BE FINAL AND BINDING ON ALL PERSONS.

ARTICLE 3            SHARES AVAILABLE FOR GRANTS.

3.1           BASIC LIMITATION.  COMMON SHARES ISSUED PURSUANT TO THE PLAN MAY
BE AUTHORIZED BUT UNISSUED SHARES OR TREASURY SHARES.  THE AGGREGATE NUMBER OF
COMMON SHARES AVAILABLE FOR RESTRICTED SHARES, STOCK UNITS, OPTIONS AND SARS
AWARDED UNDER THE PLAN SHALL NOT EXCEED FIVE HUNDRED FIFTY THOUSAND (550,000). 
THE LIMITATION OF THIS SECTION 3.1 SHALL BE SUBJECT TO ADJUSTMENT PURSUANT TO
ARTICLE 10.

1

--------------------------------------------------------------------------------

 

3.2           ADDITIONAL SHARES.  IF STOCK UNITS, OPTIONS OR SARS ARE FORFEITED
OR IF OPTIONS OR SARS TERMINATE FOR ANY OTHER REASON BEFORE BEING EXERCISED,
THEN THE CORRESPONDING COMMON SHARES SHALL AGAIN BECOME AVAILABLE FOR AWARDS
UNDER THE PLAN.  IF RESTRICTED SHARES ARE FORFEITED BEFORE ANY DIVIDENDS HAVE
BEEN PAID WITH RESPECT TO SUCH SHARES, THEN SUCH SHARES SHALL AGAIN BECOME
AVAILABLE FOR AWARDS UNDER THE PLAN.  IF STOCK UNITS ARE SETTLED, THEN ONLY THE
NUMBER OF COMMON SHARES (IF ANY) ACTUALLY ISSUED IN SETTLEMENT OF SUCH STOCK
UNITS SHALL REDUCE THE NUMBER AVAILABLE UNDER SECTION 3.1 AND THE BALANCE SHALL
AGAIN BECOME AVAILABLE FOR AWARDS UNDER THE PLAN.  IF SARS ARE EXERCISED, THEN
ONLY THE NUMBER OF COMMON SHARES (IF ANY) ACTUALLY ISSUED IN SETTLEMENT OF SUCH
SARS SHALL REDUCE THE NUMBER AVAILABLE UNDER SECTION 3.1 AND THE BALANCE SHALL
AGAIN BECOME AVAILABLE FOR AWARDS UNDER THE PLAN.

3.3           DIVIDEND EQUIVALENTS.  ANY DIVIDEND EQUIVALENTS DISTRIBUTED UNDER
THE PLAN SHALL NOT BE APPLIED AGAINST THE NUMBER OF RESTRICTED SHARES, STOCK
UNITS, OPTIONS OR SARS AVAILABLE FOR AWARDS, WHETHER OR NOT SUCH DIVIDEND
EQUIVALENTS ARE CONVERTED INTO STOCK UNITS.

ARTICLE 4            ELIGIBILITY AND PARTICIPATION.

4.1           ELIGIBILITY.  ONLY ELIGIBLE EMPLOYEES AND CONSULTANTS (WHO ARE
NATURAL PERSONS) OF THE COMPANY, PARENT OR SUBSIDIARY SHALL BE ELIGIBLE FOR
DESIGNATION AS PARTICIPANTS BY THE COMMITTEE, PROVIDED, HOWEVER, THAT OFFICERS
AND MEMBERS OF THE BOARD SHALL NOT BE ELIGIBLE FOR DESIGNATION AS PARTICIPANTS
BY THE COMMITTEE OR THE BOARD AND SHALL NOT BE ELIGIBLE TO RECEIVE ANY AWARDS
UNDER THIS PLAN.

4.2           PARTICIPATION.  ONLY PERSONS ELIGIBLE TO PARTICIPATE IN THIS PLAN
AS PROVIDED IN SECTION 4.1 ABOVE AND WHO ARE DESIGNATED AS PARTICIPANTS BY THE
COMMITTEE AND ARE GRANTED SPECIFIC AWARDS BY THE COMMITTEE  UNDER THIS PLAN
SHALL PARTICIPATE IN THIS PLAN.

ARTICLE 5            OPTIONS.

5.1           STOCK OPTION AGREEMENT.  EACH GRANT OF AN OPTION UNDER THE PLAN
SHALL BE EVIDENCED BY A STOCK OPTION AGREEMENT BETWEEN THE OPTIONEE AND THE
COMPANY.  SUCH OPTION SHALL BE SUBJECT TO ALL APPLICABLE TERMS OF THE PLAN AND
MAY BE SUBJECT TO ANY OTHER TERMS THAT ARE NOT INCONSISTENT WITH THE PLAN.  THE
PROVISIONS OF THE VARIOUS STOCK OPTION AGREEMENTS ENTERED INTO UNDER THE PLAN
NEED NOT BE IDENTICAL.  OPTIONS MAY BE GRANTED IN CONSIDERATION OF A CASH
PAYMENT OR IN CONSIDERATION OF A REDUCTION IN THE OPTIONEE’S OTHER
COMPENSATION.  A STOCK OPTION AGREEMENT MAY PROVIDE THAT A NEW OPTION WILL BE
GRANTED AUTOMATICALLY TO THE OPTIONEE WHEN HE OR SHE EXERCISES A PRIOR OPTION
AND PAYS THE EXERCISE PRICE IN THE FORM DESCRIBED IN SECTION 6.2.

5.2           NUMBER OF SHARES.  EACH STOCK OPTION AGREEMENT SHALL SPECIFY THE
NUMBER OF COMMON SHARES SUBJECT TO THE OPTION AND SHALL PROVIDE FOR THE
ADJUSTMENT OF SUCH NUMBER IN ACCORDANCE WITH ARTICLE 10.

5.3           EXERCISE PRICE.  EACH STOCK OPTION AGREEMENT SHALL SPECIFY THE
EXERCISE PRICE PROVIDED THAT THE EXERCISE PRICE UNDER AN NSO SHALL IN NO EVENT
BE LESS THAN THE PAR VALUE OF THE COMMON SHARES SUBJECT TO SUCH NSO.  IN THE
CASE OF AN NSO, A STOCK OPTION AGREEMENT MAY SPECIFY AN EXERCISE PRICE THAT
VARIES IN ACCORDANCE WITH A PREDETERMINED FORMULA WHILE THE NSO IS OUTSTANDING.

5.4           EXERCISABILITY AND TERM.  EACH STOCK OPTION AGREEMENT SHALL
SPECIFY THE DATE WHEN ALL OR ANY INSTALLMENT OF THE OPTION IS TO BECOME
EXERCISABLE.  THE STOCK OPTION AGREEMENT SHALL ALSO SPECIFY THE TERM OF THE
OPTION.  A STOCK OPTION AGREEMENT MAY PROVIDE FOR ACCELERATED EXERCISABILITY IN
THE EVENT OF THE OPTIONEE’S DEATH, DISABILITY OR RETIREMENT OR OTHER EVENTS AND
MAY PROVIDE FOR EXPIRATION PRIOR TO THE END OF ITS TERM IN THE EVENT OF THE
TERMINATION OF THE OPTIONEE’S SERVICE.

Options may be awarded in combination with SARs, and such an Award may provide
that the Options will not be exercisable unless the related SARs are forfeited. 
NSOs may also be awarded in combination with Restricted Shares or Stock Units,
and such an Award may provide that the NSOs will not be exercisable unless the
related Restricted Shares or Stock Units are forfeited.

2

--------------------------------------------------------------------------------

 

5.5           EFFECT OF CHANGE IN CONTROL.  THE COMMITTEE MAY DETERMINE, AT THE
TIME OF GRANTING AN OPTION OR THEREAFTER, THAT SUCH OPTION SHALL BECOME FULLY
EXERCISABLE AS TO ALL COMMON SHARES SUBJECT TO SUCH OPTION IN THE EVENT THAT A
CHANGE IN CONTROL OCCURS WITH RESPECT TO THE COMPANY.

5.6           MODIFICATION OR ASSUMPTION OF OPTIONS.  WITHIN THE LIMITATIONS OF
THE PLAN, THE COMMITTEE MAY MODIFY, EXTEND OR ASSUME OUTSTANDING OPTIONS.  THE
FOREGOING NOTWITHSTANDING, NO MODIFICATION OF AN OPTION SHALL, WITHOUT THE
CONSENT OF THE OPTIONEE, ALTER OR IMPAIR HIS OR HER RIGHTS OR OBLIGATIONS UNDER
SUCH OPTION.

ARTICLE 6            PAYMENT FOR OPTION SHARES.

6.1           GENERAL RULE.  THE ENTIRE EXERCISE PRICE OF COMMON SHARES ISSUED
UPON EXERCISE OF OPTIONS SHALL BE PAYABLE IN CASH AT THE TIME WHEN SUCH COMMON
SHARES ARE PURCHASED, EXCEPT AS FOLLOWS.  THE EXERCISE PRICE MAY BE PAID IN SUCH
FORM PERMITTED IN THE STOCK OPTION AGREEMENT FOR SUCH OPTIONS AND THE COMMITTEE
MAY, IN ITS DISCRETION AT ANY TIME ACCEPT PAYMENT IN ANY FORM(S) DESCRIBED IN
THIS ARTICLE 6.

6.2           SURRENDER OF STOCK.  TO THE EXTENT THAT THIS SECTION 6.2 IS
APPLICABLE, PAYMENT FOR ALL OR ANY PART OF THE EXERCISE PRICE MAY BE MADE WITH
COMMON SHARES WHICH HAVE ALREADY BEEN OWNED BY THE OPTIONEE FOR MORE THAN SIX
MONTHS.  SUCH COMMON SHARES SHALL BE VALUED AT THEIR FAIR MARKET VALUE ON THE
DATE WHEN THE NEW COMMON SHARES ARE PURCHASED UNDER THE PLAN.

6.3           EXERCISE/SALE.  TO THE EXTENT THAT THIS SECTION 6.3 IS APPLICABLE,
PAYMENT MAY BE MADE BY THE DELIVERY (ON A FORM PRESCRIBED BY THE COMPANY) OF AN
IRREVOCABLE DIRECTION TO A SECURITIES BROKER APPROVED BY THE COMPANY TO SELL
COMMON SHARES AND TO DELIVER ALL OR PART OF THE SALES PROCEEDS TO THE COMPANY IN
PAYMENT OF ALL OR PART OF THE EXERCISE PRICE AND ANY WITHHOLDING TAXES.

6.4           EXERCISE/PLEDGE.  TO THE EXTENT THAT THIS SECTION 6.4 IS
APPLICABLE, PAYMENT MAY BE MADE BY THE DELIVERY (ON A FORM PRESCRIBED BY THE
COMPANY) OF AN IRREVOCABLE DIRECTION TO PLEDGE COMMON SHARES TO A SECURITIES
BROKER OR LENDER APPROVED BY THE COMPANY, AS SECURITY FOR A LOAN, AND TO DELIVER
ALL OR PART OF THE LOAN PROCEEDS TO THE COMPANY IN PAYMENT OF ALL OR PART OF THE
EXERCISE PRICE AND ANY WITHHOLDING TAXES.

6.5           PROMISSORY NOTE.  TO THE EXTENT THAT THIS SECTION 6.5 IS
APPLICABLE, PAYMENT MAY BE MADE WITH A FULL-RECOURSE PROMISSORY NOTE WITH
INTEREST AT A RATE TO BE DETERMINED BY THE COMPANY; PROVIDED THAT THE PAR VALUE
OF THE COMMON SHARES SHALL BE PAID IN CASH.

6.6           OTHER FORMS OF PAYMENT.  TO THE EXTENT THAT THIS SECTION 6.6 IS
APPLICABLE, PAYMENT MAY BE MADE IN ANY OTHER FORM THAT IS CONSISTENT WITH
APPLICABLE LAWS, REGULATIONS AND RULES.

ARTICLE 7            STOCK APPRECIATION RIGHTS.

7.1           SAR AGREEMENT.  EACH GRANT OF AN SAR UNDER THE PLAN SHALL BE
EVIDENCED BY AN SAR AGREEMENT BETWEEN THE OPTIONEE AND THE COMPANY.  SUCH SAR
SHALL BE SUBJECT TO ALL APPLICABLE TERMS OF THE PLAN AND MAY BE SUBJECT TO ANY
OTHER TERMS THAT ARE NOT INCONSISTENT WITH THE PLAN.  THE PROVISIONS OF THE
VARIOUS SAR AGREEMENTS ENTERED INTO UNDER THE PLAN NEED NOT BE IDENTICAL.  SARS
MAY BE GRANTED IN CONSIDERATION OF A REDUCTION IN THE OPTIONEE’S OTHER
COMPENSATION.

7.2           NUMBER OF SHARES.  EACH SAR AGREEMENT SHALL SPECIFY THE NUMBER OF
COMMON SHARES TO WHICH THE SAR PERTAINS AND SHALL PROVIDE FOR THE ADJUSTMENT OF
SUCH NUMBER IN ACCORDANCE WITH ARTICLE 10.  SARS GRANTED TO ANY OPTIONEE IN A
SINGLE CALENDAR YEAR SHALL IN NO EVENT PERTAIN TO MORE THAN 250,000 COMMON
SHARES, SUBJECT TO ADJUSTMENT IN ACCORDANCE WITH ARTICLE 10.

7.3           EXERCISE PRICE.  EACH SAR AGREEMENT SHALL SPECIFY THE EXERCISE
PRICE.  AN SAR AGREEMENT MAY SPECIFY AN EXERCISE PRICE THAT VARIES IN ACCORDANCE
WITH A PREDETERMINED FORMULA WHILE THE SAR IS OUTSTANDING.

3

--------------------------------------------------------------------------------

 

7.4           EXERCISABILITY AND TERM.  EACH SAR AGREEMENT SHALL SPECIFY THE
DATE WHEN ALL OR ANY INSTALLMENT OF THE SAR IS TO BECOME EXERCISABLE.  THE SAR
AGREEMENT SHALL ALSO SPECIFY THE TERM OF THE SAR.  AN SAR AGREEMENT MAY PROVIDE
FOR ACCELERATED EXERCISABILITY IN THE EVENT OF THE OPTIONEE’S DEATH, DISABILITY
OR RETIREMENT OR OTHER EVENTS AND MAY PROVIDE FOR EXPIRATION PRIOR TO THE END OF
ITS TERM IN THE EVENT OF THE TERMINATION OF THE OPTIONEE’S SERVICE.  SARS MAY
ALSO BE AWARDED IN COMBINATION WITH OPTIONS, RESTRICTED SHARES OR STOCK UNITS,
AND SUCH AN AWARD MAY PROVIDE THAT THE SARS WILL NOT BE EXERCISABLE UNLESS THE
RELATED OPTIONS, RESTRICTED SHARES OR STOCK UNITS ARE FORFEITED.  AN SAR MAY BE
INCLUDED IN AN NSO AT THE TIME OF GRANT OR THEREAFTER.  AN SAR GRANTED UNDER THE
PLAN MAY PROVIDE THAT IT WILL BE EXERCISABLE ONLY IN THE EVENT OF A CHANGE IN
CONTROL.

7.5           EFFECT OF CHANGE IN CONTROL.  THE COMMITTEE MAY DETERMINE, AT THE
TIME OF GRANTING AN SAR OR THEREAFTER, THAT SUCH SAR SHALL BECOME FULLY
EXERCISABLE AS TO ALL COMMON SHARES SUBJECT TO SUCH SAR IN THE EVENT THAT A
CHANGE IN CONTROL OCCURS WITH RESPECT TO THE COMPANY.

7.6           EXERCISE OF SARS.  THE EXERCISE OF AN SAR SHALL BE SUBJECT TO THE
RESTRICTIONS IMPOSED BY RULE 16B–3 (OR ITS SUCCESSOR) UNDER THE EXCHANGE ACT, IF
APPLICABLE.  IF, ON THE DATE WHEN AN SAR EXPIRES, THE EXERCISE PRICE UNDER SUCH
SAR IS LESS THAN THE FAIR MARKET VALUE ON SUCH DATE BUT ANY PORTION OF SUCH SAR
HAS NOT BEEN EXERCISED OR SURRENDERED, THEN SUCH SAR SHALL AUTOMATICALLY BE
DEEMED TO BE EXERCISED AS OF SUCH DATE WITH RESPECT TO SUCH PORTION.  UPON
EXERCISE OF AN SAR, THE OPTIONEE (OR ANY PERSON HAVING THE RIGHT TO EXERCISE THE
SAR AFTER HIS OR HER DEATH) SHALL RECEIVE FROM THE COMPANY (A) COMMON SHARES,
(B) CASH OR (C) A COMBINATION OF COMMON SHARES AND CASH, AS THE COMMITTEE SHALL
DETERMINE.  THE AMOUNT OF CASH AND/OR THE FAIR MARKET VALUE OF COMMON SHARES
RECEIVED UPON EXERCISE OF SARS SHALL, IN THE AGGREGATE, BE EQUAL TO THE AMOUNT
BY WHICH THE FAIR MARKET VALUE (ON THE DATE OF SURRENDER) OF THE COMMON SHARES
SUBJECT TO THE SARS EXCEEDS THE EXERCISE PRICE.

7.7           MODIFICATION OR ASSUMPTION OF SARS.  WITHIN THE LIMITATIONS OF THE
PLAN, THE COMMITTEE MAY MODIFY, EXTEND OR ASSUME OUTSTANDING SARS OR MAY ACCEPT
THE CANCELLATION OF OUTSTANDING SARS (WHETHER GRANTED BY THE COMPANY OR BY
ANOTHER ISSUER) IN RETURN FOR THE GRANT OF NEW SARS FOR THE SAME OR A DIFFERENT
NUMBER OF SHARES AND AT THE SAME OR A DIFFERENT EXERCISE PRICE.  THE FOREGOING
NOTWITHSTANDING, NO MODIFICATION OF AN SAR SHALL, WITHOUT THE CONSENT OF THE
OPTIONEE, ALTER OR IMPAIR HIS OR HER RIGHTS OR OBLIGATIONS UNDER SUCH SAR.

ARTICLE 8            RESTRICTED SHARES AND STOCK UNITS.

8.1           TIME, AMOUNT AND FORM OF AWARDS.  AWARDS UNDER THE PLAN MAY BE
GRANTED IN THE FORM OF RESTRICTED SHARES, IN THE FORM OF STOCK UNITS, OR IN ANY
COMBINATION OF BOTH.  RESTRICTED SHARES OR STOCK UNITS MAY ALSO BE AWARDED IN
COMBINATION WITH NSOS OR SARS, AND SUCH AN AWARD MAY PROVIDE THAT THE RESTRICTED
SHARES OR STOCK UNITS WILL BE FORFEITED IN THE EVENT THAT THE RELATED NSOS OR
SARS ARE EXERCISED.

8.2           PAYMENT FOR AWARDS.  TO THE EXTENT THAT AN AWARD IS GRANTED IN THE
FORM OF NEWLY ISSUED RESTRICTED SHARES, THE AWARD RECIPIENT, AS A CONDITION TO
THE GRANT OF SUCH AWARD, SHALL BE REQUIRED TO PAY THE COMPANY IN CASH AN AMOUNT
EQUAL TO THE PAR VALUE OF SUCH RESTRICTED SHARES.  TO THE EXTENT THAT AN AWARD
IS GRANTED IN THE FORM OF RESTRICTED SHARES FROM THE COMPANY’S TREASURY OR IN
THE FORM OF STOCK UNITS, NO CASH CONSIDERATION SHALL BE REQUIRED OF THE AWARD
RECIPIENTS.

8.3           VESTING CONDITIONS.  EACH AWARD OF RESTRICTED SHARES OR STOCK
UNITS SHALL BECOME VESTED, IN FULL OR IN INSTALLMENTS, UPON SATISFACTION OF THE
CONDITIONS SPECIFIED IN THE STOCK AWARD AGREEMENT.  A STOCK AWARD AGREEMENT MAY
PROVIDE FOR ACCELERATED VESTING IN THE EVENT OF THE PARTICIPANT’S DEATH,
DISABILITY OR RETIREMENT OR OTHER EVENTS.  THE COMMITTEE MAY DETERMINE, AT THE
TIME OF MAKING AN AWARD OR THEREAFTER, THAT SUCH AWARD SHALL BECOME FULLY VESTED
IN THE EVENT THAT A CHANGE IN CONTROL OCCURS WITH RESPECT TO THE COMPANY.

8.4           FORM AND TIME OF SETTLEMENT OF STOCK UNITS.  SETTLEMENT OF VESTED
STOCK UNITS MAY BE MADE IN THE FORM OF (A) CASH, (B) COMMON SHARES OR (C) ANY
COMBINATION OF BOTH, AS DETERMINED BY THE COMMITTEE.  THE ACTUAL NUMBER OF STOCK
UNITS ELIGIBLE FOR SETTLEMENT MAY BE LARGER OR SMALLER THAN THE NUMBER INCLUDED
IN THE ORIGINAL AWARD, BASED ON PREDETERMINED PERFORMANCE FACTORS.  METHODS OF
CONVERTING STOCK UNITS INTO CASH MAY INCLUDE (WITHOUT LIMITATION) A METHOD BASED
ON THE AVERAGE FAIR MARKET VALUE OF COMMON SHARES OVER A SERIES OF TRADING
DAYS.  VESTED STOCK UNITS MAY BE SETTLED IN A LUMP SUM OR IN INSTALLMENTS.  THE
DISTRIBUTION MAY OCCUR OR COMMENCE WHEN ALL VESTING CONDITIONS APPLICABLE TO THE
STOCK UNITS HAVE BEEN SATISFIED OR HAVE LAPSED, OR IT MAY BE DEFERRED TO ANY
LATER

4

--------------------------------------------------------------------------------

 

DATE.  THE AMOUNT OF A DEFERRED DISTRIBUTION MAY BE INCREASED BY AN INTEREST
FACTOR OR BY DIVIDEND EQUIVALENTS.  UNTIL AN AWARD OF STOCK UNITS IS SETTLED,
THE NUMBER OF SUCH STOCK UNITS SHALL BE SUBJECT TO ADJUSTMENT PURSUANT TO
ARTICLE 10.

8.5           DEATH OF RECIPIENT.  ANY STOCK UNITS AWARD THAT BECOMES PAYABLE
AFTER THE RECIPIENT’S DEATH SHALL BE DISTRIBUTED TO THE RECIPIENT’S BENEFICIARY
OR BENEFICIARIES.  EACH RECIPIENT OF A STOCK UNITS AWARD UNDER THE PLAN SHALL
DESIGNATE ONE OR MORE BENEFICIARIES FOR THIS PURPOSE BY FILING THE PRESCRIBED
FORM WITH THE COMPANY.  A BENEFICIARY DESIGNATION MAY BE CHANGED BY FILING THE
PRESCRIBED FORM WITH THE COMPANY AT ANY TIME BEFORE THE AWARD RECIPIENT’S
DEATH.  IF NO BENEFICIARY WAS DESIGNATED OR IF NO DESIGNATED BENEFICIARY
SURVIVES THE AWARD RECIPIENT, THEN ANY STOCK UNITS AWARD THAT BECOMES PAYABLE
AFTER THE RECIPIENT’S DEATH SHALL BE DISTRIBUTED TO THE RECIPIENT’S ESTATE.

8.6           CREDITORS’ RIGHTS.  A HOLDER OF STOCK UNITS SHALL HAVE NO RIGHTS
OTHER THAN THOSE OF A GENERAL CREDITOR OF THE COMPANY.  STOCK UNITS REPRESENT AN
UNFUNDED AND UNSECURED OBLIGATION OF THE COMPANY, SUBJECT TO THE TERMS AND
CONDITIONS OF THE APPLICABLE STOCK AWARD AGREEMENT.

ARTICLE 9            VOTING AND DIVIDEND RIGHTS.

9.1           RESTRICTED SHARES.  THE HOLDERS OF RESTRICTED SHARES AWARDED UNDER
THE PLAN SHALL HAVE THE SAME VOTING, DIVIDEND AND OTHER RIGHTS AS THE COMPANY’S
OTHER STOCKHOLDERS.  A STOCK AWARD AGREEMENT, HOWEVER, MAY REQUIRE THAT THE
HOLDERS OF RESTRICTED SHARES INVEST ANY CASH DIVIDENDS RECEIVED IN ADDITIONAL
RESTRICTED SHARES.  SUCH ADDITIONAL RESTRICTED SHARES SHALL BE SUBJECT TO THE
SAME CONDITIONS AND RESTRICTIONS AS THE AWARD WITH RESPECT TO WHICH THE
DIVIDENDS WERE PAID.  SUCH ADDITIONAL RESTRICTED SHARES SHALL NOT REDUCE THE
NUMBER OF COMMON SHARES AVAILABLE UNDER ARTICLE 3.

9.2           STOCK UNITS.  THE HOLDERS OF STOCK UNITS SHALL HAVE NO VOTING
RIGHTS.  PRIOR TO SETTLEMENT OR FORFEITURE, ANY STOCK UNIT AWARDED UNDER THE
PLAN MAY, AT THE COMMITTEE’S DISCRETION, CARRY WITH IT A RIGHT TO DIVIDEND
EQUIVALENTS.  SUCH RIGHT ENTITLES THE HOLDER TO BE CREDITED WITH AN AMOUNT EQUAL
TO ALL CASH DIVIDENDS PAID ON ONE COMMON SHARE WHILE THE STOCK UNIT IS
OUTSTANDING.  DIVIDEND EQUIVALENTS MAY BE CONVERTED INTO ADDITIONAL STOCK
UNITS.  SETTLEMENT OF DIVIDEND EQUIVALENTS MAY BE MADE IN THE FORM OF CASH, IN
THE FORM OF COMMON SHARES, OR IN A COMBINATION OF BOTH.  PRIOR TO DISTRIBUTION,
ANY DIVIDEND EQUIVALENTS WHICH ARE NOT PAID SHALL BE SUBJECT TO THE SAME
CONDITIONS AND RESTRICTIONS AS THE STOCK UNITS TO WHICH THEY ATTACH.

ARTICLE 10          PROTECTION AGAINST DILUTION.

10.1         ADJUSTMENTS.  IN THE EVENT OF A SUBDIVISION OF THE OUTSTANDING
COMMON SHARES, A DECLARATION OF A DIVIDEND PAYABLE IN COMMON SHARES, A
DECLARATION OF A DIVIDEND PAYABLE IN A FORM OTHER THAN COMMON SHARES IN AN
AMOUNT THAT HAS A MATERIAL EFFECT ON THE PRICE OF COMMON SHARES, A COMBINATION
OR CONSOLIDATION OF THE OUTSTANDING COMMON SHARES (BY RECLASSIFICATION OR
OTHERWISE) INTO A LESSER NUMBER OF COMMON SHARES, A RECAPITALIZATION, A SPINOFF
OR A SIMILAR OCCURRENCE, THE COMMITTEE SHALL MAKE SUCH ADJUSTMENTS AS IT, IN ITS
SOLE DISCRETION, DEEMS APPROPRIATE IN ONE OR MORE OF (A) THE NUMBER OF OPTIONS,
SARS, RESTRICTED SHARES AND STOCK UNITS AVAILABLE FOR FUTURE AWARDS UNDER
ARTICLE 3, (B) THE LIMITATIONS SET FORTH IN SECTIONS 5.2 AND 7.2, (C) THE NUMBER
OF NSOS TO BE GRANTED TO OUTSIDE DIRECTORS UNDER SECTION 4.2, (D) THE NUMBER OF
STOCK UNITS INCLUDED IN ANY PRIOR AWARD WHICH HAS NOT YET BEEN SETTLED, (E) THE
NUMBER OF COMMON SHARES COVERED BY EACH OUTSTANDING OPTION AND SAR OR (F) THE
EXERCISE PRICE UNDER EACH OUTSTANDING OPTION AND SAR.  EXCEPT AS PROVIDED IN
THIS ARTICLE 10, A PARTICIPANT SHALL HAVE NO RIGHTS BY REASON OF ANY ISSUE BY
THE COMPANY OF STOCK OF ANY CLASS OR SECURITIES CONVERTIBLE INTO STOCK OF ANY
CLASS, ANY SUBDIVISION OR CONSOLIDATION OF SHARES OF STOCK OF ANY CLASS, THE
PAYMENT OF ANY STOCK DIVIDEND OR ANY OTHER INCREASE OR DECREASE IN THE NUMBER OF
SHARES OF STOCK OF ANY CLASS.

10.2         REORGANIZATIONS.  IN THE EVENT THAT THE COMPANY IS A PARTY TO A
MERGER OR OTHER REORGANIZATION, OUTSTANDING OPTIONS, SARS, RESTRICTED SHARES AND
STOCK UNITS SHALL BE SUBJECT TO THE AGREEMENT OF MERGER OR REORGANIZATION.  SUCH
AGREEMENT MAY PROVIDE, WITHOUT LIMITATION, FOR THE ASSUMPTION OF OUTSTANDING
AWARDS BY THE SURVIVING CORPORATION OR ITS PARENT, FOR THEIR CONTINUATION BY THE
COMPANY (IF THE COMPANY IS A SURVIVING CORPORATION), FOR ACCELERATED VESTING AND
ACCELERATED EXPIRATION, OR FOR SETTLEMENT IN CASH.

5

--------------------------------------------------------------------------------

 

ARTICLE 11          AWARDS UNDER OTHER PLANS.

The Company may grant awards under other plans or programs.  Such awards may be
settled in the form of Common Shares issued under this Plan.  Such Common Shares
shall be treated for all purposes under the Plan like Common Shares issued in
settlement of Stock Units and shall, when issued, reduce the number of Common
Shares available under Article 3.

ARTICLE 12          LIMITATION ON RIGHTS.

12.1         RETENTION RIGHTS.  NEITHER THE PLAN NOR ANY AWARD GRANTED UNDER THE
PLAN SHALL BE DEEMED TO GIVE ANY INDIVIDUAL A RIGHT TO REMAIN AN EMPLOYEE,
CONSULTANT OR DIRECTOR OF THE COMPANY, A PARENT OR A SUBSIDIARY.  THE COMPANY
AND ITS PARENTS AND SUBSIDIARIES RESERVE THE RIGHT TO TERMINATE THE SERVICE OF
ANY EMPLOYEE, CONSULTANT OR DIRECTOR AT ANY TIME, WITH OR WITHOUT CAUSE, SUBJECT
TO APPLICABLE LAWS, THE COMPANY’S CERTIFICATE OF INCORPORATION AND BY-LAWS AND A
WRITTEN EMPLOYMENT AGREEMENT (IF ANY).

12.2         STOCKHOLDERS’ RIGHTS.  A PARTICIPANT SHALL HAVE NO DIVIDEND RIGHTS,
VOTING RIGHTS OR OTHER RIGHTS AS A STOCKHOLDER WITH RESPECT TO ANY COMMON SHARES
COVERED BY HIS OR HER AWARD PRIOR TO THE ISSUANCE OF A STOCK CERTIFICATE FOR
SUCH COMMON SHARES.  NO ADJUSTMENT SHALL BE MADE FOR CASH DIVIDENDS OR OTHER
RIGHTS FOR WHICH THE RECORD DATE IS PRIOR TO THE DATE WHEN SUCH CERTIFICATE IS
ISSUED, EXCEPT AS EXPRESSLY PROVIDED IN ARTICLES 8, 9 AND 10.

12.3         REGULATORY REQUIREMENTS.  ANY OTHER PROVISION OF THE PLAN
NOTWITHSTANDING, THE OBLIGATION OF THE COMPANY TO ISSUE COMMON SHARES UNDER THE
PLAN SHALL BE SUBJECT TO ALL APPLICABLE LAWS, RULES AND REGULATIONS AND SUCH
APPROVAL BY ANY REGULATORY BODY AS MAY BE REQUIRED.  THE COMPANY RESERVES THE
RIGHT TO RESTRICT, IN WHOLE OR IN PART, THE DELIVERY OF COMMON SHARES PURSUANT
TO ANY AWARD PRIOR TO THE SATISFACTION OF ALL LEGAL REQUIREMENTS RELATING TO THE
ISSUANCE OF SUCH COMMON SHARES, TO THEIR REGISTRATION, QUALIFICATION OR LISTING
OR TO AN EXEMPTION FROM REGISTRATION, QUALIFICATION OR LISTING.

ARTICLE 13          LIMITATION ON PAYMENTS.

13.1         EXCISE TAX.   IF ANY ACCELERATION OF THE VESTING OF A PARTICIPANT’S
AWARDS UNDER THIS PLAN  (“ACCELERATION”) WOULD (I) CONSTITUTE A “PARACHUTE
PAYMENT” WITHIN THE MEANING OF SECTION 280G OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE “CODE”), AND (II) BUT FOR THIS SENTENCE, BE SUBJECT TO THE
EXCISE TAX IMPOSED BY SECTION 4999 OF THE CODE (THE “EXCISE TAX”), THEN SUCH
ACCELERATION SHALL BE REDUCED TO THE REDUCED AMOUNT.  THE “REDUCED AMOUNT” SHALL
BE WHICHEVER OF THE FOLLOWING WHICH WOULD PROVIDE THE LARGEST AFTER-TAX BENEFIT
TO THE PARTICIPANT: (I) THE LARGEST PORTION OF THE ACCELERATION THAT WOULD
RESULT IN NO PORTION OF THE ACCELERATION BEING SUBJECT TO THE EXCISE TAX OR (II)
THE LARGEST PORTION, UP TO AND INCLUDING THE TOTAL, OF THE ACCELERATION,
WHICHEVER AMOUNT, AFTER TAKING INTO ACCOUNT ALL APPLICABLE FEDERAL, STATE AND
LOCAL EMPLOYMENT TAXES, INCOME TAXES, AND THE EXCISE TAX (ALL COMPUTED AT THE
HIGHEST APPLICABLE MARGINAL RATE), RESULTS IN PARTICIPANT’S RECEIPT, ON AN
AFTER-TAX BASIS, OF THE GREATER AMOUNT OF THE ACCELERATION NOTWITHSTANDING THAT
ALL OR SOME PORTION OF THE PAYMENT MAY BE SUBJECT TO THE EXCISE TAX. IN THE
EVENT THAT THE ACCELERATION IS TO BE REDUCED, SUCH ACCELERATION SHALL BE
CANCELLED IN THE REVERSE ORDER OF THE DATE OF GRANT OF THE PARTICIPANT’S AWARDS
UNLESS THE PARTICIPANT ELECTS IN WRITING A DIFFERENT ORDER FOR CANCELLATION.

The accounting firm engaged by the Company for general audit purposes as of the
day prior to the effective date of the transaction triggering the Acceleration
(“Triggering Transaction”) shall perform the foregoing calculations.  If the
accounting firm so engaged by the Company is serving as accountant or auditor
for the individual, entity or group effecting the Triggering Transaction, the
Company shall appoint a nationally recognized accounting firm to make the
determinations required hereunder.  The Company shall bear all expenses with
respect to the determinations by such accounting firm required to be made
hereunder.

13.2         CALCULATIONS.  THE ACCOUNTING FIRM ENGAGED TO MAKE THE
DETERMINATIONS HEREUNDER SHALL PROVIDE ITS CALCULATIONS, TOGETHER WITH DETAILED
SUPPORTING DOCUMENTATION, TO THE CORPORATION AND PARTICIPANT WITHIN FIFTEEN (15)
CALENDAR DAYS AFTER THE DATE ON WHICH PARTICIPANT’S RIGHT TO ACCELERATION ARISES
(IF REQUESTED AT THAT TIME BY

6

--------------------------------------------------------------------------------

 

THE COMPANY OR PARTICIPANT) OR AT SUCH OTHER TIME AS REQUESTED BY THE COMPANY OR
PARTICIPANT.  IF THE ACCOUNTING FIRM DETERMINES THAT NO EXCISE TAX IS PAYABLE
WITH RESPECT TO AN ACCELERATION, EITHER BEFORE OR AFTER THE APPLICATION OF THE
REDUCED AMOUNT, IT SHALL FURNISH THE COMPANY AND PARTICIPANT WITH AN OPINION
REASONABLY ACCEPTABLE TO PARTICIPANT THAT NO EXCISE TAX WILL BE IMPOSED WITH
RESPECT TO SUCH ACCELERATION.  ANY GOOD FAITH DETERMINATION OF THE ACCOUNTING
FIRM MADE HEREUNDER SHALL BE FINAL, BINDING AND CONCLUSIVE UPON THE COMPANY AND
PARTICIPANT.

13.3         RELATED CORPORATIONS.  FOR PURPOSES OF THIS ARTICLE 13, THE TERM
“COMPANY” SHALL INCLUDE AFFILIATED CORPORATIONS TO THE EXTENT DETERMINED BY THE
AUDITORS IN ACCORDANCE WITH SECTION 280G(D)(5) OF THE CODE.

ARTICLE 14          WITHHOLDING TAXES.

14.1         GENERAL.  TO THE EXTENT REQUIRED BY APPLICABLE FEDERAL, STATE,
LOCAL OR FOREIGN LAW, A PARTICIPANT OR HIS OR HER SUCCESSOR SHALL MAKE
ARRANGEMENTS SATISFACTORY TO THE COMPANY FOR THE SATISFACTION OF ANY WITHHOLDING
TAX OBLIGATIONS THAT ARISE IN CONNECTION WITH THE PLAN.  THE COMPANY SHALL NOT
BE REQUIRED TO ISSUE ANY COMMON SHARES OR MAKE ANY CASH PAYMENT UNDER THE PLAN
UNTIL SUCH OBLIGATIONS ARE SATISFIED.

14.2         SHARE WITHHOLDING.  THE COMMITTEE MAY PERMIT A PARTICIPANT TO
SATISFY ALL OR PART OF HIS OR HER WITHHOLDING OR INCOME TAX OBLIGATIONS BY
HAVING THE COMPANY WITHHOLD ALL OR A PORTION OF ANY COMMON SHARES THAT OTHERWISE
WOULD BE ISSUED TO HIM OR HER OR BY SURRENDERING ALL OR A PORTION OF ANY COMMON
SHARES THAT HE OR SHE PREVIOUSLY ACQUIRED.  SUCH COMMON SHARES SHALL BE VALUED
AT THEIR FAIR MARKET VALUE ON THE DATE WHEN TAXES OTHERWISE WOULD BE WITHHELD IN
CASH.  ANY PAYMENT OF TAXES BY ASSIGNING COMMON SHARES TO THE COMPANY MAY BE
SUBJECT TO RESTRICTIONS, INCLUDING ANY RESTRICTIONS REQUIRED BY RULES OF THE
SECURITIES AND EXCHANGE COMMISSION.

ARTICLE 15          ASSIGNMENT OR TRANSFER OF AWARDS.

15.1         GENERAL.  AN AWARD GRANTED UNDER THE PLAN SHALL NOT BE ANTICIPATED,
ASSIGNED, ATTACHED, GARNISHED, OPTIONED, TRANSFERRED OR MADE SUBJECT TO ANY
CREDITOR’S PROCESS, WHETHER VOLUNTARILY, INVOLUNTARILY OR BY OPERATION OF LAW,
EXCEPT AS APPROVED BY THE COMMITTEE.  HOWEVER, THIS ARTICLE 15 SHALL NOT
PRECLUDE A PARTICIPANT FROM DESIGNATING A BENEFICIARY WHO WILL RECEIVE ANY
OUTSTANDING AWARDS IN THE EVENT OF THE PARTICIPANT’S DEATH, NOR SHALL IT
PRECLUDE A TRANSFER OF AWARDS BY WILL OR BY THE LAWS OF DESCENT AND
DISTRIBUTION.

15.2         TRUSTS.  NEITHER THIS ARTICLE 15 NOR ANY OTHER PROVISION OF THE
PLAN SHALL PRECLUDE A PARTICIPANT FROM TRANSFERRING OR ASSIGNING RESTRICTED
SHARES TO (A) THE TRUSTEE OF A TRUST THAT IS REVOCABLE BY SUCH PARTICIPANT
ALONE, BOTH AT THE TIME OF THE TRANSFER OR ASSIGNMENT AND AT ALL TIMES
THEREAFTER PRIOR TO SUCH PARTICIPANT’S DEATH, OR (B) THE TRUSTEE OF ANY OTHER
TRUST TO THE EXTENT APPROVED IN ADVANCE BY THE COMMITTEE IN WRITING.  A TRANSFER
OR ASSIGNMENT OF RESTRICTED SHARES FROM SUCH TRUSTEE TO ANY PERSON OTHER THAN
SUCH PARTICIPANT SHALL BE PERMITTED ONLY TO THE EXTENT APPROVED IN ADVANCE BY
THE COMMITTEE IN WRITING, AND RESTRICTED SHARES HELD BY SUCH TRUSTEE SHALL BE
SUBJECT TO ALL OF THE CONDITIONS AND RESTRICTIONS SET FORTH IN THE PLAN AND IN
THE APPLICABLE STOCK AWARD AGREEMENT, AS IF SUCH TRUSTEE WERE A PARTY TO SUCH
AGREEMENT.

ARTICLE 16          FUTURE OF THE PLAN.

16.1         TERM OF THE PLAN.  THE PLAN, AS SET FORTH HEREIN, WAS ADOPTED ON
NOVEMBER 7, 2002, AND BECAME EFFECTIVE NOVEMBER 7, 2002.  THE PLAN SHALL REMAIN
IN EFFECT UNTIL IT IS TERMINATED UNDER SECTION 16.2.

16.2         AMENDMENT OR TERMINATION.  THE BOARD MAY, AT ANY TIME AND FOR ANY
REASON, AMEND OR TERMINATE THE PLAN.  AN AMENDMENT OF THE PLAN SHALL BE SUBJECT
TO THE APPROVAL OF THE COMPANY’S STOCKHOLDERS ONLY TO THE EXTENT REQUIRED BY
APPLICABLE LAWS, REGULATIONS OR RULES OR APPLICABLE STOCK EXCHANGE RULES.  NO
AWARDS SHALL BE GRANTED UNDER THE PLAN AFTER THE TERMINATION THEREOF.  THE
TERMINATION OF THE PLAN, OR ANY AMENDMENT THEREOF, SHALL NOT AFFECT ANY AWARD
PREVIOUSLY GRANTED UNDER THE PLAN.

7

--------------------------------------------------------------------------------

 

ARTICLE 17          DEFINITIONS.

17.1         “AWARD” MEANS ANY AWARD OF AN OPTION, AN SAR, A RESTRICTED SHARE OR
A STOCK UNIT UNDER THE PLAN.

17.2         “BOARD” MEANS THE COMPANY’S BOARD OF DIRECTORS, AS CONSTITUTED FROM
TIME TO TIME.

17.3         “CHANGE IN CONTROL” SHALL MEAN THE OCCURRENCE OF ANY OF THE
FOLLOWING EVENTS:

(A)         THE CONSUMMATION OF A MERGER OR CONSOLIDATION OF THE COMPANY WITH OR
INTO ANOTHER ENTITY OR ANY OTHER CORPORATE REORGANIZATION, IF MORE THAN 50% OF
THE COMBINED VOTING POWER OF THE CONTINUING OR SURVIVING ENTITY’S SECURITIES
OUTSTANDING IMMEDIATELY AFTER SUCH MERGER, CONSOLIDATION OR OTHER REORGANIZATION
IS OWNED BY PERSONS WHO WERE NOT STOCKHOLDERS OF THE COMPANY IMMEDIATELY PRIOR
TO SUCH MERGER, CONSOLIDATION OR OTHER REORGANIZATION;

(B)         A CHANGE IN THE COMPOSITION OF THE BOARD, AS A RESULT OF WHICH FEWER
THAN ONE-HALF OF THE INCUMBENT DIRECTORS ARE DIRECTORS WHO EITHER:

(A)          HAD BEEN DIRECTORS OF THE COMPANY 24 MONTHS PRIOR TO SUCH CHANGE;
OR

(B)           WERE ELECTED, OR NOMINATED FOR ELECTION, TO THE BOARD WITH THE
AFFIRMATIVE VOTES OF AT LEAST A MAJORITY OF THE DIRECTORS WHO HAD BEEN DIRECTORS
OF THE COMPANY 24 MONTHS PRIOR TO SUCH CHANGE AND WHO WERE STILL IN OFFICE AT
THE TIME OF THE ELECTION OR NOMINATION; OR

(C)         ANY “PERSON” (AS SUCH TERM IS USED IN SECTIONS 13(D) AND 14(D) OF
THE EXCHANGE ACT) BY THE ACQUISITION OR AGGREGATION OF SECURITIES IS OR BECOMES
THE BENEFICIAL OWNER, DIRECTLY OR INDIRECTLY, OF SECURITIES OF THE COMPANY
REPRESENTING 50% OR MORE OF THE COMBINED VOTING POWER OF THE COMPANY’S THEN
OUTSTANDING SECURITIES ORDINARILY (AND APART FROM RIGHTS ACCRUING UNDER SPECIAL
CIRCUMSTANCES) HAVING THE RIGHT TO VOTE AT ELECTIONS OF DIRECTORS (THE “BASE
CAPITAL STOCK”); EXCEPT THAT ANY CHANGE IN THE RELATIVE BENEFICIAL OWNERSHIP OF
THE COMPANY’S SECURITIES BY ANY PERSON RESULTING SOLELY FROM A REDUCTION IN THE
AGGREGATE NUMBER OF OUTSTANDING SHARES OF BASE CAPITAL STOCK, AND ANY DECREASE
THEREAFTER IN SUCH PERSON’S OWNERSHIP OF SECURITIES, SHALL BE DISREGARDED UNTIL
SUCH PERSON INCREASES IN ANY MANNER, DIRECTLY OR INDIRECTLY, SUCH PERSON’S
BENEFICIAL OWNERSHIP OF ANY SECURITIES OF THE COMPANY.

The term “Change in Control” shall not include a transaction, the sole purpose
of which is to change the state of the Company’s incorporation.

17.4         “CODE” MEANS THE INTERNAL REVENUE CODE OF 1986, AS AMENDED.

17.5         “COMMITTEE” MEANS A COMMITTEE OF THE BOARD, AS DESCRIBED IN
ARTICLE 2.

17.6         “COMMON SHARE” MEANS ONE SHARE OF THE COMMON STOCK OF THE COMPANY.

17.7         “COMPANY” MEANS BIOSITE INCORPORATED, A DELAWARE CORPORATION.

17.8         “ELIGIBLE EMPLOYEE” MEANS A COMMON–LAW EMPLOYEE OF THE COMPANY, A
PARENT OR A SUBSIDIARY.

17.9         “EXCHANGE ACT” MEANS THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

17.10       “EXERCISE PRICE,” IN THE CASE OF AN OPTION, MEANS THE AMOUNT FOR
WHICH ONE COMMON SHARE MAY BE PURCHASED UPON EXERCISE OF SUCH OPTION, AS
SPECIFIED IN THE APPLICABLE STOCK OPTION AGREEMENT.  ”EXERCISE PRICE,” IN THE
CASE OF AN SAR, MEANS AN AMOUNT, AS SPECIFIED IN THE APPLICABLE SAR AGREEMENT,
WHICH IS SUBTRACTED FROM THE FAIR MARKET VALUE OF ONE COMMON SHARE IN
DETERMINING THE AMOUNT PAYABLE UPON EXERCISE OF SUCH SAR.

8

--------------------------------------------------------------------------------

 

17.11       “FAIR MARKET VALUE” MEANS THE MARKET PRICE OF COMMON SHARES,
DETERMINED BY THE COMMITTEE AS FOLLOWS:

(A)         IF THE COMMON SHARES WERE TRADED OVER-THE-COUNTER ON THE DATE IN
QUESTION BUT WAS NOT TRADED ON THE NASDAQ STOCK MARKET OR THE NASDAQ NATIONAL
MARKET, THEN THE FAIR MARKET VALUE SHALL BE EQUAL TO THE MEAN BETWEEN THE LAST
REPORTED REPRESENTATIVE BID AND ASKED PRICES QUOTED FOR SUCH DATE BY THE
PRINCIPAL AUTOMATED INTER-DEALER QUOTATION SYSTEM ON WHICH THE COMMON SHARES ARE
QUOTED OR, IF THE COMMON SHARES ARE NOT QUOTED ON ANY SUCH SYSTEM, BY THE “PINK
SHEETS” PUBLISHED BY THE NATIONAL QUOTATION BUREAU, INC.;

(B)         IF THE COMMON SHARES WERE TRADED OVER-THE-COUNTER ON THE DATE IN
QUESTION AND WERE TRADED ON THE NASDAQ STOCK MARKET OR THE NASDAQ NATIONAL
MARKET, THEN THE FAIR MARKET VALUE SHALL BE EQUAL TO THE LAST-TRANSACTION PRICE
QUOTED FOR SUCH DATE BY THE NASDAQ STOCK MARKET OR THE NASDAQ NATIONAL MARKET;

(C)         IF THE COMMON SHARES WERE TRADED ON A STOCK EXCHANGE ON THE DATE IN
QUESTION, THEN THE FAIR MARKET VALUE SHALL BE EQUAL TO THE CLOSING PRICE
REPORTED BY THE APPLICABLE COMPOSITE TRANSACTIONS REPORT FOR SUCH DATE; AND

(D)         IF NONE OF THE FOREGOING PROVISIONS IS APPLICABLE, THEN THE FAIR
MARKET VALUE SHALL BE DETERMINED BY THE COMMITTEE IN GOOD FAITH ON SUCH BASIS AS
IT DEEMS APPROPRIATE.

Whenever possible, the determination of Fair Market Value by the Committee shall
be based on the prices reported in the Western Edition of The Wall Street
Journal.  Such determination shall be conclusive and binding on all persons.

17.12       “ISO” MEANS AN INCENTIVE STOCK OPTION DESCRIBED IN SECTION 422(B) OF
THE CODE.

17.13       “NSO” MEANS A STOCK OPTION NOT DESCRIBED IN SECTION 422 OR 423 OF
THE CODE.

17.14       “OFFICER” MEANS A PERSON WHO IS AN OFFICER OF THE COMPANY WITHIN THE
MEANING OF SECTION 16 OF THE EXCHANGE ACT AND THE RULES AND REGULATIONS
PROMULGATED THERE THEREUNDER AND ALSO MEANS A PERSON WHO HOLDS A VICE PRESIDENT
OR HIGHER POSITION WITH THE COMPANY.

17.15       “OPTION” MEANS A NONSTATUTORY STOCK OPTION GRANTED UNDER THE PLAN
AND ENTITLING THE HOLDER TO PURCHASE ONE COMMON SHARE.  THE TERM “OPTION” SHALL
NOT INCLUDE AN INCENTIVE STOCK OPTION DESCRIBED SECTION 422 OF THE CODE.

17.16       “OPTIONEE” MEANS AN INDIVIDUAL OR ESTATE WHO HOLDS AN OPTION OR SAR.

17.17       “OUTSIDE DIRECTOR” SHALL MEAN A MEMBER OF THE BOARD WHO IS NOT A
COMMON-LAW EMPLOYEE OF THE COMPANY, A PARENT OR A SUBSIDIARY.

17.18       “PARENT” MEANS ANY CORPORATION (OTHER THAN THE COMPANY) IN AN
UNBROKEN CHAIN OF CORPORATIONS ENDING WITH THE COMPANY, IF EACH OF THE
CORPORATIONS OTHER THAN THE COMPANY OWNS STOCK POSSESSING 50% OR MORE OF THE
TOTAL COMBINED VOTING POWER OF ALL CLASSES OF STOCK IN ONE OF THE OTHER
CORPORATIONS IN SUCH CHAIN.  A CORPORATION THAT ATTAINS THE STATUS OF A PARENT
ON A DATE AFTER THE ADOPTION OF THE PLAN SHALL BE CONSIDERED A PARENT COMMENCING
AS OF SUCH DATE.

17.19       “PARTICIPANT” MEANS AN INDIVIDUAL OR ESTATE WHO HOLDS AN AWARD AS
PROVIDED IN SECTION 4.2.

17.20       “PLAN” MEANS THIS BIOSITE INCORPORATED 2002 NONQUALIFIED STOCK
INCENTIVE PLAN, AS AMENDED FROM TIME TO TIME.

17.21       “RESTRICTED SHARE” MEANS A COMMON SHARE AWARDED UNDER THE PLAN.

17.22       “SAR” MEANS A STOCK APPRECIATION RIGHT GRANTED UNDER THE PLAN.

9

--------------------------------------------------------------------------------

 

17.23       “SAR AGREEMENT” MEANS THE AGREEMENT BETWEEN THE COMPANY AND AN
OPTIONEE WHICH CONTAINS THE TERMS, CONDITIONS AND RESTRICTIONS PERTAINING TO HIS
OR HER SAR.

17.24       “STOCK AWARD AGREEMENT” MEANS THE AGREEMENT BETWEEN THE COMPANY AND
THE RECIPIENT OF A RESTRICTED SHARE OR STOCK UNIT WHICH CONTAINS THE TERMS,
CONDITIONS AND RESTRICTIONS PERTAINING TO SUCH RESTRICTED SHARE OR STOCK UNIT.

17.25       “STOCK OPTION AGREEMENT” MEANS THE AGREEMENT BETWEEN THE COMPANY AND
AN OPTIONEE WHICH CONTAINS THE TERMS, CONDITIONS AND RESTRICTIONS PERTAINING TO
HIS OR HER OPTION.

17.26       “STOCK UNIT” MEANS A BOOKKEEPING ENTRY REPRESENTING THE EQUIVALENT
OF ONE COMMON SHARE, AS AWARDED UNDER THE PLAN.

17.27       “SUBSIDIARY” MEANS ANY CORPORATION (OTHER THAN THE COMPANY) IN AN
UNBROKEN CHAIN OF CORPORATIONS BEGINNING WITH THE COMPANY, IF EACH OF THE
CORPORATIONS OTHER THAN THE LAST CORPORATION IN THE UNBROKEN CHAIN OWNS STOCK
POSSESSING 50% OR MORE OF THE TOTAL COMBINED VOTING POWER OF ALL CLASSES OF
STOCK IN ONE OF THE OTHER CORPORATIONS IN SUCH CHAIN.  A CORPORATION THAT
ATTAINS THE STATUS OF A SUBSIDIARY ON A DATE AFTER THE ADOPTION OF THE PLAN
SHALL BE CONSIDERED A SUBSIDIARY COMMENCING AS OF SUCH DATE.

ARTICLE 18          EXECUTION.

To record the adoption of the Plan by the Board, the Company has caused its duly
authorized officer to affix the corporate name and seal hereto.

BIOSITE INCORPORATED

 

 

 

By     /s/  KIM D. BLICKENSTAFF

 

 

10

--------------------------------------------------------------------------------