Exhibit 10.6

APPENDIX C

2010 Equity Incentive Plan

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LA JOLLA PHARMACEUTICAL COMPANY

2010 EQUITY INCENTIVE PLAN

ARTICLE I

GENERAL PROVISIONS

1.01 Definitions.

Terms used herein and not otherwise defined shall have the meanings set forth
below:

(a) “Administrator” means the Board or a Committee that has been delegated the
authority to administer the Plan.

(b) “Award” means an Incentive Award or a Nonemployee Director’s Option.

(c) “Award Document” means an award agreement duly executed on behalf of the
Company and by the Recipient or, in the Administrator’s discretion, a confirming
memorandum issued by the Company to the Recipient.

(d) “Board” means the Board of Directors of the Company.

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

(i) Except as provided by subsection (iii) hereof, the acquisition (other than
from the Company) by any person, entity or “group,” within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act (excluding, for this purpose,
the Company or its subsidiaries, or any employee benefit plan of the Company or
its subsidiaries which acquires beneficial ownership of voting securities of the
Company), of beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of forty percent (40%) or more of either the then
outstanding shares of Common Stock or the combined voting power of the Company’s
then outstanding voting securities entitled to vote generally in the election of
directors; or

(ii) Individuals who, as of the effective date of the Plan, constitute the Board
(the “Incumbent Board”) cease for any reason to constitute at least a majority
of the Board, provided that any person becoming a director subsequent to the
date hereof whose election, or nomination for election by the Company’s
stockholders, is or was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board (other than an election or
nomination of an individual whose initial assumption of office is in connection
with an actual or threatened election contest relating to the election of the
directors of the Company, as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) shall be, for purposes of the
Plan, considered as though such person were a member of the Incumbent Board; or

(iii) Approval by the stockholders of the Company of a reorganization, merger or
consolidation with any other person, entity or corporation, other than:

(A) a merger or consolidation which would result in the persons holding the
voting securities of the Company outstanding immediately prior thereto
continuing to hold more than fifty percent (50%) of the combined voting power of
the voting securities of the Company or its successor which are outstanding
immediately after such merger or consolidation, or

(B) a merger or consolidation effected to implement a recapitalization of the
Company (or similar transaction) in which no person acquires forty percent
(40%) or more of the combined voting power of the Company’s then outstanding
voting securities; or

 

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(iv) Approval by the stockholders of the Company of a plan of complete
liquidation of the Company or an agreement for the sale or other disposition by
the Company of all or substantially all of the Company’s assets.

Notwithstanding the foregoing, a Change in Control shall not be deemed to have
occurred (1) if the “person” is an underwriter or underwriting syndicate that
has acquired the ownership of 50% or more of the combined voting power of the
Company’s then outstanding voting securities solely in connection with a public
offering of the Company’s securities, or (2) if the “person” is an employee
stock ownership plan or other employee benefit plan maintained by the Company
that is qualified under the provisions of the Employee Retirement Income
Security Act of 1974, as amended.

(f) “Code” means the Internal Revenue Code of 1986, as amended. Where the
context so requires, a reference to a particular Code section shall also refer
to any successor provision of the Code to such section.

(g) “Committee” means the committee appointed by the Board to administer the
Plan.

(h) “Common Stock” means the common stock of the Company.

(i) “Company” means La Jolla Pharmaceutical Company.

(j) “Dividend Equivalent” means a right granted by the Company under
Section 2.07 to a holder of an Option, Stock Appreciation Right, or other
Incentive Award denominated in shares of Common Stock to receive from the
Company during the Applicable Dividend Period (as defined in Section 2.07)
payments equivalent to the amount of dividends payable to holders of the number
of shares of Common Stock underlying such Option, Stock Appreciation Right, or
other Incentive Award.

(k) “Eligible Person” means any director, Employee or consultant of the Company
or any Related Corporation.

(l) “Employee” means an individual who is in the employ of the Company (or any
Parent or Subsidiary) subject to the control and direction of the employer
entity as to both the work to be performed and the manner and method of
performance.

(m) “Exchange Act” means the Securities Exchange Act of 1934, as amended. Where
the context so requires, a reference to a particular section of the Exchange Act
or rule thereunder shall also refer to any successor provision to such section
or rule.

(n) “Exercise Price” means the price at which the Holder may purchase shares of
Common Stock underlying an Option.

(o) “Fair Market Value” of capital stock of the Company shall be determined with
reference to the closing price of such stock on the day in question (or, if such
day is not a trading day in the U.S. securities markets, on the nearest
preceding trading day), as reported with respect to the principal market or
trading system on which such stock is then traded; or, if no such closing prices
are reported, the mean between the high bid and low ask prices that day on the
principal market or national quotation system on which such shares are then
quoted; provided, however, that when appropriate, the Administrator in
determining Fair Market Value of capital stock of the Company may take into
account such other factors as may be deemed appropriate under the circumstances.
Notwithstanding the foregoing, the Fair Market Value of capital stock for
purposes of grants of Incentive Stock Options shall be determined in compliance
with applicable provisions of the Code. The Fair Market Value of rights or
property other than capital stock of the Company means the fair market value
thereof as determined by the Administrator on the basis of such factors as it
may deem appropriate.

(p) “Holder” means the Recipient of an Award or any permitted assignee holding
the Award.

(q) “Incentive Award” means any Option (other than a Nonemployee Director’s
Option), Restricted Stock, Stock Appreciation Right, Stock Payment, Performance
Award or Dividend Equivalent granted or sold to an Eligible Person under this
Plan.

 

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(r) “Incentive Stock Option” means an Option that qualifies as an incentive
stock option under Section 422 (or any successor section) of the Code and the
regulations thereunder.

(s) “Just Cause Dismissal” shall mean a termination of a Recipient’s Service for
any of the following reasons: (i) the Recipient violates any reasonable rule or
regulation of the Company or the Recipient’s superiors or the Chief Executive
Officer or President of the Company that (A) results in damage to the Company or
(B) after written notice to do so, the Recipient fails to correct within a
reasonable time; (ii) any willful misconduct or gross negligence by the
Recipient in the responsibilities assigned to him or her; (iii) any willful
failure to perform his or her job; (iv) any wrongful conduct of a Recipient
which has an adverse impact on the Company or which constitutes fraud,
embezzlement or dishonesty; (v) the Recipient’s performing services for any
other person or entity which competes with the Company while he or she is
providing Service, without the written approval of the Chief Executive Officer
or President of the Company; or (vi) any other conduct that the Administrator
determines constitutes Just Cause for Dismissal; provided, however, that if the
term of concept has been defined in an employment agreement between the Company
and the Recipient, then Just Cause Dismissal shall have the definition set forth
in such employment agreement. The foregoing definition shall not in any way
preclude or restrict the right of the Company or any Related Corporation to
discharge or dismiss any Recipient or other person in the Service of the Company
or any Related Corporation for any other acts or omissions but such other acts
or omission shall not be deemed, for purposes of the Plan, to constitute grounds
for Just Cause Dismissal.

(t) “Nonemployee Director” means a director of the Company who is not an
Employee of the Company or any of its Related Corporations.

(u) “Nonemployee Director’s Option” means a Nonqualified Stock Option granted to
a Nonemployee Director pursuant to Article III of the Plan.

(v) “Nonqualified Stock Option” means an Option that does not qualify as an
Incentive Stock Option.

(w) “Option” means a right to purchase stock of the Company granted under this
Plan, and can be an Incentive Stock Option or a Nonqualified Stock Option.

(x) “Parent” means any corporation (other than the Company) in an unbroken chain
of corporations ending with the Company, provided each corporation in the
unbroken chain (other than the Company) owns, at the time of the determination,
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.

(y) “Performance Award” means an award, payable in cash, Common Stock or a
combination thereof, which vests and becomes payable over a period of time upon
attainment of performance criteria established in connection with the grant of
the award.

(z) “Performance-Based Compensation” means performance-based compensation as
described in Section 162(m) of the Code and the regulations thereunder. If the
amount of compensation an Eligible Person will receive under any Incentive Award
is not based solely on an increase in the value of Common Stock after the date
of grant or award, the Administrator, in order to qualify an Incentive Award as
performance-based compensation under Section 162(m) of the Code and the
regulations thereunder, can condition the grant, award, vesting, or
exercisability of such an award on the attainment of a preestablished, objective
performance goal. For this purpose, a preestablished, objective performance goal
may include one or more of the following performance criteria: (i) cash flow,
(ii) earnings per share (including earnings before interest, taxes, and
amortization), (iii) return on equity, (iv) total stockholder return, (v) return
on capital, (vi) return on assets or net assets, (vii) income or net income,
(viii) operating margin, (ix) return on operating revenue, (x) attainment of
stated goals related to the Company’s research and development or clinical
trials programs, (xi) attainment of stated goals related to the Company’s
capitalization, costs, financial condition, or results of operations, and
(xii) any other similar performance criteria.

(aa) “Permanent Disability” shall mean the inability of the Recipient to engage
in any substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death or has
lasted or can be expected to last for a continuous period of twelve months or
more.

(bb) “Plan” means the La Jolla Pharmaceutical Company 2010 Equity Incentive Plan
as set forth in this document.

 

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(cc) “Purchase Price” means the purchase price (if any) to be paid by a
Recipient for Restricted Stock as determined by the Administrator (which price
shall be at least equal to the minimum price required under applicable laws and
regulations for the issuance of Common Stock).

(dd) “Recipient” means an Eligible Person who has received an Award hereunder.

(ee) “Related Corporation” means either a Parent or Subsidiary.

(ff) “Restricted Stock” means Common Stock that is the subject of an award made
under Section 2.04 and which is nontransferable and subject to a substantial
risk of forfeiture until specific conditions are met as set forth in this Plan
and in any Award Document.

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

(hh) “Service” means the performance of services for the Company or its Related
Corporations by a person in the capacity of an Employee, a director or a
consultant, except to the extent otherwise specifically provided in the Award
Document.

(ii) “Stock Appreciation Right” means a right granted under Section 2.05 to
receive a payment that is measured with reference to the amount by which the
Fair Market Value of a specified number of shares of Common Stock appreciates
from a specified date, such as the date of grant of the Stock Appreciation
Right, to the date of exercise.

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

(kk) “Subsidiary” means any corporation (other than the Company) in an unbroken
chain of corporations beginning with the Company, provided each corporation in
the unbroken chain (other than the last corporation) owns, at the time of the
determination, 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.

(ll) “Ten Percent Owner” means an employee who owns or is deemed to own (by
reason of the attribution rules of Section 424(d) of the Code) more than
10 percent of the combined voting power of all classes of stock of the Company
or any parent or subsidiary corporation.

1.02 Purpose of the Plan.

The Board has adopted this Plan to advance the interests of the Company and its
stockholders by (a) providing Eligible Persons with financial incentives to
promote the success of the Company’s business objectives, and to increase their
proprietary interest in the success of the Company, and (b) giving the Company a
means to attract and retain Eligible Persons.

1.03 Common Stock Subject to the Plan.

(a) Number of Shares. Subject to Section 1.05(b), the total number of shares of
Common Stock initially authorized for issuance pursuant to Awards granted
hereunder shall be 9,600,000, provided that the total number of shares
authorized for issuance hereunder shall be automatically increased to equal 10%
of the number of shares of Common Stock issued and outstanding as of the
following measurement dates: January 1, 2011, May 1, 2011, September 1, 2011,
January 1, 2012, May 1, 2012, September 1, 2012 and January 1, 2013, provided,
further that in no event shall the total number of shares issued hereunder
exceed 170,000,000.

(b) Source of Shares. The Common Stock to be issued under this Plan will be made
available, at the discretion of the Administrator, either from authorized but
unissued shares of Common Stock or from previously issued shares of Common Stock
reacquired by the Company, including shares purchased on the open market.

(c) Availability of Unused Shares. Shares of Common Stock subject to unexercised
portions of any Award granted under this Plan that expire, terminate or are
cancelled, and shares of Common Stock issued pursuant to an Award under this
Plan that are reacquired by the Company pursuant to the terms of the Award under
which such shares were issued, will again become available for the grant of
further Awards under this Plan.

 

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(d) Grant Limits. Notwithstanding any other provision of this Plan, no Eligible
Person shall be granted Awards with respect to more than 20 million shares of
Common Stock in the aggregate in any one calendar year; provided, however, that
this limitation shall not apply if it is not required in order for the
compensation attributable to Awards hereunder to qualify as Performance-Based
Compensation.

1.04 Administration of the Plan.

(a) The Administrator. The Plan will be administered by a Committee, which will
consist of two or more members of the Board each of whom must be an “independent
director” as defined by applicable listing standards. Notwithstanding the
foregoing or any provision of the Plan to the contrary, the Board may, in lieu
of the Committee, exercise any authority granted to the Committee pursuant to
the provisions of the Plan. To obtain the benefits of Rule 16b-3, Incentive
Awards must be granted by the entire Board or a Committee comprised entirely of
“non-employee directors” as such term is defined in Rule 16b-3. In addition, if
Incentive Awards are to be made to persons subject to Section 162(m) of the Code
and such Awards are intended to constitute Performance-Based Compensation, then
such Incentive Awards must be granted by a Committee comprised entirely of
“outside directors” as such term is defined in the regulations under
Section 162(m) of the Code.

(b) Authority of the Administrator. The Administrator has authority in its
discretion to select the Eligible Persons to whom, and the time or times at
which, Incentive Awards shall be granted or sold, the nature of each Incentive
Award, the number of shares of Common Stock or the number of rights that make up
or underlie each Incentive Award, the period for the exercise of each Incentive
Award, the performance criteria (which need not be identical) utilized to
measure the value of Performance Awards, and such other terms and conditions
applicable to each individual Incentive Award as the Administrator shall
determine. In addition, the Administrator shall have all other powers granted to
it in the Plan.

(c) Interpretation. Subject to the express provisions of the Plan, the
Administrator has the authority to interpret the Plan and any Award Documents,
to determine the terms and conditions of Incentive Awards and to make all other
determinations necessary or advisable for the administration of the Plan. All
interpretations, determinations and actions by the Administrator shall be final,
conclusive and binding upon all parties. The Administrator has authority to
prescribe, amend and rescind rules and regulations relating to the Plan.

(d) No Liability. The Administrator and its delegates shall be indemnified by
the Company to the fullest extent provided for in the Company’s certificate of
incorporation and bylaws.

1.05 Other Provisions.

(a) Documentation. Each Award granted under the Plan shall be evidenced by an
Award Document which shall set forth the terms and conditions applicable to the
Award as the Administrator may in its discretion determine consistent with the
Plan, provided that the Administrator shall exercise no discretion with respect
to Nonemployee Directors’ Options, which shall reflect only the terms of the
Award as set forth in Article III and certain administrative matters dictated by
the Plan. Award Documents shall comply with and be subject to the terms and
conditions of the Plan. In case of any conflict between the Plan and any Award
Document, the Plan shall control. Various Award Documents covering the same
types of Awards may but need not be identical.

(b) Adjustment Provisions. Should any change be made to the outstanding shares
of Common Stock by reason of a merger, consolidation, reorganization,
recapitalization, reclassification, combination of shares, stock dividend, stock
split, reverse stock split, exchange of shares or other change affecting the
outstanding Common Stock without the Company’s receipt of consideration, an
appropriate and proportionate adjustment may be made in (i) the maximum number
and kind of shares subject to the Plan as provided in Section 1.03, (ii) the
number and kind of shares or other securities subject to then outstanding
Awards, (iii) the price for each share or other unit of any other securities
subject to then outstanding Awards and (iv) the number and kind of shares or
other securities subject to the Nonemployee Director Options described in
Section 3.01 and 3.02. In addition, the per person limitation set forth in
Section 1.03(d) shall also be subject to adjustment as provided in this
Section 1.05(b), but only to the extent such adjustment would not affect the
status of compensation attributable to Awards hereunder as Performance-Based
Compensation. Such adjustments are to be effected in a manner that shall
preclude the enlargement or dilution of rights and benefits under the Awards. In
no event shall any adjustments be made in connection with the conversion of
preferred stock or warrants into shares of Common Stock. No fractional interests
will be issued under the Plan resulting from any such adjustments.

 

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(c) Continuation of Service. Nothing contained in this Plan (or in Award
Documents or in any other documents related to this Plan or to Awards granted
hereunder) shall confer upon any Eligible Person or Recipient any right to
continue in the Service of the Company or its Related Corporations or constitute
any contract or agreement of employment or engagement, or interfere in any way
with the right of the Company or its Related Corporations to reduce such
person’s compensation or other benefits or to terminate the Service of such
Eligible Person or Recipient, with or without cause. Except as expressly
provided in the Plan or in any Award Document, the Company shall have the right
to deal with each Recipient in the same manner as if the Plan and any Award
Document did not exist, including, without limitation, with respect to all
matters related to the hiring, discharge, compensation and conditions of the
employment or engagement of the Recipient.

(d) Restrictions. All Awards granted under the Plan shall be subject to the
requirement that, if at any time the Company shall determine, in its discretion,
that the listing, registration or qualification of the shares subject to Awards
granted under the Plan upon any securities exchange or under any state or
federal law, or the consent or approval of any government regulatory body, is
necessary or desirable as a condition of, or in connection with, the granting of
such an Award or the issuance, if any, or purchase of shares in connection
therewith, such Award may not be exercised in whole or in part unless such
listing, registration, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Company.

(e) Additional Conditions. Any Incentive Award may also be subject to such other
provisions (whether or not applicable to any other Award or Recipient) as the
Administrator determines appropriate.

(f) Tax Withholding. The Company’s obligation to deliver shares of Common Stock
under the Plan shall be subject to the satisfaction of all applicable income and
employment tax withholding requirements.

(g) Privileges of Stock Ownership. Except as otherwise set forth herein, a
Holder shall have no rights as a stockholder of the Company with respect to any
shares issuable or issued in connection with the Award until the date of the
receipt by the Company of all amounts payable in connection with exercise of the
Award, performance by the Holder of all obligations thereunder, and the Company
issues a stock certificate representing the appropriate number of shares. Status
as an Eligible Person shall not be construed as a commitment that any Incentive
Award will be granted under this Plan to an Eligible Person or to Eligible
Persons generally. No person shall have any right, title or interest in any fund
or in any specific asset (including shares of capital stock) of the Company by
reason of any Award granted hereunder. Neither this Plan (or any documents
related hereto) nor any action taken pursuant hereto shall be construed to
create a trust of any kind or a fiduciary relationship between the Company and
any person. To the extent that any person acquires a right to receive an Award
hereunder, such right shall be no greater than the right of any unsecured
general creditor of the Company.

(h) Effective Date and Duration of Plan; Amendment and Termination of Plan. The
Plan shall become effective upon its approval by the Company’s stockholders.
Unless terminated by the Board prior to such time, the Plan shall continue in
effect until the 10th anniversary of the date the Plan was adopted, whereupon
the Plan shall terminate automatically. The Board may, insofar as permitted by
law, from time to time suspend or terminate the Plan. No Awards may be granted
during any suspension of this Plan or after its termination. Any Award
outstanding after the termination of the Plan shall remain in effect until such
Award has been exercised or expires in accordance with its terms and the terms
of the Plan. The Board may, insofar as permitted by law, from time to time
revise or amend the Plan in any respect except that no such amendment shall
adversely affect any rights or obligations of the Holder under any outstanding
Award previously granted under the Plan without the consent of the Holder.
Amendments shall be subject to stockholder approval to the extent such approval
is required to comply with the listing requirements imposed by any exchange or
trading system upon which the Company’s securities trade or applicable law.

(i) Amendment of Awards. The Administrator may make any modifications in the
terms and conditions of an outstanding Incentive Award, provided that (i) the
resultant provisions are permissible under the Plan and (ii) the consent of the
Holder shall be obtained if the amendment will adversely affect his or her
rights under the Award. However, the outstanding Options may not be repriced
without stockholder approval.

(j) Nonassignability. No Incentive Stock Option granted under the Plan shall be
assignable or transferable except by will or by the laws of descent and
distribution. No other Awards granted under the Plan shall be assignable or
transferable except (i) by will or by the laws of descent and distribution,
(ii) to one or more of the Recipient’s family members (as such term is defined
in the instructions to Form S-8) or (iii) upon dissolution of marriage pursuant
to a qualified domestic relations order. During the lifetime of a Recipient, an
Award granted to him or her shall be exercisable only by the Holder or his or
her guardian or legal representative.

 

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(k) Other Compensation Plans. The adoption of the Plan shall not affect any
other stock option, incentive or other compensation plans in effect for the
Company, and the existence of the Plan shall not preclude the Company from
establishing any other forms of incentive or other compensation for Eligible
Persons.

(l) Plan Binding on Successors. The Plan shall be binding upon the successors
and assigns of the Company.

(m) Participation by Foreign Employees. Notwithstanding anything to the contrary
herein, the Administrator may, in order to fulfill the purposes of the Plan,
structure grants of Incentive Awards to Recipients who are foreign nationals or
employed outside of the United States to recognize differences in applicable
law, tax policy or local custom.

ARTICLE II

INCENTIVE AWARDS

2.01 Grants of Incentive Awards.

Subject to the express provisions of this Plan, the Administrator may from time
to time in its discretion select from the class of Eligible Persons those
individuals to whom Incentive Awards may be granted pursuant to its authority as
set forth in Section 1.04(b). Each Incentive Award shall be subject to the terms
and conditions of the Plan and such other terms and conditions established by
the Administrator as are not inconsistent with the provisions of the Plan.

2.02 Options.

(a) Nature of Options. The Administrator may grant Incentive Stock Options and
Nonqualified Stock Options under the Plan. However, Incentive Stock Options may
only be granted to Employees of the Company or its Related Corporations.

(b) Option Price. The Exercise Price per share for each Option (other than a
Nonemployee Director’s Option) shall be determined by the Administrator at the
date such Option is granted and shall not be less than the Fair Market Value of
a share of Common Stock (or other securities, as applicable) on the date of
grant. In the case of an Incentive Stock Option that is granted to a Ten Percent
Owner, the option price of such Incentive Stock Option shall not be less than
110% of the Fair Market Value of a share of Common Stock (or other securities,
as applicable). Notwithstanding the foregoing, however, in no event shall the
Exercise Price be less than the par value of the shares of Common Stock.

(c) Option Period and Vesting. Options (other than Nonemployee Directors’
Options) hereunder shall vest and may be exercised as determined by the
Administrator, except that exercise of such Options after termination of the
Recipient’s Service shall be subject to Section 2.02(g). Each Option granted
hereunder (other than a Nonemployee Directors Option) and all rights or
obligations thereunder shall expire on such date as shall be determined by the
Administrator, but not later than ten years after the date the Option is granted
and shall be subject to earlier termination as herein provided.

(d) Exercise of Options. Except as otherwise provided herein, an Option may
become exercisable, in whole or in part, on the date or dates specified by the
Administrator (or, in the case of Nonemployee Directors’ Options, the Plan) at
the time the Option is granted and thereafter shall remain exercisable until the
expiration or earlier termination of the Option. No Option shall be exercisable
except in respect of whole shares, and fractional share interests shall be
disregarded. An Option shall be deemed to be exercised when the Secretary of the
Company receives written notice of such exercise from the Holder, together with
payment of the Exercise Price made in accordance with Section 2.02(e). Upon
proper exercise, the Company shall deliver to the person entitled to exercise
the Option or his or her designee a certificate or certificates for the shares
of stock for which the Option is exercised.

 

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(e) Form of Exercise Price. The aggregate Exercise Price shall be immediately
due and payable upon the exercise of an Option and shall, subject to the
provisions of the Award Document, be payable in one or more of the following:
(i) by delivery of legal tender of the United States, (ii) by delivery of shares
of Common Stock held for the requisite period, if any, necessary to avoid a
charge to the Company’s earnings for financial reporting purposes, and/or
(iii) through a sale and remittance procedure pursuant to which the Holder shall
concurrently provide irrevocable instructions to (A) a brokerage firm to effect
the immediate sale of the purchased shares and remit to the Company, out of the
sale proceeds available on the settlement date, sufficient funds to cover the
aggregate Exercise Price payable for the purchased shares plus all applicable
income and employment taxes required to be withheld by the Company by reason of
such exercise and (B) the Company to deliver the certificates for the purchased
shares directly to such brokerage firm in order to complete the sale. Any shares
of Company stock or other non-cash consideration assigned and delivered to the
Company in payment or partial payment of the Exercise Price will be valued at
Fair Market Value on the exercise date.

(f) Limitation on Exercise of Incentive Stock Options. The aggregate Fair Market
Value (determined as of the respective date or dates of grant) of the Common
Stock for which one or more Options granted to any Recipient under the Plan (or
any other option plan of the Company or any of its subsidiaries or affiliates)
may for the first time become exercisable as Incentive Stock Options under the
Code during any one calendar year shall not exceed $100,000. Any Options granted
as Incentive Stock Options pursuant to the Plan in excess of such limitation
shall be treated as Nonqualified Stock Options. Options are to be taken into
account in the order in which they were awarded.

(g) Termination of Service.

(i) Termination for Cause. Except as otherwise provided by the Administrator, in
the event of a Just Cause Dismissal of a Recipient, all of the outstanding
Options granted to such Recipient shall expire and become unexercisable as of
the date of such Just Cause Dismissal.

(ii) Termination Other Than for Cause. Subject to subsection (i) above and
except as otherwise provided by the Administrator, in the event of a Recipient’s
termination of Service from the Company or its Related Corporations due to:

(A) any reason other than Just Cause Dismissal, death, or Permanent Disability,
or normal retirement, the outstanding Options granted to such Recipient, whether
or not vested, shall expire and become unexercisable as of the earlier of
(1) the date such Options would expire in accordance with their terms if the
Recipient had remained in Service or (2) three calendar months after the date
the Recipient’s Service terminated in the case of Incentive Stock Options, or
six months after the Recipient’s Service terminated, in the case of Nonqualified
Stock Options.

(B) death or Permanent Disability, the outstanding Options granted to such
Recipient, whether or not vested, shall expire and become unexercisable as of
the earlier of (1) the date such Options would expire in accordance with their
terms if the Recipient had remained in Service or twelve months after the date
of termination.

(C) normal retirement, the outstanding Options granted to such Recipient,
whether or not vested, shall expire and become unexercisable as of the earlier
of (A) the date such Options expire in accordance with their terms or
(B) twenty-four months after the date of retirement.

(iii) Termination of Director Service. In the event that a Director shall cease
to be a Nonemployee Director, all outstanding Options granted to such Recipient
shall be exercisable, to the extent already vested and exercisable on the date
such Recipient ceases to be a Nonemployee Director and regardless of the reason
the Recipient ceases to be a Nonemployee Director until the fifth anniversary of
the date such Director ceases to be a Nonemployee Director; provided that the
Administrator may extend such post-termination period to up to the expiration
date of the Option.

2.03 Performance Awards.

(a) Grant of Performance Award. The Administrator may grant Performance Awards
under the Plan and shall determine the performance criteria (which need not be
identical and may be established on an individual or group basis) governing
Performance Awards, the terms thereof, and the form and timing of payment of
Performance Awards.

 

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(b) Payment of Award; Limitation. Upon satisfaction of the conditions applicable
to a Performance Award, payment will be made to the Holder in cash or in shares
of Common Stock valued at Fair Market Value or a combination of Common Stock and
cash, as the Administrator in its discretion may determine. Notwithstanding any
other provision of this Plan, no Eligible Person shall be paid Performance
Awards with a value in excess of $1,000,000 in any one calendar year; provided,
however, that this limitation shall not apply if it is not required in order for
the compensation attributable to the Performance Award hereunder to qualify as
Performance-Based Compensation.

(c) Expiration of Performance Award. If any Recipient’s Service is terminated
for any reason other than normal retirement, death or Permanent Disability prior
to the time a Performance Award or any portion thereof becomes payable, all of
the Holder’s rights under the unpaid portion of the Performance Award shall
expire unless otherwise determined by the Administrator. In the event of
termination of Service by reason of death, Permanent Disability or normal
retirement, the Administrator, in its discretion, may determine what portions,
if any, of the Performance Award should be paid to the Holder.

2.04 Restricted Stock.

(a) Award of Restricted Stock. The Administrator may issue Restricted Stock
under the Plan. The Administrator shall determine the Purchase Price (if any),
the forms of payment of the Purchase Price (which shall be either cash or past
services), the restrictions upon the Restricted Stock, and when such
restrictions shall lapse (provided that the restriction period shall be at least
one year for performance-based grants and three years for non-performance-based
grants).

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

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

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

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

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

(c) Rights of Holder. Subject to the provisions of Section 2.04(b) and any
additional restrictions imposed by the Administrator, the Holder will have all
rights of a stockholder with respect to the Restricted Stock, including the
right to vote the shares and receive all dividends and other distributions paid
or made with respect thereto.

(d) Termination of Service. Unless the Administrator in its discretion
determines otherwise, upon a Recipient’s termination of Service for any reason,
all of the Restricted Stock issued to the Recipient that remains subject to
restrictions imposed pursuant to the Plan on the date of such termination of
Service may be repurchased by the Company at the Purchase Price (if any).

(e) Adjustments. Any new, substituted or additional securities or other property
which Holder may have the right to receive with respect to the Holder’s shares
of Restricted Stock by reason of a merger, consolidation, reorganization,
recapitalization, reclassification, combination of shares, stock dividend, stock
split, reverse stock split, exchange of shares or other change affecting the
outstanding Common Stock without the Company’s receipt of consideration shall be
issued subject to the same vesting requirements applicable to the Holder’s
shares of Restricted Stock and shall be treated as if they had been acquired on
the same date as such shares.

 

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2.05 Stock Appreciation Rights.

(a) Granting of Stock Appreciation Rights. The Administrator may grant Stock
Appreciation Rights, either related or unrelated to Options, under the Plan.

(b) Stock Appreciation Rights Related to Options.

(i) A Stock Appreciation Right granted in connection with an Option granted
under this Plan will entitle the holder of the related Option, upon exercise of
the Stock Appreciation Right, to surrender such Option, or any portion thereof
to the extent unexercised, with respect to the number of shares as to which such
Stock Appreciation Right is exercised, and to receive payment of an amount
computed pursuant to Section 2.05(b)(iii). Such Option will, to the extent
surrendered, then cease to be exercisable.

(ii) A Stock Appreciation Right granted in connection with an Option hereunder
will be exercisable at such time or times, and only to the extent that, the
related Option is exercisable, and will not be transferable except to the extent
that such related Option may be transferable.

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

(c) Stock Appreciation Rights Unrelated to Options. The Administrator may grant
Stock Appreciation Rights unrelated to Options to Eligible Persons.
Section 2.05(b)(iii) shall be used to determine the amount payable at exercise
under such Stock Appreciation Right, except that in lieu of the Exercise Price
specified in the related Option the initial base amount specified in the
Incentive Award shall be used.

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

(e) Payments. Payment of the amount determined under the foregoing provisions
may be made solely in whole shares of Common Stock valued at their Fair Market
Value on the date of exercise of the Stock Appreciation Right, in cash or in a
combination of cash and shares of Common Stock as the Administrator deems
advisable. If permitted by the Administrator, the Holder may elect to receive
cash in full or partial settlement of a Stock Appreciation Right. If the
Administrator decides to make full payment in shares of Common Stock, and the
amount payable results in a fractional share, payment for the fractional share
will be made in cash.

(f) Termination of Service. Section 2.02(g) will govern the treatment of Stock
Appreciation Rights upon the termination of a Recipient’s Service.

2.06 Stock Payments.

The Administrator may issue Stock Payments under the Plan for all or any portion
of the compensation (other than base salary) or other payment that would
otherwise become payable by the Company to the Eligible Person in cash.

 

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2.07 Dividend Equivalents.

The Administrator may grant Dividend Equivalents to any Recipient who has
received an Option, Stock Appreciation Right, or other Incentive Award
denominated in shares of Common Stock. Such Dividend Equivalents shall be
effective and shall entitle the Recipients thereof to payments during the
“Applicable Dividend Period,” which shall be (a) the period between the date the
Dividend Equivalent is granted and the date the related Option, Stock
Appreciation Right, or other Incentive Award is exercised, terminates, or is
converted to Common Stock, or (b) such other time as the Administrator may
specify in the Award Document. Dividend Equivalents may be paid in cash, Common
Stock, or other Incentive Awards; the amount of Dividend Equivalents paid other
than in cash shall be determined by the Administrator by application of such
formula as the Administrator may deem appropriate to translate the cash value of
dividends paid to the alternative form of payment of the Dividend Equivalent.
Dividend Equivalents shall be computed as of each dividend record date and shall
be payable to Recipients thereof at such time as the Administrator may
determine. Notwithstanding the foregoing, if it is intended that an Incentive
Award qualify as Performance-Based Compensation and the amount of the
compensation the Eligible Person could receive under the award is based solely
on an increase in value of the underlying stock after the date of grant or award
(i.e., the grant, vesting, or exercisability of the award is not conditioned
upon the attainment of a preestablished, objective performance goal described in
Section 1.01(x)), then the payment of any Dividend Equivalents related to the
Award shall not be made contingent on the exercise of the Award.

ARTICLE III

NONEMPLOYEE DIRECTOR’S OPTIONS

3.01 Grants of Initial Awards.

Each Nonemployee Director shall, upon first becoming a Nonemployee Director,
receive a one-time grant of an Award on such terms as may be determined from
time to time by the Administrator. Awards granted under this Section 3.01 vest
in accordance with Section 3.04(a) hereof and are “Initial Awards” for purposes
hereof.

3.02 Grants of Additional Awards.

On the date of the annual meeting of stockholders of the Company next following
a Nonemployee Director becoming such, and on the date of each subsequent annual
meeting of stockholders of the Company, in each case if the Nonemployee Director
has served as a director since his or her election or appointment and has been
re-elected as a director at such annual meeting or is continuing as a director
without being re-elected due to the classification of the Board, such
Nonemployee Director shall automatically receive an Award on such terms as may
be determined from time to time by the Administrator Awards granted under this
Section 3.02 vest in accordance with Section 3.04(b) hereof and are “Additional
Awards” for purposes hereof. Notwithstanding the foregoing to the contrary, the
first grant of Additional Awards shall be made to eligible Nonemployee Directors
on the date of the 2010 annual meeting of stockholders.

3.03 Exercise Price.

The Exercise Price for Nonemployee Directors’ Options shall be payable as set
forth in Section 2.02(e).

3.04 Vesting and Exercise.

(a) Initial Awards shall vest and become exercisable with respect to 25% of the
underlying shares on the grant date and with respect to an additional 25% of the
underlying shares on the dates of each of the first three anniversaries of the
date of grant provided the Recipient has remained a Nonemployee Director for the
entire period from the date of grant to such date.

(b) Additional Awards shall vest and become exercisable upon the earlier of
(i) the first anniversary of the grant date or (ii) immediately prior to the
annual meeting of stockholders of the Company next following the grant date,
provided the Recipient has remained a Nonemployee Director for the entire period
from the date of grant to such earlier date.

(c) Notwithstanding the foregoing, however, Initial Awards and Additional Awards
that have not vested and become exercisable at the time the Recipient ceases to
be a Nonemployee Director shall expire.

 

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3.05 Term of Options and Effect of Termination.

No Nonemployee Directors’ Option shall be exercisable after the expiration of
ten years from the date of its grant. In the event that the Recipient of a
Nonemployee Director’s Option shall cease to be a Nonemployee Director, all
outstanding Nonemployee Directors’ Options granted to such Recipient shall be
exercisable, to the extent already vested and exercisable on the date such
Recipient ceases to be a Nonemployee Director and regardless of the reason the
Recipient ceases to be a Nonemployee Director until the fifth anniversary of the
date such Director ceases to be a Nonemployee Director; provided that the
Administrator may extend such post-termination period to the expiration date of
the Option.

ARTICLE IV

RECAPITALIZATIONS AND REORGANIZATIONS

4.01 Corporate Transactions.

(a) Options. Unless the Administrator provides otherwise in the Award Document
or another written agreement, in the event of a Change in Control, the
Administrator shall provide that all Options (other than Non-employee Director
Options) either (i) vest in full immediately preceding the Change in Control and
terminate upon the Change in Control, (ii) are assumed or continued in effect in
connection with the Change in Control transaction, (iii) are cashed out for an
amount equal to the deal consideration per share less the Exercise Price or
(iv) are substituted for similar awards of the surviving corporation. Each
Option that is assumed or otherwise continued in effect in connection with a
Change in Control shall be appropriately adjusted, immediately after such Change
in Control, to apply to the number and class of securities which would have been
issuable to Recipient in consummation of such Change in Control had the
Recipient been exercised immediately prior to such Change in Control.
Appropriate adjustments to reflect such Change in Control shall also be made to
(A) the Exercise Price payable per share under each outstanding Option, provided
the aggregate Exercise Price payable for such securities shall remain the same,
(B) the maximum number and/or class of securities available for issuance over
the remaining term of the Plan, (C) the maximum number and/or class of
securities for which any one person may be granted options and direct stock
issuances pursuant to the Plan per calendar year and (D) the number and/or class
of securities subject to Nonemployee Director’s Options. To the extent the
holders of Common Stock receive cash consideration in whole or part for their
Common Stock in consummation of the Change in Control, the successor corporation
may, in connection with the assumption of the outstanding Options, substitute
one or more shares of its own common stock with a fair market value equivalent
to the cash consideration paid per share of Common Stock in such Change in
Control transaction.

(b) Nonemployee Directors’ Options. Immediately prior to a Change of Control,
all outstanding Nonemployee Directors’ Options shall vest in full.

(c) Other Incentive Awards. The Administrator may specify the effect that a
Change in Control has on an Incentive Award (other than an Option) outstanding
at the time such a Change in Control occurs either in the applicable Award
Document or by subsequent modification of the Award.

4.02 No Restraint.

The grant of an Option pursuant to the Plan shall not affect in any way the
right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merge or
to consolidate or to dissolve, liquidate or sell, or transfer all of any part of
its business or assets.

 

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FORM OF OPTION GRANT

 

Notice of Grant of Stock Options and Option Agreement  

La Jolla Pharmaceutical Co.

ID: 33-0361285

4365 Executive Drive, Suite 300

San Diego, CA 92121

(858) 452-6600

Name:

  Option Number:                

Address:

  Plan: 2010   ID:                 

Effective             , you have been granted a(n) Incentive Stock Option to
buy             shares of La Jolla Pharmaceutical Co. (the Company) stock at
$             per share.

The total option price of the shares granted is $            .

Shares in each period will become fully vested on the date shown.

 

Shares

 

Vest Type

 

Full Vest

 

Expiration

             

By your signature and the Company’s signature below, you and the Company agree
that these options are granted under and governed by the terms and conditions of
the Company’s Stock Option Plan as amended and the Option Agreement, all of
which are attached and made a part of this document.

 

 

     

 

La Jolla Pharmaceutical Company       Date

 

     

 

Name       Date

 

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