Exhibit 10.1

 

AMYLIN PHARMACEUTICALS, INC.

 

AMENDED AND RESTATED 2001 EQUITY INCENTIVE PLAN

 

1.             PURPOSES AND RELATIONSHIP WITH THE COMPANY’S 2003 NON-EMPLOYEE
DIRECTORS’ STOCK OPTION PLAN.

 

(a)           Eligible Stock Award Recipients.  The persons eligible to receive
Stock Awards are the Employees, Directors and Consultants of the Company and its
Affiliates.

 

(b)           Available Stock Awards.  The purpose of the Plan is to provide a
means by which eligible recipients of Stock Awards may be given an opportunity
to benefit from increases in value of the Common Stock through the granting of
the following Stock Awards:  (i) Incentive Stock Options, (ii) Nonstatutory
Stock Options, and (iii) restricted stock awards.

 

(c)           General Purpose.  The Company, by means of the Plan, seeks to
retain the services of the group of persons eligible to receive Stock Awards, to
secure and retain the services of new members of this group and to provide
incentives for such persons to exert maximum efforts for the success of the
Company and its Affiliates.

 

(d)           Relationship with the Company’s 2003 Non-Employee Directors’ Stock
Option Plan.  All Non-Employee Director Options shall be deemed to have been
issued under and pursuant to the terms of the Plan and subject to all the terms
and conditions of the Plan except to the extent otherwise provided for in the
Non-Employee Directors’ Plan.  In the event that any of the terms or conditions
of the Plan are inconsistent with or in conflict with any of the terms or
conditions of the Non-Employee Directors’ Plan or the Non-Employee Director
Options, the terms and conditions of the Non-Employee Directors’ Plan or the
Non-Employee Director Options shall control.

 

2.             DEFINITIONS.

 

(a)           “Affiliate” means any parent corporation or subsidiary corporation
of the Company, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f), respectively, of the Code.

 

(b)           “Annual Meeting” means the annual meeting of the stockholders of
the Company.

 

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

 

(d)           “Code” means the Internal Revenue Code of 1986, as amended.

 

(e)           “Committee” means a committee of one or more members of the Board
appointed by the Board in accordance with subsection 3(c).

 

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

 

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(g)           “Company” means Amylin Pharmaceuticals, Inc., a Delaware
corporation.

 

(h)           “Consultant” means any person, including an advisor, whether an
individual or an entity, (i) engaged by the Company or an Affiliate to render
consulting or advisory services and who is compensated for such services or
(ii) who is a member of the Board of Directors of an Affiliate and who is
compensated for such services.  However, the term “Consultant” shall not include
Directors who are not compensated by the Company for their services as
Directors, and the payment of a director’s fee by the Company for services as a
Director shall not cause a Director to be considered a “Consultant” for purposes
of the Plan.

 

(i)            “Continuous Service” means that the Participant’s service with
the Company or an Affiliate, whether as an Employee, Director or Consultant, is
not interrupted or terminated.  A Participant’s Continuous Service shall not be
deemed to have terminated by reason of a change in the capacity in which such
Participant renders service to the Company or an Affiliate as an Employee,
Consultant or Director or a change in the entity for which such Participant
renders such service, provided that there is otherwise no interruption or
termination of such Participant’s Continuous Service.  For example, a change in
status from an Employee of the Company to a Consultant of an Affiliate or a
Director will not constitute an interruption of Continuous Service.  The Board
or the chief executive officer of the Company, in that party’s sole discretion,
may determine whether Continuous Service shall be considered interrupted in the
case of any leave of absence approved by that party, including sick leave,
military leave or any other personal leave.

 

(j)            “Covered Employee” means the chief executive officer and the four
(4) other highest compensated officers of the Company for whom total
compensation is required to be reported to stockholders under the Exchange Act,
as determined for purposes of Section 162(m) of the Code.

 

(k)           “Director” means a member of the Board of Directors of the
Company.

 

(l)            “Disability” means the permanent and total disability of a person
within the meaning of Section 22(e)(3) of the Code.

 

(m)          “Employee” means any person employed by the Company or an
Affiliate.  A person shall not be deemed an Employee by reason of such person’s
service as a Director and/or payments of director’s fees to such person.

 

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

 

(o)           “Fair Market Value” means, as of any date, the value of the Common
Stock determined as follows:

 

(i)            If the Common Stock is listed on any established stock exchange
or traded on the Nasdaq National Market or the Nasdaq SmallCap Market, 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 market (or the exchange or market with the greatest volume of
trading in the Common Stock) on the day of determination (or if the day of
determination is not a market trading day, the last market trading day prior to
the day of

 

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determination), as reported in The Wall Street Journal or such other source as
the Board deems reliable.

 

(ii)           In the absence of such markets for the Common Stock, the Fair
Market Value shall be determined in good faith by the Board.

 

(p)           “Incentive Stock Option” means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.

 

(q)           “Non-Employee Director” means a Director who either (i) is not a
current Employee or Officer of the Company or its parent or a subsidiary, does
not receive compensation (directly or indirectly) from the Company or its parent
or a subsidiary for services rendered as a consultant or in any capacity other
than as a Director (except for an amount as to which disclosure would not be
required under Item 404(a) of Regulation S-K promulgated pursuant to the
Securities Act (“Regulation S-K”)), does not possess an interest in any other
transaction as to which disclosure would be required under Item 404(a) of
Regulation S-K and is not engaged in a business relationship as to which
disclosure would be required under Item 404(b) of Regulation S-K; or (ii) is
otherwise considered a “non-employee director” for purposes of Rule 16b-3.

 

(r)           “Non-Employee Director Option” means a nonstatutory stock option
granted pursuant to the Non-Employee Directors’ Plan.

 

(s)           “Non-Employee Directors’ Plan” means the Company’s 2003
Non-Employee Directors’ Stock Option Plan.

 

(t)            “Nonstatutory Stock Option” means an Option not intended to
qualify as an Incentive Stock Option.

 

(u)           “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 thereunder.

 

(v)            “Option” means an Incentive Stock Option or a Nonstatutory Stock
Option granted pursuant to the Plan or a Non-Employee Director Option.

 

(w)           “Option Agreement” means a written agreement between the Company
and an Optionholder evidencing the terms and conditions of an individual Option
grant.  Each Option Agreement shall be subject to the terms and conditions of
the Plan.

 

(x)           “Optionholder” means a person to whom an Option is granted
pursuant to the Plan or, if applicable, such other person who holds an
outstanding Option.

 

(y)           “Outside Director” means a Director who either (i) is not a
current employee of the Company or an “affiliated corporation” (within the
meaning of Treasury Regulations promulgated under Section 162(m) of the Code),
is not a former employee of the Company or an “affiliated corporation” receiving
compensation for prior services (other than benefits under a tax qualified
pension plan), was not an officer of the Company or an “affiliated corporation”
at any time and is not currently receiving direct or indirect remuneration from
the Company or an

 

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“affiliated corporation” for services in any capacity other than as a Director
or (ii) is otherwise considered an “outside director” for purposes of
Section 162(m) of the Code.

 

(z)           “Participant” means a person to whom a Stock Award is granted
pursuant to the Plan or, if applicable, such other person who holds an
outstanding Stock Award.

 

(aa)         “Plan” means this Amylin Pharmaceuticals, Inc. Amended and Restated
2001 Equity Incentive Plan.

 

(bb)         “Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act or
any successor to Rule 16b-3, as in effect from time to time.

 

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

 

(dd)         “Stock Award” means any right granted under the Plan, including an
Option and a restricted stock award.

 

(ee)         “Stock Award Agreement” means a written agreement between the
Company and a holder of a Stock Award evidencing the terms and conditions of an
individual Stock Award grant.  Each Stock Award Agreement shall be subject to
the terms and conditions of the Plan.

 

(ff)           “Ten Percent Stockholder” means a person who owns (or is deemed
to own pursuant to Section 424(d) of the Code) stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or of any of its Affiliates.

 

3.             ADMINISTRATION.

 

(a)           Administration by Board.  The Board shall administer the Plan
unless and until the Board delegates administration to a Committee, as provided
in subsection 3(c).

 

(b)           Powers of Board.  The Board shall have the power, subject to, and
within the limitations of, the express provisions of the Plan:

 

(i)            To determine from time to time which of the persons eligible
under the Plan shall be granted Stock Awards; when and how each Stock Award
shall be granted; what type or combination of types of Stock Award shall be
granted; the provisions of each Stock Award granted (which need not be
identical), including the time or times when a person shall be permitted to
receive Common Stock pursuant to a Stock Award; and the number of shares of
Common Stock with respect to which a Stock Award shall be granted to each such
person.

 

(ii)           To construe and interpret the Plan and Stock Awards granted under
it, and to establish, amend and revoke rules and regulations for its
administration.  The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any Stock Award Agreement,
in a manner and to the extent it shall deem necessary or expedient to make the
Plan fully effective.

 

(iii)         To amend the Plan or a Stock Award as provided in Section 12.

 

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(iv)          Generally, to exercise such powers and to perform such acts as the
Board deems necessary or expedient to promote the best interests of the Company
which are not in conflict with the provisions of the Plan.

 

(c)           Delegation to Committee.

 

(i)            General.  The Board may delegate administration of the Plan to a
Committee or Committees of one (1) or more members of the Board, and the term
“Committee” shall apply to any person or persons to whom such authority has been
delegated.  If administration is delegated to a Committee, the Committee shall
have, in connection with the administration of the Plan, the powers theretofore
possessed by the Board, including the power to delegate to a subcommittee any of
the administrative powers the Committee is authorized to exercise (and
references in this Plan to the Board shall thereafter be to the Committee or
subcommittee), subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board.  The
Board may abolish the Committee at any time and revest in the Board the
administration of the Plan.

 

(ii)           Committee Composition when Common Stock is Publicly Traded. 
Notwithstanding any contrary provision of subparagraph 3(c)(i) of this Plan, at
such time as the Common Stock is publicly traded, in the discretion of the
Board, a Committee may consist solely of two or more Outside Directors, in
accordance with Section 162(m) of the Code, and/or solely of two or more
Non-Employee Directors, in accordance with Rule 16b-3.  Within the scope of such
authority, the Board or the Committee may (1) delegate to a committee of one or
more members of the Board who are not Outside Directors the authority to grant
Stock Awards to eligible persons who are either (a) not then Covered Employees
and are not expected to be Covered Employees at the time of recognition of
income resulting from such Stock Award or (b) not persons with respect to whom
the Company wishes to comply with Section 162(m) of the Code and/or (2) delegate
to a committee of one or more members of the Board who are not Non-Employee
Directors the authority to grant Stock Awards to eligible persons who are not
then subject to Section 16 of the Exchange Act.

 

(d)           Effect of Board’s Decision.  All determinations, interpretations
and constructions made by the Board in good faith shall not be subject to review
by any person and shall be final, binding and conclusive on all persons.

 

4.             SHARES SUBJECT TO THE PLAN.

 

(a)           Share Reserve.  Subject to the provisions of Section 11 relating
to adjustments upon changes in Common Stock, an aggregate of twenty-five million
(25,000,000) shares of Common Stock shall be authorized for issuance pursuant to
Stock Awards; provided, however, such aggregate number shall increase
automatically without further Board action or stockholder approval, as and to
the extent that options to purchase Common Stock issued under the Company’s 1991
Stock Option Plan (the “1991 Plan”) expire, terminate or otherwise cancel prior
to exercise following the date the Plan is approved by the Board, by the number
of shares underlying such expired, terminated or canceled options issued under
the 1991 Plan, subject to a maximum increase of five million two hundred
seventy-five thousand six hundred eighty-nine (5,275,689) shares.  Accordingly,
subject to the provisions of Section 11 relating to adjustments

 

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upon changes in Common Stock, the Common Stock that may be issued pursuant to
Stock Awards shall not exceed in the aggregate thirty million two hundred
seventy-five thousand six hundred eighty-nine (30,275,689) shares of Common
Stock.  Effective as of April 18, 2008, subject to Section 4(b), the number of
shares of Common Stock available for issuance under the Plan shall be reduced
by: (i) one (1) share for each share of Common Stock issued pursuant to an
Option under the Plan, and (ii) two and twenty-one hundredths (2.21) of a share
for each share of Common Stock issued pursuant to a restricted stock award under
the Plan.

 

(b)           Reversion of Shares to the Share Reserve.  If any Stock Award
shall for any reason expire or otherwise terminate, in whole or in part, without
having been exercised in full, the shares of Common Stock not acquired under
such Stock Award shall revert to and again become available for issuance under
the Plan.  To the extent there is issued a share of Common Stock pursuant to a
Stock Award that counted as two and twenty-one hundredths (2.21) of a share
against the number of shares available for issuance under the Plan pursuant to
Section 4(a) and such share of Common Stock again becomes available for issuance
under the Plan pursuant to this Section 4(b), then the number of shares of
Common Stock available for issuance under the Plan shall increase by two and
twenty-one hundredths (2.21) of a share.

 

(c)           Source of Shares.  The shares of Common Stock subject to the Plan
may be unissued shares or reacquired shares, bought on the market or otherwise.

 

5.             ELIGIBILITY.

 

(a)           Eligibility for Specific Stock Awards.  Incentive Stock Options
may be granted only to Employees.  Stock Awards other than Incentive Stock
Options may be granted to Employees, Directors and Consultants.

 

(b)           Ten Percent Stockholders.  A Ten Percent Stockholder shall not be
granted an Incentive Stock Option unless the exercise price of such Option is at
least one hundred ten percent (110%) of the Fair Market Value of the Common
Stock at the date of grant and the Option is not exercisable after the
expiration of five (5) years from the date of grant.

 

(c)           Section 162(m) Limitation.  Subject to the provisions of
Section 11 relating to adjustments upon changes in the shares of Common Stock,
no Employee shall be eligible to be granted Options covering more than one
million (1,000,000) shares of Common Stock during any calendar year.

 

(d)           Consultants.  A Consultant shall not be eligible for the grant of
a Stock Award if, at the time of grant, a Form S-8 Registration Statement under
the Securities Act (“Form S-8”) is not available to register either the offer or
the sale of the Company’s securities to such Consultant because of the nature of
the services that the Consultant is providing to the Company, or because the
Consultant is not a natural person, or as otherwise provided by the
rules governing the use of Form S-8, unless the Company determines both (i) that
such grant (A) shall be registered in another manner under the Securities Act
(e.g., on a Form S-3 Registration Statement) or (B) does not require
registration under the Securities Act in order to comply with the requirements
of the Securities Act, if applicable, and (ii) that such grant complies with the
securities laws of all other relevant jurisdictions.

 

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6.             OPTION PROVISIONS.

 

Each Option shall be in such form and shall contain such terms and conditions as
the Board shall deem appropriate.  All Options shall be separately designated
Incentive Stock Options or Nonstatutory Stock Options at the time of grant, and,
if certificates are issued, a separate certificate or certificates will be
issued for shares of Common Stock purchased on exercise of each type of Option. 
The provisions of separate Options need not be identical, but each Option shall
include (through incorporation of provisions hereof by reference in the Option
or otherwise) the substance of each of the following provisions:

 

(a)           Term.  Subject to the provisions of subsection 5(b) regarding the
maximum term of Incentive Stock Options granted to Ten Percent Stockholders, no
Incentive Stock Option or Nonstatutory Stock Option shall be exercisable after
the expiration of seven (7) years from the date it was granted.

 

(b)           Minimum Exercise Price of an Option.  Subject to the provisions of
subsection 5(b) regarding the minimum exercise price of Incentive Stock Options
granted to Ten Percent Stockholders, the exercise price of each Incentive Stock
Option and Nonstatutory Stock Option shall be not less than one hundred percent
(100%) of the Fair Market Value of the Common Stock subject to the Option on the
date the Option is granted.  Notwithstanding the foregoing, an Option may be
granted with an exercise price lower than that set forth in the preceding
sentence if such Option is granted pursuant to an assumption or substitution for
another option in a manner satisfying the provisions of Section 424(a) of the
Code.(1)

 

(c)           Consideration.  The purchase price of Common Stock acquired
pursuant to an Option shall be paid, to the extent permitted by applicable
statutes and regulations, either (i) in cash at the time the Option is exercised
or (ii) at the discretion of the Board at the time of the grant of the Option
(or subsequently in the case of a Nonstatutory Stock Option) (1) by delivery to
the Company of other Common Stock, (2) according to a deferred payment or other
similar arrangement with the Optionholder or (3) in any other form of legal
consideration that may be acceptable to the Board.  Unless otherwise
specifically provided in the Option, the purchase price of Common Stock acquired
pursuant to an Option that is paid by delivery to the Company of other Common
Stock acquired, directly or indirectly from the Company, shall be paid only by
shares of the Common Stock of the Company that have been held for more than six
(6) months (or such longer or shorter period of time required to avoid a charge
to earnings for financial accounting purposes).  At any time that the Company is
incorporated in Delaware, payment of the Common Stock’s “par value,” as defined
in the Delaware General Corporation Law, shall not be made by deferred payment.

 

 

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(1) Code Section 424(a) applies to the substitution of a new option for an old
option, or an assumption of an old option, by an employer corporation or a
parent or subsidiary of such corporation, by reason of a corporate merger,
consolidation, acquisition of property or stock, separation, reorganization, or
liquidation if (1) the excess of the aggregate fair market value of the shares
subject to the option immediately after the substitution or assumption over the
aggregate option price of such shares is not more than the excess of the
aggregate fair market value of all shares subject to the options immediately
before such substitution or assumption over the aggregate option price of such
shares; and (2) the new option or the assumption of the old option does not give
the employee additional benefits which he or she did not have under the old
option.

 

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In the case of any deferred payment arrangement, interest shall be compounded at
least annually and shall be charged at the market rate of interest necessary to
avoid a charge to earnings for financial accounting purposes.

 

(d)           Transferability of an Incentive Stock Option.  Pursuant to
provisions of the Code, an Incentive Stock Option shall not be transferable
except by will or by the laws of descent and distribution and shall be
exercisable during the lifetime of the Optionholder only by the Optionholder. 
Notwithstanding the foregoing, in the event of the Optionholder’s divorce, upon
receipt of proof of such divorce, the Board in its discretion may, but shall
have no obligation to, amend the terms of an Incentive Stock Option to provide
for either (i) the transfer of the beneficial ownership of all or a portion of
the Incentive Stock Option to the Optionholder’s former spouse, or (ii) the
transfer of all or a portion of the Incentive Stock Option, provided that the
transferred Option shall be deemed a Nonstatutory Stock Option to the extent
required by applicable law.  In addition to the foregoing, the Optionholder may,
by delivering written notice to the Company, in a form satisfactory to the
Company, designate a third party who, in the event of the death of the
Optionholder, shall thereafter be entitled to exercise the Option.

 

(e)           Transferability of a Nonstatutory Stock Option.  A Nonstatutory
Stock Option shall be transferable to the extent provided in the Option
Agreement.  If the Nonstatutory Stock Option does not provide for
transferability, then the Nonstatutory Stock Option shall not be transferable
except by will or by the laws of descent and distribution and shall be
exercisable during the lifetime of the Optionholder only by the Optionholder. 
Notwithstanding the foregoing, in the event of the Optionholder’s divorce or
legal separation, all or a portion of the Nonstatutory Stock Option shall be
transferable upon receipt of proof of such divorce or legal separation and in
accordance with the terms of such divorce or legal separation.  In addition to
the foregoing, the Optionholder may, by delivering written notice to the
Company, in a form satisfactory to the Company, designate a third party who, in
the event of the death of the Optionholder, shall thereafter be entitled to
exercise the Option.

 

(f)            Vesting Generally.  The total number of shares of Common Stock
subject to an Option may, but need not, vest and therefore become exercisable in
periodic installments that may, but need not, be equal.  The Option may be
subject to such other terms and conditions on the time or times when it may be
exercised (which may be based on performance or other criteria) as the Board may
deem appropriate.  The vesting provisions of individual Options may vary.  The
provisions of this subsection 6(f) are subject to any Option provisions
governing the minimum number of shares of Common Stock as to which an Option may
be exercised.

 

(g)           Termination of Continuous Service.  In the event an Optionholder’s
Continuous Service terminates (other than upon the Optionholder’s death or
Disability), the Optionholder may exercise his or her Option (to the extent that
the Optionholder was entitled to exercise such Option as of the date of
termination) but only within such period of time as is determined by the Board
(but in no event later than the expiration of the term of such Option as set
forth in the Option Agreement).  In the case of an Incentive Stock Option, to
the extent the Board intends that the Option remain an Incentive Stock Option,
such period of time shall not exceed three (3) months from the date of
termination.  If, after termination, the Optionholder does not exercise his or
her Option within the time specified in the Option Agreement, the Option shall
terminate.

 

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(h)           Extension of Termination Date.  An Optionholder’s Option Agreement
may also provide that if the exercise of the Option following the termination of
the Optionholder’s Continuous Service (other than upon the Optionholder’s death
or Disability) would be prohibited at any time solely because the issuance of
shares of Common Stock would violate the registration requirements under the
Securities Act, then the Option shall terminate on the earlier of (i) the
expiration of the term of the Option set forth in the Option Agreement or
(ii) the expiration of a period of three (3) months after the termination of the
Optionholder’s Continuous Service during which the exercise of the Option would
not be in violation of such registration requirements.

 

(i)            Disability of Optionholder.  In the event that an Optionholder’s
Continuous Service terminates as a result of the Optionholder’s Disability, the
Optionholder may exercise his or her Option (to the extent that the Optionholder
was entitled to exercise such Option as of the date of termination), but only
within such period of time ending on the earlier of (i) the date twelve (12)
months following such termination (or such longer or shorter period specified in
the Option Agreement) or (ii) the expiration of the term of the Option as set
forth in the Option Agreement.  If, after termination, the Optionholder does not
exercise his or her Option within the time specified herein, the Option shall
terminate.

 

(j)            Death of Optionholder.  In the event (i) an Optionholder’s
Continuous Service terminates as a result of the Optionholder’s death or
(ii) the Optionholder dies within the period (if any) specified in the Option
Agreement after the termination of the Optionholder’s Continuous Service for a
reason other than death, then the Option may be exercised (to the extent the
Optionholder was entitled to exercise such Option as of the date of death) by
the Optionholder’s estate, by a person who acquired the right to exercise the
Option by bequest or inheritance or by a person designated to exercise the
Option upon the Optionholder’s death pursuant to subsection 6(d) or 6(e), but
only within the period ending on the earlier of (1) the date twelve (12) months
following the date of death (or such longer or shorter period specified in the
Option Agreement) or (2) the expiration of the term of such Option as set forth
in the Option Agreement.  If, after death, the Option is not exercised within
the time specified herein, the Option shall terminate.

 

(k)           Early Exercise.  The Option may, but need not, include a provision
whereby the Optionholder may elect at any time before the Optionholder’s
Continuous Service terminates to exercise the Option as to any part or all of
the shares of Common Stock subject to the Option prior to the full vesting of
the Option.  Any unvested shares of Common Stock so purchased may be subject to
a repurchase option in favor of the Company or to any other restriction the
Board determines to be appropriate.

 

7.             PROVISIONS OF RESTRICTED STOCK AWARDS.

 

Each restricted stock award agreement shall be in such form and shall contain
such terms and conditions as the Board shall deem appropriate.  The terms and
conditions of the restricted stock award agreements may change from time to
time, and the terms and conditions of separate restricted stock award agreements
need not be identical, but each restricted stock award agreement shall include
(through incorporation of provisions hereof by reference in the agreement or
otherwise) the substance of each of the following provisions:

 

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(a)           Consideration.  A restricted stock award may be granted in
consideration for past or future services rendered to the Company or an
Affiliate for its benefit.

 

(b)           Vesting.  Shares of Common Stock acquired under the restricted
stock award agreement may, but need not, be subject to a share reacquisition
option in favor of the Company in accordance with a vesting schedule to be
determined by the Board.

 

(c)           Termination of Participant’s Continuous Service.  In the event a
Participant’s Continuous Service terminates, the Company may reacquire any or
all of the shares of Common Stock held by the Participant which have not vested
as of the date of termination under the terms of the restricted stock award
agreement.

 

(d)           Transferability.  Shares of Common Stock issued pursuant to the
restricted stock award shall be transferable by the Participant only upon such
terms and conditions as are set forth in the restricted stock award agreement,
as the Board shall determine in its discretion, so long as Common Stock awarded
under the restricted stock award agreement remains subject to the Company’s
reacquisition right under the terms of the restricted stock award agreement.

 

8.             COVENANTS OF THE COMPANY.

 

(a)           Availability of Shares.  During the terms of the Stock Awards, the
Company shall keep available at all times the number of shares of Common Stock
required to satisfy such Stock Awards.

 

(b)           Securities Law Compliance.  The Company shall seek to obtain from
each regulatory commission or agency having jurisdiction over the Plan such
authority as may be required to grant Stock Awards and to issue and sell shares
of Common Stock upon exercise of the Stock Awards; provided, however, that this
undertaking shall not require the Company to register under the Securities Act
the Plan, the Non-Employee Directors’ Plan, any Stock Award or any Common Stock
issued or issuable pursuant to any such Stock Award.  If, after reasonable
efforts, the Company is unable to obtain from any such regulatory commission or
agency the authority which counsel for the Company deems necessary for the
lawful issuance and sale of Common Stock under the Plan, the Company shall be
relieved from any liability for failure to issue and sell Common Stock upon
exercise of such Stock Awards unless and until such authority is obtained.

 

(c)           Cancellation and Re-Grant of Options.  The Board shall not have
the authority to effect, at any time, without stockholder approval, either
(1) the repricing of any outstanding Options under the Plan and/or (2) the
cancellation of any outstanding Options under the Plan and the grant in
substitution therefor of new Options under the Plan covering the same or
different numbers of shares of Common Stock.

 

9.             USE OF PROCEEDS FROM STOCK.

 

Proceeds from the sale of Common Stock pursuant to Stock Awards shall constitute
general funds of the Company.

 

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10.          MISCELLANEOUS.

 

(a)           Acceleration of Exercisability and Vesting.  The Board shall have
the power to accelerate the time at which a Stock Award may first be exercised
or the time during which a Stock Award or any part thereof will vest in
accordance with the Plan, notwithstanding the provisions in the Stock Award
stating the time at which it may first be exercised or the time during which it
will vest.

 

(b)           Stockholder Rights.  No Participant shall be deemed to be the
holder of, or to have any of the rights of a holder with respect to, any shares
of Common Stock subject to such Stock Award unless and until such Participant
has satisfied all requirements for exercise of the Stock Award pursuant to its
terms.

 

(c)           No Employment or other Service Rights.  Nothing in the Plan or any
instrument executed or Stock Award granted pursuant thereto shall confer upon
any Participant any right to continue to serve the Company or an Affiliate in
the capacity in effect at the time the Stock Award was granted or shall affect
the right of the Company or an Affiliate to terminate (i) the employment of an
Employee with or without notice and with or without cause, (ii) the service of a
Consultant pursuant to the terms of such Consultant’s agreement with the Company
or an Affiliate or (iii) the service of a Director pursuant to the Bylaws of the
Company or an Affiliate, and any applicable provisions of the corporate law of
the state in which the Company or the Affiliate is incorporated, as the case may
be.

 

(d)           Incentive Stock Option $100,000 Limitation.  To the extent that
the aggregate Fair Market Value (determined at the time of grant) of Common
Stock with respect to which Incentive Stock Options are exercisable for the
first time by any Optionholder during any calendar year (under all plans of the
Company and its Affiliates) exceeds one hundred thousand dollars ($100,000), the
Options or portions thereof which exceed such limit (according to the order in
which they were granted) shall be treated as Nonstatutory Stock Options.

 

(e)           Investment Assurances.  The Company may require a Participant, as
a condition of exercising or acquiring Common Stock under any Stock Award,
(i) to give written assurances satisfactory to the Company as to the
Participant’s knowledge and experience in financial and business matters and/or
to employ a purchaser representative reasonably satisfactory to the Company who
is knowledgeable and experienced in financial and business matters and that he
or she is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the Stock Award; and (ii) to
give written assurances satisfactory to the Company stating that the Participant
is acquiring Common Stock subject to the Stock Award for the Participant’s own
account and not with any present intention of selling or otherwise distributing
the Common Stock.  The foregoing requirements, and any assurances given pursuant
to such requirements, shall be inoperative if (1) the issuance of the shares of
Common Stock upon the exercise or acquisition of Common Stock under the Stock
Award has been registered under a then currently effective registration
statement under the Securities Act or (2) as to any particular requirement, a
determination is made by counsel for the Company that such requirement need not
be met in the circumstances under the then applicable securities laws.  The
Company may, upon advice of counsel to the Company, place legends on stock
certificates issued under the Plan as such counsel deems necessary or
appropriate in order to comply with

 

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applicable securities laws, including, but not limited to, legends restricting
the transfer of the Common Stock.

 

(f)            Withholding Obligations.  To the extent provided by the terms of
a Stock Award Agreement, the Participant may satisfy any federal, state or local
tax withholding obligation relating to the exercise or acquisition of Common
Stock under a Stock Award by any of the following means (in addition to the
Company’s right to withhold from any compensation paid to the Participant by the
Company) or by a combination of such means:  (i) tendering a cash payment;
(ii) authorizing the Company to withhold shares of Common Stock from the shares
of Common Stock otherwise issuable to the Participant as a result of the
exercise or acquisition of Common Stock under the Stock Award, provided,
however, that no shares of Common Stock are withheld with a value exceeding the
minimum amount of tax required to be withheld by law; or (iii) delivering to the
Company owned and unencumbered shares of Common Stock.

 

(g)           Transferability of Stock Awards for Value or Consideration. 
Notwithstanding anything to the contrary set forth herein, Participants may not
transfer Stock Awards for value or consideration pursuant to the provisions of
subsections 6(d), 6(e) or 7(d) of the Plan without the prior approval of the
Company’s stockholders.

 

11.          ADJUSTMENTS UPON CHANGES IN STOCK.

 

(a)           Capitalization Adjustments.  If any change is made in the Common
Stock subject to the Plan, or subject to any Stock Award, without the receipt of
consideration by the Company (through merger, consolidation, reorganization,
recapitalization, reincorporation, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or other transaction not involving the
receipt of consideration by the Company), the Plan will be appropriately
adjusted in the class(es) and maximum number of securities subject to the Plan
pursuant to subsection 4(a) and the maximum number of securities subject to
Option grants to any Employee pursuant to subsection 5(c), and the outstanding
Stock Awards will be appropriately adjusted in the class(es) and number of
securities and price per share of Common Stock subject to such outstanding Stock
Awards.  The Board shall make such adjustments, and its determination shall be
final, binding and conclusive.  (The conversion of any convertible securities of
the Company shall not be treated as a transaction “without receipt of
consideration” by the Company.)

 

(b)           Dissolution or Liquidation.  In the event of a dissolution or
liquidation of the Company, then all outstanding Stock Awards shall terminate
immediately prior to such event.

 

(c)           Asset Sale, Merger, Consolidation or Reverse Merger.  In the event
of (i) a sale, lease or other disposition of all or substantially all of the
assets of the Company, (ii) a merger or consolidation in which the Company is
not the surviving corporation or (iii) a reverse merger in which the Company is
the surviving corporation but the shares of Common Stock outstanding immediately
preceding the merger are converted by virtue of the merger into other property,
whether in the form of securities, cash or otherwise (individually, a “Corporate
Transaction”), then any surviving corporation or acquiring corporation shall
assume any Stock Awards outstanding under the Plan or shall substitute similar
stock awards (including an award to acquire the same consideration paid to the
stockholders in the Corporate Transaction for those

 

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outstanding under the Plan).  In the event any surviving corporation or
acquiring corporation refuses to assume such Stock Awards or to substitute
similar stock awards for those outstanding under the Plan, then with respect to
Stock Awards held by Participants whose Continuous Service has not terminated,
the vesting of such Stock Awards (and, if applicable, the time during which such
Stock Awards may be exercised) shall be accelerated in full, and the Stock
Awards shall terminate if not exercised (if applicable) at or prior to the
Corporate Transaction.  With respect to any other Stock Awards outstanding under
the Plan, such Stock Awards shall terminate if not exercised (if applicable)
prior to the Corporate Transaction.

 

12.          AMENDMENT OF THE PLAN AND STOCK AWARDS.

 

(a)           Amendment of Plan.  The Board at any time, and from time to time,
may amend the Plan.  However, except as provided in Section 11 relating to
adjustments upon changes in Common Stock, no amendment shall be effective unless
approved by the stockholders of the Company to the extent stockholder approval
is necessary to satisfy the requirements of Section 422 of the Code, Rule 16b-3
or any Nasdaq or securities exchange listing requirements.

 

(b)           Stockholder Approval.  The Board may, in its sole discretion,
submit any other amendment to the Plan for stockholder approval, including, but
not limited to, amendments to the Plan intended to satisfy the requirements of
Section 162(m) of the Code and the regulations thereunder regarding the
exclusion of performance-based compensation from the limit on corporate
deductibility of compensation paid to certain executive officers.

 

(c)           Contemplated Amendments.  It is expressly contemplated that the
Board may amend the Plan in any respect the Board deems necessary or advisable
to provide eligible Employees with the maximum benefits provided or to be
provided under the provisions of the Code and the regulations promulgated
thereunder relating to Incentive Stock Options and/or to bring the Plan and/or
Incentive Stock Options granted under it into compliance therewith.

 

(d)           No Impairment of Rights.  Rights under any Stock Award granted
before amendment of the Plan shall not be impaired by any amendment of the Plan
unless (i) the Company requests the consent of the Participant and (ii) the
Participant consents in writing.

 

(e)           Amendment of Stock Awards.  Subject to the restrictions of
subsection 8(c), the Board at any time, and from time to time, may amend the
terms of any one or more Stock Awards; provided, however, that the rights under
any Stock Award shall not be impaired by any such amendment unless (i) the
Company requests the consent of the Participant and (ii) the Participant
consents in writing.

 

13.          TERMINATION OR SUSPENSION OF THE PLAN.

 

(a)           Plan Term.  The Board may suspend or terminate the Plan at any
time.  Unless sooner terminated, the Plan shall terminate on the day before the
tenth (10th) anniversary of the date the Plan is adopted by the Board or
approved by the stockholders of the Company, whichever is earlier.  No Stock
Awards may be granted under the Plan while the Plan is suspended or after it is
terminated.

 

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(b)           No Impairment of Rights.  Suspension or termination of the Plan
shall not impair rights and obligations under any Stock Award granted while the
Plan is in effect except with the written consent of the Participant.

 

14.          EFFECTIVE DATE OF PLAN.

 

The Plan shall become effective as determined by the Board, but no Stock Award
shall be exercised (or, in the case of a restricted stock award, shall be
granted) unless and until the Plan has been approved by the stockholders of the
Company, which approval shall be within twelve (12) months before or after the
date the Plan is adopted by the Board.

 

15.          CHOICE OF LAW.

 

The law of the State of California shall govern all questions concerning the
construction, validity and interpretation of this Plan, without regard to such
state’s conflict of laws rules.

 

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