Exhibit 10.1

 

XCYTE THERAPIES, INC.

 

2003 STOCK PLAN

 

1. Purposes of the Plan. The purposes of this 2003 Stock Plan are to attract and
retain the best available personnel for positions of substantial responsibility,
to provide additional incentive to Employees, Consultants and Directors and to
promote the success of the Company’s business. Options granted under the Plan
may be Incentive Stock Options or Nonstatutory Stock Options, as determined by
the Administrator at the time of grant of an Option and subject to the
applicable provisions of Section 422 of the Code and the regulations and
interpretations promulgated thereunder. Stock Grants, Stock Units, Stock
Appreciation Rights and Stock Purchase Rights may also be granted under the
Plan.

 

2. Definitions. As used herein, the following definitions shall apply:

 

(a) “Administrator” means the Board or its Committee appointed pursuant to
Section 4 of the Plan.

 

(b) “Affiliate” means an entity other than a Subsidiary (as defined below)
which, together with the Company, is under common control of a third person or
entity.

 

(c) “Applicable Laws” means the legal requirements relating to the
administration of stock option and restricted stock plans, including under
applicable U.S. state corporate laws, U.S. federal and applicable state
securities laws, other U.S. federal and state laws, the Code, any Stock Exchange
rules or regulations and the applicable laws, rules and regulations of any other
country or jurisdiction where Options or Stock Awards are granted under the
Plan, as such laws, rules, regulations and requirements shall be in place from
time to time.

 

(d) “Award” means a Stock Award or an Option granted in accordance with the
terms of the Plan.

 

(e) “Award Agreement” means a Stock Award Agreement and/or Option Agreement,
which may be in written or electronic format, in such form and with such terms
and conditions as may be specified by the Administrator, evidencing the terms
and conditions of an individual Award. Each Award Agreement is subject to the
terms and conditions of the Plan.

 

(f) “Award Exchange Program” means a program approved by the Administrator
whereby outstanding Awards are exchanged for Awards with a lower exercise price
or purchase price or are amended to decrease the exercise price or purchase
price as a result of a decline in the Fair Market Value of the Common Stock.

 

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

 

(h) “Cause” means (i) Participant’s material breach of any of the terms of any
written agreement between the Participant and the Company; (ii) Participant’s
conviction of a felony harmful to the reputation of the Company or of a crime
involving moral turpitude;

 

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(iii) Participant’s willful misconduct in the performance of his or her duties
and responsibilities to the Company; (iv) Participant’s violation of his or her
duty of loyalty or his or her obligations with respect to proprietary
information or trade secrets of the Company or to any party to whom the
Participant owes an obligation of nondisclosure as a result of his or her
relationship with the Company; (v) Participant’s violation of the Company’s
nondiscrimination policies or policies prohibiting harassment; or (vi)
Participant’s commission of any other intentional wrongful act that could cause
the Company to be liable to a third party. The determination as to whether a
Participant’s Continuous Service is terminated for Cause shall be made in good
faith by the Company and shall be final and binding on the Participant. The
foregoing definition does not in any way limit the Company’s ability to
terminate a Participant’s employment or consulting relationship at any time as
provided in Section 5(d) below. For purposes of this definition of Cause, the
term “Company” will be interpreted to include any Subsidiary, Parent, Affiliate
or successor thereto, as appropriate.

 

(i) “Change of Control” means (i) a sale of all or substantially all of the
Company’s assets, or (ii) any merger, consolidation or other business
combination transaction of the Company with or into another corporation, entity
or person, other than a transaction in which the holders of at least a majority
of the shares of voting capital stock of the Company outstanding immediately
prior to such transaction continue to hold (either by such shares remaining
outstanding or by their being converted into shares of voting capital stock of
the surviving entity) a majority of the total voting power represented by the
shares of voting capital stock of the Company (or the surviving entity)
outstanding immediately after such transaction, or (iii) the direct or indirect
acquisition (including by way of a tender or exchange offer) by any person, or
persons acting as a group, of beneficial ownership or a right to acquire
beneficial ownership of shares representing a majority of the voting power of
the then outstanding shares of capital stock of the Company.

 

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

 

(k) “Committee” means one or more committees or subcommittees of the Board
appointed by the Board to administer the Plan in accordance with Section 4
below.

 

(l) “Common Stock” means the Common Stock of the Company.

 

(m) “Company” means Xcyte Therapies, Inc., a Delaware corporation.

 

(n) “Consultant” means any person, including an advisor, who is engaged by the
Company or any Parent, Subsidiary or Affiliate to render services and is
compensated for such services.

 

(o) “Continuous Service Status” means the absence of any interruption or
termination of service as an Employee, Director or Consultant. Continuous
Service Status as an Employee, Director or Consultant shall not be considered
interrupted in the case of: (i) sick leave; (ii) military leave; (iii) any other
leave of absence approved by the Administrator, provided that such leave is for
a period of not more than ninety (90) days, unless reemployment upon the
expiration of such leave is guaranteed by contract or statute, or unless
provided otherwise

 

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pursuant to Company policy adopted from time to time; or (iv) in the case of
transfers between locations of the Company or between the Company, its Parents,
Subsidiaries, Affiliates or their respective successors. A change in the
capacity in which the Participant renders service to the Company or a Parent,
Subsidiary or Affiliate of the Company, such as a change in status from an
Employee to a Consultant or from a Consultant to an Employee will not constitute
an interruption of Continuous Service Status.

 

(p) “Corporate Transaction” means a sale of all or substantially all of the
Company’s assets, or a merger, consolidation or other capital reorganization or
transaction of the Company with or into another corporation, entity or person,
and includes a Change of Control.

 

(q) “Director” means a member of the Board.

 

(r) “Employee” means any person employed by the Company or any Parent,
Subsidiary or Affiliate, with the status of employment determined based upon
such factors as are deemed appropriate by the Administrator in its discretion,
subject to any requirements of the Code or the Applicable Laws. The payment by
the Company of a director’s fee to a Director shall not be sufficient to
constitute “employment” of such Director by the Company.

 

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

 

(t) “Fair Market Value” means, as of any date, the fair market value of the
Common Stock, as determined by the Administrator in good faith on such basis as
it deems appropriate and applied consistently with respect to Participants.
Whenever possible, the determination of Fair Market Value shall be based upon
the closing price for the Shares as reported in the Wall Street Journal for the
applicable date.

 

(u) “Incentive Stock Option” means an Option intended to qualify as an incentive
stock option within the meaning of Section 422 of the Code, as designated in the
applicable Option Agreement.

 

(v) “Involuntary Termination” means termination of a Participant’s Continuous
Service Status under the following circumstances: (i) termination without Cause
by the Company or a Subsidiary, Parent, Affiliate or successor thereto, as
appropriate, other than on account of the Participant’s death or disability; or
(ii) voluntary resignation by the Participant within 30 days following (A) a
reduction in the Participant’s then-current base salary of more than 20%, other
than in connection with a similar reduction in the base salaries of similarly
situated employees or consultants as part of a general salary level reduction;
or (B) relocation by the Company or a Subsidiary, Parent, Affiliate or successor
thereto, as appropriate, of the Participant’s principal work site to a facility
or location by more than 50 miles from the Participant’s principal work site
immediately prior to such relocation.

 

(w) “Listed Security” means any security of the Company that is listed or
approved for listing on a national securities exchange or designated or approved
for designation as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc.

 

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(x) “Named Executive” means any individual who, on the last day of the Company’s
fiscal year, is the chief executive officer of the Company (or is acting in such
capacity) or is among the four most highly compensated officers of the Company
(other than the chief executive officer). Such officer status shall be
determined pursuant to the executive compensation disclosure rules under the
Exchange Act.

 

(y) “Nonstatutory Stock Option” means an Option not intended to qualify as an
Incentive Stock Option, as designated in the applicable Option Agreement.

 

(z) “Option” means a stock option granted pursuant to the Plan.

 

(aa) “Option Agreement” means a written document, the form(s) of which shall be
approved from time to time by the Administrator, reflecting the terms of an
Option granted under the Plan and includes any documents attached to or
incorporated into such Option Agreement, including, but not limited to, a notice
of stock option grant and a form of exercise notice.

 

(bb) “Optioned Stock” means the Common Stock subject to an Option.

 

(cc) “Optionee” means an Employee, Director or Consultant who receives an
Option.

 

(dd) “Parent” means a “parent corporation,” whether now or hereafter existing,
as defined in Section 424(e) of the Code, or any successor provision.

 

(ee) “Participant” means any holder of one or more Options or Stock Awards or
the Shares issuable or issued upon exercise of such Awards, under the Plan.

 

(ff) “Plan” means this 2003 Stock Plan.

 

(gg) “Qualifying Performance Criteria” means any one or more of the following
performance criteria, either individually, alternatively or in any combination,
applied to either the Company as a whole or to a business unit, Affiliate or
business segment, either individually, alternatively or in any combination, and
measured either annually or cumulatively over a period of years, on an absolute
basis or relative to a pre-established target, to previous years’ results or to
a designated comparison group, in each case as specified by the Committee in the
Award: (i) cash flow; (ii) earnings (including gross margin, earnings before
interest and taxes, earnings before taxes, and net earnings); (iii) earnings per
share; (iv) growth in earnings or earnings per share; (v) stock price; (vi)
return on equity or average stockholders’ equity; (vii) total stockholder
return; (viii) return on capital; (ix) return on assets or net assets; (x)
return on investment; (xi) revenue; (xii) income or net income; (xiii) operating
income or net operating income; (xiv) operating profit or net operating profit;
(xv) operating margin; (xvi) return on operating revenue; (xvii) market share;
(xviii) contract awards or backlog; (xix) overhead or other expense reduction;
(xx) growth in stockholder value relative to the moving average of the S&P 500
Index or a peer group index; (xxi) credit rating; (xxii) strategic plan
development and implementation (including individual performance objectives that
relate to achievement of the

 

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Company’s or any business unit’s strategic plan); (xxiii) improvement in
workforce diversity, and (xxiv) any other similar criteria. The Committee may
appropriately adjust any evaluation of performance under a Qualifying
Performance Criteria to exclude any of the following events that occurs during a
performance period: (A) asset write-downs; (B) litigation or claim judgments or
settlements; (C) the effect of changes in tax law, accounting principles or
other such laws or provisions affecting reported results; (D) accruals for
reorganization and restructuring programs; and (E) any extraordinary
non-recurring items as described in Accounting Principles Board Opinion No. 30
and/or in management’s discussion and analysis of financial condition and
results of operations appearing in the Company’s annual report to stockholders
for the applicable year.

 

(hh) “Restricted Stock” means Shares of Common Stock acquired pursuant to a
grant of a Stock Award under Sections 11, 12 or 13.

 

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

 

(jj) “Share” means a share of the Common Stock, as adjusted in accordance with
Section 17 of the Plan.

 

(kk) “Stock Appreciation Right” means a right to receive cash and/or shares of
Common Stock based on a change in the Fair Market Value of a specific number of
shares of Common Stock granted under Section 13.

 

(ll) “Stock Award” means a Stock Grant, a Stock Unit, a Stock Appreciation Right
or a Stock Purchase Right.

 

(mm) “Stock Award Agreement” means a written agreement, the form(s) of which
shall be approved from time to time by the Administrator, 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.

 

(nn) “Stock Exchange” means any stock exchange or consolidated stock price
reporting system on which prices for the Common Stock are quoted at any given
time.

 

(oo) “Stock Grant” means the award of a certain number of shares of Common Stock
granted under Section 11 below.

 

(pp) “Stock Purchase Right” means the right to purchase Common Stock pursuant to
Section 12 below.

 

(qq) “Stock Unit” means a bookkeeping entry representing an amount equivalent to
the Fair Market Value of one Share, payable in cash, property or Shares. Stock
Units represent an unfunded and unsecured obligation of the Company, except as
otherwise provided for by the Administrator.

 

(rr) “Subsidiary” means a “subsidiary corporation,” whether now or hereafter
existing, as defined in Section 424(f) of the Code, or any successor provision.

 

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(ss) “Ten Percent Holder” means a person who owns stock representing more than
ten percent (10%) of the voting power of all classes of stock of the Company or
any Parent or Subsidiary.

 

3. Stock Subject to the Plan. Subject to the provisions of Section 17 of the
Plan, the maximum aggregate number of Shares that may be sold under the Plan is
1,345,453 Shares of Common Stock, plus an annual increase on the first day of
each of the Company’s fiscal years beginning in 2005 and ending in 2010 equal to
the lesser of (a) 109,090 Shares, (b) 4% of the Shares outstanding on the last
day of the immediately preceding fiscal year, or (c) such lesser number of
Shares as the Board shall determine. The Shares may be authorized, but unissued,
or reacquired Common Stock. If an Award should expire or become unexercisable
for any reason without having been exercised in full, or is surrendered pursuant
to an Award Exchange Program, the unpurchased Shares that were subject thereto
shall, unless the Plan shall have been terminated, become available for future
grant under the Plan. In addition, any Shares of Common Stock which are retained
by the Company upon exercise of an Award in order to satisfy the exercise or
purchase price for such Award or any withholding taxes due with respect to such
exercise or purchase shall be treated as not issued and shall continue to be
available under the Plan. Shares issued under the Plan and later repurchased by
the Company pursuant to any repurchase right which the Company may have
exercised shall not be available for future grant under the Plan.

 

4. Administration of the Plan.

 

(a) General. The Plan shall be administered by the Board or a Committee, or a
combination thereof, as determined by the Board. The Plan may be administered by
different administrative bodies with respect to different classes of
Participants and, if permitted by the Applicable Laws, the Board may authorize
one or more officers to make Awards under the Plan.

 

(b) Committee Composition. If a Committee has been appointed pursuant to this
Section 4, such Committee shall continue to serve in its designated capacity
until otherwise directed by the Board. From time to time the Board may increase
the size of any Committee and appoint additional members thereof, remove members
(with or without cause) and appoint new members in substitution therefor, fill
vacancies (however caused) and remove all members of a Committee and thereafter
directly administer the Plan, all to the extent permitted by the Applicable Laws
and, in the case of a Committee administering the Plan in accordance with the
requirements of Rule 16b-3 or Section 162(m) of the Code, to the extent
permitted or required by such provisions. The Committee shall in all events
conform to any requirements of the Applicable Laws.

 

(c) Powers of the Administrator. Subject to the provisions of the Plan and in
the case of a Committee, the specific duties delegated by the Board to such
Committee, the Administrator shall have the authority, in its discretion:

 

(i) to determine the Fair Market Value of the Common Stock, in accordance with
Section 2(t) of the Plan, provided that such determination shall be applied
consistently with respect to Participants under the Plan;

 

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(ii) to select the Employees, Consultants and Directors to whom Awards may from
time to time be granted;

 

(iii) to determine whether and to what extent Awards are granted;

 

(iv) to determine the number of Shares of Common Stock to be covered by each
Award granted;

 

(v) to approve the form(s) of agreement(s) used under the Plan;

 

(vi) to determine the terms and conditions, not inconsistent with the terms of
the Plan, of any Award granted hereunder, which terms and conditions include but
are not limited to the exercise or purchase price, the time or times when Awards
may be exercised (which may be based on performance criteria), any vesting
acceleration or waiver of forfeiture restrictions, any pro rata adjustment to
vesting as a result of a Participant’s transitioning from full- to part-time
service (or vice versa), and any restriction or limitation regarding any Option,
Optioned Stock, Stock Award or Restricted Stock, based in each case on such
factors as the Administrator, in its sole discretion, shall determine;

 

(vii) to determine whether and under what circumstances an Option may be settled
in cash under Section 10(c) instead of Common Stock;

 

(viii) to implement an Award Exchange Program on such terms and conditions as
the Administrator in its discretion deems appropriate, provided that no
amendment or adjustment to an Award that would materially and adversely affect
the rights of any Participant shall be made without the prior written consent of
the Participant;

 

(ix) to adjust the vesting of an Option or Stock Award held by an Employee,
Consultant or Director as a result of a change in the terms or conditions under
which such person is providing services to the Company;

 

(x) to construe and interpret the terms of the Plan and Awards granted under the
Plan, which constructions, interpretations and decisions shall be final and
binding on all Participants; and

 

(xi) in order to fulfill the purposes of the Plan and without amending the Plan,
to modify grants of Options or Stock Awards to Participants who are foreign
nationals or employed outside of the United States in order to recognize
differences in local law, tax policies or customs.

 

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5. Eligibility.

 

(a) Recipients of Grants. Nonstatutory Stock Options and Stock Awards may be
granted to Employees, Directors and Consultants. Incentive Stock Options may be
granted only to Employees, provided that Employees of Affiliates shall not be
eligible to receive Incentive Stock Options.

 

(b) Type of Option. Each Option shall be designated in the Option Agreement as
either an Incentive Stock Option or a Nonstatutory Stock Option.

 

(c) ISO $100,000 Limitation. Notwithstanding any designation under Section 5(b),
to the extent that the aggregate Fair Market Value of Shares with respect to
which Options designated as Incentive Stock Options are exercisable for the
first time by any Optionee during any calendar year (under all plans of the
Company or any Parent or Subsidiary) exceeds $100,000, such excess Options shall
be treated as Nonstatutory Stock Options. For purposes of this Section 5(c),
Incentive Stock Options shall be taken into account in the order in which they
were granted, and the Fair Market Value of the Shares subject to an Incentive
Stock Option shall be determined as of the date of the grant of such Option.

 

(d) No Employment Rights. The Plan shall not confer upon any Participant any
right with respect to continuation of an employment or consulting relationship
with the Company, nor shall it interfere in any way with such Participant’s
right or the Company’s right to terminate the employment or consulting
relationship at any time for any reason.

 

6. Term of Plan. The Plan shall become effective upon its adoption by the Board
of Directors. It shall continue in effect for a term of ten (10) years unless
sooner terminated under Section 19 of the Plan.

 

7. Term of Option. The term of each Option shall be the term stated in the
Option Agreement; provided that the term shall be no more than ten years from
the date of grant thereof or such shorter term as may be provided in the Option
Agreement and provided further that, in the case of an Incentive Stock Option
granted to a person who at the time of such grant is a Ten Percent Holder, the
term of the Option shall be five years from the date of grant thereof or such
shorter term as may be provided in the Option Agreement.

 

8. Limitation on Grants to Employees. Subject to adjustment as provided in
Section 17 below, the maximum number of Shares that may be subject to Options
and Stock Awards granted to any one Employee under this Plan for any fiscal year
of the Company shall be 1,000,000, provided that this Section 8 shall apply only
after such time, if any, as the Common Stock becomes a Listed Security.

 

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9. Option Exercise Price and Consideration.

 

(a) Exercise Price. The per Share exercise price for the Shares to be issued
pursuant to exercise of an Option shall be such price as is determined by the
Administrator and set forth in the Option Agreement, but shall be subject to the
following:

 

(i) In the case of an Incentive Stock Option

 

(A) granted to an Employee who at the time of grant is a Ten Percent Holder, the
per Share exercise price shall be no less than 110% of the Fair Market Value per
Share on the date of grant; or

 

(B) granted to any other Employee, the per Share exercise price shall be no less
than 100% of the Fair Market Value per Share on the date of grant.

 

(ii) In the case of a Nonstatutory Stock Option, the per share Exercise Price
shall be such price as determined by the Administrator provided that if such
eligible person is, at the time of the grant of such Option, a Named Executive
of the Company or an individual whom the Administrator reasonably believes may
become a Named Executive of the Company, the per share Exercise Price shall be
no less than 100% of the Fair Market Value on the date of grant if such Option
is intended to qualify as performance-based compensation under Section 162(m) of
the Code.

 

(iii) Notwithstanding the foregoing, Options may be granted with a per Share
exercise price other than as required above pursuant to a Corporate Transaction.

 

(b) Permissible Consideration. The consideration to be paid for the Shares to be
issued upon exercise of an Option, including the method of payment, shall be
determined by the Administrator (and, in the case of an Incentive Stock Option,
shall be determined at the time of grant) and may consist entirely of (i) cash;
(ii) check; (iii) subject to any requirements of the Applicable Laws (including
without limitation Section 153 of the Delaware General Corporation Law),
delivery of Optionee’s promissory note having such recourse, interest, security
and redemption provisions as the Administrator determines to be appropriate
after taking into account the potential accounting consequences of permitting an
Optionee to deliver a promissory note; (iv) cancellation of indebtedness; (v)
other Shares that have a Fair Market Value on the date of surrender equal to the
aggregate exercise price of the Shares as to which the Option is exercised,
provided that in the case of Shares acquired, directly or indirectly, from the
Company, such Shares must have been owned by the Optionee for more than six
months on the date of surrender (or such other period as may be required to
avoid the Company’s incurring an adverse accounting charge); (vi) if, as of the
date of exercise of an Option the Company then is permitting employees to engage
in a “same-day sale” cashless brokered exercise program involving one or more
brokers, through such a program that complies with the Applicable Laws
(including without limitation the requirements of Regulation T and other
applicable regulations promulgated by the Federal Reserve Board) and that
ensures prompt delivery to the Company of the amount required to pay the
exercise price and any applicable withholding taxes; or (vii) any combination of
the foregoing methods of payment. In making its determination as to the type of

 

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consideration to accept, the Administrator shall consider if acceptance of such
consideration may be reasonably expected to benefit the Company and the
Administrator may, in its sole discretion, refuse to accept a particular form of
consideration at the time of any Option exercise.

 

10. Exercise of Option.

 

(a) General.

 

(i) Exercisability. Any Option granted hereunder shall be exercisable at such
times and under such conditions as determined by the Administrator, consistent
with the term of the Plan and reflected in the Option Agreement, including
vesting requirements and/or performance criteria with respect to the Company
and/or the Optionee.

 

(ii) Leave of Absence. In the absence of determination by the Administrator at
the time of grant of the Option, vesting of an Option shall be tolled during any
unpaid leave of absence, except to the extent otherwise provided by Applicable
Laws. In the event of a military leave, to the extent required by Applicable
Laws, vesting shall toll during any unpaid portion of such leave, provided that
upon a Participant’s return from military leave he or she shall be given vesting
credit with respect to Options to the same extent as would have applied had the
Participant continued to provide services to the Company throughout the leave on
the same terms as he or she was providing services immediately prior to such
leave.

 

(iii) Minimum Exercise Requirements. An Option may not be exercised for a
fraction of a Share. The Administrator may require that an Option be exercised
as to a minimum number of Shares, provided that such requirement shall not
prevent an Optionee from exercising the full number of Shares as to which the
Option is then exercisable.

 

(iv) Procedures for and Results of Exercise. An Option shall be deemed exercised
when written notice of such exercise has been given to the Company in accordance
with the terms of the Option by the person entitled to exercise the Option and
the Company has received full payment for the Shares with respect to which the
Option is exercised. Full payment may, as authorized by the Administrator,
consist of any consideration and method of payment allowable under Section 9(b)
of the Plan, provided that the Administrator may, in its sole discretion, refuse
to accept any form of consideration at the time of any Option exercise.

 

Exercise of an Option in any manner shall result in a decrease in the number of
Shares that thereafter may be available, both for purposes of the Plan and for
sale under the Option, by the number of Shares as to which the Option is
exercised.

 

(v) Rights as Stockholder. Until the issuance of the Shares (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company), no right to vote or receive dividends or any other rights
as a stockholder shall exist with respect to the Optioned Stock, notwithstanding
the exercise of the Option. No adjustment will be made for a dividend or other
right for which the record date is prior to the date the stock certificate is
issued, except as provided in Section 17 of the Plan.

 

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(b) Termination of Employment or Consulting Relationship. Except as otherwise
set forth in this Section 10(b), the Administrator shall establish and set forth
in the applicable Option Agreement the terms and conditions upon which an Option
shall remain exercisable, if at all, following termination of an Optionee’s
Continuous Service Status, which provisions may be waived or modified by the
Administrator at any time. Unless the Administrator otherwise provides in the
Option Agreement, to the extent that the Optionee is not vested in Optioned
Stock at the date of termination of his or her Continuous Service Status, or if
the Optionee (or other person entitled to exercise the Option) does not exercise
the Option to the extent so entitled within the time specified in the Option
Agreement or below (as applicable), the Option shall terminate and the Optioned
Stock underlying the unexercised portion of the Option shall revert to the Plan.
In no event may any Option be exercised after the expiration of the Option term
as set forth in the Option Agreement (and subject to Section 7).

 

The following provisions (1) shall apply to the extent an Option Agreement does
not specify the terms and conditions upon which an Option shall terminate upon
termination of an Optionee’s Continuous Service Status, and (2) establish the
minimum post-termination exercise periods that may be set forth in an Option
Agreement:

 

(i) Termination other than Upon Disability or Death or for Cause. In the event
of termination of Optionee’s Continuous Service Status other than under the
circumstances set forth in subsections (ii) through (iv) below, such Optionee
may exercise an Option for three months following such termination to the extent
the Optionee was vested in the Optioned Stock as of the date of such
termination. No termination shall be deemed to occur and this Section 10(b)(i)
shall not apply if (A) the Optionee is a Consultant who becomes an Employee or
Director, (B) the Optionee is an Employee who becomes a Consultant or Director
or (C) the Optionee is a Director who becomes an Employee or a Consultant.

 

(ii) Disability of Optionee. In the event of termination of an Optionee’s
Continuous Service Status as a result of his or her disability (including a
disability within the meaning of Section 22(e)(3) of the Code), such Optionee
may exercise an Option at any time within 12 months following such termination
to the extent the Optionee was vested in the Optioned Stock as of the date of
such termination.

 

(iii) Death of Optionee. In the event of the death of an Optionee during the
period of Continuous Service Status since the date of grant of the Option, or
within 30 days following termination of Optionee’s Continuous Service Status,
the Option may be exercised by Optionee’s estate or by a person who acquired the
right to exercise the Option by bequest or inheritance at any time within 12
months following the date of death, but only to the extent the Optionee was
vested in the Optioned Stock as of the date of death or, if earlier, the date
the Optionee’s Continuous Service Status terminated.

 

(iv) Termination for Cause. In the event of termination of an Optionee’s
Continuous Service Status for Cause, any Option (including any exercisable
portion thereof) held by such Optionee shall immediately terminate in its
entirety upon first notification to the Optionee of termination of the
Optionee’s Continuous Service Status. If an Optionee’s employment or consulting
relationship with the Company is suspended pending an investigation

 

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of whether the Optionee shall be terminated for Cause, all the Optionee’s rights
under any Option likewise shall be suspended during the investigation period and
the Optionee shall have no right to exercise any Option. Unless prohibited by
Applicable Laws, this Section 10(b)(iv) shall apply with equal effect to vested
Shares acquired upon exercise of an Option, in that the Company shall have the
right to repurchase such Shares from the Participant at the lesser of
Participant’s original cost for the Shares or the Fair Market Value of the Share
at the time of repurchase. Such repurchase shall be effected pursuant to such
terms and conditions, and at such time, as the Administrator shall determine.
Nothing in this Section 10(b)(iv) shall in any way limit the Company’s right to
purchase unvested Shares issued upon exercise of an Option as set forth in the
applicable Option Agreement.

 

(c) Buyout Provisions. The Administrator may at any time offer to buy out for a
payment in cash or Shares an Option previously granted under the Plan based on
such terms and conditions as the Administrator shall establish and communicate
to the Optionee at the time that such offer is made.

 

11. Stock Grants and Stock Unit Awards. Each Stock Award Agreement reflecting
the issuance of a Stock Grant or Stock Unit shall be in such form and shall
contain such terms and conditions as the Board shall deem appropriate. The terms
and conditions of such agreements may change from time to time, and the terms
and conditions of separate agreements need not be identical, but each such
agreement shall include (through incorporation of provisions hereof by reference
in the agreement or otherwise) the substance of each of the following
provisions:

 

(a) Consideration. A Stock Grant or Stock Unit may be awarded in consideration
for such property or services as is permitted under Applicable Law, including
for past services actually rendered to the Company or an Affiliate for its
benefit.

 

(b) Vesting. Shares of Common Stock awarded under an agreement reflecting a
Stock Grant and a Stock Unit award may, but need not, be subject to a share
repurchase option, forfeiture restriction or other conditions in favor of the
Company in accordance with a vesting or lapse 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 held by the Participant which have not vested or which are
otherwise subject to forfeiture or other conditions as of the date of
termination under the terms of the agreement.

 

(d) Transferability. Rights to acquire Shares under a Stock Grant or a Stock
Unit agreement shall be transferable by the Participant only by will or by the
laws of descent and distribution.

 

12. Stock Purchase Rights.

 

(a) Rights to Purchase. When the Administrator determines that it will offer
Stock Purchase Rights under the Plan, it shall advise the offeree in writing of
the terms,

 

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conditions and restrictions related to the offer, including the number of Shares
that such person shall be entitled to purchase, the price to be paid, and the
time within which such person must accept such offer. The offer to purchase
Shares subject to Stock Purchase Rights shall be accepted by execution of a
Stock Award Agreement in the form determined by the Administrator.

 

(b) Repurchase Option.

 

(i) General. Unless the Administrator determines otherwise, the Stock Award
Agreement shall grant the Company a repurchase option exercisable upon the
voluntary or involuntary termination of the purchaser’s employment with the
Company for any reason (including death or disability). The purchase price for
Shares repurchased pursuant to the Stock Award Agreement shall be the lesser of
the original purchase price paid by the purchaser or the Fair Market Value of
the Shares on the date of repurchase, and may be paid by cancellation of any
indebtedness of the purchaser to the Company. The repurchase option shall lapse
at such rate as the Administrator may determine. In the absence of determination
by the Administrator at the time of grant of the Stock Purchase Right, lapse of
the repurchase option shall be tolled during any unpaid leave of absence, except
to the extent otherwise provided by Applicable Laws. In the event of a military
leave, to the extent required by Applicable Laws, lapse of the repurchase option
shall toll during any unpaid portion of such leave, provided that upon a
Participant’s return from military leave the repurchase option shall be deemed
to have lapsed to the same extent as would have applied had the Participant
continued to provide services to the Company throughout the leave on the same
terms as he or she was providing services immediately prior to such leave.

 

(ii) Termination of Continuous Service Status for Cause. Unless prohibited by
Applicable Laws, in the event of termination of a Participant’s Continuous
Service Status for Cause, the Company shall have the right to repurchase from
the Participant vested Shares issued upon exercise of a Stock Purchase Right at
the lesser of Participant’s original cost for the Shares or the Fair Market
Value of the Share at the time of repurchase or such other terms as determined
by the Administrator. Such repurchase shall be effected pursuant to such terms
and conditions, and at such time, as the Administrator shall determine. Nothing
in this Section 12(b)(ii) shall in any way limit the Company’s right to purchase
unvested Shares as set forth in the applicable Stock Award Agreement.

 

(c) Other Provisions. The Stock Award Agreement shall contain such other terms,
provisions and conditions not inconsistent with the Plan as may be determined by
the Administrator in its sole discretion. In addition, the provisions of Stock
Award Agreements need not be the same with respect to each purchaser.

 

(d) Rights as a Stockholder. Once the Stock Purchase Right is exercised, the
purchaser shall have the rights equivalent to those of a stockholder, and shall
be a stockholder when his or her purchase is entered upon the records of the
duly authorized transfer agent of the Company. No adjustment will be made for a
dividend or other right for which the record date is prior to the date the Stock
Purchase Right is exercised, except as provided in Section 17 of the Plan.

 

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13. Stock Appreciation Rights.

 

(a) General. Stock Appreciation Rights may be granted either alone, in addition
to, or in tandem with other Awards granted under the Plan. The Board may grant
Stock Appreciation Rights to eligible Participants subject to terms and
conditions not inconsistent with this Plan and determined by the Board. The
specific terms and conditions applicable to the Participant shall be provided
for in the Stock Award Agreement. Stock Appreciation Rights shall be
exercisable, in whole or in part, at such times as the Board shall specify in
the Stock Award Agreement.

 

(b) Exercise of Stock Appreciation Right. Upon the exercise of a Stock
Appreciation Right, in whole or in part, the Participant shall be entitled to a
payment in an amount equal to the excess of the Fair Market Value on the date of
exercise of a fixed number of Shares covered by the exercised portion of the
Stock Appreciation Right, over the Fair Market Value on the grant date of the
Shares covered by the exercised portion of the Stock Appreciation Right (or such
other amount calculated with respect to Shares subject to the award as the Board
may determine). The amount due to the Participant upon the exercise of a Stock
Appreciation Right shall be paid in such form of consideration as determined by
the Board and may be in cash, Shares or a combination thereof, over the period
or periods specified in the Stock Award Agreement. A Stock Award Agreement may
place limits on the amount that may be paid over any specified period or periods
upon the exercise of a Stock Appreciation Right, on an aggregate basis or as to
any Participant. A Stock Appreciation Right shall be considered exercised when
the Company receives written notice of exercise in accordance with the terms of
the Stock Award Agreement from the person entitled to exercise the Stock
Appreciation Right.

 

(c) Nonassignability of Stock Appreciation Rights. Except as determined by the
Board, no Stock Appreciation Right shall be assignable or otherwise transferable
by the Participant except by will or by the laws of descent and distribution.

 

14. Section 162(m) Compliance. Any Stock Award (other than an Option or any
other Stock Award having a purchase price equal to 100% of the Fair Market Value
on the date such award is made) that is intended as “qualified performance-based
compensation” within the meaning of Section 162(m) of the Code must vest or
become exercisable contingent on the achievement of one or more Qualifying
Performance Criteria. Notwithstanding anything to the contrary herein, the
Committee shall have the discretion to determine the time and manner of
compliance with Section 162(m) of the Code as required under applicable
regulations and to conform the procedures related to the Award to the
requirements of Section 162(m).

 

15. Taxes.

 

(a) As a condition of the grant, vesting or exercise of an Option or Stock Award
granted under the Plan, the Participant (or in the case of the Participant’s
death, the person exercising the Option or Stock Award) shall make such
arrangements as the Administrator may require for the satisfaction of any
applicable federal, state, local or foreign withholding tax obligations that may
arise in connection with such grant, vesting or exercise of the Option or Stock
Award or the issuance of Shares. The Company shall not be required to

 

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issue any Shares under the Plan until such obligations are satisfied. If the
Administrator allows the withholding or surrender of Shares to satisfy a
Participant’s tax withholding obligations under this Section 15 (whether
pursuant to Section 15(c), (d) or (e), or otherwise), the Administrator shall
not allow Shares to be withheld in an amount that exceeds the minimum statutory
withholding rates for federal and state tax purposes, including payroll taxes.

 

(b) In the case of an Employee and in the absence of any other arrangement, the
Employee shall be deemed to have directed the Company to withhold or collect
from his or her compensation an amount sufficient to satisfy such tax
obligations from the next payroll payment otherwise payable after the date of an
exercise of the Option or Stock Award.

 

(c) This Section 15(c) shall apply only after the date, if any, upon which the
Common Stock becomes a Listed Security. In the case of Participant other than an
Employee (or in the case of an Employee where the next payroll payment is not
sufficient to satisfy such tax obligations, with respect to any remaining tax
obligations), in the absence of any other arrangement and to the extent
permitted under the Applicable Laws, the Participant shall be deemed to have
elected to have the Company withhold from the Shares to be issued upon exercise
of the Option or Stock Award that number of Shares having a Fair Market Value
determined as of the applicable Tax Date (as defined below) equal to the amount
required to be withheld. For purposes of this Section 15, the Fair Market Value
of the Shares to be withheld shall be determined on the date that the amount of
tax to be withheld is to be determined under the Applicable Laws (the “Tax
Date”).

 

(d) If permitted by the Administrator, in its discretion, a Participant may
satisfy his or her tax withholding obligations upon exercise of an Option or
Stock Award by surrendering to the Company Shares that have a Fair Market Value
determined as of the applicable Tax Date equal to the amount required to be
withheld. In the case of Shares previously acquired from the Company that are
surrendered under this Section 15(d), such Shares must have been owned by the
Participant for more than six (6) months on the date of surrender (or such other
period of time as is required for the Company to avoid adverse accounting
charges).

 

(e) Any election or deemed election by a Participant to have Shares withheld to
satisfy tax withholding obligations under Section 15(c) or (d) above shall be
irrevocable as to the particular Shares as to which the election is made and
shall be subject to the consent or disapproval of the Administrator. Any
election by a Participant under Section 5(d) above must be made on or prior to
the applicable Tax Date.

 

(f) In the event an election to have Shares withheld is made by a Participant
and the Tax Date is deferred under Section 83 of the Code because no election is
filed under Section 83(b) of the Code, the Participant shall receive the full
number of Shares with respect to which the Option or Stock Award is exercised
but such Participant shall be unconditionally obligated to tender back to the
Company the proper number of Shares on the Tax Date.

 

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16. Non-Transferability of Options and Stock Awards.

 

(a) General. Except as set forth in this Section 16, Options and Stock Awards
may not be sold, pledged, assigned, hypothecated, transferred or disposed of in
any manner other than by will or by the laws of descent or distribution. The
designation of a beneficiary by an Optionee will not constitute a transfer. An
Option or Stock Award may be exercised, during the lifetime of the holder of an
Option or Stock Award, only by such holder or a transferee permitted by this
Section 16.

 

(b) Limited Transferability Rights. Notwithstanding anything else in this
Section 16, prior to the date, if any, on which the Common Stock becomes a
Listed Security, the Administrator may in its discretion grant Nonstatutory
Stock Options that may be transferred by instrument to an inter vivos or
testamentary trust in which the Options are to be passed to beneficiaries upon
the death of the trustor (settlor) or by gift to “Immediate Family” (as defined
below), on such terms and conditions as the Administrator deems appropriate.
Following the date, if any, on which the Common Stock becomes a Listed Security,
the Administrator may in its discretion grant transferable Nonstatutory Stock
Options pursuant to Option Agreements specifying the manner in which such
Nonstatutory Stock Options are transferable. “Immediate Family” means any child,
stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law, and shall include adoptive relationships.

 

17. Adjustments Upon Changes in Capitalization, Merger or Certain Other
Transactions.

 

(a) Changes in Capitalization. Subject to any action required under Applicable
Laws by the stockholders of the Company, the number of Shares of Common Stock
covered by each outstanding Award, the numbers of Shares set forth in Sections 3
and 8 above, and the number of Shares of Common Stock that have been authorized
for issuance under the Plan but as to which no Awards have yet been granted or
that have been returned to the Plan upon cancellation or expiration of an Award,
as well as the price per Share of Common Stock covered by each such outstanding
Award, shall be proportionately adjusted for any increase or decrease in the
number of issued Shares of Common Stock resulting from a stock split, reverse
stock split, stock dividend, combination, recapitalization or reclassification
of the Common Stock, or any other increase or decrease in the number of issued
Shares of Common Stock effected without receipt of consideration by the Company;
provided, however, that conversion of any convertible securities of the Company
shall not be deemed to have been “effected without receipt of consideration.”
Such adjustment shall be made by the Administrator, whose determination in that
respect shall be final, binding and conclusive. Except as expressly provided
herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of Shares of Common Stock subject to an Award.

 

(b) Dissolution or Liquidation. In the event of the dissolution or liquidation
of the Company, each Option and Stock Award will terminate immediately prior to
the consummation of such action, unless otherwise determined by the
Administrator.

 

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(c) Corporate Transaction.

 

(i) In the event of a Corporate Transaction, each outstanding Option and Stock
Award shall be assumed or an equivalent option or right shall be substituted by
the successor corporation or a Parent or Subsidiary of such successor
corporation, unless such successor corporation does not agree to assume the
outstanding Options or Stock Awards or to substitute equivalent options or
rights, in which case such Options or Stock Awards shall terminate upon the
consummation of the transaction.

 

(ii) In the event of a Change of Control, if the successor corporation or a
Parent or Subsidiary of such successor corporation agrees to assume outstanding
Options or Stock Awards or to substitute them with equivalent options or stock
awards, the vesting and exercisability of each outstanding Option and Stock
Award shall accelerate such that the Options and Stock Awards shall become
vested and exercisable as to the lesser of 25% of the Shares subject to the
Option or Stock Award or the remaining unvested Shares, and any repurchase right
of the Company with respect to Shares issued upon exercise of an Option or Stock
Award shall lapse as to the lesser of 25% of the Shares initially subject to the
Company repurchase right or the remaining Shares subject to the Company
repurchase right. The acceleration of vesting and lapse of repurchase rights
provided for in this Section 17(c)(ii) shall occur immediately prior to
consummation of the Change of Control and shall apply to Shares that would have
vested last under the vesting schedule applicable to the Option or Stock Award
or the Shares subject to Company repurchase right.

 

(iii) In addition to the acceleration of vesting and lapse of repurchase rights
provided for in Section 17(c)(ii), in the event of the Involuntary Termination
within 12 months of the Change of Control of a Participant holding an Option or
Stock Award that is assumed or substituted by the successor corporation in the
Change of Control, or holding Common Stock issued upon exercise of an Option or
Stock Award with respect to which the successor corporation has succeeded to a
repurchase right as a result of the Change of Control, then any assumed or
substituted Option or Stock Award held by such Participant at the time of the
Involuntary Termination shall accelerate and become exercisable as to the lesser
of 25% of the Shares subject to the Option or Stock Award or the remaining
unvested Shares, and any repurchase right of the Company with respect to Shares
issued upon exercise of an Option or Stock Award shall lapse as to the lesser of
25% of the Shares initially subject to the Company repurchase right or the
remaining Shares subject to the Company repurchase right. The acceleration of
vesting and lapse of repurchase rights provided for in this Section 17(c)(iii)
shall occur as of the Participant’s last day of Continuous Service Status and
shall apply to Shares that would have vested first under the vesting schedule
applicable to the Options or Stock Awards or the Shares subject to Company
repurchase right had the Participant’s employment continued.

 

(iv) In the event the successor corporation does not agree to assume outstanding
Options or Stock Awards, or to substitute them with equivalent options or stock
awards, the vesting and exercisability of each outstanding Option and Stock
Award shall accelerate such that the Options and Stock Awards shall become
vested and exercisable as to 100% of the remaining unvested Shares, and any
repurchase right of the Company with respect to Shares issued upon exercise of
an Option or Stock Award shall lapse as to 100% of the remaining Shares subject
to the Company repurchase right. The acceleration of vesting and lapse

 

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of repurchase rights provided for in this Section 17(c)(iv) shall occur
immediately prior to consummation of the Change of Control.

 

(v) For purposes of this Section 17(c), an Option or a Stock Award shall be
considered assumed, without limitation, if, at the time of issuance of the stock
or other consideration upon a Corporate Transaction or a Change of Control, as
the case may be, each holder of an Option or Stock Award would be entitled to
receive upon exercise of the Option or Stock Award the same number and kind of
shares of stock or the same amount of property, cash or securities as such
holder would have been entitled to receive upon the occurrence of the
transaction if the holder had been, immediately prior to such transaction, the
holder of the number of Shares of Common Stock covered by the Option or the
Stock Award at such time (after giving effect to any adjustments in the number
of Shares covered by the Option or Stock Award as provided for in this Section
17); provided however that if such consideration received in the transaction is
not solely common stock of the successor corporation or its Parent, the
Administrator may, with the consent of the successor corporation, provide for
the consideration to be received upon exercise of the Option or Stock Award to
be solely common stock of the successor corporation or its Parent equal to the
Fair Market Value of the per Share consideration received by holders of Common
Stock in the transaction.

 

(d) Certain Distributions. In the event of any distribution to the Company’s
stockholders of securities of any other entity or other assets (other than
dividends payable in cash or stock of the Company) without receipt of
consideration by the Company, the Administrator may, in its discretion,
appropriately adjust the price per Share of Common Stock covered by each
outstanding Option or Stock Award to reflect the effect of such distribution.

 

18. Time of Granting Options and Stock Awards. The date of grant of an Option or
Stock Award shall, for all purposes, be the date on which the Administrator
makes the determination granting such Option or Stock Award, or such other date
as is determined by the Administrator, provided that in the case of any
Incentive Stock Option, the grant date shall be the later of the date on which
the Administrator makes the determination granting such Incentive Stock Option
or the date of commencement of the Optionee’s employment relationship with the
Company. Notice of the determination shall be given to each Employee, Consultant
or Director to whom an Option or Stock Award is so granted within a reasonable
time after the date of such grant.

 

19. Amendment and Termination of the Plan.

 

(a) Authority to Amend or Terminate. The Board may at any time amend, alter,
suspend or discontinue the Plan, but no amendment, alteration, suspension or
discontinuation (other than an adjustment pursuant to Section 17 above) shall be
made that would materially and adversely affect the rights of any Optionee or
holder of Stock Awards under any outstanding grant, without his or her consent.
In addition, to the extent necessary and desirable to comply with the Applicable
Laws, the Company shall obtain stockholder approval of any Plan amendment in
such a manner and to such a degree as required.

 

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(b) Effect of Amendment or Termination. Except as to amendments which the
Administrator has the authority under the Plan to make unilaterally, no
amendment or termination of the Plan shall materially and adversely affect
Options or Stock Awards already granted, unless mutually agreed otherwise
between the Optionee or holder of the Stock Awards and the Administrator, which
agreement must be in writing and signed by the Optionee or holder of Stock
Awards and the Company.

 

20. Conditions Upon Issuance of Shares. Notwithstanding any other provision of
the Plan or any agreement entered into by the Company pursuant to the Plan, the
Company shall not be obligated, and shall have no liability for failure, to
issue or deliver any Shares under the Plan unless such issuance or delivery
would comply with the Applicable Laws, with such compliance determined by the
Company in consultation with its legal counsel. As a condition to the exercise
of an Option or Stock Award, the Company may require the person exercising the
Award to represent and warrant at the time of any such exercise that the Shares
are being purchased only for investment and without any present intention to
sell or distribute such Shares if, in the opinion of counsel for the Company,
such a representation is required by law. Shares issued upon exercise of Awards
granted prior to the date on which the Common Stock becomes a Listed Security
shall be subject to a right of first refusal in favor of the Company pursuant to
which the Participant will be required to offer Shares to the Company before
selling or transferring them to any third party on such terms and subject to
such conditions as is reflected in the applicable Option Agreement or Stock
Award Agreement.

 

21. Reservation of Shares. The Company, during the term of this Plan, will at
all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.

 

22. Agreements. Options and Stock Awards shall be evidenced by Option Agreements
and Stock Award Agreements, respectively, in such form(s) as the Administrator
shall from time to time approve.

 

23. Stockholder Approval. If required by the Applicable Laws, continuance of the
Plan shall be subject to approval by the stockholders of the Company within
twelve (12) months before or after the date the Plan is adopted. Such
stockholder approval shall be obtained in the manner and to the degree required
under the Applicable Laws.

 

24. Information and Documents to Optionees and Purchasers. Prior to the date, if
any, upon which the Common Stock becomes a Listed Security and if required by
the Applicable Laws, the Company shall provide financial statements at least
annually to each Optionee and to each individual who acquired Shares pursuant to
the Plan, during the period such Optionee or purchaser has one or more Options
or Stock Awards outstanding, and in the case of an individual who acquired
Shares pursuant to the Plan, during the period such individual owns such Shares.
The Company shall not be required to provide such information if the issuance of
Options or Stock Awards under the Plan is limited to key employees whose duties
in connection with the Company assure their access to equivalent information.

 

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