Exhibit 10.1

BIOCRYST PHARMACEUTICALS, INC.
STOCK INCENTIVE PLAN
(formerly the “BioCryst Pharmaceuticals, Inc. 1991 Stock Option Plan”)

(AMENDED AND RESTATED EFFECTIVE MARCH 7, 2006)

ARTICLE ONE
GENERAL PROVISIONS

I.          PURPOSES OF THE PLAN

 

 

 

 

     A.          This Stock Incentive Plan (the “Plan”), formerly the “BioCryst
Pharmaceuticals, Inc. 1991 Stock Option Plan,” is intended to promote the
interests of BioCryst Pharmaceuticals, Inc., a Delaware corporation (the
“Company”), by providing a method whereby (i) key employees (including officers
and directors) of the Company (or its parent or subsidiary corporations) who are
responsible for the management, growth and financial success of the Company (or
any parent or subsidiary corporations), (ii) non-employee members of the board
of directors of the Company (the “Board”) (or of any parent or subsidiary
corporations) and (iii) consultants and other independent contractors who
provide valuable services to the Company (or any parent or subsidiary
corporations) may be offered the opportunity to acquire a proprietary interest,
or otherwise increase their proprietary interest, in the Company as an incentive
for them to remain in the service of the Company (or any parent or subsidiary
corporations).

 

 

 

 

     B.          For purposes of the Plan, the following provisions shall be
applicable in determining the parent and subsidiary corporations of the Company:

 

 

 

 

 

                              -          Any corporation (other than the
Company) in an unbroken chain of corporations ending with the Company shall be
considered to be a parent corporation of the Company, provided each such
corporation in the unbroken chain (other than the Company) owns, at the time of
the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.

 

 

 

 

 

                              -          Each corporation (other than the
Company) in an unbroken chain of corporations beginning with the Company shall
be considered to be a subsidiary of the Company, provided each such corporation
(other than the last corporation) in the unbroken chain owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.

 

 

 

 

     C.          The Plan, as hereby amended and restated, was approved and
adopted by the Board effective March 7, 2006 (the “Effective Date”) in order to
(i) increase by 1,500,000 the number of shares of the Company’s common stock,
par value $.01 per share (the “Common Stock”), that may be issued pursuant to
the Plan, (ii) expand the types of awards available under the Plan by adding a
Stock Issuance Program (as described below), (iii) change the name of the Plan
in accordance with the expanded types of awards that may be issued under the
Plan, and (iv) incorporate other items the Board deemed desirable.  The Board’s
adoption of the Plan is subject to approval by the Company’s stockholders at the
Company’s 2006 Annual Stockholders Meeting.

 

 

 

II.         STRUCTURE OF THE PLAN

 

 

 

 

A.               The Plan shall be divided into three separate equity programs:

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                              -          the Discretionary Option Grant Program
specified in Article Two, pursuant to which eligible persons may, at the
discretion of the Plan Administrator, be granted options to purchase shares of
Common Stock,

 

 

 

 

 

                              -          the Stock Issuance Program specified in
Article Three, pursuant to which eligible persons may, at the discretion of the
Plan Administrator, be issued shares of Common Stock directly, either through
immediate purchase of such shares or as compensation for services rendered to
the Company (or any parent or subsidiary), and

 

 

 

 

 

                              -          the Automatic Option Grant Program
specified in Article Four, pursuant to which non-employee members of the Board
will automatically receive option grants to purchase shares of Common Stock.

 

 

 

 

     B.          Unless the context clearly indicates otherwise, the provisions
of Articles One and Five of the Plan shall apply to all equity programs under
the Plan and shall accordingly govern the interests of all individuals under the
Plan.

III.        ADMINISTRATION OF THE PLAN

 

 

 

 

     A.          A committee of two (2) or more non-employee Board members
appointed by the Board (the “Primary Committee”) shall have sole and exclusive
authority to administer the Discretionary Option Grant and Stock Issuance
Programs with respect to Section 16 Insiders.  For purposes of this Section, a
Section 16 Insider shall mean an officer or director of the Company subject to
the short-swing profit liabilities of Section 16 of the Securities Exchange Act
of 1934 (the “1934 Act”).

 

 

 

 

     B.          Administration of the Discretionary Option Grant and Stock
Issuance Programs with respect to all other persons eligible to participate in
the programs may, at the Board’s discretion, be vested in the Primary Committee,
another committee of one (1) or more Board members appointed by the Board (the
“Secondary Committee”), or the Board may retain the power to administer those
programs with respect to all such persons.

 

 

 

 

     C.          Members of the Primary Committee and any Secondary Committee
shall serve for such period of time as the Board may determine and shall be
subject to removal by the Board at any time.

 

 

 

 

     D.          Each Plan Administrator (whether the Primary Committee, the
Board or the Secondary Committee) shall, within the scope of its administrative
functions under the Plan, have full power and authority (subject to the express
provisions of the Plan) to establish such rules and regulations as it may deem
appropriate for the proper administration of the Discretionary Option Grant and
Stock Issuance Programs and to make such determinations under, and issue
interpretations of, the provisions of such programs and any outstanding options
or stock issuances thereunder as it may deem necessary or advisable.  Decisions
of the Plan Administrator within the scope of its administrative authority under
the Plan shall be final and binding on all parties.

 

 

 

 

     E.          Service on the Primary Committee or the Secondary Committee
shall constitute service as a Board member, and members of each such committee
shall accordingly be entitled to full indemnification and reimbursement as Board
members for their service on such committee.  No member of the Primary Committee
or Secondary Committee shall be liable for any act of omission made in good
faith with respect to the Plan or any option grants or stock issuances under the
Plan.

 

 

 

 

     F.          Administration of the Automatic Option Grant Program shall be
self-executing in accordance with the express terms and conditions of Article
Four, and no Plan Administrator shall exercise any discretionary functions under
that program.

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IV.         ELIGIBILITY

 

 

 

 

     A.          The persons eligible to participate in the Discretionary Option
Grant and Stock Issuance Programs shall be limited to the following:

 

 

 

 

 

                              (i)          officers and other key employees of
the Company (or its parent or subsidiary corporations) who render services which
contribute to the management, growth and financial success of the Company (or
its parent or subsidiary corporations);

 

 

 

 

 

                              (ii)         individuals who are consultants or
independent advisors and who provide valuable services to the Company (or its
parent or subsidiary corporations); and

 

 

 

 

 

                              (iii)        non-employee members of the Board (or
of the board of directors of parent or subsidiary corporations).

 

 

 

 

     B.          Only Board members who are not employees of the Company (or any
parent or subsidiary) shall be eligible to receive automatic option grants
pursuant to the Automatic Option Grant Program specified in Article Four.

 

 

 

 

     C.          The Plan Administrator shall, within the scope of its
administrative jurisdiction under the Plan, have full power and authority to
determine (i) whether to grant options in accordance with the Discretionary
Option Grant Program or to effect stock issuances in accordance with the Stock
Issuance Program, (ii) which eligible persons are to receive option grants under
the Discretionary Option Grant Program, the time or times when such option
grants are to be made, the number of shares to be covered by each such grant,
the status of the granted option as either an incentive stock option (“Incentive
Option”) which satisfies the requirements of Section 422 of the Internal Revenue
Code of 1986, as amended (the “Code”) or a non-statutory option not intended to
meet such requirements, the time or times when each such option is to become
exercisable, the vesting schedule (if any) applicable to the option shares and
the maximum term for which such option is to remain outstanding, and (iii) which
eligible persons are to receive stock issuances under the Stock Issuance
Program, the time or times when such issuances are to be made, the number of
shares to be issued to each participant, the vesting schedule (if any)
applicable to the shares and the consideration for such shares.

 

 

 

V.          STOCK SUBJECT TO THE PLAN

 

 

 

 

     A.          Shares of the Company’s Common Stock shall be available for
issuance under the Plan and shall be drawn from either the Company’s authorized
but unissued shares of Common Stock or from reacquired shares of Common Stock,
including shares repurchased by the Company on the open market.  The maximum
number of shares of Common Stock which may be issued over the term of the Plan,
as amended and restated, shall not exceed 4,957,982 shares, subject to
adjustment from time to time in accordance with the provisions of this Section
V.  Such authorized share reserve includes (i) the 3,457,982 shares of Common
Stock reserved and available for issuance under the Plan as of March 20, 2006;
and (ii) the increase of 1,500,000 shares of Common Stock authorized by the
Board on March 7, 2006 subject to shareholder approval at the 2006 Annual
Stockholders Meeting.

 

 

 

 

     B.          In no event shall the number of shares of Common Stock for
which any one individual participating in the Plan may receive options,
separately exercisable stock appreciation rights and direct stock issuances
exceed 1,500,000 shares of Common Stock in the aggregate.  For purposes of such
limitation, however, no stock options granted prior to the date the Common Stock
was first registered under Section 12 of the 1934 Act (the “Section 12(g)
Registration Date”) shall be taken into account.

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     C.          Should an outstanding option under this Plan expire or
terminate for any reason prior to exercise in full, the shares subject to the
portion of the option not so exercised shall be available for subsequent option
grant or direct stock issuances under the Plan.  Unvested shares issued under
the Plan and subsequently repurchased by the Corporation, at the original issue
price paid per share, pursuant to the Corporation’s repurchase rights under the
Plan, or shares underlying terminated share right awards, shall be added back to
the number of shares of Common Stock reserved for issuance under the Plan and
shall accordingly be available for reissuance through one or more subsequent
option grants or direct stock issuances under the Plan.  However, should the
exercise price of an outstanding option under the Plan be paid with shares of
Common Stock or should shares of Common Stock otherwise issuable under the Plan
be withheld by the Company in satisfaction of the withholding taxes incurred in
connection with the exercise of an outstanding option or the vesting of a direct
stock issuance under the Plan, then the number of shares of Common Stock
available for issuance under the Plan shall be reduced by the gross number of
shares for which the option is exercised or which vest under the direct stock
issuance, and not by the net number of shares of Common Stock actually issued to
the holder of such option or stock issuance.  Shares of Common Stock subject to
any option surrendered for an appreciation distribution under Section IV of
Article Two or Section IV of Article Four shall not be available for subsequent
issuance under the Plan.

 

 

 

     D.          In the event any change is made to the Common Stock issuable
under the Plan by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without receipt of consideration, then
appropriate adjustments shall be made to (i) the maximum number and/or class of
securities issuable under the Plan, (ii) the maximum number and/or class of
securities for which any one individual participating in the Plan may be granted
stock options, separately exercisable stock appreciation rights, and direct
stock issuances under the Plan from and after the Section 12(g) Registration
Date, (iii) the number and/or class of securities and price per share in effect
under each outstanding option under the Plan, (iv) the number and/or class of
securities in effect under each outstanding direct stock issuance under the
Plan, and (v) the number and/or class of securities for which automatic option
grants are subsequently to be made per non-employee Board member under the
Automatic Option Grant Program.  The purpose of such adjustments shall be to
preclude the enlargement or dilution of rights and benefits under the Plan.

 

 

 

     E.          The fair market value per share of Common Stock on any relevant
date under the Plan shall be determined in accordance with the following
provisions:

 

                              (i)          If the Common Stock is not at the
time listed or admitted to trading on any national securities exchange but is
traded in the over-the-counter market, the fair market value shall be the mean
between the highest bid and lowest asked prices (or, if such information is
available, the closing selling price) per share of Common Stock on the date in
question in the over-the-counter market, as such prices are reported by the
National Association of Securities Dealers through the Nasdaq National Market or
any successor system.  If there are no reported bid and asked prices (or closing
selling price) for the Common Stock on the date in question, then the mean
between the highest bid price and lowest asked price (or the closing selling
price) on the last preceding date for which such quotations exist shall be
determinative of fair market value.

 

 

 

                              (ii)          If the Common Stock is at the time
listed or admitted to trading on any national securities exchange, then the fair
market value shall be the closing selling price per share of Common Stock on the
date in question on the securities exchange determined by the Plan Administrator
to be the primary market for the Common Stock, as such price is officially
quoted in the composite tape of transactions on such exchange.  If there is no
reported sale of Common Stock on the exchange on the date in question, then the
fair market value shall be the closing selling price on the exchange on the last
preceding date for which such quotation exists.

 

 

 

 

                              (iii)          If the Common Stock is at the time
neither listed nor admitted to trading on any securities exchange nor traded in
the over-the-counter market, then the fair market value shall be determined by
the Plan Administrator after taking into account such factors as the Plan
Administrator shall deem appropriate.

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ARTICLE TWO
DISCRETIONARY OPTION GRANT PROGRAM

     I.          TERMS AND CONDITIONS OF OPTIONS

                              Options granted pursuant to this Article Two shall
be authorized by action of the Plan Administrator and may, at the Plan
Administrator’s discretion, be either Incentive Options or non-statutory
options.  Individuals who are not Employees may only be granted non-statutory
options under this Article Two.  Each option granted shall be evidenced by one
or more instruments in the form approved by the Plan Administrator.  Each such
instrument shall, however, comply with the terms and conditions specified below,
and each instrument evidencing an Incentive Option shall, in addition, be
subject to the applicable provisions of Section II of this Article Two.

          A.          Option Price.

                                        1.          The option price per share
shall be fixed by the Plan Administrator.  In no event, however, shall the
option price per share be less than one hundred percent (100%) of the fair
market value per share of Common Stock on the date of the option grant.

                                        2.          The option price shall
become immediately due upon exercise of the option and shall, subject to the
provisions of Section V of this Article Two and the instrument evidencing the
grant, be payable as follows:

 

                                          -          full payment in cash or
check drawn to the Company’s order;

 

 

 

                                          -          full payment in shares of
Common Stock held by the optionee for the requisite period necessary to avoid a
charge to the Company’s earnings for financial reporting purposes and valued at
fair market value on the Exercise Date (as such term is defined below);

 

 

 

                                          -          full payment through a
combination of shares of Common Stock held by the optionee for the requisite
period necessary to avoid a charge to the Company’s earnings for financial
reporting purposes and valued at fair market value on the Exercise Date and cash
or cash equivalent; or

 

 

 

                                          -          full payment through a
broker-dealer sale and remittance procedure pursuant to which the optionee (I)
shall provide irrevocable written instructions to a designated brokerage firm to
effect the immediate sale of the purchased shares and remit to the Company, out
of the sale proceeds available on the settlement date, sufficient funds to cover
the aggregate option price payable for the purchased shares plus all applicable
Federal and State income and employment taxes required to be withheld by the
Company in connection with such purchase and (II) shall provide written
directives to the Company to deliver the certificates for the purchased shares
directly to such brokerage firm in order to complete the sale transaction.

                    For purposes of this subparagraph 2, the Exercise Date shall
be the date on which written notice of the option exercise is delivered to the
Corporation.  Except to the extent the sale and remittance procedure is utilized
in connection with the exercise of the option, payment of the option price for
the purchased shares must accompany such notice.

 

B.      Term and Exercise of Options.

 

 

                    Each option granted under this Article Two shall be
exercisable at such time or times, during such period, and for such number of
shares as shall be determined by the Plan Administrator and set forth in the
instrument evidencing the option grant.  No such option, however, shall have a
maximum term in excess of ten (10) years from the grant date.  During the
lifetime of the optionee, the option, together with any stock appreciation
rights pertaining to such option, shall be exercisable only by the optionee and
shall not be assignable or transferable by the optionee except for a

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transfer of the option by will or by the laws of descent and distribution
following the optionee’s death.  However, the Plan Administrator shall have the
discretion to provide that a non-statutory option may, in connection with the
optionee’s estate plan, be assigned in whole or in part during the optionee’s
lifetime either as (i) as a gift to one or more members of optionee’s immediate
family, to a trust in which optionee and/or one or more such family members hold
more than fifty percent (50%) of the beneficial interest or an entity in which
more than fifty percent (50%) of the voting interests are owned by optionee
and/or one or more such family members, or (ii) pursuant to a domestic relations
order.  The assigned portion shall be exercisable only by the person or persons
who acquire a proprietary interest in the option pursuant to such assignment. 
The terms applicable to the assigned portion shall be the same as those in
effect for this option immediately prior to such assignment and shall be set
forth in such documents issued to the assignee as the Plan Administrator may
deem appropriate.

 

 

 

C.          Termination of Service.

 

 

 

                              1.           Except to the extent otherwise
provided pursuant to Section V of this Article Two, the following provisions
shall govern the exercise period applicable to any options held by the optionee
at the time of cessation of Service or death.

 

                                             -          Should the optionee
cease to remain in Service for any reason other than death or permanent
disability, then the period for which each outstanding option held by such
optionee is to remain exercisable shall be limited to the three (3)-month period
following the date of such cessation of Service.  However, should optionee die
during the three (3)-month period following his or her cessation of service, the
personal representative of the optionee’s estate or the person or persons to
whom the option is transferred pursuant to the optionee’s will or in accordance
with the laws of descent and distribution shall have a twelve (12)-month period
following the date of the optionee’s death during which to exercise such option.

 

 

 

                                             -          In the event such
Service terminates by reason of permanent disability (as defined in Section
22(e)(3) of the Internal Revenue Code), then the period for which each
outstanding option held by the optionee is to remain exercisable shall be
limited to the twelve (12)-month period following the date of such cessation of
Service.

 

                                             -          Should the optionee,
after completing five (5) full years of service, die while in Service, then the
exercisability of each of his or her outstanding options shall automatically
accelerate so that each such option shall become fully exercisable with respect
to the total number of shares of Common Stock at the time subject to such option
and may be exercised for all or any portion of such shares.  The personal
representative of the optionee’s estate or the person or persons to whom the
option is transferred pursuant to the optionee’s will or in accordance with the
laws of descent and distribution shall have a twelve (12)-month period following
the date of the optionee’s death during which to exercise such option.

 

 

 

                                             -          In the event such
service terminates by reason of death prior to the optionee obtaining five (5)
full years of service, then the period for which each outstanding vested option
held by the optionee at the time of death shall be exercisable by the optionee’s
estate or the person or persons to whom the option is transferred pursuant to
the optionee’s will shall be limited to the twelve (12)-month period following
the date of the optionee’s death.

 

 

 

                                             -          Under no circumstances,
however, shall any such option be exercisable after the specified expiration
date of the option term.

 

 

 

                                             -          Each such option shall,
during such limited exercise period, be exercisable for any or all of the shares
for which the option is exercisable on the date of the optionee’s cessation of
Service.  Upon the expiration of such limited exercise period or (if earlier)
upon the expiration of the option term, the option shall terminate and cease to
be exercisable.  However, each outstanding option shall immediately terminate
and cease to remain outstanding, at the time of the optionee’s cessation of
Service, with respect to any shares for which the option is not otherwise at
that time exercisable or in which the optionee is not otherwise vested.

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                                             -          Should (i) the
optionee’s Service be terminated for misconduct (including, but not limited to,
any act of dishonesty, willful misconduct, fraud or embezzlement) or (ii) the
optionee make any unauthorized use or disclosure of confidential information or
trade secrets of the Company or its parent or subsidiary corporations, then in
any such event all outstanding options held by the optionee under this Article
Two shall terminate immediately and cease to be exercisable.

 

 

                                        2.           The Plan Administrator
shall have complete discretion, exercisable either at the time the option is
granted or at any time while the option remains outstanding, to permit one or
more options held by the optionee under this Article Two to be exercised, during
the limited period of exercisability provided under subparagraph 1 above, not
only with respect to the number of shares for which each such option is
exercisable at the time of the optionee’s cessation of Service but also with
respect to one or more subsequent installments of purchasable shares for which
the option would otherwise have become exercisable had such cessation of Service
not occurred.

 

                                        3.           For purposes of the
foregoing provisions of this Section I.C (and for all other purposes under the
Plan):

 

                                          -          The optionee shall be
deemed to remain in the Service of the Company for so long as such individual
renders services on a periodic basis to the Company (or any parent or subsidiary
corporation) in the capacity of an Employee, a non-employee member of the board
of directors or an independent consultant or advisor, unless the agreement
evidencing the applicable option grant specifically states otherwise.

 

 

 

                                          -          The optionee shall be
considered to be an Employee for so long as such individual remains in the
employ of the Company or one or more of its parent or subsidiary corporations,
subject to the control and direction of the employer entity not only as to the
work to be performed but also as to the manner and method of performance.

 

 

     D.          Stockholder Rights.

 

 

 

An optionee shall have no stockholder rights with respect to any shares covered
by the option until such individual shall have exercised the option and paid the
option price for the purchased shares.

 

 

     E.          Repurchase Rights.

 

 

                                        The shares of Common Stock acquired upon
the exercise of options granted under this Article Two may be subject to
repurchase by the Company in accordance with the following provisions:

 

                                        (a)          The Plan Administrator
shall have the discretion to grant options which are exercisable for unvested
shares of Common Stock under this Article Two.  Should the optionee cease
Service while holding such unvested shares, the Company shall have the right to
repurchase any or all those unvested shares at the option price paid per share. 
The terms and conditions upon which such repurchase right shall be exercisable
(including the period and procedure for exercise and the appropriate vesting
schedule for the purchased shares) shall be established by the Plan
Administrator and set forth in the instrument evidencing such repurchase right.

 

 

 

                                        (b)          All of the Company’s
outstanding repurchase rights shall automatically terminate, and all shares
subject to such terminated rights shall immediately vest in full, upon the
occurrence of any Corporate Transaction under Section III of this Article Two,
except to the extent:  (i) any such repurchase right is expressly assigned to
the successor corporation (or parent thereof) in connection with the Corporate
Transaction or (ii) such termination is precluded by other limitations imposed
by the Plan Administrator at the time the repurchase right is issued.

 

 

 

                                        (c)          The Plan Administrator
shall have the discretionary authority, exercisable either before or after the
optionee’s cessation of Service, to cancel the Corporation’s outstanding
repurchase rights with respect to one or more shares purchased or purchasable by
the optionee under this Discretionary Option Grant Program and thereby
accelerate the vesting of such shares in whole or in part at any time.

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II.

INCENTIVE OPTIONS

 

 

                       The terms and conditions specified below shall be
applicable to all Incentive Options granted under this Article Two.  Incentive
Options may only be granted to individuals who are Employees of the Company. 
Options which are specifically designated as “non-statutory” options when issued
under the Plan shall not be subject to such terms and conditions.

 

     A.          Dollar Limitation.  The aggregate fair market value (determined
as of the respective date or dates of grant) of the Common Stock for which one
or more options granted to any Employee under this Plan (or any other option
plan of the Company or its parent or subsidiary corporations) may for the first
time become exercisable as incentive stock options under the Federal tax laws
during any one calendar year shall not exceed the sum of One Hundred Thousand
Dollars ($100,000).  To the extent the Employee holds two or more such options
which become exercisable for the first time in the same calendar year, the
foregoing limitation on the exercisability of such options as incentive stock
options under the Federal tax laws shall be applied on the basis of the order in
which such options are granted.  Should the number of shares of Common Stock for
which any Incentive Option first becomes exercisable in any calendar year exceed
the applicable One Hundred Thousand Dollar ($100,000) limitation, then that
option may nevertheless be exercised in such calendar year for the excess number
of shares as a non-statutory option under the Federal tax laws.

 

 

 

     B.          10% Stockholder.  If any individual to whom an Incentive Option
is granted is the owner of stock (as determined under Section 424(d) of the
Internal Revenue Code) possessing 10% or more of the total combined voting power
of all classes of stock of the Company or any one of its parent or subsidiary
corporations, then the option price per share shall not be less than one hundred
and ten percent (110%) of the fair market value per share of Common Stock on the
grant date, and the option term shall not exceed five (5) years, measured from
the grant date.

 

 

 

     C.          Termination of Employment.  Any portion of an Incentive Option
that remains outstanding (by reason of the optionee remaining in the Service of
the Company, pursuant to the Plan Administrator’s exercise of discretion under
Section V of this Article Two, or otherwise) more than 3 months following the
date an optionee ceases to be an Employee of the Company shall thereafter be
exercisable as a non-statutory option under federal tax laws.

 

 

 

                         Except as modified by the preceding provisions of this
Section II, the provisions of Articles One, Two and Five of the Plan shall apply
to all Incentive Options granted hereunder.

     III.     CORPORATE TRANSACTIONS/CHANGES IN CONTROL

          A.          In the event of any of the following stockholder-approved
transactions (a “Corporate Transaction”):

 

                                        (i)          a merger or consolidation
in which the Company is not the surviving entity, except for a transaction the
principal purpose of which is to change the State of the Company’s
incorporation,

 

 

 

                                        (ii)         the sale, transfer or other
disposition of all or substantially all of the assets of the Company in
liquidation or dissolution of the Company, or

 

 

 

                                        (iii)        any reverse merger in which
the Company is the surviving entity but in which securities possessing more than
fifty percent (50%) of the total combined voting power of the Company’s
outstanding securities are transferred to a person or persons different from the
persons holding those securities immediately prior to such merger,

then the exercisability of each option outstanding under this Article Two shall
automatically accelerate so that each such option shall, immediately prior to
the specified effective date for the Corporate Transaction, become fully
exercisable with respect to the total number of shares of Common Stock at the
time subject to such option and may be exercised for

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all or any portion of such shares.  However, an outstanding option under this
Article Two shall not so accelerate if and to the extent the acceleration of
such option is subject to other limitations imposed by the Plan Administrator at
the time of grant, unless the Plan Administrator, in its discretion, later
determines to waive such limitations.

 

     B.          Immediately after the consummation of the Corporate
Transaction, all outstanding options under this Article Two shall terminate and
cease to be outstanding, except to the extent assumed by the successor
corporation or its parent company.  The Plan Administrator shall have complete
discretion to provide, on such terms and conditions as it sees fit, for a cash
payment to be made to any optionee on account of any option terminated in
accordance with this paragraph, in an amount equal to the excess (if any) of (A)
the fair market value of the shares subject to the option as of the date of the
Corporate Transaction, over (B) the aggregate exercise price of the option.

 

 

 

 

     C.          Each outstanding option under this Article Two which is assumed
in connection with the Corporate Transaction or is otherwise to continue in
effect shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply and pertain to the number and class of securities which
would have been issued to the option holder, in consummation of such Corporate
Transaction, had such person exercised the option immediately prior to such
Corporate Transaction.  Appropriate adjustments shall also be made to the option
price payable per share, provided the aggregate option price payable for such
securities shall remain the same.  In addition, the class and number of
securities available for issuance under the Plan following the consummation of
the Corporate Transaction shall be appropriately adjusted.

 

 

 

 

     D.          The grant of options under this Article Two shall in no way
affect the right of the Company to adjust, reclassify, reorganize or otherwise
change its capital or business structure or to merge, consolidate, dissolve,
liquidate or sell or transfer all or any part of its business or assets.

 

 

 

 

     E.          The exercisability of each outstanding option under this
Article Two shall automatically accelerate, and the Company’s outstanding
repurchase rights under this Article Two shall immediately terminate upon the
occurrence of a Change in Control.

 

 

 

 

     F.          For purposes of this Section III (and for all other purposes
under the Plan), a Change in Control shall be deemed to occur in the event:

 

                                        (i)          any person or related group
of persons (other than the Company or a person that directly or indirectly
controls, is controlled by, or is under common control with, the Company)
directly or indirectly acquires beneficial ownership (within the meaning of Rule
13d-3 of the 1934 Act) of securities possessing more than fifty percent (50%) of
the total combined voting power of the Company’s outstanding securities pursuant
to a tender or exchange offer made directly to the Company’s stockholders; or

 

 

 

                                        (ii)          there is a change in the
composition of the Board over a period of twenty-four (24) consecutive months or
less such that a majority of the Board members (rounded up to the next whole
number) ceases, by reason of one or more contested elections for Board
membership, to be comprised of individuals who either (A) have been Board
members continuously since the beginning of such period or (B) have been elected
or nominated for election as Board members during such period by at least
two-thirds of the Board members described in clause (A) who were still in office
at the time such election or nomination was approved by the Board.

 

     G.          All options accelerated in connection with the Change in
Control shall remain fully exercisable until the expiration or sooner
termination of the option term.

 

 

 

 

     H.          The portion of any Incentive Option accelerated under this
Section III in connection with a Corporate Transaction or Change in Control
shall remain exercisable as an incentive stock option under the Federal tax laws
only to the extent the dollar limitation of Section II of this Article Two is
not exceeded.  To the extent such dollar limitation is exceeded, the accelerated
portion of such option shall be exercisable as a non-statutory option under the
Federal tax laws.

9

IV.          STOCK APPRECIATION RIGHTS

 

     A.          Provided and only if the Plan Administrator determines in its
discretion to implement the stock appreciation right provisions of this Section
IV, one or more optionees may be granted the right, exercisable upon such terms
and conditions as the Plan Administrator may establish, to surrender all or part
of an unexercised option granted under this Article Two in exchange for a
distribution from the Company in an amount equal to the excess of (i) the fair
market value (on the option surrender date) of the number of shares in which the
optionee is at the time vested under the surrendered option (or surrendered
portion thereof) over (ii) the aggregate option price payable for such vested
shares.  The distribution may be made in shares of Common Stock valued at fair
market value on the option surrender date, in cash, or partly in shares and
partly in cash, as the Plan Administrator shall determine in its sole
discretion.

 

 

 

     B.          The shares of Common Stock subject to any option surrendered
for an appreciation distribution pursuant to this Section IV shall not be
available for subsequent option grant under the Plan.

V.          EXTENSION OF EXERCISE PERIOD

                              The Plan Administrator shall have full power and
authority, exercisable either at the time the option is granted or at any time
while the option remains outstanding, to extend the period of time for which any
option granted under this Article Two is to remain exercisable following the
optionee’s cessation of Service or death from the limited period in effect under
Section I.C.1 of Article Two to such greater period of time as the Plan
Administrator shall deem appropriate; provided, however, that in no event shall
such option be exercisable after the specified expiration date of the option
term.

ARTICLE THREE
STOCK ISSUANCE PROGRAM

     I.          STOCK ISSUANCE TERMS

Shares of Common Stock may be issued under the Stock Issuance Program through
direct and immediate issuances without any intervening option grants.  Each such
stock issuance shall be evidenced by a Stock Issuance Agreement which complies
with the terms specified below. Shares of Common Stock may also be issued under
the Stock Issuance Program pursuant to share right awards which entitle the
recipients to receive shares upon the attainment of designated Service and/or
performance goals.

          A.          Purchase Price.

                                        1.          The purchase price per share
shall be fixed by the Plan Administrator, but shall not be less than one hundred
percent (100%) of the fair market value per share of Common Stock on the
issuance date.

                                        2.          Shares of Common Stock may
be issued under the Stock Issuance Program for any of the following items of
consideration which the Plan Administrator may deem appropriate in each
individual instance:

 

                                          -          cash or check made payable
to the Company, or

 

 

 

                                          -          services rendered to the
Company (or any parent or subsidiary).

          B.          Vesting Provisions.

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                                        1.          The Plan Administrator may
issue shares of Common Stock under the Stock Issuance Program which are fully
and immediately vested upon issuance or which are to vest in one or more
installments over the participant’s period of Service or upon attainment of
specified performance objectives. Alternatively, the Plan Administrator may
issue share right awards under the Stock Issuance Program which shall entitle
the recipient to receive a specified number of shares of Common Stock upon the
attainment of one or more Service and/or performance goals established by the
Plan Administrator. Upon the attainment of such Service and/or performance
goals, fully-vested shares of Common Stock shall be issued in satisfaction of
those share right awards.

                                        2.          Any new, substituted or
additional securities or other property (including money paid other than as a
regular cash dividend) issued by reason of any stock dividend, stock split,
recapitalization, combination of shares, exchange of shares or other change
affecting the outstanding Common Stock as a class without the Company’s receipt
of consideration, shall be issued or set aside with respect to the shares of
unvested Common Stock granted to a participant or subject to a participant’s
share right award, subject to (i) the same vesting requirements applicable to
the participant’s unvested shares of Common Stock or share rights award, and
(ii) such escrow arrangements as the Plan Administrator shall deem appropriate.

                                        3.          The participant shall have
full stockholder rights with respect to any shares of Common Stock issued to the
participant under the Stock Issuance Program, whether or not the participant’s
interest in those shares is vested. Accordingly, the participant shall have the
right to vote such shares and to receive any regular cash dividends paid on such
shares. 

                                        4.          The participant shall not
have any stockholders rights with respect to any shares of Common Stock subject
to a share right award. However, the Plan Administrator may provide for a
participant to receive one or more dividend equivalents with respect to such
shares, entitling the participant to all regular cash dividends payable on the
shares of Common Stock underlying the share right award, which amounts shall be
(i) subject to the same vesting requirements applicable to the shares of Common
Stock underlying the share rights award, and (ii) payable upon issuance of the
shares to which such dividend equivalents relate.

                                        5.          Should the participant cease
to remain in Service while holding one or more unvested shares of Common Stock
issued under the Stock Issuance Program or should the performance objectives not
be attained with respect to one or more such unvested shares of Common Stock,
then those shares shall be immediately surrendered to the Company for
cancellation, and the participant shall have no further stockholder rights with
respect to those shares. To the extent the surrendered shares were previously
issued to the participant for consideration paid in cash, the Company shall
repay to the participant the cash consideration paid for the surrendered shares.

                                        6.          The Plan Administrator may
in its discretion waive the surrender and cancellation of one or more unvested
shares of Common Stock which would otherwise occur upon the cessation of the
Participant’s Service or the non-attainment of the performance objectives
applicable to those shares. Such waiver shall result in the immediate vesting of
the participant’s interest in the shares of Common Stock as to which the waiver
applies.  Such waiver may be effected at any time, whether before or after the
participant’s cessation of Service or the attainment or non-attainment of the
applicable performance objectives.

                                        7.          Outstanding share right
awards under the Stock Issuance Program shall automatically terminate, and no
shares of Common Stock shall actually be issued in satisfaction of those awards,
if the Service and/or performance goals established for such awards are not
attained. The Plan Administrator, however, shall have the discretionary
authority to issue shares of Common Stock in satisfaction of one or more
outstanding share right awards as to which the designated Service and/or
performance goals are not attained. Such authority may be exercised at any time,
whether before or after the participant’s cessation of Service or the attainment
or non-attainment of the applicable performance objectives.

     II.          CORPORATE TRANSACTION/CHANGE IN CONTROL

          A.          All of the Company’s outstanding repurchase rights under
the Stock Issuance Program shall terminate automatically, and all the shares of
Common Stock subject to those terminated rights shall immediately vest in full,
in the event of any Corporate Transaction, except to the extent (i) those
repurchase rights are to be assigned to the

11

successor corporation (or parent thereof) in connection with the such Corporate
Transaction, or (ii) such accelerated vesting is precluded by other limitations
imposed in the Stock Issuance Agreement, unless the Plan Administrator
determines to waive such limitations.

          B.          Each repurchase right which is assigned in connection with
(or is otherwise to continue in effect after) a Corporate Transaction shall be
appropriately adjusted such that it shall apply and pertain to the number and
class of securities issued to the participant in consummation of the Corporate
Transaction with respect to the shares granted to participant under this Article
III.

          C.          All of the Company’s outstanding repurchase rights under
the Stock Issuance Program shall automatically terminate, and all shares of
Common Stock subject to those terminated rights shall immediately vest, in the
event of any Change in Control.

          D.          All shares of Common Stock underlying outstanding share
right awards issued under the Stock Issuance Program shall vest, and all of the
shares of Common Stock subject to such share right awards shall be issued to
participants, immediately prior to the consummation of any Corporate Transaction
or Change in Control.

     III.          SHARE ESCROW/LEGENDS

                             Unvested shares may, in the Plan Administrator’s
discretion, be held in escrow by the Company until the participant’s interest in
such shares vests or may be issued directly to the participant with restrictive
legends on the certificates evidencing those unvested shares.

ARTICLE FOUR
AUTOMATIC OPTION GRANT PROGRAM

     I.          ELIGIBILITY. 

                              The individuals eligible to receive automatic
option grants pursuant to the provisions of this Article Four shall be (i) those
individuals who, after the Effective Date, first become non-employee Board
members, whether through appointment by the Board, election by the Company’s
stockholders, or by continuing to serve as a Board member after ceasing to be
employed by the Company, and (ii) those individuals already serving as
non-employee Board members on the Effective Date.  As used herein, a
“non-employee” Board member is any Board member who is not employed by the
Company on the date in question.

     II.          TERMS AND CONDITIONS OF AUTOMATIC OPTION GRANTS

          A.                  Grants.  Option grants shall be made under this
Article Three as follows:

                                        1.          Each individual who first
becomes a non-employee Board member on or after the Effective Date shall
automatically be granted at such time a non-statutory stock option under the
terms and conditions of this Article Four, to purchase a number shares of Common
Stock equal to the product of (i) 20,000, and (ii) a fraction, the numerator of
which is the number of months (rounded to the nearest whole number) remaining
between the date such Board member first became a non-employee Board member and
the Company’s next scheduled Annual Stockholders Meeting, and the denominator of
which is 12.

                                        2.          Immediately following each
Annual Stockholders Meeting of the Company, each individual who is then serving
as a non-employee Board member (except for those individuals first elected to
serve as

12

non-employee Board members at such meeting), shall automatically be granted a
non-statutory stock option under this Article Four to acquire 15,000 shares of
Common Stock.

          B.          Exercise Price.  The exercise price per share of each
automatic option grant made under this Article Four shall be equal to one
hundred percent (100%) of the fair market value per share of Common Stock on the
automatic grant date.

          C.          Payment.  The exercise price shall be payable in one of
the alternative forms specified below:

 

                                        (i)          full payment in cash or
check made payable to the Company’s order; or

 

 

 

                                        (ii)         full payment in shares of
Common Stock held for the requisite period necessary to avoid a charge to the
Company’s reported earnings and valued at fair market value on the Exercise Date
(as such term is defined below); or

 

 

 

                                        (iii)        full payment in a
combination of shares of Common Stock held for the requisite period necessary to
avoid a charge to the Company’s reported earnings and valued at fair market
value on the Exercise Date and cash or check payable to the Company’s order; or

 

 

 

                                        (iv)         full payment through a sale
and remittance procedure pursuant to which the non-employee Board member (I)
shall provide irrevocable written instructions to a designated brokerage firm to
effect the immediate sale of the purchased shares and remit to the Company, out
of the sale proceeds available on the settlement date, sufficient funds to cover
the aggregate exercise price payable for the purchased shares and shall (II)
concurrently provide written directives to the Company to deliver the
certificates for the purchased shares directly to such brokerage firm in order
to complete the sale transaction.

                              For purposes of this subparagraph C, the Exercise
Date shall be the date on which written notice of the option exercise is
delivered to the Company.  Except to the extent the sale and remittance
procedure specified above is utilized for the exercise of the option, payment of
the option price for the purchased shares must accompany the exercise notice.

          D.          Option Term.  Each automatic grant under this Article Four
shall have a term of ten (10) years measured from the automatic grant date.

          E.          Exercisability.

                              1.          Each initial automatic grant made
pursuant to Section II.A.1 of this Article Four shall vest and become
exercisable over the period extending from the date of grant to the scheduled
date of the next Annual Stockholders Meeting following the grant.  A pro rata
portion of such automatic grant shall vest on the last day of each calendar
month following the date of grant, with the final portion vesting on the
scheduled date of such Annual Stockholders Meeting.

                              2.          Each 15,000 share automatic grant made
pursuant to Section II.A.2 of this Article Four shall vest and become
exercisable for 1/12th of the option shares upon the optionee’s completion of
each month of Board service over the twelve (12)-month period measured from the
automatic grant date.

          F.          Non-Transferability.  During the lifetime of the optionee,
each automatic option, together with the limited stock appreciation right
pertaining to such option, shall be exercisable only by the optionee, except to
the extent such option or the limited stock appreciation right is assigned or
transferred (i) by will or by the laws of descent and distribution following the
optionee’s death, or (ii) during optionee’s lifetime either (A) as a gift in
connection with the optionee’s estate plan to one or more members of optionee’s
immediate family, to a trust in which optionee and/or one or more such family
members hold more than fifty percent (50%) of the beneficial interest or to an
entity in which more than fifty percent (50%) of the voting interests are owned
by optionee and/or one or more such family members, or (B) pursuant to a
domestic relations order.  The portion of any option

13

assigned or transferred during optionee’s lifetime shall be exercisable only by
the person or persons who acquire a proprietary interest in the option pursuant
to such assignment.  The terms applicable to the assigned portion shall be the
same as those in effect for this option immediately prior to such assignment and
shall be set forth in such documents issued to the assignee as the Plan
Administrator may deem appropriate.

          G.          Cessation of Board Service.

                                        1.          Should the optionee cease to
serve as a Board member for any reason while holding one or more automatic
option grants under this Article Four, then such optionee shall have the
remainder of the ten (10) year term of each such option in which to exercise
each such option for any or all of the shares of Common Stock for which the
option is exercisable at the time of such cessation of Board service.  Each such
option shall immediately terminate and cease to be outstanding, at the time of
such cessation of Board service, with respect to any shares for which the option
is not otherwise at that time exercisable.  Upon the expiration of the ten
(10)-year option term, the automatic grant shall terminate and cease to be
outstanding in its entirety.  Upon the death of the optionee, whether before or
after cessation of Board service, any option held by optionee at the time of
optionee’s death may be exercised, for any or all of the shares of Common Stock
for which the option was exercisable at the time of cessation of Board service
by the optionee and which have not been theretofore exercised by the optionee,
by the personal representative of the optionee’s estate or by the person or
persons to whom the option is transferred pursuant to the optionee’s will or in
accordance with the laws of descent and distribution. Any such exercise must
occur during the reminder of the ten (10) year term of such option.

          H.          Stockholder Rights.  The holder of an automatic option
grant under this Article Four shall have none of the rights of a stockholder
with respect to any shares subject to such option until such individual shall
have exercised the option and paid the exercise price for the purchased shares.

     III.          CORPORATE TRANSACTIONS/CHANGES IN CONTROL

          A.          In the event of a Corporate Transaction, the
exercisability of each option outstanding under this Article Four shall
     automatically accelerate so that each such option shall, immediately prior
to the specified effective date for the Corporate      Transaction, become fully
exercisable with respect to the total number of shares of Common Stock at the
time subject to such      option and may be exercised for all or any portion of
such shares. 

          B.          Immediately after the consummation of the Corporate
Transaction, all outstanding options under this Article Four shall terminate and
cease to be outstanding, except to the extent assumed by the successor
corporation or its parent company.  If so provided by the terms of the Corporate
Transaction, the optionee shall receive a cash payment on account of any option
terminated in accordance with this paragraph, in an amount equal to the excess
(if any) of (A) the fair market value of the shares subject to the option as
valued pursuant to the Corporate Transaction over (B) the aggregate exercise
price of the option.

          C.          Each outstanding option under this Article Four which is
assumed in connection with the Corporate Transaction or is otherwise to continue
in effect shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply and pertain to the number and class of securities which
would have been issued to the option holder, in consummation of such Corporate
Transaction, had such person exercised the option immediately prior to such
Corporate Transaction.  Appropriate adjustments shall also be made to the option
price payable per share, provided the aggregate option price payable for such
securities shall remain the same.

          D.          In connection with any Change in Control, the
exercisability of each option grant outstanding at the time under this Article
Four shall automatically accelerate so that each such option shall, immediately
prior to the specified effective date for the Change in Control, become fully
exercisable with respect to the total number of shares of Common Stock at the
time subject to such option and may be exercised for all or any portion of such
shares. 

14

          E.          The automatic grant of options under this Article Four
shall in no way affect the right of the Company to adjust,      reclassify,
reorganize or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or      transfer all or any part of its
business or assets.

     IV.          STOCK APPRECIATION RIGHTS

          A.          With respect to options granted under the Automatic Option
Grant Program prior to the Effective Date of this amendment and restatement:

                                        1.          Upon the occurrence of a
Hostile Take-Over, the optionee shall have a thirty (30)-day period in which to
surrender to the Company each option held by him or her under this Article
Four.  The optionee shall in return be entitled to a cash distribution from the
Company in an amount equal to the excess of (i) the Take-Over Price of the
shares of Common Stock at the time subject to each surrendered option (whether
or not the option is then exercisable for those shares) over (ii) the aggregate
exercise price payable for such shares.  The cash distribution shall be made
within five (5) days following the date the option is surrendered to the
Company, and neither the approval of the Plan Administrator nor the consent of
the Board shall be required in connection with the option surrender and cash
distribution.  Any unsurrendered portion of the option shall continue to remain
outstanding and become exercisable in accordance with the terms of the
instrument evidencing such grant.  This limited stock appreciation right shall
in all events terminate upon the expiration or sooner termination of the option
term and may not be assigned or transferred by the optionee.

                                        2.          For purposes of Article
Four, the following definitions shall be in effect:

 

                                         -          A Hostile Take-Over shall be
deemed to occur in the event any person or related group of persons (other than
the Company or a person that directly or indirectly controls, is controlled by,
or is under common control with, the Company) directly or indirectly acquires
beneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act, as
amended) of securities possessing more than fifty percent (50%) of the total
combined voting power of the Company’s outstanding securities pursuant to a
tender or exchange offer made directly to the Company’s stockholders which the
Board does not recommend such stockholders to accept.

 

 

 

                                         -          The Take-Over Price per
share shall be deemed to be equal to the fair market value per share on the
option surrender date.

          B.          With respect to each option granted under the Automatic
Option Grant Program on and after the Effective Date, each optionee shall have
the right to surrender all or part of the option (to the extent not then
exercised) in exchange for a distribution from the Company in an amount equal to
the excess of (i) the fair market value (on the option surrender date) of the
number of shares in which the optionee is at the time vested under the
surrendered option (or surrendered portion thereof) over (ii) the aggregate
option price payable for such vested shares.  The distribution shall be made in
shares of Common Stock valued at fair market value on the option surrender date.

          C.          The shares of Common Stock subject to any option
surrendered for an appreciation distribution pursuant to this Section IV shall
not be available for subsequent option grant under the Plan.

ARTICLE FIVE
MISCELLANEOUS

     I.          AMENDMENT OF THE PLAN

15

                              The Board shall have complete and exclusive power
and authority to amend or modify the Plan in any or all respects whatsoever. 
However, no such amendment or modification shall, without the consent of the
holders, adversely affect rights and obligations with respect to options at the
time outstanding under the Plan.  In addition, certain amendments may require
stockholder approval pursuant to applicable laws or regulations.

     II.          TAX WITHHOLDING

          A.          The Company’s obligation to deliver shares or cash upon
the exercise of stock options or stock appreciation rights or upon the grant or
vesting of direct stock issuances under the Plan shall be subject to the
satisfaction of all applicable Federal, State and local income and employment
tax withholding requirements.

          B.          The Plan Administrator may, in its discretion and upon
such terms and conditions as it may deem appropriate, provide any or all holders
of outstanding options or stock issuances under the Plan (other than the
automatic option grants under Article Four) with the election to have the
Company withhold, from the shares of Common Stock otherwise issuable upon the
exercise or vesting of such awards, a whole number of such shares with an
aggregate fair market value equal to the minimum amount necessary to satisfy the
Federal, State and local income and employment tax withholdings (the “Taxes”)
incurred in connection with the acquisition or vesting of such shares.  In lieu
of such direct withholding, one or more participants may also be granted the
right to deliver whole shares of Common Stock to the Company in satisfaction of
such Taxes.  Any withheld or delivered shares shall be valued at their fair
market value on the applicable determination date for such Taxes. 

     III.          EFFECTIVE DATE AND TERM OF PLAN

          A.          The Plan, as amended and restated, shall be effective on
the Effective Date set forth in Section I.C of Article One.  Except as provided
below, each option issued and outstanding under the Plan immediately prior to
such Effective Date shall continue to be governed solely by the terms and
conditions of the agreement evidencing such grant, and nothing in this
restatement of the Plan shall be deemed to affect or otherwise modify the rights
or obligations of the holders of such options with respect to their acquisition
of shares of Common Stock thereunder.  The Plan Administrator shall, however,
have full power and authority, under such circumstances as the Plan
Administrator may deem appropriate (but in accordance with Article I of this
Section Five), to extend one or more features of this amendment and restatement
to any options outstanding on the Effective Date.  In addition, pursuant to the
Board’s approval of this Plan, the provisions of Article Four of this amendment
and restatement shall be applicable to all options previously granted pursuant
to the Plan’s Automatic Grant Program which are outstanding on the Effective
Date.

          B.          Unless sooner terminated in accordance with the other
provisions of this Plan, the Plan shall terminate upon the earlier of (i) March
6, 2016 or (ii) the date on which all shares available for issuance under the
Plan shall have been issued or cancelled pursuant to the exercise, surrender or
cash-out of the options granted hereunder.  If the date of termination is
determined under clause (i) above, then any options or stock issuances
outstanding on such date shall continue to have force and effect in accordance
with the provisions of the agreements evidencing those awards.

          C.          Options may be granted with respect to a number of shares
of Common Stock in excess of the number of shares at the time available for
issuance under the Plan, provided each granted option is not to become
exercisable, in whole or in part, at any time prior to stockholder approval of
an amendment authorizing a sufficient increase in the number of shares issuable
under the Plan.

     IV.          USE OF PROCEEDS

                                   Any cash proceeds received by the Company
from the sale of shares pursuant to options or stock issuances granted under the
Plan shall be used for general corporate purposes.

16

     V.          REGULATORY APPROVALS

          A.          The implementation of the Plan, the granting of any option
hereunder, and the issuance of stock (i) upon the exercise or surrender of any
option or (ii) under the Stock Issuance Program shall be subject to the
procurement by the Company of all approvals and permits required by regulatory
authorities having jurisdiction over the Plan, the options granted under it and
the stock issued pursuant to it.

          B.          No shares of Common Stock or other assets shall be issued
or delivered under the Plan unless and until there shall have been compliance
with all applicable requirements of Federal and state securities laws, including
(to the extent required) the filing and effectiveness of the Form S-8
registration statement for the shares of Common Stock issuable under the Plan,
and all applicable listing requirements of any stock exchange (or the Nasdaq
National Market, if applicable) on which Common Stock is then trading.

     VI.          NO EMPLOYMENT/SERVICE RIGHTS

                                   Neither the action of the Company in
establishing or restating the Plan, nor any action taken by the Plan
Administrator hereunder, nor any provision of the Plan shall be construed so as
to grant any individual the right to remain in the employ or service of the
Company (or any parent or subsidiary corporation) for any period of specific
duration, and the Company (or any parent or subsidiary corporation retaining the
services of such individual) may terminate such individual’s employment or
service at any time and for any reason, with or without cause.

     VII.          MISCELLANEOUS PROVISIONS

          A.          Except to the extent otherwise expressly provided in the
Plan, the right to acquire Common Stock or other assets under the Plan may not
be assigned, encumbered or otherwise transferred by any participant.

          B.          The provisions of the Plan relating to the exercise of
options and the issuance and/or vesting of shares shall be governed by the laws
of the State of Alabama without resort to that state’s conflict-of-laws
provisions, as such laws are applied to contracts entered into and performed in
such State.

17