Exhibit 10.5

OREXIGEN THERAPEUTICS, INC.

AMENDED AND RESTATED 2007 EQUITY INCENTIVE AWARD PLAN

ARTICLE 1

PURPOSE

The purpose of the Orexigen Therapeutics, Inc. 2007 Equity Incentive Award Plan,
as amended and restated herein (the “Plan”) is to promote the success and
enhance the value of Orexigen Therapeutics, Inc. (the “Company”) by linking the
personal interests of the members of the Board, Employees, and Consultants to
those of Company stockholders and by providing such individuals with an
incentive for outstanding performance to generate superior returns to Company
stockholders. The Plan is further intended to provide flexibility to the Company
in its ability to motivate, attract, and retain the services of members of the
Board, Employees, and Consultants upon whose judgment, interest, and special
effort the successful conduct of the Company’s operation is largely dependent.
This Plan amends and restates in its entirety the Orexigen, Inc. 2007 Equity
Incentive Award Plan adopted by the Board on April 24, 2007 and shall become
effective upon approval of the Company’s stockholders.

ARTICLE 2

DEFINITIONS AND CONSTRUCTION

Wherever the following terms are used in the Plan they shall have the meanings
specified below, unless the context clearly indicates otherwise. The singular
pronoun shall include the plural where the context so indicates.

2.1 “Award” means an Option, a Restricted Stock award, a Stock Appreciation
Right award, a Performance Share award, a Performance Stock Unit award, a
Dividend Equivalents award, a Stock Payment award, a Deferred Stock award, a
Restricted Stock Unit award, an Other Stock-Based Award, a Performance Bonus
Award, or a Performance-Based Award granted to a Participant pursuant to the
Plan.

2.2 “Award Agreement” means any written agreement, contract, or other instrument
or document evidencing an Award, including through an electronic medium.

2.3 “Board” means the Board of Directors of the Company.

2.4 “Cause” means the occurrence of any of the following events:

(a) a Participant’s conviction of or plea of guilty or nolo contendere to any
felony or a crime of moral turpitude;

(b) a Participant’s continued failure or refusal to follow lawful and reasonable
instructions of such Participant’s supervisor or the Board or lawful and
reasonable policies and regulations of the Company or its affiliates;

(c) a Participant’s continued failure to faithfully and diligently perform the
assigned duties of his or her employment with the Company or its affiliates;

(d) unprofessional, unethical, immoral or fraudulent conduct by a Participant;

(e) conduct by a Participant that materially discredits the Company or any
affiliate or is materially detrimental to the reputation, character and standing
of the Company or any affiliate; or

 

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(f) a Participant’s material breach of his or her Employment Agreement,
Proprietary Information and Inventions Agreement, the Company’s Code of Conduct
and/or Insider Trading Policy, each as applicable, or any other contractual,
fiduciary, or statutory duty owed to the Company.

An event described in Section 2.4(b) through (f) shall not be treated as “Cause”
until after a Participant has been given written notice of such event, failure,
conduct or breach and such Participant fails to cure such event, failure,
conduct or breach within 30 days from such written notice; provided, however,
that such 30-day cure period shall not be required if the event, failure,
conduct or breach is incapable of being cured. Failure of the Company to meet
financial or performance targets or goals shall not be deemed to be a breach
pursuant to Section 2.4 (b) or (c).

2.5 “Change in Control” means and includes each of the following:

(a) A transaction or series of transactions (other than an offering of Stock to
the general public through a registration statement filed with the Securities
and Exchange Commission) whereby any “person” or related “group” of “persons”
(as such terms are used in Sections 13(d) and 14(d)(2) of the Exchange Act)
(other than the Company, any of its subsidiaries, an employee benefit plan
maintained by the Company or any of its subsidiaries or a “person” that, prior
to such transaction, 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 under the Exchange Act)
of securities of the Company possessing more than 50% of the total combined
voting power of the Company’s securities outstanding immediately after such
acquisition; or

(b) During any period of two consecutive years, individuals who, at the
beginning of such period, constitute the Board together with any new director(s)
(other than a director designated by a person who shall have entered into an
agreement with the Company to effect a transaction described in Section 2.4(a)
or Section 2.4(c)) whose election by the Board or nomination for election by the
Company’s stockholders was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the beginning of the
two year period or whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority thereof;

(c) The consummation by the Company (whether directly involving the Company or
indirectly involving the Company through one or more intermediaries) of (x) a
merger, consolidation, reorganization, or business combination or (y) a sale or
other disposition of all or substantially all of the Company’s assets or (z) the
acquisition of assets or stock of another entity, in each case other than a
transaction:

(i) Which results in the Company’s voting securities outstanding immediately
before the transaction continuing to represent (either by remaining outstanding
or by being converted into voting securities of the Company or the person that,
as a result of the transaction, controls, directly or indirectly, the Company or
owns, directly or indirectly, all or substantially all of the Company’s assets
or otherwise succeeds to the business of the Company (the Company or such
person, the “Successor Entity”)) directly or indirectly, at least a majority of
the combined voting power of the Successor Entity’s outstanding voting
securities immediately after the transaction, and

(ii) After which no person or group beneficially owns voting securities
representing 50% or more of the combined voting power of the Successor Entity;
provided, however, that no person or group shall be treated for purposes of this
Section 2.4(c)(ii) as beneficially owning 50% or more of combined voting power
of the Successor Entity solely as a result of the voting power held in the
Company prior to the consummation of the transaction; or

(d) The Company’s stockholders approve a liquidation or dissolution of the
Company.

The Committee shall have full and final authority, which shall be exercised in
its discretion, to determine conclusively whether a Change in Control of the
Company has occurred pursuant to the above definition, and the date of the
occurrence of such Change in Control and any incidental matters relating
thereto.

 

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2.6 “Code” means the Internal Revenue Code of 1986, as amended.

2.7 “Committee” means the committee of the Board described in Article 13.

2.8 “Consultant” means any consultant or adviser if:

(a) the consultant or adviser renders bona fide services to the Company or any
Parent or Subsidiary;

(b) the services rendered by the consultant or adviser are not in connection
with the offer or sale of securities in a capital-raising transaction and do not
directly or indirectly promote or maintain a market for the Company’s
securities; and

(c) the consultant or adviser is a natural person.

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

2.10 “Covered Employee” means an Employee who is, or could be, a “covered
employee” within the meaning of Section 162(m) of the Code.

2.11 “Deferred Stock” means a right to receive a specified number of shares of
Stock during specified time periods pursuant to Section 8.5.

2.12 “Director” means a member of the Board, or, as applicable, a member of the
board of directors of a Subsidiary.

2.13 “Disability” means “disability,” as such term is defined in
Section 22(e)(3) of the Code.

2.14 “Dividend Equivalents” means a right granted to a Participant pursuant to
Section 8.3 to receive the equivalent value (in cash or Stock) of dividends paid
on Stock.

2.15 “Eligible Individual” means any person who is an Employee, a Consultant or
a member of the Board, as determined by the Committee.

2.16 “Employee” means any officer or other employee (as defined in accordance
with Section 3401(c) of the Code) of the Company or of any Parent or Subsidiary.

2.17 “Equity Restructuring” shall mean a non-reciprocal transaction between the
Company and its stockholders, such as a stock dividend, stock split, spin-off,
rights offering or recapitalization through a large, nonrecurring cash dividend,
that affects the number or kind shares of Stock (or other securities of the
Company) or the share price of Stock (or other securities) and causes a change
in the per share value of the Stock underlying outstanding Awards.

2.18 “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

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2.19 “Fair Market Value” means, as of any given date,

(a) if Stock is traded on an exchange, the closing price (or the closing bid, if
no sales were reported) of a share of Stock as reported in the Wall Street
Journal (or such other source the Committee deems reliable) for such date, or if
no bids or sales were reported for such date, then the closing price (or the
closing bid, if no sales were reported) on the trading date immediately prior to
such date during which a bid or sale occurred;

(b) if Stock is not traded on an exchange but is quoted on a quotation system,
the mean between the closing representative bid and asked prices for the Stock
on such date, or if no closing representative bid and asked prices were reported
for such date, the date immediately prior to such date during which closing
representative bid and asked prices were quoted for the Stock, in each case, as
reported in the Wall Street Journal or such other source the Committee deems
reliable; or

(c) if Stock is not publicly traded, the fair market value established by the
Committee acting in good faith.

2.20 “Incentive Stock Option” means an Option that is intended to meet the
requirements of Section 422 of the Code or any successor provision thereto.

2.21 “Inducement Award” means an Award granted pursuant to Section 3.4 of the
Plan.

2.22 “Independent Director” means a Director of the Company who is not an
Employee of the Company or of any Parent or Subsidiary.

2.23 “Non-Employee Director” means a Director of the Company who qualifies as a
“Non-Employee Director” as defined in Rule 16b-3(b)(3) of the Exchange Act, or
any successor rule.

2.24 “Non-Qualified Stock Option” means an Option that is not intended to be an
Incentive Stock Option.

2.25 “Option” means a right granted to a Participant pursuant to Article 5 of
the Plan to purchase a specified number of shares of Stock at a specified price
during specified time periods. An Option may be either an Incentive Stock Option
or a Non-Qualified Stock Option.

2.26 “Other Stock-Based Award” means an Award granted or denominated in Stock or
units of Stock pursuant to Section 8.7 of the Plan.

2.27 “Parent” means any “parent corporation,” as defined in Section 424(e) of
the Code and any applicable regulations promulgated thereunder, of the Company
or any other entity which beneficially owns, directly or indirectly, a majority
of the outstanding voting stock or voting power of the Company.

2.28 “Participant” means any Eligible Individual who, as a member of the Board,
Consultant or Employee, has been granted an Award pursuant to the Plan.

2.29 “Performance-Based Award” means an Award granted to selected Covered
Employees pursuant to Articles 6 and 8, but which is subject to the terms and
conditions set forth in Article 9. All Performance-Based Awards are intended to
qualify as Qualified Performance-Based Compensation.

2.30 “Performance Bonus Award” has the meaning set forth in Section 8.8.

2.31 “Performance Criteria” means the criteria that the Committee selects for
purposes of establishing the Performance Goal or Performance Goals for a
Participant for a Performance Period. The Performance Criteria that will be used
to establish Performance Goals shall be based on the attainment of specified
levels of one or any combination of the following:

 

  •   sales (including same store or comparable sales);

 

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  •   net sales;

 

  •   return on sales;

 

  •   revenue, net revenue, product revenue or system-wide revenue (including
growth of such revenue measures);

 

  •   operating income (before or after taxes);

 

  •   pre- or after-tax income or loss (before or after allocation of corporate
overhead and bonus);

 

  •   earnings or loss per share;

 

  •   net income or loss (before or after taxes);

 

  •   return on equity;

 

  •   total stockholder return;

 

  •   return on assets or net assets;

 

  •   appreciation in and/or maintenance of the price of the Shares or any other
publicly-traded securities of the Company;

 

  •   market share;

 

  •   gross profits;

 

  •   gross or net profit margin;

 

  •   gross profit growth;

 

  •   net operating profit (before or after taxes);

 

  •   operating earnings;

 

  •   earnings or losses or net earnings or losses (including earnings or losses
before taxes, before interest and taxes, or before interest, taxes, depreciation
and amortization);

 

  •   economic value-added models or equivalent metrics;

 

  •   comparisons with various stock market indices;

 

  •   reductions in costs;

 

  •   cash flow (including operating cash flow and free cash flow) or cash flow
per share (before or after dividends);

 

  •   return on capital (including return on total capital or return on invested
capital);

 

  •   cash flow return on investment;

 

  •   cash flow return on capital;

 

  •   improvement in or attainment of expense levels or working capital levels,
including cash, inventory and accounts receivable;

 

  •   general and administrative expense savings;

 

  •   inventory control;

 

  •   operating margin;

 

  •   gross margin;

 

  •   year-end cash;

 

  •   cash margin;

 

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  •   debt reduction;

 

  •   stockholders equity;

 

  •   operating efficiencies;

 

  •   cost reductions or savings;

 

  •   customer satisfaction;

 

  •   customer growth;

 

  •   employee satisfaction;

 

  •   productivity or productivity ratios;

 

  •   regulatory achievements (including submitting or filing applications or
other documents with regulatory authorities or receiving approval of any such
applications or other documents and passing pre-approval inspections (whether of
the Company or the Company’s third-party manufacturer) and validation of
manufacturing processes (whether the Company’s or the Company’s third-party
manufacturer’s));

 

  •   clinical achievements (including initiating clinical studies; initiating
enrollment, completing enrollment or enrolling particular numbers of subjects in
clinical studies; completing phases of a clinical study (including the treatment
phase); or announcing or presenting preliminary or final data from clinical
studies; in each case, whether on particular timelines or generally);

 

  •   strategic partnerships or transactions (including in-licensing and
out-licensing of intellectual property;

 

  •   establishing relationships with commercial entities with respect to the
marketing, distribution and sale of the Company’s products (including with group
purchasing organizations, distributors and other vendors);

 

  •   supply chain achievements (including establishing relationships with
manufacturers or suppliers of component materials and manufacturers of the
Company’s products);

 

  •   co-development, co-marketing, profit sharing, joint venture or other
similar arrangements);

 

  •   financial ratios, including those measuring liquidity, activity,
profitability or leverage;

 

  •   cost of capital or assets under management;

 

  •   financing and other capital raising transactions (including sales of the
Company’s equity or debt securities);

 

  •   debt level year-end cash position; book value;

 

  •   factoring transactions;

 

  •   competitive market metrics;

 

  •   timely completion of new product roll-outs;

 

  •   timely launch of new facilities (such as new store openings, gross or
net);

 

  •   sales or licenses of the Company’s assets, including its intellectual
property, whether in a particular jurisdiction or territory or globally (or
through partnering transactions);

 

  •   royalty rates or royalty income;

 

  •   reported prescriptions over a period;

 

  •   implementation, completion or attainment of measurable objectives with
respect to research, development, manufacturing, commercialization, products or
projects, production volume levels, acquisitions and divestitures, succession
and hiring projects, reorganization and other corporate transactions, expansions
of specific business operations and meeting divisional or project budgets;

 

  •  

and recruiting and maintaining personnel, any of which may be measured either in
absolute terms or as compared to any incremental increase or as compared to
results of other companies or a peer group. Any

 

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Performance Goals that are financial metrics, may be determined in accordance
with U.S. Generally Accepted Accounting Principles (“GAAP”), in accordance with
accounting principles established by the International Accounting Standards
Board (“IASB Principles”), or may be adjusted when established to include or
exclude any items otherwise includable or excludable under GAAP or under IASB
Principles. To the extent an Award is intended to be Qualified Performance-Based
Compensation, the Committee shall, within the time prescribed by Section 162(m)
of the Code, define in an objective fashion the manner of calculating the
Performance Criteria it selects to use for such Performance Period for such
Participant.

2.32 “Performance Goals” means, for a Performance Period, the goals established
in writing by the Committee for the Performance Period based upon the
Performance Criteria. Depending on the Performance Criteria used to establish
such Performance Goals, the Performance Goals may be expressed in terms of
overall Company performance or the performance of a division, business unit,
Subsidiary, or an individual. To the extent an Award is intended to be Qualified
Performance-Based Compensation, the Committee, in its discretion, may, within
the time prescribed by Section 162(m) of the Code, provide for exclusion of the
impact of an event or occurrence which the Committee determines should
appropriately be excluded, including without limitation (a) in the event of, or
in anticipation of, any unusual or extraordinary corporate item, transaction,
event, or development, or (b) in recognition of, or in anticipation of, any
other unusual or nonrecurring events affecting the Company, or the financial
statements of the Company, or in response to, or in anticipation of, changes in
applicable laws, regulations, accounting principles, or business conditions.

2.33 “Performance Period” means the one or more periods of time, which may be of
varying and overlapping durations, as the Committee may select, over which the
attainment of one or more Performance Goals will be measured for the purpose of
determining a Participant’s right to, and the payment of, a Performance-Based
Award.

2.34 “Performance Share” means a right granted to a Participant pursuant to
Section 8.1, to receive Stock, the payment of which is contingent upon achieving
certain Performance Goals or other performance-based targets established by the
Committee.

2.35 “Performance Stock Unit” means a right granted to a Participant pursuant to
Section 8.2, to receive Stock, cash, or a combination of Stock and cash, the
payment of which is contingent upon achieving certain Performance Goals or other
performance-based targets established by the Committee.

2.36 “Plan” means this Orexigen Therapeutics, Inc. Amended and Restated 2007
Incentive Award Plan, as it may be amended from time to time.

2.37 “Qualified Performance-Based Compensation” means any compensation that is
intended to qualify as “qualified performance-based compensation” as described
in Section 162(m)(4)(C) of the Code.

2.38 “Restatement Date” has the meaning set forth in Section 14.1.

2.39 “Restricted Stock” means Stock awarded to a Participant pursuant to Article
6 that is subject to certain restrictions and may be subject to risk of
forfeiture.

2.40 “Restricted Stock Unit” means an Award granted pursuant to Section 8.6.

2.41 “Securities Act” shall mean the Securities Act of 1933, as amended.

2.42 “Shares” shall mean shares of Stock of the Company.

 

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2.43 “Stock” means the common stock of the Company, par value $0.001 per share,
and such other securities of the Company that may be substituted for Stock
pursuant to Article 12.

2.44 “Stock Appreciation Right” or “SAR” means a right granted pursuant to
Article 7 to receive a payment equal to the excess of the Fair Market Value of a
specified number of shares of Stock on the date the SAR is exercised over the
Fair Market Value on the date the SAR was granted as set forth in the applicable
Award Agreement.

2.45 “Stock Payment” means (a) a payment in the form of shares of Stock, or
(b) an option or other right to purchase shares of Stock, as part of any bonus,
deferred compensation or other arrangement, made in lieu of all or any portion
of the compensation, granted pursuant to Section 8.4.

2.46 “Subsidiary” means any “subsidiary corporation” as defined in
Section 424(f) of the Code and any applicable regulations promulgated thereunder
or any other entity of which a majority of the outstanding voting stock or
voting power is beneficially owned directly or indirectly by the Company.

2.47 “Substitute Awards” shall mean Awards granted or Shares issued by the
Company in assumption of, or in substitution or exchange for, awards previously
granted, or the right or obligation to make future awards, in each case by a
company acquired by the Company or any Subsidiary or with which the Company or
any Subsidiary combines.

ARTICLE 3

SHARES SUBJECT TO THE PLAN

3.1 Number of Shares.

(a) As of the Restatement Date and subject to adjustment as provided in Article
12, a total of one hundred and three million (103,000,000) Shares shall be
authorized for Awards granted under the Plan, plus the number of Shares reserved
for Inducement Awards under Section 3.4 of the Plan, less one (1) Share for
every one (1) Award granted under the Plan after March 31, 2016 and prior to the
Restatement Date. The maximum number of Shares that may be delivered upon
exercise of Incentive Stock Options shall not exceed one hundred and three
million (103,000,000).

(b) If any Shares subject to an Award are forfeited, an Award expires or
otherwise terminates without issuance of Shares, or an Award is settled for cash
(in whole or in part) or otherwise does not result in the issuance of all or a
portion of the Shares subject to such Award (including on payment in Shares on
exercise of a Stock Appreciation Right), such Shares shall, to the extent of
such forfeiture, expiration, termination, cash settlement or non-issuance, be
added to the Shares available for grant under the Plan on a one-for-one basis.

(c) In the event that (i) any Option or other Award granted hereunder is
exercised through the tendering of Shares (either actually or by attestation) or
by the withholding of Shares by the Company, or (ii) withholding tax liabilities
arising from such Option or other Award are satisfied by the tendering of Shares
(either actually or by attestation) or by the withholding of Shares by the
Company, then in each such case the Shares so tendered or withheld shall be
added to the Shares available for grant under the Plan on a one-for-one basis.

(d) Substitute Awards shall not reduce the Shares authorized for grant under the
Plan or the applicable limitations on grants to a Participant under Section 3.3,
nor shall Shares subject to a Substitute Award be added to the Shares available
for Awards under the Plan as provided above. Additionally, in the event that a
company acquired by the Company or any Subsidiary or with which the Company or
any Subsidiary combines has shares available under a pre-existing plan approved
by stockholders and not adopted in contemplation of such

 

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acquisition or combination, the shares available for grant pursuant to the terms
of such pre-existing plan (as adjusted, to the extent appropriate, using the
exchange ratio or other adjustment or valuation ratio or formula used in such
acquisition or combination to determine the consideration payable to the holders
of common stock of the entities party to such acquisition or combination) may be
used for Awards under the Plan and shall not reduce the Shares authorized for
grant under the Plan (and Shares subject to such Awards shall not be added to
the Shares available for Awards under the Plan as provided above); provided that
Awards using such available shares shall not be made after the date awards or
grants could have been made under the terms of the pre-existing plan, absent the
acquisition or combination, and shall only be made to individuals who were not
employees or directors prior to such acquisition or combination.

3.2 Stock Distributed. Any shares of Stock distributed pursuant to an Award may
consist, in whole or in part, of authorized and unissued Stock, treasury Stock
or Stock purchased on the open market.

3.3 Limitation on Number of Shares Subject to Awards. Subject to adjustment as
provided in Article 12, no Participant may be granted (i) Options or Stock
Appreciation Rights during any 12-month period with respect to more than
15,000,000 Shares and (ii) any Awards (other than Options or Stock Appreciation
Rights) during any calendar year that are intended to constitute Qualified
Performance-Based Compensation and are denominated in Shares under which more
than 15,000,000 Shares may be earned within any applicable vesting period or
Performance Period. During any calendar year no Participant may be granted
Awards of Qualified Performance-Based Compensation that are denominated in cash
under which more than $15,000,000 may be earned within any applicable vesting
period or Performance Period. Each of the limitations in this section shall be
multiplied by two (2) with respect to Awards granted to a Participant during the
first calendar year in which the Participant commences employment with the
Company and its Subsidiaries. If an Award is cancelled, the cancelled Award
shall continue to be counted toward the applicable limitation in this Section.

Notwithstanding any other provision of the Plan to the contrary, the aggregate
grant date fair value (computed as of the date of grant in accordance with
applicable financial accounting rules) of all Awards granted to any Independent
Director during any single calendar year, taken together with any cash fees paid
to such Independent Director during such calendar year, shall not exceed
$750,000.

3.4 Inducement Shares. This Section 3.4 shall apply with respect to the two
million five hundred thousand (2,500,000) Shares reserved under this Plan by
action of the Board (or a committee thereof) to be used exclusively for the
grant of Inducement Awards. The persons who are eligible for Inducement Awards
shall consist of Eligible Individuals who are Employees and whose potential
contribution, in the judgment of the Committee, will benefit the future success
of the Company and/or an affiliated corporation. Notwithstanding anything to the
contrary in Article 4, an Inducement Award may be granted only to an Eligible
Individual not previously an Employee or an Independent Director of the Company,
or following a bona fide period of non-employment, as an inducement material to
the individual’s entering into employment with the Company within the meaning of
Rule 5635(c)(4) of the NASDAQ Listing Rules. In addition, notwithstanding any
other provision of the Plan to the contrary, all such Inducement Awards must be
granted either by a majority of the Company’s Independent Directors or a
committee comprised of a majority of Independent Directors.

ARTICLE 4

ELIGIBILITY AND PARTICIPATION

4.1 Eligibility. Each Eligible Individual shall be eligible to be granted one or
more Awards pursuant to the Plan, each such Award not to exceed a term of ten
(10) years; provided that Inducement Awards may be granted only to Eligible
Individuals as provided in Section 3.4.

4.2 Participation. Subject to the provisions of the Plan, the Committee may,
from time to time, select from among all Eligible Individuals those to whom
Awards shall be granted and shall determine the nature and amount of each Award.
No Eligible Individual shall have any right to be granted an Award pursuant to
the Plan.

 

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4.3 Foreign Participants. Notwithstanding any provision of the Plan to the
contrary, in order to comply with the laws in other countries in which the
Company and its Subsidiaries operate or have Eligible Individuals, the
Committee, in its sole discretion, shall have the power and authority to:
(i) determine which Subsidiaries shall be covered by the Plan; (ii) determine
which Eligible Individuals outside the United States are eligible to participate
in the Plan; (iii) modify the terms and conditions of any Award granted to
Eligible Individuals outside the United States to comply with applicable foreign
laws; (iv) establish subplans and modify exercise procedures and other terms and
procedures, to the extent such actions may be necessary or advisable (any such
subplans and/or modifications shall be attached to this Plan as appendices);
provided, however, that no such subplans and/or modifications shall increase the
share limitations contained in Sections 3.1 and 3.3 of the Plan; and (v) take
any action, before or after an Award is made, that it deems advisable to obtain
approval or comply with any necessary local governmental regulatory exemptions
or approvals. Notwithstanding the foregoing, the Committee may not take any
actions hereunder, and no Awards shall be granted, that would violate the
Exchange Act, the Code, any securities law or governing statute or any other
applicable law.

ARTICLE 5

STOCK OPTIONS

5.1 General. The Committee is authorized to grant Options to Eligible
Individuals on the following terms and conditions:

(a) Exercise Price. The exercise price per share of Stock subject to an Option
shall be determined by the Committee and set forth in the Award Agreement;
provided that the exercise price for any Option shall not be less than 100% of
the Fair Market Value of a share of Stock on the date of grant.

(b) Time and Conditions of Exercise. The Committee shall determine the time or
times at which an Option may be exercised in whole or in part. The Committee
shall also determine the performance or other conditions, if any, that must be
satisfied before all or part of an Option may be exercised.

(c) Payment. The Committee shall determine the methods by which the exercise
price of an Option may be paid, the form of payment, including, without
limitation: (i) cash, (ii) shares of Stock held for such period of time as may
be required by the Committee in order to avoid adverse accounting consequences
and having a Fair Market Value on the date of delivery equal to the aggregate
exercise price of the Option or exercised portion thereof, or (iii) other
property acceptable to the Committee (including through the delivery of a notice
that the Participant has placed a market sell order with a broker with respect
to shares of Stock then issuable upon exercise of the Option, and that the
broker has been directed to pay a sufficient portion of the net proceeds of the
sale to the Company in satisfaction of the Option exercise price; provided that
payment of such proceeds is then made to the Company upon settlement of such
sale). The Committee shall also determine the methods by which shares of Stock
shall be delivered or deemed to be delivered to Participants. Notwithstanding
any other provision of the Plan to the contrary, no Participant who is a member
of the Board or an “executive officer” of the Company within the meaning of
Section 13(k) of the Exchange Act shall be permitted to pay the exercise price
of an Option in any method which would violate Section 13(k) of the Exchange
Act.

(d) Evidence of Grant. All Options shall be evidenced by an Award Agreement
between the Company and the Participant. The Award Agreement shall include such
additional provisions as may be specified by the Committee.

5.2 Incentive Stock Options. The terms of any Incentive Stock Options granted
pursuant to the Plan must comply with the conditions and limitations contained
in Section 14.2 and this Section 5.2.

(a) Eligibility. Incentive Stock Options may be granted only to Employees.

(b) Exercise Price. The exercise price per share of Stock shall be set by the
Committee; provided that subject to Section 5.2(e), the exercise price for any
Incentive Stock Option shall not be less than 100% of the Fair Market Value on
the date of grant.

 

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(c) Expiration. Subject to Section 5.2(e), an Incentive Stock Option may not be
exercised to any extent by anyone after the first to occur of the following
events: the tenth anniversary of the date it is granted, unless an earlier time
is set in the Award Agreement; the later of (x) three months after the
Participant’s termination of employment as an Employee or, if applicable,
(y) one year after the date of the Participant’s termination of employment or
service on account of Disability or death. Upon the Participant’s Disability or
death, any Incentive Stock Options exercisable at the Participant’s Disability
or death may be exercised by the Participant’s legal representative or
representatives, by the person or persons entitled to do so pursuant to the
Participant’s last will and testament, or, if the Participant fails to make
testamentary disposition of such Incentive Stock Option or dies intestate, by
the person or persons entitled to receive the Incentive Stock Option pursuant to
the applicable laws of descent and distribution.

(d) Individual Dollar Limitation. The aggregate Fair Market Value (determined as
of the time the Option is granted) of all shares of Stock with respect to which
Incentive Stock Options are first exercisable by a Participant in any calendar
year may not exceed $100,000 or such other limitation as imposed by
Section 422(d) of the Code, or any successor provision. To the extent that
Incentive Stock Options are first exercisable by a Participant in excess of such
limitation, the excess shall be considered Non-Qualified Stock Options.

(e) Ten Percent Owners. An Incentive Stock Option shall be granted to any
individual who, at the date of grant, owns stock possessing more than ten
percent of the total combined voting power of all classes of Stock of the
Company only if such Option is granted at a price that is not less than 110% of
Fair Market Value on the date of grant and the Option is exercisable for no more
than five years from the date of grant.

(f) Notice of Disposition. The Participant shall give the Company prompt notice
of any disposition of shares of Stock acquired by exercise of an Incentive Stock
Option within (i) two years from the date of grant of such Incentive Stock
Option or (ii) one year after the transfer of such shares of Stock to the
Participant.

(g) Right to Exercise. During a Participant’s lifetime, an Incentive Stock
Option may be exercised only by the Participant.

(h) Failure to Meet Requirements. Any Option (or portion thereof) purported to
be an Incentive Stock Option, which, for any reason, fails to meet the
requirements of Section 422 of the Code shall be considered a Non-Qualified
Stock Option.

5.3 Substitution of Stock Appreciation Rights. The Committee may provide in the
Award Agreement evidencing the grant of an Option that the Committee, in its
sole discretion, shall have to right to substitute a Stock Appreciation Right
for such Option at any time prior to or upon exercise of such Option, subject to
the provisions of Sections 7.2 and 13.6; provided that such Stock Appreciation
Right shall be exercisable with respect to the same number of shares of Stock
for which such substituted Option would have been exercisable.

ARTICLE 6

RESTRICTED STOCK AWARDS

6.1 Grant of Restricted Stock. The Committee is authorized to make Awards of
Restricted Stock to any Eligible Individual selected by the Committee in such
amounts and subject to such terms and conditions as determined by the Committee.
All Awards of Restricted Stock shall be evidenced by an Award Agreement.

6.2 Issuance and Restrictions. Restricted Stock shall be subject to such
restrictions on transferability and other restrictions as the Committee may
impose (including, without limitation, limitations on the right to vote
Restricted Stock or the right to receive dividends on the Restricted Stock).
These restrictions may lapse separately or in combination at such times,
pursuant to such circumstances, in such installments, or otherwise, as the
Committee determines at the time of the grant of the Award or thereafter.

 

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6.3 Forfeiture. Except as otherwise determined by the Committee at the time of
the grant of the Award or thereafter, upon termination of employment or service
during the applicable restriction period, Restricted Stock that is at that time
subject to restrictions shall be forfeited; provided, however, that the
Committee may (a) provide in any Restricted Stock Award Agreement that
restrictions or forfeiture conditions relating to Restricted Stock will be
waived in whole or in part in the event of terminations resulting from specified
causes, and (b) in other cases waive in whole or in part restrictions or
forfeiture conditions relating to Restricted Stock.

6.4 Certificates for Restricted Stock. Restricted Stock granted pursuant to the
Plan may be evidenced in such manner as the Committee shall determine. If
certificates representing shares of Restricted Stock are registered in the name
of the Participant, certificates must bear an appropriate legend referring to
the terms, conditions, and restrictions applicable to such Restricted Stock, and
the Company may, at its discretion, retain physical possession of the
certificate until such time as all applicable restrictions lapse.

ARTICLE 7

STOCK APPRECIATION RIGHTS

7.1 Grant of Stock Appreciation Rights. A Stock Appreciation Right may be
granted to any Eligible Individual selected by the Committee. A Stock
Appreciation Right shall be subject to such terms and conditions not
inconsistent with the Plan as the Committee shall impose and shall be evidenced
by an Award Agreement.

7.2 Stock Appreciation Rights.

(a) A Stock Appreciation Right (“SAR”) shall have a term set by the Committee.
An SAR shall be exercisable in such installments as the Committee may determine.
An SAR shall cover such number of shares of Stock as the Committee may
determine. The exercise price per share of Stock subject to each SAR shall be
set by the Committee; provided, however, that the Committee in its sole and
absolute discretion may provide that the SAR may be exercised subsequent to a
termination of employment or service, as applicable, or following a Change in
Control of the Company, or because of the Participant’s retirement, death or
Disability, or otherwise.

(b) An SAR shall entitle the Participant (or other person entitled to exercise
the SAR pursuant to the Plan) to exercise all or a specified portion of the SAR
(to the extent then exercisable pursuant to its terms) and to receive from the
Company an amount equal to the product of (i) the excess of (A) the Fair Market
Value of a share of Stock on the date the SAR is exercised over (B) the Fair
Market Value of a share of Stock on the date the SAR was granted and (ii) the
number of shares of Stock with respect to which the SAR shall have been
exercised, subject to any limitations the Committee may impose.

7.3 Payment and Limitations on Exercise.

(a) Subject to Section 7.3(b), payment of the amounts determined under
Section 7.2(b) above shall be in cash, in Stock (based on its Fair Market Value
as of the date the SAR is exercised) or a combination of both, as determined by
the Committee.

(b) To the extent any payment under Section 7.2(b) is effected in Stock it shall
be made subject to satisfaction of all provisions of Article 5 above pertaining
to Options.

ARTICLE 8

OTHER TYPES OF AWARDS

8.1 Performance Share Awards. Any Eligible Individual selected by the Committee
may be granted one or more Performance Share awards which shall be denominated
in a number of shares of Stock and which may be

 

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linked to any one or more of the Performance Criteria or other specific
performance criteria determined appropriate by the Committee, in each case on a
specified date or dates or over any period or periods determined by the
Committee. In making such determinations, the Committee shall consider (among
such other factors as it deems relevant in light of the specific type of award)
the contributions, responsibilities and other compensation of the particular
Participant.

8.2 Performance Stock Units. Any Eligible Individual selected by the Committee
may be granted one or more Performance Stock Unit awards which shall be
denominated in units of value including dollar value of shares of Stock and
which may be linked to any one or more of the Performance Criteria or other
specific performance criteria determined appropriate by the Committee, in each
case on a specified date or dates or over any period or periods determined by
the Committee. In making such determinations, the Committee shall consider
(among such other factors as it deems relevant in light of the specific type of
award) the contributions, responsibilities and other compensation of the
particular Participant.

8.3 Dividend Equivalents.

(a) Any Eligible Individual selected by the Committee may be granted Dividend
Equivalents based on the dividends declared on the shares of Stock that are
subject to any Award, to be credited as of dividend payment dates, during the
period between the date the Award is granted and the date the Award is
exercised, vests or expires, as determined by the Committee. Such Dividend
Equivalents shall be converted to cash or additional shares of Stock by such
formula and at such time and subject to such limitations as may be determined by
the Committee. Notwithstanding the provisions of this Section, Dividend
Equivalents, cash dividends, stock and any other property (other than cash)
distributed as a dividend or otherwise with respect to any Award that vests
based on achievement of performance goals shall either (i) not be paid or
credited or (ii) be accumulated, shall be subject to restrictions and risk of
forfeiture to the same extent as the underlying Award and shall be paid at the
time such restrictions and risk of forfeiture lapse.

(b) Dividend Equivalents shall not be granted with respect to Options or SARs.

8.4 Stock Payments. Any Eligible Individual selected by the Committee may
receive Stock Payments in the manner determined from time to time by the
Committee. The number of shares of Stock or the number of options or other
rights to purchase shares of Stock subject to a Stock Payment shall be
determined by the Committee and may be based upon the Performance Criteria or
other specific performance criteria determined appropriate by the Committee,
determined on the date such Stock Payment is made or on any date thereafter.

8.5 Deferred Stock. Any Eligible Individual selected by the Committee may be
granted an award of Deferred Stock in the manner determined from time to time by
the Committee in accordance with Section 409A of the Code. The number of shares
of Deferred Stock shall be determined by the Committee and may be linked to the
Performance Criteria or other specific performance criteria determined to be
appropriate by the Committee, in each case on a specified date or dates or over
any period or periods determined by the Committee. Stock underlying a Deferred
Stock award will not be issued until the Deferred Stock award has vested,
pursuant to a vesting schedule or performance criteria set by the Committee.
Unless otherwise provided by the Committee, a Participant awarded Deferred Stock
shall have no rights as a Company stockholder with respect to such Deferred
Stock until such time as the Deferred Stock Award has vested and the Stock
underlying the Deferred Stock Award has been issued. In addition, the Committee
shall be authorized to establish procedures pursuant to which the payment of any
Award may be deferred.

8.6 Restricted Stock Units. The Committee is authorized to make Awards of
Restricted Stock Units to any Eligible Individual selected by the Committee in
such amounts and subject to such terms and conditions as determined by the
Committee. At the time of grant, the Committee shall specify the date or dates
on which the Restricted Stock Units shall become fully vested and
nonforfeitable, and may specify such conditions to vesting as it deems
appropriate. At the time of grant, the Committee shall specify the maturity date
applicable to each

 

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grant of Restricted Stock Units which shall be no earlier than the vesting date
or dates of the Award and may be determined at the election of the grantee;
provided, that such dates and such election shall be subject to compliance with
Section 409A of the Code. On the maturity date, the Company shall, subject to
Section 11.5(b), transfer to the Participant one unrestricted, fully
transferable share of Stock for each Restricted Stock Unit (or an equivalent
value in cash, or a combination thereof) scheduled to be paid out on such date
and not previously forfeited. The Committee shall specify the purchase price, if
any, to be paid by the grantee to the Company for such shares of Stock.

8.7 Other Stock-Based Awards. Any Eligible Individual selected by the Committee
may be granted one or more Awards that provide Participants with shares of Stock
or the right to purchase shares of Stock or that have a value derived from the
value of, or an exercise or conversion privilege at a price related to, or that
are otherwise payable in shares of Stock and which may be linked to any one or
more of the Performance Criteria or other specific performance criteria
determined appropriate by the Committee, in each case on a specified date or
dates or over any period or periods determined by the Committee. In making such
determinations, the Committee shall consider (among such other factors as it
deems relevant in light of the specific type of Award) the contributions,
responsibilities and other compensation of the particular Participant.

8.8 Performance Bonus Awards. Any Participant selected by the Committee may be
granted one or more Performance-Based Awards in the form of a cash bonus (a
“Performance Bonus Award”) payable upon the attainment of Performance Goals that
are established by the Committee and relate to one or more of the Performance
Criteria, in each case on a specified date or dates or over any period or
periods determined by the Committee. Any such Performance Bonus Award paid to a
Covered Employee shall be based upon objectively determinable bonus formulas
established in accordance with Article 9.

8.9 Term. Except as otherwise provided herein, the vesting schedule of any Award
of Performance Shares, Performance Stock Units, Dividend Equivalents, Stock
Payments, Deferred Stock, Restricted Stock Units or Other Stock-Based Award
shall be set by the Committee in its discretion.

8.10 Exercise or Purchase Price. The Committee may establish the exercise or
purchase price, if any, of any Award of Performance Shares, Performance Stock
Units, Deferred Stock, Stock Payments, Restricted Stock Units or Other
Stock-Based Award; provided, however, that such price shall not be less than the
par value of a share of Stock on the date of grant, unless otherwise permitted
by applicable state law.

8.11 Exercise Upon Termination of Employment or Service. An Award of Performance
Shares, Performance Stock Units, Dividend Equivalents, Deferred Stock, Stock
Payments, Restricted Stock Units and Other Stock-Based Award shall only be
exercisable or payable while the Participant is an Employee, Consultant or a
Director, as applicable; provided, however, that the Committee in its sole and
absolute discretion may provide that an Award of Performance Shares, Performance
Stock Units, Dividend Equivalents, Stock Payments, Deferred Stock, Restricted
Stock Units or Other Stock-Based Award may be exercised or paid subsequent to a
termination of employment or service, as applicable, or following a Change in
Control of the Company, or because of the Participant’s retirement, death or
Disability, or otherwise; provided, however, that any such provision with
respect to Awards of Qualified Performance-Based Compensation shall be subject
to the requirements of Section 162(m) of the Code that apply to Qualified
Performance-Based Compensation.

8.12 Form of Payment. Payments with respect to any Awards granted under this
Article 8 shall be made in cash, in Stock or a combination of both, as
determined by the Committee.

8.13 Award Agreement. All Awards under this Article 8 shall be subject to such
additional terms and conditions as determined by the Committee and shall be
evidenced by an Award Agreement.

 

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ARTICLE 9

PERFORMANCE-BASED AWARDS

9.1 Purpose. The purpose of this Article 9 is to provide the Committee the
ability to qualify Awards other than Options and SARs and that are granted
pursuant to Articles 6 and 8 as Qualified Performance-Based Compensation. If the
Committee, in its discretion, decides to grant a Performance-Based Award to a
Covered Employee, the provisions of this Article 9 shall control over any
contrary provision contained in Articles 6 or 8; provided, however, that the
Committee may in its discretion grant Awards to Covered Employees that are based
on Performance Criteria or Performance Goals but that do not satisfy the
requirements of this Article 9, provided, however, that all Performance-Based
Awards are intended to qualify as Qualified Performance-Based Compensation.

9.2 Applicability. This Article 9 shall apply only to those Covered Employees
selected by the Committee to receive Performance-Based Awards. The designation
of a Covered Employee as a Participant for a Performance Period shall not in any
manner entitle the Participant to receive an Award for the period. Moreover,
designation of a Covered Employee as a Participant for a particular Performance
Period shall not require designation of such Covered Employee as a Participant
in any subsequent Performance Period and designation of one Covered Employee as
a Participant shall not require designation of any other Covered Employees as a
Participant in such period or in any other period.

9.3 Procedures with Respect to Performance-Based Awards. To the extent necessary
to comply with the Qualified Performance-Based Compensation requirements of
Section 162(m)(4)(C) of the Code, with respect to any Award granted under
Articles 6 or 8 which may be granted to one or more Covered Employees, prior to
the earlier of ninety (90) days following the commencement of the applicable
Performance Period and the expiration of 25% of the Performance Period (or such
other time as may be required or permitted by Section 162(m) of the Code), the
Committee shall, in writing, (a) designate one or more Covered Employees,
(b) select the Performance Criteria applicable to the Performance Period,
(c) establish the Performance Goals, and amounts of such Awards, as applicable,
which may be earned for such Performance Period, and (d) specify the
relationship between Performance Criteria and the Performance Goals and the
amounts of such Awards, as applicable, to be earned by each Covered Employee for
such Performance Period. Following the completion of each Performance Period,
the Committee shall certify in writing whether the applicable Performance Goals
have been achieved for such Performance Period. In determining the amount earned
by a Covered Employee, the Committee shall have the right to reduce or eliminate
(but not to increase) the amount payable at a given level of performance to take
into account additional factors that the Committee may deem relevant to the
assessment of individual or corporate performance for the Performance Period.

9.4 Payment of Performance-Based Awards. Unless otherwise provided in the
applicable Award Agreement, a Participant must be employed by the Company or a
Parent or Subsidiary on the day a Performance-Based Award for such Performance
Period is paid to the Participant. Furthermore, a Participant shall be eligible
to receive payment pursuant to a Performance-Based Award for a Performance
Period only if the Performance Goals for such period are achieved. In
determining the amount earned under a Performance-Based Award, the Committee may
reduce or eliminate the amount of the Performance-Based Award earned for the
Performance Period, if in its sole and absolute discretion, such reduction or
elimination is appropriate.

9.5 Additional Limitations. Notwithstanding any other provision of the Plan, any
Award which is granted to a Covered Employee and is intended to constitute
Qualified Performance-Based Compensation, including all Performance-Based
Awards, shall be subject to any additional limitations set forth in
Section 162(m) of the Code (including any amendment to Section 162(m) of the
Code) or any regulations or rulings issued thereunder that are requirements for
qualification as qualified performance-based compensation as described in
Section 162(m)(4)(C) of the Code, and the Plan shall be deemed amended to the
extent necessary to conform to such requirements.

 

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ARTICLE 10

INDEPENDENT DIRECTOR AWARDS

10.1 The Board may grant Awards to Independent Directors, subject to the
limitations of the Plan, pursuant to a written plan established by the
Committee, or any successor committee thereto carrying out its responsibilities
on the date of grant of any such Award (the “Independent Director Compensation
Policy”). The Independent Director Compensation Policy shall set forth the type
of Award(s) to be granted to Independent Directors, the number of shares of
Common Stock to be subject to Independent Director Awards, the conditions on
which such Awards shall be granted, become exercisable and/or payable, and such
other terms and conditions as the Committee (or such other successor committee
as described above) shall determine in its discretion. For the avoidance of
doubt, Awards granted to Independent Directors shall be subject to all of the
limitations set forth in the Plan.

ARTICLE 11

PROVISIONS APPLICABLE TO AWARDS

11.1 Stand-Alone and Tandem Awards. Awards granted pursuant to the Plan may, in
the discretion of the Committee, be granted either alone, in addition to, or in
tandem with, any other Award granted pursuant to the Plan. Awards granted in
addition to or in tandem with other Awards may be granted either at the same
time as or at a different time from the grant of such other Awards.

11.2 Award Agreement. Awards under the Plan shall be evidenced by Award
Agreements that set forth the terms, conditions and limitations for each Award
which may include the term of an Award, the provisions applicable in the event
the Participant’s employment or service terminates, and the Company’s authority
to unilaterally or bilaterally amend, modify, suspend, cancel or rescind an
Award.

11.3 Limits on Transfer. Except as set forth in this Section 11.3 and
Section 11.4, no right or interest of a Participant in any Award may be pledged,
encumbered, or hypothecated to or in favor of any party other than the Company,
a Parent, or a Subsidiary, or shall be subject to any lien, obligation, or
liability of such Participant to any other party other than the Company, a
Parent, or a Subsidiary. Except as otherwise provided by the Committee, no Award
shall be assigned, transferred, or otherwise disposed of by a Participant other
than by will or the laws of descent and distribution. The Committee by express
provision in the Award or an amendment thereto may permit an Award (other than
an Incentive Stock Option) to be transferred to, exercised by and paid to
certain persons or entities related to the Participant, including but not
limited to members of the Participant’s family, charitable institutions, or
trusts or other entities whose beneficiaries or beneficial owners are members of
the Participant’s family and/or charitable institutions, or to such other
persons or entities as may be expressly approved by the Committee, pursuant to
such conditions and procedures as the Committee may establish. Any permitted
transfer shall be subject to the condition that the Committee receive evidence
satisfactory to it that the transfer is being made for estate and/or tax
planning purposes (or to a “blind trust” in connection with the Participant’s
termination of employment or service with the Company, a Parent, or a Subsidiary
to assume a position with a governmental, charitable, educational or similar
non-profit institution) and on a basis consistent with the Company’s lawful
issue of securities.

11.4 Beneficiaries. Notwithstanding Section 11.3, a Participant may, in the
manner determined by the Committee, designate a beneficiary to exercise the
rights of the Participant and to receive any distribution with respect to any
Award upon the Participant’s death. A beneficiary, legal guardian, legal
representative, or other person claiming any rights pursuant to the Plan is
subject to all terms and conditions of the Plan and any Award Agreement
applicable to the Participant, except to the extent the Plan and Award Agreement
otherwise provide, and to any additional restrictions deemed necessary or
appropriate by the Committee. If the Participant is married

 

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and resides in a community property state, a designation of a person other than
the Participant’s spouse as his or her beneficiary with respect to more than 50%
of the Participant’s interest in the Award shall not be effective without the
prior written consent of the Participant’s spouse. If no beneficiary has been
designated or survives the Participant, payment shall be made to the person
entitled thereto pursuant to the Participant’s will or the laws of descent and
distribution. Subject to the foregoing, a beneficiary designation may be changed
or revoked by a Participant at any time provided the change or revocation is
filed with the Committee.

11.5 Stock Certificates; Book Entry Procedures.

(a) Notwithstanding anything herein to the contrary, the Company shall not be
required to issue or deliver any certificates evidencing shares of Stock
pursuant to the exercise of any Award, unless and until the Board has
determined, with advice of counsel, that the issuance and delivery of such
certificates is in compliance with all applicable laws, regulations of
governmental authorities and, if applicable, the requirements of any exchange on
which the shares of Stock are listed or traded. All Stock certificates delivered
pursuant to the Plan are subject to any stop-transfer orders and other
restrictions as the Committee deems necessary or advisable to comply with
federal, state, or foreign jurisdiction, securities or other laws, rules and
regulations and the rules of any national securities exchange or automated
quotation system on which the Stock is listed, quoted, or traded. The Committee
may place legends on any Stock certificate to reference restrictions applicable
to the Stock. In addition to the terms and conditions provided herein, the Board
may require that a Participant make such reasonable covenants, agreements, and
representations as the Board, in its discretion, deems advisable in order to
comply with any such laws, regulations, or requirements. The Committee shall
have the right to require any Participant to comply with any timing or other
restrictions with respect to the settlement or exercise of any Award, including
a window-period limitation, as may be imposed in the discretion of the
Committee.

(b) Notwithstanding any other provision of the Plan, unless otherwise determined
by the Committee or required by any applicable law, rule or regulation, the
Company shall not deliver to any Participant certificates evidencing shares of
Stock issued in connection with any Award and instead such shares of Stock shall
be recorded in the books of the Company (or, as applicable, its transfer agent
or stock plan administrator).

11.6 Paperless Administration. In the event that the Company establishes, for
itself or using the services of a third party, an automated system for the
documentation, granting or exercise of Awards, such as a system using an
internet website or interactive voice response, then the paperless
documentation, granting or exercise of Awards by a Participant may be permitted
through the use of such an automated system.

ARTICLE 12

CHANGES IN CAPITAL STRUCTURE

12.1 Adjustments.

(a) In the event of any stock dividend, stock split, combination or exchange of
shares, merger, consolidation or other distribution (whether in cash, shares or
other property and other than normal cash dividends), or any other change
affecting the shares of Stock or the share price of the Stock other than an
Equity Restructuring, the Committee shall make such equitable adjustments, if
any, as the Committee in its discretion may deem appropriate to reflect such
change with respect to (i) the aggregate number and kind of shares that may be
issued under the Plan (including, but not limited to, adjustments of the
limitations in Sections 3.1 and 3.3); (ii) the terms and conditions of any
outstanding Awards (including, without limitation, any applicable performance
targets or criteria with respect thereto); and (iii) the grant or exercise price
per share for any outstanding Awards under the Plan. Any adjustment affecting an
Award intended as Qualified Performance-Based Compensation shall be made
consistent with the requirements of Section 162(m) of the Code.

(b) In the event of any transaction or event described in Section 12.1 or any
unusual or nonrecurring transactions or events affecting the Company, any
affiliate of the Company, or the financial statements of the

 

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Company or any affiliate, or of changes in applicable laws, regulations or
accounting principles, the Committee, in its sole and absolute discretion, and
on such terms and conditions as it deems appropriate, either by the terms of the
Award or by action taken prior to the occurrence of such transaction or event
and either automatically or upon the Participant’s request, is hereby authorized
to take any one or more of the following actions whenever the Committee
determines that such action is appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available
under the Plan or with respect to any Award under the Plan, to facilitate such
transactions or events or to give effect to such changes in laws, regulations or
principles:

(i) To provide for either (A) termination of any such Award in exchange for an
amount of cash, if any, equal to the amount that would have been attained upon
the exercise of such Award or realization of the Participant’s rights (and, for
the avoidance of doubt, if as of the date of the occurrence of the transaction
or event described in this Section 12.1(b) the Committee determines in good
faith that no amount would have been attained upon the exercise of such Award or
realization of the Participant’s rights, then such Award may be terminated by
the Company without payment) or (B) the replacement of such Award with other
rights or property selected by the Committee in its sole discretion;

(ii) To provide that such Award be assumed by the successor or survivor
corporation, or a parent or subsidiary thereof, or shall be substituted for by
similar options, rights or awards covering the stock of the successor or
survivor corporation, or a parent or subsidiary thereof, with appropriate
adjustments as to the number and kind of shares and prices;

(iii) To make adjustments in the number and type of shares of Stock (or other
securities or property) subject to outstanding Awards, and in the number and
kind of outstanding Restricted Stock or Deferred Stock and/or in the terms and
conditions of (including the grant or exercise price), and the criteria included
in, outstanding options, rights and awards and options, rights and awards which
may be granted in the future;

(iv) To provide that such Award shall be exercisable or payable or fully vested
with respect to all shares covered thereby, notwithstanding anything to the
contrary in the Plan or the applicable Award Agreement; and

(v) To provide that the Award cannot vest, be exercised or become payable after
such event.

(c) In connection with the occurrence of any Equity Restructuring, and
notwithstanding anything to the contrary in Sections 12.1(a) and 12.1(b):

(i) The number and type of securities subject to each outstanding Award and the
exercise price or grant price thereof, if applicable, will be equitably
adjusted. The adjustments provided under this Section 12.1(c)(i) shall be
nondiscretionary and shall be final and binding on the affected Participant and
the Company.

(ii) The Committee shall make such equitable adjustments, if any, as the
Committee in its discretion may deem appropriate to reflect such Equity
Restructuring with respect to the aggregate number and kind of shares that may
be issued under the Plan (including, but not limited to, adjustments of the
limitations in Sections 3.1 and 3.3).

12.2 Change in Control.

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

(b) In the event of a Change in Control, then any surviving corporation or
acquiring corporation shall assume any Awards outstanding under the Plan or
shall substitute similar awards (including an award to acquire the same
consideration paid to the stockholders in the transaction described in such
Change in Control) for those outstanding under the Plan. In the event any
surviving corporation or acquiring corporation refuses to assume such Awards or
to substitute similar awards for those outstanding under the Plan, then the
vesting of such

 

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Awards (and, if applicable, the time during which such Awards may be exercised)
shall be accelerated in full (provided, however, that performance-based awards
shall be treated as provided for in the applicable Award Agreements), and the
Awards shall terminate if not exercised (if applicable) at or prior to such
event. With respect to any other Awards outstanding under the Plan, such Awards
shall terminate if not exercised (if applicable) prior to such event. The
Committee shall have the right to provide that in the event of a Change in
Control, performance-based awards shall be (x) considered to be earned and
payable based on achievement of performance goals or based on target performance
(either in full or pro rata based on the portion of Performance Period completed
as of the date of the Change in Control), and any limitations or other
restrictions shall lapse and such performance-based awards shall be immediately
settled or distributed or (y) converted into Restricted Stock or Restricted
Stock Unit Awards based on achievement of performance goals or based on target
performance (either in full or pro rata based on the portion of Performance
Period completed as of the date of the Change in Control).

(c) Notwithstanding any other provisions of this Plan to the contrary other than
Sections 12.3 or 12.5 below, and unless otherwise provided in an Award
Agreement, if within twelve (12) months after the date of a Change in Control
the Continuous Service of a Participant terminates due to an involuntary
termination (not including death or Disability) without Cause, then the vesting
and exercisability of all time-based Awards held by such Participant shall be
fully accelerated and all performance-based Awards shall be treated as provided
for in the applicable Award Agreements, or any reacquisition or repurchase
rights held by the Company with respect to an Award shall fully lapse.

12.3 Qualified Performance-Based Compensation. With respect to Awards granted to
Covered Employees and are intended to qualify as Qualified Performance-Based
Compensation, no adjustment or action described in Section 12.1 or 12.2 or in
any other provision of the Plan shall be authorized to the extent that such
adjustment or action would cause such Award to fail to so qualify as Qualified
Performance-Based Compensation, unless the Committee determines that the Award
should not so qualify. No adjustment or action described in Section 12.1 or 12.2
or in any other provision of the Plan shall be authorized to the extent that
such adjustment or action would cause the Plan to violate Section 422(b)(1) of
the Code. Furthermore, no such adjustment or action shall be authorized to the
extent such adjustment or action would result in short-swing profits liability
under Section 16 of the Exchange Act or violate the exemptive conditions of Rule
16b-3 under the Exchange Act unless the Committee determines that the Award is
not to comply with such exemptive conditions.

12.4 No Other Rights. Except as expressly provided in the Plan, no Participant
shall have any rights by reason of any subdivision or consolidation of shares of
stock of any class, the payment of any dividend, any increase or decrease in the
number of shares of stock of any class or any dissolution, liquidation, merger,
or consolidation of the Company or any other corporation. Except as expressly
provided in the Plan or pursuant to action of the Committee under the Plan, 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 of shares of Stock
subject to an Award or the grant or exercise price of any Award.

12.5 Section 409A. No action shall be taken under Section 12.1 or 12.2 which
shall cause an Award to fail to comply with Section 409A of the Code or the
Treasury Regulations thereunder, to the extent applicable to such Award.

12.6 Restrictions on Exercise. In the event of any pending stock dividend, stock
split, combination or exchange of shares, merger, consolidation or other
distribution (other than normal cash dividends) of Company assets to
stockholders, or any other change affecting the shares of Stock or the share
price of the Stock including any Equity Restructuring, for reasons of
administrative convenience, the Company in its sole discretion may refuse to
permit the exercise of any Award during a period of thirty (30) days prior to
the consummation of any such transaction.

 

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ARTICLE 13

ADMINISTRATION

13.1 Committee. Unless and until the Board delegates administration of the Plan
to a Committee as set forth below, the Plan shall be administered by the full
Board, and for such purposes the term “Committee” as used in the Plan shall be
deemed to refer to the Board. The Board, at its discretion or as otherwise
necessary to comply with the requirements of Section 162(m) of the Code, Rule
16b-3 promulgated under the Exchange Act or to the extent required by any other
applicable rule or regulation, shall delegate administration of the Plan to a
Committee. The Committee shall consist solely of two or more members of the
Board each of whom is a Non-Employee Director, and with respect to awards that
are intended to be Performance-Based Awards, an “outside director” within the
meaning of Section 162(m) of the Code. Notwithstanding the foregoing: (a) the
full Board, acting by a majority of its members in office, shall conduct the
general administration of the Plan with respect to all Awards granted to
Independent Directors and for purposes of such Awards the term “Committee” as
used in the Plan shall be deemed to refer to the Board and (b) the Committee may
delegate its authority hereunder to the extent permitted by Section 13.5.
Appointment of Committee members shall be effective upon acceptance of
appointment. The Board may abolish the Committee at any time and revest in the
Board the administration of the Plan. Committee members may resign at any time
by delivering written notice to the Board. Vacancies in the Committee may only
be filled by the Board.

13.2 Action by the Committee. Unless otherwise established by the Board or in
any charter of the Committee, a majority of the Committee shall constitute a
quorum, and the acts of a majority of the members present at any meeting at
which a quorum is present, and acts approved in writing by a majority of the
Committee in lieu of a meeting, shall be deemed the acts of the Committee. Each
member of the Committee is entitled to, in good faith, rely or act upon any
report or other information furnished to that member by any officer or other
employee of the Company or of any Parent or Subsidiary, the Company’s
independent certified public accountants, or any executive compensation
consultant or other professional retained by the Company or any Parent or
Subsidiary to assist in the administration of the Plan.

13.3 Authority of Committee. Subject to any specific designation in the Plan,
the Committee has the exclusive power, authority and discretion to:

(a) Designate Participants to receive Awards;

(b) Determine the type or types of Awards to be granted to each Participant;

(c) Determine the number of Awards to be granted and the number of shares of
Stock to which an Award will relate;

(d) Determine the terms and conditions of any Award granted pursuant to the
Plan, including, but not limited to, the exercise price, grant price, or
purchase price, any restrictions or limitations on the Award, any schedule for
lapse of forfeiture restrictions or restrictions on the exercisability of an
Award, and accelerations or waivers thereof, any provisions related to
non-competition and recapture of gain on an Award, based in each case on such
considerations as the Committee in its sole discretion determines; provided,
however, that the Committee shall not have the authority to accelerate the
vesting or waive the forfeiture of any Performance-Based Awards;

(e) Determine whether, to what extent, and pursuant to what circumstances an
Award may be settled in, or the exercise price of an Award may be paid in, cash,
Stock, other Awards, or other property, or an Award may be canceled, forfeited,
or surrendered;

(f) Prescribe the form of each Award Agreement, which need not be identical for
each Participant;

(g) Decide all other matters that must be determined in connection with an
Award;

(h) Establish, adopt, or revise any rules and regulations as it may deem
necessary or advisable to administer the Plan;

 

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(i) Interpret the terms of, and any matter arising pursuant to, the Plan or any
Award Agreement; and

(j) Make all other decisions and determinations that may be required pursuant to
the Plan or as the Committee deems necessary or advisable to administer the
Plan.

13.4 Decisions Binding. The Committee’s interpretation of the Plan, any Awards
granted pursuant to the Plan, any Award Agreement and all decisions and
determinations by the Committee with respect to the Plan are final, binding, and
conclusive on all parties.

13.5 Delegation of Authority. To the extent permitted by applicable law, the
Committee may from time to time delegate its authority under the Plan to a
sub-committee or to one or more senior executive officers of the Company to the
extent such delegation is appropriate under Section 162(m) of the Code and Rule
16b-3 under the Exchange Act. Any delegation hereunder shall be subject to the
restrictions and limits that the Committee specifies at the time of such
delegation, and the Committee may at any time rescind the authority so delegated
or appoint a new delegatee. At all times, the delegatee appointed under this
Section 13.5 shall serve in such capacity at the pleasure of the Committee.

13.6 Prohibition on Repricing of Awards. Other than pursuant to Article 12, the
Committee shall not without the approval of the Company’s stockholders (a) lower
the exercise price per Share of an Option or Stock Appreciation Right after it
is granted, (b) cancel an Option or Stock Appreciation Right when the exercise
price per Share exceeds the Fair Market Value of one Share in exchange for cash
or another Award (other than in connection with a Change in Control), or
(c) take any other action with respect to an Option or Stock Appreciation Right
that would be treated as a repricing under the rules and regulations of the
principal U.S. national securities exchange on which the Shares are listed.

ARTICLE 14

EFFECTIVE, RESTATEMENT AND EXPIRATION DATE

14.1 Effective Date. The Plan was effective as of April 24, 2007. The Plan was
amended and restated effective July 8, 2016 (the “Restatement Date”). The Plan
is deemed to be approved by the stockholders if it is approved either:

(a) By a majority of the votes cast at a duly held stockholder’s meeting at
which a quorum representing a representing a majority of outstanding voting
stock is, either in person or by proxy, present and voting on the plan; or

(b) By a method and in a degree that would be treated as adequate under Delaware
law in the case of an action requiring stockholder approval.

14.2 Expiration Date. The Plan will expire on, and no Award may be granted
pursuant to the Plan after April 21, 2026 (the tenth anniversary of the date the
Plan, as amended and restated, was approved by the Board). Any Awards that are
outstanding upon the expiration of the Plan shall remain in force according to
the terms of the Plan and the applicable Award Agreement.

ARTICLE 15

AMENDMENT, MODIFICATION, AND TERMINATION

15.1 Amendment, Modification, and Termination. Subject to Section 16.13, with
the approval of the Board, at any time and from time to time, the Committee may
terminate, amend or modify the Plan; provided, however, that (a) to the extent
necessary and desirable to comply with any applicable law, regulation, or stock
exchange

 

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rule, the Company shall obtain stockholder approval of any Plan amendment in
such a manner and to such a degree as required, and (b) stockholder approval is
required for any amendment to the Plan that (i) increases the number of shares
of Stock available under the Plan (other than any adjustment as provided by
Article 12), (ii) permits the Committee to grant Options with an exercise price
that is below Fair Market Value on the date of grant, (iii) permits the
Committee to extend the exercise period for an Option beyond ten years from the
date of grant; or (iv) amends Section 13.6.

15.2 Awards Previously Granted. Except with respect to amendments made pursuant
to Section 16.13, no termination, amendment, or modification of the Plan shall
adversely affect in any material way any Award previously granted pursuant to
the Plan without the prior written consent of the Participant.

ARTICLE 16

GENERAL PROVISIONS

16.1 No Rights to Awards. No Eligible Individual or other person shall have any
claim to be granted any Award pursuant to the Plan, and neither the Company nor
the Committee is obligated to treat Eligible Individuals, Participants or any
other persons uniformly.

16.2 No Stockholders Rights. Except as otherwise provided herein, a Participant
shall have none of the rights of a stockholder with respect to shares of Stock
covered by any Award until the Participant becomes the record owner of such
shares of Stock.

16.3 Withholding. The Company or any Parent or Subsidiary shall have the
authority and the right to deduct or withhold, or require a Participant to remit
to the Company, an amount sufficient to satisfy federal, state, local and
foreign taxes (including the Participant’s employment tax obligation) required
by law to be withheld with respect to any taxable event concerning a Participant
arising as a result of the Plan. The Committee may in its discretion and in
satisfaction of the foregoing requirement allow a Participant to elect to have
the Company withhold shares of Stock otherwise issuable under an Award (or allow
the return of shares of Stock) having a Fair Market Value equal to the sums
required to be withheld. Notwithstanding any other provision of the Plan, the
number of shares of Stock which may be withheld with respect to the issuance,
vesting, exercise or payment of any Award (or which may be repurchased from the
Participant of such Award within six months (or such other period as may be
determined by the Committee) after such shares of Stock were acquired by the
Participant from the Company) in order to satisfy the Participant’s federal,
state, local and foreign income and payroll tax liabilities with respect to the
issuance, vesting, exercise or payment of the Award shall be limited to the
number of shares of Stock which have a Fair Market Value on the date of
withholding or repurchase equal to the aggregate amount of such liabilities
based on the minimum statutory withholding rates for federal, state, local and
foreign income tax and payroll tax purposes that are applicable to such
supplemental taxable income (or such other rate that will not cause an adverse
accounting consequence or cost).

16.4 No Right to Employment or Services. Nothing in the Plan or any Award
Agreement shall interfere with or limit in any way the right of the Company or
any Parent or Subsidiary to terminate any Participant’s employment or services
at any time, nor confer upon any Participant any right to continue in the employ
or service of the Company or any Parent or Subsidiary.

16.5 Unfunded Status of Awards. The Plan is intended to be an “unfunded” plan
for incentive compensation. With respect to any payments not yet made to a
Participant pursuant to an Award, nothing contained in the Plan or any Award
Agreement shall give the Participant any rights that are greater than those of a
general creditor of the Company or any Parent or Subsidiary.

16.6 Indemnification. To the extent allowable pursuant to applicable law, each
member of the Committee or of the Board shall be indemnified and held harmless
by the Company from any loss, cost, liability, or expense

 

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that may be imposed upon or reasonably incurred by such member in connection
with or resulting from any claim, action, suit, or proceeding to which he or she
may be a party or in which he or she may be involved by reason of any action or
failure to act pursuant to the Plan and against and from any and all amounts
paid by him or her in satisfaction of judgment in such action, suit, or
proceeding against him or her; provided he or she gives the Company an
opportunity, at its own expense, to handle and defend the same before he or she
undertakes to handle and defend it on his or her own behalf. The foregoing right
of indemnification shall not be exclusive of any other rights of indemnification
to which such persons may be entitled pursuant to the Company’s Certificate of
Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the
Company may have to indemnify them or hold them harmless.

16.7 Relationship to other Benefits. No payment pursuant to the Plan shall be
taken into account in determining any benefits pursuant to any pension,
retirement, savings, profit sharing, group insurance, welfare or other benefit
plan of the Company or any Parent or Subsidiary except to the extent otherwise
expressly provided in writing in such other plan or an agreement thereunder.

16.8 Expenses. The expenses of administering the Plan shall be borne by the
Company and its Subsidiaries.

16.9 Titles and Headings. The titles and headings of the Sections in the Plan
are for convenience of reference only and, in the event of any conflict, the
text of the Plan, rather than such titles or headings, shall control.

16.10 Fractional Shares. No fractional shares of Stock shall be issued and the
Committee shall determine, in its discretion, whether cash shall be given in
lieu of fractional shares of Stock or whether such fractional shares of Stock
shall be eliminated by rounding up or down (on an aggregated basis) as
appropriate.

16.11 Limitations Applicable to Section 16 Persons. Notwithstanding any other
provision of the Plan but subject to Section 12.3, the Plan, and any Award
granted or awarded to any Participant who is then subject to Section 16 of the
Exchange Act, shall be subject to any additional limitations set forth in any
applicable exemptive rule under Section 16 of the Exchange Act (including any
amendment to Rule 16b-3 of the Exchange Act) that are requirements for the
application of such exemptive rule. To the extent permitted by applicable law,
the Plan and Awards granted or awarded hereunder shall be deemed amended to the
extent necessary to conform to such applicable exemptive rule.

16.12 Government and Other Regulations. The obligation of the Company to make
payment of awards in Stock or otherwise shall be subject to all applicable laws,
rules, and regulations, and to such approvals by government agencies as may be
required. The Company shall be under no obligation to register pursuant to the
Securities Act of 1933, as amended, any of the shares of Stock paid pursuant to
the Plan. If the shares of Stock paid pursuant to the Plan may in certain
circumstances be exempt from registration pursuant to the Securities Act of
1933, as amended, the Company may restrict the transfer of such shares of Stock
in such manner as it deems advisable to ensure the availability of any such
exemption.

16.13 Section 409A. To the extent that the Committee determines that any Award
granted under the Plan is subject to Section 409A of the Code, the Award
Agreement evidencing such Award shall incorporate the terms and conditions
required by Section 409A of the Code. To the extent applicable, the Plan and
Award Agreements shall be interpreted in accordance with Section 409A of the
Code and Department of Treasury regulations and other interpretive guidance
issued thereunder, including without limitation any such regulations or other
guidance that may be issued after the Restatement Date. Notwithstanding any
provision of the Plan to the contrary, in the event that following the
Restatement Date the Committee determines that any Award may be subject to
Section 409A of the Code and related Department of Treasury guidance (including
such Department of Treasury guidance as may be issued after the Restatement
Date), the Committee may adopt such amendments to the Plan and the applicable
Award Agreement or adopt other policies and procedures (including amendments,
policies and procedures with retroactive effect), or take any other actions,
that the Committee determines are necessary or

 

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appropriate to (a) exempt the Award from Section 409A of the Code and/or
preserve the intended tax treatment of the benefits provided with respect to the
Award, or (b) comply with the requirements of Section 409A of the Code and
related Department of Treasury guidance and thereby avoid the application of any
penalty taxes under such Section. If any amount shall be payable with respect to
any Award hereunder as a result of a Participant’s termination of employment or
service and such amount is subject to the provisions of Code Section 409A, then
notwithstanding any other provision of this Plan, a termination of employment or
service will be deemed to have occurred only at such time as the Participant has
experienced a “separation from service” as such term is defined for purposes of
Code Section 409A.

16.14 Compensation Recoupment Policy. All Awards shall be subject to the
Company’s Recoupment Policy, as may be in effect from time to time.

16.15 Governing Law. The Plan and all Award Agreements shall be construed in
accordance with and governed by the laws of the State of Delaware.

**** *

I hereby certify that the foregoing Plan was duly adopted by the Board of
Directors of Orexigen Therapeutics, Inc. on April 21, 2016.

**** *

I hereby certify that the foregoing Plan was approved by the stockholders of
Orexigen Therapeutics, Inc. on July 8, 2016.

Executed on this      day of                     , 2016.

 

 

[Title]

 

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