2008 Equity Incentive Plan



 Exhibit 10.1 
 2008 EQUITY INCENTIVE PLAN 
 Purposes of the Plan. The purposes of this Plan are: 

 

	 	•	 	 to attract and retain the best available personnel for positions of substantial responsibility, 


  

	 	•	 	 to provide incentives to individuals who perform services to the Company, and 


  

	 	•	 	 to promote the success of the Company’s business. 


 The Plan permits the grant of Incentive Stock Options, Nonstatutory Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Units, Performance Shares and other stock or cash awards as the
Administrator may determine. 
 Definitions. As used herein, the following definitions will apply: 
 “Administrator” means the Board or any of its Committees as will be administering the Plan, in accordance with
Section 4 of the Plan. 
 “Applicable Laws” means the requirements relating to the administration of
equity-based awards under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any foreign country or
jurisdiction where Awards are, or will be, granted under the Plan. 
 “Approval Authority” means an
authority, governmental or otherwise, that regulates pre-market approval of goods and services, including, but not limited to, the United States Food and Drug Administration. 
 “Award” means, individually or collectively, a grant under the Plan of Options, Stock Appreciation Rights, Restricted
Stock, Restricted Stock Units, Performance Units, Performance Shares and other stock or cash awards as the Administrator may determine. 
 “Award Agreement” means the written or electronic agreement setting forth the terms and provisions applicable to each Award granted under the Plan. The Award Agreement is subject to the terms and
conditions of the Plan. 
 “Board” means the Board of Directors of the Company. 







 “Change in Control” means the occurrence of any of the following events:

 A change in the ownership of the Company which occurs on the date that any one person, or more than one person acting as a
group, (“Person”) acquires ownership of the stock of the Company that, together with the stock held by such Person, constitutes more than 50% of the total voting power of the stock of the Company; provided, however, that for
purposes of this subsection (i), the acquisition of additional stock by any one Person, who is considered to own more than 50% of the total voting power of the stock of the Company will not be considered a Change in Control; or 
 A change in the effective control of the Company which occurs on the date that a majority of members of the Board is replaced during any
twelve (12) month period by Directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election. For purposes of this clause (ii), if any Person is considered to
effectively control the Company, the acquisition of additional control of the Company by the same Person will not be considered a Change in Control; or 
 A change in the ownership of a substantial portion of the Company’s assets which occurs on the date that any Person acquires (or has acquired during the twelve (12) month period ending on the date of the
most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more than 50% of the total gross fair market value of all of the assets of the Company immediately prior to such
acquisition or acquisitions; provided, however, that for purposes of this subsection (iii), the following will not constitute a change in the ownership of a substantial portion of the Company’s assets: (A) a transfer to an entity that is
controlled by the Company’s stockholders immediately after the transfer, or (B) a transfer of assets by the Company to: (1) a stockholder of the Company (immediately before the asset transfer) in exchange for or with respect to the
Company’s stock, (2) an entity, 50% or more of the total value or voting power of which is owned, directly or indirectly, by the Company, (3) a Person, that owns, directly or indirectly, 50% or more of the total value or voting power
of all the outstanding stock of the Company, or (4) an entity, at least 50% of the total value or voting power of which is owned, directly or indirectly, by a Person described in this subsection (iii)(B)(3). For purposes of this subsection
(iii), gross fair market value means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets. 
 For purposes of this Section 2(g), persons will be considered to be acting as a group if they are owners of a corporation that enters
into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the Company. 
 “Code” means the Internal Revenue Code of 1986, as amended. Any reference to a section of the Code herein will be a reference to any successor or amended section of the Code. 
 “Collaboration Arrangement” means, for any Performance Period, entry into an agreement or arrangement with a third party
for the development, commercialization, marketing or distribution of a Product or for the conducting of a research program to discover or develop a Product or technologies. 







 “Collaboration Progression” means, for any Performance Period, an event
that triggers an obligation or payment right to accrue under a Collaboration Arrangement. 
 “Committee”
means a committee of Directors or of other individuals satisfying Applicable Laws appointed by the Board in accordance with Section 4 hereof. 
 “Common Stock” means the common stock of the Company. 
 “Company” means Pain Therapeutics, Inc., a Delaware corporation, or any successor thereto. 
 “Consultant” means any person, including an advisor, engaged by the Company or a Parent or Subsidiary to render services to such entity. 
 “Determination Date” means the latest possible date that will not jeopardize the qualification of an Award granted under
the Plan as “performance-based compensation” under Section 162(m) of the Code. 
 “Director”
means a member of the Board. 
 “Disability” means total and permanent disability as defined in
Section 22(e)(3) of the Code, provided that in the case of Awards other than Incentive Stock Options, the Administrator in its discretion may determine whether a permanent and total disability exists in accordance with uniform and
non-discriminatory standards adopted by the Administrator from time to time. 
 “Earnings Per Share” means as
to any Performance Period, the Company’s or a business unit’s Profit After-Tax, divided by a weighted average number of Shares outstanding and dilutive common equivalent Shares deemed outstanding, determined in accordance with generally
accepted accounting principles. 
 “Employee” means any person, including Officers and Directors, employed by
the Company or any Parent or Subsidiary of the Company. Neither service as a Director nor payment of a director’s fee by the Company will be sufficient to constitute “employment” by the Company. 
 “Exchange Act” means the Securities Exchange Act of 1934, as amended. 
 “Exchange Program” means a program under which (i) outstanding Awards are surrendered or cancelled in exchange for
Awards of the same type (which may have lower exercise prices and different terms), Awards of a different type, and/or cash, (ii) Participants would have the opportunity to transfer any outstanding Awards to a financial institution or other
person or entity selected by the Administrator, and/or (iii) the exercise price of an outstanding Award is reduced. The Administrator will determine the terms and conditions of any Exchange Program in its sole discretion. 







 “Fair Market Value” means, as of any date, the value of the Common Stock
as the Administrator may determine in good faith by reference to the price of such stock on any established stock exchange or a national market system on the day of determination if the Common Stock is so listed on any established stock exchange or
a national market system. If the Common Stock is not listed on any established stock exchange or a national market system, the value of the Common Stock will be determined as the Administrator may determine in good faith. 
 “Financing Event” means, for any Performance Period, the closing of any financing event for capital raising purposes.

 “Fiscal Year” means the fiscal year of the Company. 
 “Incentive Stock Option” means an Option that by its terms qualifies and is otherwise intended to qualify as an incentive
stock option within the meaning of Section 422 of the Code and the regulations promulgated thereunder. 
 “Nonstatutory Stock Option” means an Option that by its terms does not qualify or is not intended to qualify as an Incentive Stock Option. 
 “Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and
the rules and regulations promulgated thereunder. 
 “Operating Cash Flow” means as to any Performance
Period, the Company’s or a business unit’s sum of Profit After-Tax plus depreciation and amortization less capital expenditures plus changes in working capital comprised of accounts receivable, inventories, other current assets, trade
accounts payable, accrued expenses, product warranty, advance payments from customers and long-term accrued expenses, determined in accordance with generally acceptable accounting principles. 
 “Operating Income” means as to any Performance Period, the Company’s or a business unit’s income from
operations but excluding any unusual items, determined in accordance with generally accepted accounting principles. 
 “Option” means a stock option granted pursuant to Section 6 of the Plan. 
 “Outside
Director” means a Director who is not an Employee. 
 “Parent” means a “parent
corporation,” whether now or hereafter existing, as defined in Section 424(e) of the Code. 
 “Participant” means the holder of an outstanding Award. 
 “Performance Goals” will
have the meaning set forth in Section 11 of the Plan. 
 “Performance Period” means any Fiscal Year of
the Company or such other period as determined by the Administrator in its sole discretion. 







 “Performance Share” means an Award denominated in Shares which may be
earned in whole or in part upon attainment of Performance Goals or other vesting criteria as the Administrator may determine pursuant to Section 10. 
 “Performance Unit” means an Award which may be earned in whole or in part upon attainment of Performance Goals or other vesting criteria as the Administrator may determine and which may be settled for
cash, Shares or other securities or a combination of the foregoing pursuant to Section 10. 
 “Period of
Restriction” means the period during which the transfer of Shares of Restricted Stock are subject to restrictions and therefore, the Shares are subject to a substantial risk of forfeiture. Such restrictions may be based on the passage of
time, the achievement of target levels of performance, or the occurrence of other events as determined by the Administrator. 
 “Plan” means this 2008 Equity Incentive Plan. 
 “Product” means any drug candidate
requiring pre-market approval by an Approval Authority. 
 “Product Approval” means the approval by any
Approval Authority of the right to market or sell a Product. 
 “Product Sales” means as to any Performance
Period, the Company’s sales generated from the sale of Products to third parties, determined in accordance with generally accepted accounting principles. 
 “Profit After-Tax” means as to any Performance Period, the Company’s or a business unit’s income after taxes,
determined in accordance with generally accepted accounting principles. 
 “Profit Before-Tax” means as to
any Performance Period, the Company’s or a business unit’s income before taxes, determined in accordance with generally accepted accounting principles. 
 “Projects in Development” refers to one or more projects at any or all stages of development from conception, discovery
and/or initial research through Product Approval, including, but not limited to, pre-clinical studies, filing of an investigational new drug application (IND) or foreign equivalent, Phase 1, Phase 2 and Phase 3 clinical trials and submission and
approval of a new drug application (NDA) or foreign equivalent. 
 “Regulatory Filings” means as to any
Performance Period, the number of filings submitted to an Approval Authority in order to satisfy one or more of such Approval Authority’s requirements for Product Approval. 
 “Restricted Stock” means Shares issued pursuant to an Award of Restricted Stock under Section 8 of the Plan, or
issued pursuant to the early exercise of an Option. 







 “Restricted Stock Unit” means a bookkeeping entry representing an amount
equal to the Fair Market Value of one Share, granted pursuant to Section 9. Each Restricted Stock Unit represents an unfunded and unsecured obligation of the Company. 
 “Return on Assets” means as to any Performance Period, the percentage equal to the Company’s or a business
unit’s Operating Income before incentive compensation, divided by average net Company or business unit, as applicable, assets, determined in accordance with generally accepted accounting principles. 
 “Return on Equity” means as to any Performance Period, the percentage equal to the Company’s Profit After-Tax
divided by average stockholder’s equity, determined in accordance with generally accepted accounting principles. 
 “Return on Sales” means as to any Performance Period, the percentage equal to the Company’s or a business unit’s Operating Income before incentive compensation, divided by the Company’s or the business
unit’s, as applicable, Revenue, determined in accordance with generally accepted accounting principles. 
 “Revenue” means as to any Performance Period, the Company’s or business unit’s net sales, determined in accordance with generally accepted accounting principles. 
 “Rule 16b-3” means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3, as in effect when discretion is being
exercised with respect to the Plan. 
 “Section 16(b)” means Section 16(b) of the Exchange Act.

 “Service Provider” means an Employee, Director, or Consultant. 
 “Share” means a share of the Common Stock, as adjusted in accordance with Section 15 of the Plan. 
 “Stock Appreciation Right” means an Award, granted alone or in connection with an Option, that pursuant to Section 7
is designated as a Stock Appreciation Right. 
 “Subsidiary” means a “subsidiary corporation,”
whether now or hereafter existing, as defined in Section 424(f) of the Code. 
 “Total Shareholder
Return” means as to any Performance Period, the total return (change in share price plus reinvestment of any dividends) of a Share. 
 Stock Subject to the Plan. 
 Subject to the provisions of Section 15 of the Plan,
the maximum aggregate number of Shares that may be awarded and sold under the Plan is 8,000,000 Shares plus (i) any Shares which have been reserved but not issued pursuant to any awards granted under the Company’s 1998 Stock Plan (the
“1998 Plan”) as of the date of stockholder approval of this Plan and (ii) any Shares subject to stock options or similar awards granted under the 1998 Plan that expire or otherwise terminate without having been exercised in
full and Shares issued pursuant to awards granted under the 1998 Plan that are forfeited to or repurchased by the Company. The Shares may be authorized, but unissued, or reacquired Common Stock. 







 Lapsed Awards. If an Award expires or becomes unexercisable without having been
exercised in full, or, with respect to Restricted Stock, Restricted Stock Units, Performance Shares or Performance Units, is forfeited to or repurchased by the Company, the unpurchased Shares (or for Awards other than Options and Stock Appreciation
Rights, the forfeited or repurchased Shares) which were subject thereto will become available for future grant or sale under the Plan (unless the Plan has terminated). Upon exercise of a Stock Appreciation Right settled in Shares, the net number of
Shares actually issued pursuant to the portion of the Award so exercised will cease to be available under the Plan. Shares that have actually been issued under the Plan under any Award will not be returned to the Plan and will not become available
for future distribution under the Plan; provided, however, that if unvested Shares of Restricted Stock, Restricted Stock Units, Performance Shares or Performance Units are repurchased by the Company or are forfeited to the Company, such Shares will
become available for future grant under the Plan. Shares used to pay the tax and/or exercise price of an Award will not become available for future grant or sale under the Plan. To the extent an Award under the Plan is paid out in cash rather than
Shares, such cash payment will not result in reducing the number of Shares available for issuance under the Plan. Notwithstanding the foregoing provisions of this Section 3(b), subject to adjustment provided in Section 15, the maximum
number of Shares that may be issued upon the exercise of Incentive Stock Options will equal the aggregate Share number stated in Section 3(a), plus, to the extent allowable under Section 422 of the Code, any Shares that become available
for issuance under the Plan under this Section 3(b). 
 Share Reserve. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as will be sufficient to satisfy the requirements of the Plan. 
 Administration of the Plan. 
 Procedure. 
 Multiple Administrative Bodies. Different Committees with respect to different groups of Service Providers may administer the Plan.

 Section 162(m). To the extent that the Administrator determines it to be desirable to qualify Awards granted
hereunder as “performance-based compensation” within the meaning of Section 162(m) of the Code, the Plan will be administered by a Committee of two (2) or more “outside directors” within the meaning of
Section 162(m) of the Code. 
 Rule 16b-3. To the extent desirable to qualify transactions hereunder as exempt
under Rule 16b-3, the transactions contemplated hereunder will be structured to satisfy the requirements for exemption under Rule 16b-3. 
 Other Administration. Other than as provided above, the Plan will be administered by (A) the Board or (B) a Committee, which committee will be constituted to satisfy Applicable Laws. 







 Powers of the Administrator. Subject to the provisions of the Plan, and in the
case of a Committee, subject to the specific duties delegated by the Board to such Committee, the Administrator will have the authority, in its discretion: 
 to determine the Fair Market Value; 
 to select the Service Providers to whom Awards may be
granted hereunder; 
 to determine the terms and conditions, not inconsistent with the terms of the Plan, of any Award granted
hereunder; 
 to determine the terms and conditions of any, and with the approval of the Company’s stockholders, to
institute an Exchange Program; 
 to construe and interpret the terms of the Plan and Awards granted pursuant to the Plan;

 to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to
sub-plans established for the purpose of satisfying applicable foreign laws; 
 to modify or amend each Award (subject to
Section 20(c) of the Plan). Notwithstanding the previous sentence, the Administrator may not, without the approval of the Company’s stockholders: (A) modify or amend an Option or Stock Appreciation Right to reduce the exercise price
of such Option or Stock Appreciation Right after it has been granted (except for adjustments made pursuant to Section 15), or (B) cancel any outstanding Option or Stock Appreciation Right and immediately replace it with a new Option or
Stock Appreciation Right with a lower exercise price; 
 to authorize any person to execute on behalf of the Company any
instrument required to effect the grant of an Award previously granted by the Administrator; 
 to allow a Participant to
defer the receipt of the payment of cash or the delivery of Shares that would otherwise be due to such Participant under an Award pursuant to such procedures as the Administrator may determine; and 
 to make all other determinations deemed necessary or advisable for administering the Plan. 
 Effect of Administrator’s Decision. The Administrator’s decisions, determinations, and interpretations will be final
and binding on all Participants and any other holders of Awards. 
 Eligibility. Nonstatutory Stock Options, Restricted Stock,
Restricted Stock Units, Stock Appreciation Rights, Performance Units, Performance Shares, and such other cash or stock awards as the Administrator determines may be granted to Service Providers. Incentive Stock Options may be granted only to
Employees. 







 Stock Options. 
 Limitations. 
 Each Option will be designated in the Award Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding such designation, to the extent that the aggregate Fair Market Value of the Shares with
respect to which Incentive Stock Options are exercisable for the first time by the Participant during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds $100,000 (U.S.), such Options will be treated as
Nonstatutory Stock Options. For purposes of this Section 6(a), Incentive Stock Options will be taken into account in the order in which they were granted. The Fair Market Value of the Shares will be determined as of the time the Option with
respect to such Shares is granted. 
 The Administrator will have complete discretion to determine the number of Shares
subject to an Option granted to any Participant, provided that during any Fiscal Year, no Participant will be granted an Option covering more than 1,000,000 Shares. Notwithstanding the limitation in the previous sentence, in connection with his or
her initial service as an Employee, an Employee may be granted Options covering up to an additional 1,000,000 Shares. 
 Term of Option. The Administrator will determine the term of each Option in its sole discretion; provided, however, that the term will be no more than ten (10) years from the date of grant thereof. Moreover, in the case of an
Incentive Stock Option granted to a Participant who, at the time the Incentive Stock Option is granted, owns stock representing more than 10% of the total combined voting power of all classes of stock of the Company or any Parent or Subsidiary, the
term of the Incentive Stock Option will be five (5) years from the date of grant or such shorter term as may be provided in the Award Agreement. 
 Option Exercise Price and Consideration. 
 Exercise Price. The per share
exercise price for the Shares to be issued pursuant to exercise of an Option will be determined by the Administrator, but will be no less than 100% of the Fair Market Value per Share on the date of grant. In addition, in the case of an Incentive
Stock Option granted to an Employee who, at the time the Incentive Stock Option is granted, owns stock representing more than 10% of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the per Share exercise price
will be no less than 110% of the Fair Market Value per Share on the date of grant. Notwithstanding the foregoing provisions of this Section 6(c), Options may be granted with a per Share exercise price of less than 100% of the Fair Market Value
per Share on the date of grant pursuant to a transaction described in, and in a manner consistent with, Section 424(a) of the Code. 
 Waiting Period and Exercise Dates. At the time an Option is granted, the Administrator will fix the period within which the Option may be exercised and will determine any conditions that must be satisfied
before the Option may be exercised. 







 Form of Consideration. The Administrator will determine the acceptable form(s) of
consideration for exercising an Option, including the method of payment, to the extent permitted by Applicable Laws. 
 Exercise of Option. 
 Procedure for Exercise; Rights as a Stockholder. Any Option granted hereunder
will be exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Administrator and set forth in the Award Agreement. An Option may not be exercised for a fraction of a Share. 
 An Option will be deemed exercised when the Company receives: (i) notice of exercise (in such form as the Administrator specifies
from time to time) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised (together with any applicable withholding taxes). No adjustment will be made for a dividend
or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 15 of the Plan. 
 Termination of Relationship as a Service Provider. If a Participant ceases to be a Service Provider, other than upon the Participant’s termination as the result of the Participant’s death or
Disability, the Participant may exercise his or her Option within such period of time as is specified in the Award Agreement to the extent that the Option is vested on the date of termination (but in no event later than the expiration of the term of
such Option as set forth in the Award Agreement). In the absence of a specified time in the Award Agreement, the Option will remain exercisable for three (3) months following the Participant’s termination. Unless otherwise provided by the
Administrator, if on the date of termination the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will revert to the Plan. If after termination the Participant does not exercise his
or her Option within the time specified by the Administrator, the Option will terminate, and the Shares covered by such Option will revert to the Plan. 
 Disability of Participant. If a Participant ceases to be a Service Provider as a result of the Participant’s Disability, the Participant may exercise his or her Option within such period of time as is
specified in the Award Agreement to the extent the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement). In the absence of a specified time in the
Award Agreement, the Option will remain exercisable for twelve (12) months following the Participant’s termination. Unless otherwise provided by the Administrator, if on the date of termination the Participant is not vested as to his or
her entire Option, the Shares covered by the unvested portion of the Option will revert to the Plan. If after termination the Participant does not exercise his or her Option within the time specified herein, the Option will terminate, and the Shares
covered by such Option will revert to the Plan. 
 Death of Participant. If a Participant dies while a Service
Provider, the Option may be exercised following the Participant’s death within such period of time as is specified in the Award Agreement to the extent that the Option is vested on the date of death (but in no event may the option be exercised
later than the expiration of the term of such Option as set forth in the Award Agreement), by the Participant’s designated beneficiary, provided such beneficiary has been designated prior to Participant’s death in a form acceptable to the
Administrator. If no such beneficiary has been designated by the 








 
Participant, then such Option may be exercised by the personal representative of the Participant’s estate or by the person(s) to whom the Option is
transferred pursuant to the Participant’s will or in accordance with the laws of descent and distribution. In the absence of a specified time in the Award Agreement, the Option will remain exercisable for twelve (12) months following
Participant’s death. Unless otherwise provided by the Administrator, if at the time of death Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will immediately revert to the Plan.
If the Option is not so exercised within the time specified herein, the Option will terminate, and the Shares covered by such Option will revert to the Plan. 
 Other Termination. A Participant’s Award Agreement may also provide that if the exercise of the Option following the
termination of Participant’s status as a Service Provider (other than upon the Participant’s death or Disability) would result in liability under Section 16(b), then the Option will terminate on the earlier of (A) the expiration
of the term of the Option set forth in the Award Agreement, or (B) the 10th day after the last date on which such exercise would result in such liability under Section 16(b). Finally, a Participant’s Award Agreement may also provide
that if the exercise of the Option following the termination of the Participant’s status as a Service Provider (other than upon the Participant’s death or Disability) would be prohibited at any time solely because the issuance of Shares
would violate the registration requirements under the Securities Act, then the Option will terminate on the earlier of (A) the expiration of the term of the Option, or (B) the expiration of a period of three (3) months after the
termination of the Participant’s status as a Service Provider during which the exercise of the Option would not be in violation of such registration requirements. 
 Stock Appreciation Rights. 
 Grant of Stock Appreciation Rights. Subject to the
terms and conditions of the Plan, a Stock Appreciation Right may be granted to Service Providers at any time and from time to time as will be determined by the Administrator, in its sole discretion. 
 Number of Shares. The Administrator will have complete discretion to determine the number of Stock Appreciation Rights granted to
any Participant, provided that during any Fiscal Year, no Participant will be granted Stock Appreciation Rights covering more than 1,200,000 Shares. Notwithstanding the limitation in the previous sentence, in connection with his or her initial
service as an Employee, an Employee may be granted Stock Appreciation Rights covering up to an additional 800,000 Shares. 
 Exercise Price and Other Terms. The Administrator, subject to the provisions of the Plan, will have complete discretion to determine the terms and conditions of Stock Appreciation Rights granted under the Plan, provided, however,
that the exercise price will be not less than 100% of the Fair Market Value of a Share on the date of grant. 
 Stock
Appreciation Right Agreement. Each Stock Appreciation Right grant will be evidenced by an Award Agreement that will specify the exercise price, the term of the Stock Appreciation Right, the conditions of exercise, and such other terms and
conditions as the Administrator, in its sole discretion, will determine. 







 Expiration of Stock Appreciation Rights. A Stock Appreciation Right granted under
the Plan will expire upon the date determined by the Administrator, in its sole discretion, and set forth in the Award Agreement; provided, however, that the term will be no more than ten (10) years from the date of grant thereof.
Notwithstanding the foregoing, the rules of Section 6(d) also will apply to Stock Appreciation Rights. 
 Payment of
Stock Appreciation Right Amount. Upon exercise of a Stock Appreciation Right, a Participant will be entitled to receive payment from the Company in an amount determined by multiplying: 
 The difference between the Fair Market Value of a Share on the date of exercise over the exercise price; times 
 The number of Shares with respect to which the Stock Appreciation Right is exercised. 
 At the discretion of the Administrator, the payment upon Stock Appreciation Right exercise may be in cash, in Shares of equivalent value, or in some combination thereof.

 Restricted Stock. 
 Grant of Restricted Stock. Subject to the terms and provisions of the Plan, the Administrator, at any time and from time to time, may grant Shares of Restricted Stock to Service Providers in such amounts as the
Administrator, in its sole discretion, will determine. 
 Restricted Stock Agreement. Each Award of Restricted Stock
will be evidenced by an Award Agreement that will specify the Period of Restriction, the number of Shares granted, and such other terms and conditions as the Administrator, in its sole discretion, will determine. Notwithstanding the foregoing
sentence, for restricted stock intended to qualify as “performance-based compensation” within the meaning of Section 162(m) of the Code, during any Fiscal Year no Participant will receive more than an aggregate of 400,000 Shares of
Restricted Stock. Notwithstanding the foregoing limitation, in connection with his or her initial service as an Employee, for restricted stock intended to qualify as “performance-based compensation” within the meaning of
Section 162(m) of the Code, an Employee may be granted an aggregate of up to an additional 200,000 Shares of Restricted Stock. Unless the Administrator determines otherwise, Shares of Restricted Stock will be held by the Company as escrow agent
until the restrictions on such Shares have lapsed. 
 Transferability. Except as provided in this Section 8,
Shares of Restricted Stock may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until the end of the applicable Period of Restriction. 
 Other Restrictions. The Administrator, in its sole discretion, may impose such other restrictions on Shares of Restricted Stock as
it may deem advisable or appropriate. 
 Removal of Restrictions. Except as otherwise provided in this Section 8,
Shares of Restricted Stock covered by each Restricted Stock grant made under the Plan will be released from escrow as soon as practicable after the last day of the Period of Restriction. The Administrator, in its discretion, may accelerate the time
at which any restrictions will lapse or be removed. 







 Voting Rights. During the Period of Restriction, Service Providers holding Shares
of Restricted Stock granted hereunder may exercise full voting rights with respect to those Shares, unless the Administrator determines otherwise. 
 Dividends and Other Distributions. During the Period of Restriction, Service Providers holding Shares of Restricted Stock will be entitled to receive all dividends and other distributions paid with respect to
such Shares unless otherwise provided in the Award Agreement. If any such dividends or distributions are paid in Shares, the Shares will be subject to the same restrictions on transferability and forfeitability as the Shares of Restricted Stock with
respect to which they were paid. 
 Return of Restricted Stock to Company. On the date set forth in the Award
Agreement, the Restricted Stock for which restrictions have not lapsed will revert to the Company and again will become available for grant under the Plan. 
 Section 162(m) Performance Restrictions. For purposes of qualifying grants of Restricted Stock as “performance-based compensation” under Section 162(m) of the Code, the Administrator, in its
discretion, may set restrictions based upon the achievement of Performance Goals. The Performance Goals will be set by the Administrator on or before the Determination Date. In granting Restricted Stock which is intended to qualify under
Section 162(m) of the Code, the Administrator will follow any procedures determined by it from time to time to be necessary or appropriate to ensure qualification of the Award under Section 162(m) of the Code (e.g., in determining the
Performance Goals). 
 Restricted Stock Units. 
 Grant. Restricted Stock Units may be granted at any time and from time to time as determined by the Administrator. Each Restricted
Stock Unit grant will be evidenced by an Award Agreement that will specify such other terms and conditions as the Administrator, in its sole discretion, will determine, including all terms, conditions, and restrictions related to the grant, the
number of Restricted Stock Units and the form of payout, which, subject to Section 9(d), may be left to the discretion of the Administrator. Notwithstanding anything to the contrary in this subsection (a), for Restricted Stock Units
intended to qualify as “performance-based compensation” within the meaning of Section 162(m) of the Code, during any Fiscal Year of the Company, no Participant will receive more than an aggregate of 400,000 Restricted Stock Units.
Notwithstanding the limitation in the previous sentence, for Restricted Stock Units intended to qualify as “performance-based compensation” within the meaning of Section 162(m) of the Code, in connection with his or her initial
service as an Employee, an Employee may be granted an aggregate of up to an additional 200,000 Restricted Stock Units. 
 Vesting Criteria and Other Terms. The Administrator will set vesting criteria in its discretion, which, depending on the extent to which the criteria are met, will determine the number of Restricted Stock Units that will be paid out
to the Participant. After the grant of Restricted Stock Units, the Administrator, in its sole discretion, may reduce or waive any restrictions for 








 
such Restricted Stock Units. Each Award of Restricted Stock Units will be evidenced by an Award Agreement that will specify the vesting criteria, and such
other terms and conditions as the Administrator, in its sole discretion will determine. The Administrator, in its discretion, may accelerate the time at which any restrictions will lapse or be removed. 
 Earning Restricted Stock Units. Upon meeting the applicable vesting criteria, the Participant will be entitled to receive a payout
as specified in the Award Agreement. 
 Form and Timing of Payment. Payment of earned Restricted Stock Units will be
made as soon as practicable after the date(s) set forth in the Award Agreement. The Administrator, in its sole discretion, may pay earned Restricted Stock Units in cash, Shares, or a combination thereof. Shares represented by Restricted Stock Units
that are fully paid in cash again will be available for grant under the Plan. 
 Cancellation. On the date set forth in
the Award Agreement, all unearned Restricted Stock Units will be forfeited to the Company. 
 Section 162(m)
Performance Restrictions. For purposes of qualifying grants of Restricted Stock Units as “performance-based compensation” under Section 162(m) of the Code, the Administrator, in its discretion, may set restrictions based upon the
achievement of Performance Goals. The Performance Goals will be set by the Administrator on or before the Determination Date. In granting Restricted Stock Units which are intended to qualify under Section 162(m) of the Code, the Administrator
will follow any procedures determined by it from time to time to be necessary or appropriate to ensure qualification of the Award under Section 162(m) of the Code (e.g., in determining the Performance Goals). 
 Performance Units and Performance Shares. 
 Grant of Performance Units/Shares. Performance Units and Performance Shares may be granted to Service Providers at any time and from time to time, as will be determined by the Administrator, in its sole
discretion. The Administrator will have complete discretion in determining the number of Performance Units/Shares granted to each Participant provided that during any Fiscal Year, for Performance Units or Performance Shares intended to qualify as
“performance-based compensation” within the meaning of Section 162(m) of the Code, (i) no Participant will receive Performance Units having an initial value greater than $2,000,000, and (ii) no Participant will receive more
than 400,000 Performance Shares. Notwithstanding the foregoing limitation, for Performance Shares intended to qualify as “performance-based compensation” within the meaning of Section 162(m) of the Code, in connection with his or her
initial service, a Service Provider may be granted up to an additional 200,000 Performance Shares. 
 Value of Performance
Units/Shares. Each Performance Unit will have an initial value that is established by the Administrator on or before the date of grant. Each Performance Share will have an initial value equal to the Fair Market Value of a Share on the date of
grant. 
 Performance Objectives and Other Terms. The Administrator will set performance objectives or other vesting
provisions. The Administrator may set vesting criteria based upon the achievement of Company-wide, business unit, or individual goals (including, but not limited to, continued employment), or any other basis determined by the Administrator in its
discretion. 







 Earning of Performance Units/Shares. After the applicable Performance Period has
ended, the holder of Performance Units/Shares will be entitled to receive a payout of the number of Performance Units/Shares earned by the Participant over the Performance Period, to be determined as a function of the extent to which the
corresponding performance objectives or other vesting provisions have been achieved. After the grant of a Performance Unit/Share, the Administrator, in its sole discretion, may reduce or waive any performance objectives or other vesting provisions
for such Performance Unit/Share. 
 Form and Timing of Payment of Performance Units/Shares. Payment of earned
Performance Units/Shares will be made as soon as practicable after the expiration of the applicable Performance Period. The Administrator, in its sole discretion, may pay earned Performance Units/Shares in the form of cash, in Shares (which have an
aggregate Fair Market Value equal to the value of the earned Performance Units/Shares at the close of the applicable Performance Period) or in a combination thereof. 
 Cancellation of Performance Units/Shares. On the date set forth in the Award Agreement, all unearned or unvested Performance
Units/Shares will be forfeited to the Company, and again will be available for grant under the Plan. 
 Section 162(m)
Performance Restrictions. For purposes of qualifying grants of Performance Units/Shares as “performance-based compensation” under Section 162(m) of the Code, the Administrator, in its discretion, may set restrictions based upon
the achievement of Performance Goals. The Performance Goals will be set by the Administrator on or before the Determination Date. In granting Performance Units/Shares which are intended to qualify under Section 162(m) of the Code, the
Administrator will follow any procedures determined by it from time to time to be necessary or appropriate to ensure qualification of the Award under Section 162(m) of the Code (e.g., in determining the Performance Goals). 
 Performance Goals. The granting and/or vesting of Awards of Restricted Stock, Restricted Stock Units, Performance Shares and Performance Units and
other incentives under the Plan may be made subject to the attainment of performance goals relating to one or more business criteria within the meaning of Section 162(m) of the Code and may provide for a targeted level or levels of achievement
(“Performance Goals”) including, (a) Collaboration Arrangement, (b) Collaboration Progression, (c) Earnings per Share, (d) Financing Event (e) Operating Cash Flow, (f) Operating Income, (g) Product
Approvals, (h) Product Sales, (i) Profit After-Tax, (j) Profit Before-Tax, (k) Projects in Development, (l) Regulatory Filings, (m) Return on Assets, (n) Return on Equity, (o) Return on Sales,
(p) Revenue, and (q) Total Shareholder Return. Any Performance Goals may be used to measure the performance of the Company as a whole or a business unit of the Company and may be measured relative to a peer group or index. The Performance
Goals may differ from Participant to Participant and from Award to Award. Prior to the Determination Date, the Administrator will determine whether any significant element(s) will be included in or excluded from the calculation of any Performance
Goal with respect to any Participant. In all other respects, Performance Goals will be calculated in accordance with the Company’s financial statements, generally accepted accounting principles, or under a methodology established by the
Administrator prior to the 








 
issuance of an Award, which is consistently applied and identified in the financial statements, including footnotes, or the management discussion and
analysis section of the Company’s annual report. In determining the amounts earned by a Participant pursuant to an Award intended to qualified as “performance-based compensation” under Section 162(m) of the Code, the
Administrator will 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 Administrator may deem relevant to the assessment of individual or
corporate performance for the Performance Period. A Participant will be eligible to receive payment pursuant to an Award intended to qualify as “performance-based compensation” under Section 162(m) of the Code for a Performance Period
only if the Performance Goals for such period are achieved. 
 Automatic Stock Option Grants to Outside Directors. 
 Procedures for Grants. All grants of Options to Outside Directors under this Section 12 will be automatic and
non-discretionary and will be made strictly in accordance with the following provisions; provided, however, that the Administrator will have authority to make changes to the following provisions with respect to grants, including, but not limited to,
a change in the number of shares subject to future Options granted pursuant to this Section 12: 
 All Options granted
pursuant to this Section 12 will be Nonstatutory Stock Options and, except as otherwise provided herein, will be subject to the other terms and conditions of the Plan. 
 Each person who first becomes an Outside Director following the effective date of this Plan will be automatically granted an Option to
purchase 25,000 Shares (the “First Option”) on the date on which such person first becomes an Outside Director, whether through election by the stockholders of the Company or appointment by the Board to fill a vacancy. 

Each Outside Director will be automatically granted an Option to purchase 25,000 Shares on the date of each Annual Stockholder’s
Meeting (a “Subsequent Option”), provided the person continues to serve as an Outside Director through the date of such Annual Stockholder’s Meeting. 
 Notwithstanding the provisions of subsections (ii) and (iii) hereof, in the event that a grant would cause the number of Shares
subject to outstanding Awards plus the number of Shares previously purchased upon exercise of an Award to exceed the number of Shares available for issuance under the Plan, then each such automatic grant will be for that number of Shares determined
by dividing the total number of Shares remaining available for grant by the number of Outside Directors on the automatic grant date. Any further grants will then be deferred until such time, if any, as additional Shares become available for grant
under the Plan through action of the stockholders to increase the number of Shares which may be issued under the Plan or through cancellation or expiration of Options previously granted hereunder. 







 The terms of an Option granted to an Outside Director shall be as follows:

 the term of the Option will be ten (10) years. 
 the Option will be exercisable only while the Outside Director remains a Director of the Company; provided, however, that in the absence
of a specified time in the Award Agreement, if an Outside Director ceases to be a Director as a result of the Outside Director’s death or Disability, the Option will remain exercisable for twelve (12) months following such termination (but
in no event later than the expiration of the term of such Option as set forth in the Award Agreement). Unless otherwise provided by the Administrator, if on the date of termination the Outside Director is not vested as to his or her entire Option,
the Shares covered by the unvested portion of the Option will revert to the Plan. If after termination the Outside Director does not exercise his or her Option within the time specified herein, the Option will terminate, and the Shares covered by
such Option will revert to the Plan. 
 the exercise price per Share will be 100% of the Fair Market Value per Share on the
date of grant of the Option. 
 subject to Section 15, the Option will vest and become exercisable as to 25% of the
Shares subject to the Option on each anniversary of its date of grant, provided that the Participant continues to serve as a Director through such dates. 
 Leaves of Absence. Unless the Administrator provides otherwise, vesting of Awards granted hereunder will be suspended during any unpaid leave of absence. A Service Provider will not cease to be an Employee in
the case of (i) any leave of absence approved by the Company, or (ii) transfers between locations of the Company or between the Company, its Parent, or any Subsidiary. For purposes of Incentive Stock Options, no such leave may exceed three
(3) months, unless reemployment upon expiration of such leave is guaranteed by statute or contract. If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, then six (6) months and one day
following the commencement of such leave any Incentive Stock Option held by the Participant will cease to be treated as an Incentive Stock Option and will be treated for tax purposes as a Nonstatutory Stock Option. 
 Transferability of Awards. Unless determined otherwise by the Administrator, an Award may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Participant, only by the Participant. If the Administrator makes an Award transferable, such
Award will contain such additional terms and conditions as the Administrator deems appropriate. 
 Adjustments; Dissolution or
Liquidation; Merger or Change in Control. 
 Adjustments. In the event that any dividend or other distribution
(whether in the form of cash, Shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Shares or other
securities of the Company, or other change in the corporate structure of the Company affecting the Shares occurs, the Administrator, in order to prevent diminution or enlargement of the benefits or potential benefits intended to be made available
under the Plan, will adjust the number and class of Shares that may be delivered under the Plan and/or the number, class, and price of Shares covered by each outstanding Award, and the numerical Share limits set forth in Sections 3, 6, 7, 8, 9,
and 10. 







 Dissolution or Liquidation. In the event of the proposed dissolution or
liquidation of the Company, the Administrator will notify each Participant as soon as practicable prior to the effective date of such proposed transaction. To the extent it has not been previously exercised, an Award will terminate immediately prior
to the consummation of such proposed action. 
 Change in Control. In the event of a merger or Change in Control, each
outstanding Award will be treated as the Administrator determines, including, without limitation, that each Award will be assumed or an equivalent option or right substituted by the successor corporation or a Parent or Subsidiary of the successor
corporation (the “Successor Corporation”). The Administrator will not be required to treat all Awards similarly in the transaction. 
 In the event that the Successor Corporation does not assume or substitute for the Award, the Participant will fully vest in and have the right to exercise all of his or her outstanding Options and Stock Appreciation
Rights, including Shares as to which such Awards would not otherwise be vested or exercisable, all restrictions on Restricted Stock will lapse, and, with respect to Restricted Stock Units, Performance Shares and Performance Units, all Performance
Goals or other vesting criteria will be deemed achieved at target levels and all other terms and conditions met. In addition, if an Option or Stock Appreciation Right is not assumed or substituted for in the event of a Change in Control, the
Administrator will notify the Participant in writing or electronically that the Option or Stock Appreciation Right will be fully vested and exercisable for a period of time determined by the Administrator in its sole discretion, and the Option or
Stock Appreciation Right will terminate upon the expiration of such period. 
 For the purposes of this subsection (c), an
Award will be considered assumed if, following the Change in Control, the Award confers the right to purchase or receive, for each Share subject to the Award immediately prior to the Change in Control, the consideration (whether stock, cash, or
other securities or property) or, in the case of a Stock Appreciation Right upon the exercise of which the Administrator determines to pay cash or a Performance Share or Performance Unit which the Administrator can determine to pay in cash, the fair
market value of the consideration received in the merger or Change in Control by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration
chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the Change in Control is not solely common stock of the Successor Corporation, the Administrator may, with the consent of the
Successor Corporation, provide for the consideration to be received upon the exercise of an Option or Stock Appreciation Right or upon the payout of a Performance Share or Performance Unit, for each Share subject to such Award (or in the case of
Performance Units, the number of implied shares determined by dividing the value of the Performance Units by the per share consideration received by holders of Common Stock in the Change in Control), to be solely common stock of the Successor
Corporation equal in fair market value to the per share consideration received by holders of Common Stock in the Change in Control. 







 Notwithstanding anything in this Section 15(c) to the contrary, an Award that vests,
is earned or paid-out upon the satisfaction of one or more Performance Goals will not be considered assumed if the Company or its successor modifies any of such Performance Goals without the Participant’s consent; provided, however, a
modification to such Performance Goals only to reflect the Successor Corporation’s post-Change in Control corporate structure will not be deemed to invalidate an otherwise valid Award assumption. 
 Tax Withholding 
 Withholding Requirements. Prior to the delivery of any Shares or cash pursuant to an Award (or exercise thereof), the Company will have the power and the right to deduct or withhold, or require a Participant to remit to the Company,
an amount sufficient to satisfy federal, state, local, foreign or other taxes (including the Participant’s FICA obligation) required to be withheld with respect to such Award (or exercise thereof). 
 Withholding Arrangements. The Administrator, in its sole discretion and pursuant to such procedures as it may specify from time to
time, may permit a Participant to satisfy such tax withholding obligation, in whole or in part by (without limitation) (i) paying cash, (ii) electing to have the Company withhold otherwise deliverable cash or Shares having a Fair Market
Value equal to the minimum amount required to be withheld, (iii) delivering to the Company already-owned Shares having a Fair Market Value equal to the amount required to be withheld, or (iv) selling a sufficient number of Shares otherwise
deliverable to the Participant through such means as the Administrator may determine in its sole discretion (whether through a broker or otherwise) equal to the amount required to be withheld. The amount of the withholding requirement will be deemed
to include any amount which the Administrator agrees may be withheld at the time the election is made, not to exceed the amount determined by using the maximum federal, state or local marginal income tax rates applicable to the Participant with
respect to the Award on the date that the amount of tax to be withheld is to be determined. The Fair Market Value of the Shares to be withheld or delivered will be determined as of the date that the taxes are required to be withheld. 
 No Effect on Employment or Service. Neither the Plan nor any Award will confer upon a Participant any right with respect to continuing the
Participant’s relationship as a Service Provider with the Company, nor will they interfere in any way with the Participant’s right or the Company’s right to terminate such relationship at any time, with or without cause, to the extent
permitted by Applicable Laws. 
 Date of Grant. The date of grant of an Award will be, for all purposes, the date on which the
Administrator makes the determination granting such Award, or such other later date as is determined by the Administrator. Notice of the determination will be provided to each Participant within a reasonable time after the date of such grant.

 Term of Plan. Subject to Section 23 of the Plan, the Plan will become effective upon its adoption by the Board. It will
continue in effect for a term of ten (10) years unless terminated earlier under Section 20 of the Plan. 







 Amendment and Termination of the Plan. 
 Amendment and Termination. The Administrator may at any time amend, alter, suspend or terminate the Plan. 
 Stockholder Approval. The Company will obtain stockholder approval of any Plan amendment to the extent necessary and desirable to
comply with Applicable Laws. 
 Effect of Amendment or Termination. No amendment, alteration, suspension, or
termination of the Plan will impair the rights of any Participant, unless mutually agreed otherwise between the Participant and the Administrator, which agreement must be in writing and signed by the Participant and the Company. Termination of the
Plan will not affect the Administrator’s ability to exercise the powers granted to it hereunder with respect to Awards granted under the Plan prior to the date of such termination. 
 Conditions Upon Issuance of Shares. 
 Legal Compliance. Shares will not be issued pursuant to the exercise of an Award unless the exercise of such Award and the issuance and delivery of such Shares will comply with Applicable Laws and will be
further subject to the approval of counsel for the Company with respect to such compliance. 
 Investment
Representations. As a condition to the exercise of an Award, the Company may require the person exercising such Award to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without
any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required. 
 Inability to Obtain Authority. The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of
any Shares hereunder, will relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority will not have been obtained. 
 Stockholder Approval. The Plan will be subject to approval by the stockholders of the Company within twelve (12) months after the date the
Plan is adopted. Such stockholder approval will be obtained in the manner and to the degree required under Applicable Laws.