Filed by Bowne Pure Compliance



 




Exhibit 10.1




BIOCRYST PHARMACEUTICALS, INC.

STOCK INCENTIVE PLAN

(formerly the “BioCryst Pharmaceuticals, Inc. 1991 Stock Option Plan”)




(AS AMENDED AND RESTATED IN MARCH OF 2007)




ARTICLE ONE

GENERAL PROVISIONS




I. PURPOSES OF THE PLAN



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



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




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




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



C. The Plan, as hereby amended and restated, was approved and adopted by the Board in March of
2007 in order to increase by 1,200,000 the number of shares of the Company’s common stock, par
value $.01 per share (the “Common Stock”), that may be issued pursuant to the Plan. The Board’s
adoption of the share increase is subject to approval by the Company’s stockholders at the
Company’s 2007 Annual Stockholders Meeting.



II. STRUCTURE OF THE PLAN



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




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




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


 


 









 






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



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



III. ADMINISTRATION OF THE PLAN



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



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



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



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



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



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



IV. ELIGIBILITY



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




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




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




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


 


 









 





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



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



V. STOCK SUBJECT TO THE PLAN



A. Shares of the Company’s Common Stock shall be available for issuance under the Plan and
shall be drawn from either the Company’s authorized but unissued shares of Common Stock or from
reacquired shares of Common Stock, including shares repurchased by the Company on the open market.
The maximum number of shares of Common Stock which may be issued over the term of the Plan, as
amended and restated, shall not exceed 5,944,274 shares, subject to adjustment from time to time in
accordance with the provisions of this Section V. Such authorized share reserve includes (i) the
4,744,274 shares of Common Stock reserved and available for issuance under the Plan as of March 20,
2007; and (ii) the increase of 1,200,000 shares of Common Stock authorized by the Board subject to
shareholder approval at the 2007 Annual Stockholders Meeting.



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



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



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


 


 









 





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




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




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




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



ARTICLE TWO

DISCRETIONARY OPTION GRANT PROGRAM




I. TERMS AND CONDITIONS OF OPTIONS



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



A. Option Price.



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



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




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




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


 


 









 






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




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



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



B. Term and Exercise of Options.



Each option granted under this Article Two shall be exercisable at such time or times, during
such period, and for such number of shares as shall be determined by the Plan Administrator and set
forth in the instrument evidencing the option grant. No such option, however, shall have a maximum
term in excess of ten (10) years from the grant date. During the lifetime of the optionee, the
option, together with any stock appreciation rights pertaining to such option, shall be exercisable
only by the optionee and shall not be assignable or transferable by the optionee except for a
transfer of the option by will or by the laws of descent and distribution following the optionee’s
death. However, the Plan Administrator shall have the discretion to provide that a non-statutory
option may, in connection with the optionee’s estate plan, be assigned in whole or in part during
the optionee’s lifetime either as (i) as a gift to one or more members of optionee’s immediate
family, to a trust in which optionee and/or one or more such family members hold more than fifty
percent (50%) of the beneficial interest or an entity in which more than fifty percent (50%) of the
voting interests are owned by optionee and/or one or more such family members, or (ii) pursuant to
a domestic relations order. The assigned portion shall be exercisable only by the person or persons
who acquire a proprietary interest in the option pursuant to such assignment. The terms applicable
to the assigned portion shall be the same as those in effect for this option immediately prior to
such assignment and shall be set forth in such documents issued to the assignee as the Plan
Administrator may deem appropriate.



C. Termination of Service.



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




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




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


 


 









 






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




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




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




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




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



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



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




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




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



D. Stockholder Rights.



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


 


 









 





E. Repurchase Rights.



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




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




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




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



II. INCENTIVE OPTIONS



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



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



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



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



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


 


 









 





III. CORPORATE TRANSACTIONS/CHANGES IN CONTROL



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




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




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




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



then the exercisability of each option outstanding under this Article Two shall automatically
accelerate so that each such option shall, immediately prior to the specified effective date for
the Corporate Transaction, become fully exercisable with respect to the total number of shares of
Common Stock at the time subject to such option and may be exercised for all or any portion of such
shares. However, an outstanding option under this Article Two shall not so accelerate if and to the
extent the acceleration of such option is subject to other limitations imposed by the Plan
Administrator at the time of grant, unless the Plan Administrator, in its discretion, later
determines to waive such limitations.



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



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



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



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



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




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


 


 









 






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



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



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



IV. STOCK APPRECIATION RIGHTS



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



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



V. EXTENSION OF EXERCISE PERIOD



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



ARTICLE THREE

STOCK ISSUANCE PROGRAM




I. STOCK ISSUANCE TERMS



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


 


 









 





A. Purchase Price.



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



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



• cash or check made payable to the Company, or



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



B. Vesting Provisions.



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



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



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



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



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



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


 


 









 





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



II. CORPORATE TRANSACTION/CHANGE IN CONTROL



A. All of the Company’s outstanding repurchase rights under the Stock Issuance Program shall
terminate automatically, and all the shares of Common Stock subject to those terminated rights
shall immediately vest in full, in the event of any Corporate Transaction, except to the extent (i)
those repurchase rights are to be assigned to the successor corporation (or parent thereof) in
connection with the such Corporate Transaction, or (ii) such accelerated vesting is precluded by
other limitations imposed in the Stock Issuance Agreement, unless the Plan Administrator determines
to waive such limitations.



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



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



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



III. SHARE ESCROW/LEGENDS



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



ARTICLE FOUR

AUTOMATIC OPTION GRANT PROGRAM




I. ELIGIBILITY.



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



II. TERMS AND CONDITIONS OF AUTOMATIC OPTION GRANTS



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



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



 


 









 





2. Immediately following each Annual Stockholders Meeting of the Company, each individual who
is then serving as a non-employee Board member (except for those individuals first elected
to serve as non-employee Board members at such meeting), shall automatically be granted a
non-statutory stock option under this Article Four to acquire 15,000 shares of Common Stock.



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



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




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




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




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




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



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



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



E. Exercisability.



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



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



F. Non-Transferability. During the lifetime of the optionee, each automatic option,
together with the limited stock appreciation right pertaining to such option, shall be exercisable
only by the optionee, except to the extent such option or the limited stock appreciation right is
assigned or transferred (i) by will or by the laws of descent and distribution following the
optionee’s death, or (ii) during optionee’s lifetime either (A) as a gift in connection with
the optionee’s estate plan to one or more members of optionee’s immediate family, to a trust
in which optionee and/or one or more such family members hold more than fifty percent (50%) of the
beneficial interest or to an entity in which more than fifty percent (50%) of the voting interests
are owned by optionee and/or one or more such family members, or (B) pursuant to a domestic
relations order. The portion of any option assigned or transferred during optionee’s lifetime shall
be exercisable only by the person or persons who acquire a proprietary interest in the option
pursuant to such assignment. The terms applicable to the assigned portion shall be the same as
those in effect for this option immediately prior to such assignment and shall be set forth in such
documents issued to the assignee as the Plan Administrator may deem appropriate.


 


 









 





G. Cessation of Board Service.



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



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



III. CORPORATE TRANSACTIONS/CHANGES IN CONTROL



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



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



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



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


 


 









 





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



IV. STOCK APPRECIATION RIGHTS



A. With respect to options granted under the Automatic Option Grant Program prior to March 7,
2006:



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




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




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




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



B. With respect to each option granted under the Automatic Option Grant Program on and after
March 7, 2006, each optionee shall have the right to surrender all or part of the option (to the
extent not then exercised) in exchange for a distribution from the Company in an amount equal to
the excess of (i) the fair market value (on the option surrender date) of the number of shares in
which the optionee is at the time vested under the surrendered option (or surrendered portion
thereof) over (ii) the aggregate option price payable for such vested shares. The distribution
shall be made in shares of Common Stock valued at fair market value on the option surrender date.



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



ARTICLE FIVE

MISCELLANEOUS




I. AMENDMENT OF THE PLAN



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



II. TAX WITHHOLDING



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


 


 









 





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



III. EFFECTIVE DATE AND TERM OF PLAN



A. The Plan, as amended and restated, shall be effective on the date specified in the Board of
Directors resolution adopting the Plan. Except as provided below, each option issued and
outstanding under the Plan immediately prior to such effective date shall continue to be governed
solely by the terms and conditions of the agreement evidencing such grant, and nothing in this
restatement of the Plan shall be deemed to affect or otherwise modify the rights or obligations of
the holders of such options with respect to their acquisition of shares of Common Stock thereunder.
The Plan Administrator shall, however, have full power and authority, under such circumstances as
the Plan Administrator may deem appropriate (but in accordance with Article I of this Section
Five), to extend one or more features of this amendment and restatement to any options outstanding
on the effective date.



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



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



IV. USE OF PROCEEDS



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



V. REGULATORY APPROVALS



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



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


 


 









 





VI. NO EMPLOYMENT/SERVICE RIGHTS



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



VII. MISCELLANEOUS PROVISIONS



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



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