Exhibit

10.1




 




 BIOSITE INCORPORATED




 




2002 NONQUALIFIED




 




STOCK INCENTIVE

PLAN




ARTICLE 1            INTRODUCTION.




The Plan was adopted by the Board on November 7, 2002,

to be effective on that date.




The purpose of the Plan is to promote the long-term

success of the Company and the creation of stockholder value by

(a) encouraging Participants to focus on critical long-range objectives,

(b) encouraging the attraction and retention of Participants with

exceptional qualifications and (c) linking Participants directly to stockholder

interests through increased stock ownership. 

The Plan seeks to achieve this purpose by providing for Awards in the

form of Restricted Shares, Stock Units, Options (which shall only include

nonstatutory stock options) or stock appreciation rights.




The Plan shall be governed by, and construed in

accordance with, the laws of the State of California.




ARTICLE 2            ADMINISTRATION.




2.1           Committee

Composition.  The Plan shall be

administered by the Committee.  Except

as provided below, the Committee shall consist exclusively of directors of the

Company, who shall be appointed by the Board. 

In addition, the composition of the Committee shall satisfy:




(a)         Such

requirements, if any, as the Securities and Exchange Commission may establish

for administrators acting under plans intended to qualify for exemption under

Rule 16b–3 (or its successor) under the Exchange Act; and




(b)         Such

requirements as the Internal Revenue Service may establish for outside

directors acting under plans intended to qualify for exemption under

section 162(m)(4)(C) of the Code.




The Board may act on its own behalf with respect to

Outside Directors and may also appoint one or more separate committees composed

of one or more officers of the Company who need not be directors of the Company

and who need not satisfy the foregoing requirements, who may administer the

Plan with respect to Participants who are not “covered employees” under

section 162(m)(3) of the Code and who are not required to report pursuant

to § 16(a) of the Exchange Act.




2.2           Committee

Responsibilities.  The Committee

shall (a) select the Participants who are to receive Awards under the

Plan, (b) determine the type, number, vesting requirements and other features

and conditions of such Awards, (c) interpret the Plan and (d) make all

other decisions relating to the operation of the Plan.  The Committee may adopt such rules or

guidelines as it deems appropriate to implement the Plan.  The Committee’s determinations under the

Plan shall be final and binding on all persons.




ARTICLE 3            SHARES AVAILABLE FOR GRANTS.




3.1           Basic

Limitation.  Common Shares issued

pursuant to the Plan may be authorized but unissued shares or treasury

shares.  The aggregate number of Common

Shares available for Restricted Shares, Stock Units, Options and SARs awarded

under the Plan shall not exceed five hundred fifty thousand (550,000).  The limitation of this Section 3.1

shall be subject to adjustment pursuant to Article 10.




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3.2           Additional

Shares.  If Stock Units, Options or

SARs are forfeited or if Options or SARs terminate for any other reason before

being exercised, then the corresponding Common Shares shall again become

available for Awards under the Plan.  If

Restricted Shares are forfeited before any dividends have been paid with

respect to such Shares, then such Shares shall again become available for

Awards under the Plan.  If Stock Units

are settled, then only the number of Common Shares (if any) actually issued in

settlement of such Stock Units shall reduce the number available under

Section 3.1 and the balance shall again become available for Awards under

the Plan.  If SARs are exercised, then

only the number of Common Shares (if any) actually issued in settlement of such

SARs shall reduce the number available under Section 3.1 and the balance

shall again become available for Awards under the Plan.




3.3           Dividend

Equivalents.  Any dividend

equivalents distributed under the Plan shall not be applied against the number

of Restricted Shares, Stock Units, Options or SARs available for Awards,

whether or not such dividend equivalents are converted into Stock Units.




ARTICLE 4            ELIGIBILITY AND PARTICIPATION.




4.1           Eligibility.  Only Eligible Employees and consultants (who

are natural persons) of the Company, Parent or Subsidiary shall be eligible for

designation as Participants by the Committee, provided, however, that Officers

and members of the Board shall not be eligible for designation as Participants

by the Committee or the Board and shall not be eligible to receive any Awards

under this Plan.




4.2           Participation.  Only persons eligible to participate in this

Plan as provided in Section 4.1 above and who are designated as Participants by

the Committee and are granted specific Awards by the Committee  under this Plan shall participate in this

Plan.




ARTICLE 5            OPTIONS.




5.1           Stock

Option Agreement.  Each grant of an

Option under the Plan shall be evidenced by a Stock Option Agreement between

the Optionee and the Company.  Such

Option shall be subject to all applicable terms of the Plan and may be subject

to any other terms that are not inconsistent with the Plan.  The provisions of the various Stock Option

Agreements entered into under the Plan need not be identical.  Options may be granted in consideration of a

cash payment or in consideration of a reduction in the Optionee’s other

compensation.  A Stock Option Agreement

may provide that a new Option will be granted automatically to the Optionee

when he or she exercises a prior Option and pays the Exercise Price in the form

described in Section 6.2.




5.2           Number

of Shares.  Each Stock Option

Agreement shall specify the number of Common Shares subject to the Option and

shall provide for the adjustment of such number in accordance with

Article 10.




5.3           Exercise

Price.  Each Stock Option Agreement

shall specify the Exercise Price provided that the Exercise Price under an NSO

shall in no event be less than the par value of the Common Shares subject to

such NSO.  In the case of an NSO, a

Stock Option Agreement may specify an Exercise Price that varies in accordance

with a predetermined formula while the NSO is outstanding.




5.4           Exercisability

and Term.  Each Stock Option

Agreement shall specify the date when all or any installment of the Option is

to become exercisable.  The Stock Option

Agreement shall also specify the term of the Option.  A Stock Option Agreement may provide for accelerated

exercisability in the event of the Optionee’s death, disability or retirement

or other events and may provide for expiration prior to the end of its term in

the event of the termination of the Optionee’s service.




Options may be awarded in combination with SARs, and

such an Award may provide that the Options will not be exercisable unless the

related SARs are forfeited.  NSOs may

also be awarded in combination with Restricted Shares or Stock Units, and such

an Award may provide that the NSOs will not be exercisable unless the related

Restricted Shares or Stock Units are forfeited.




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5.5           Effect

of Change in Control.  The Committee

may determine, at the time of granting an Option or thereafter, that such

Option shall become fully exercisable as to all Common Shares subject to such

Option in the event that a Change in Control occurs with respect to the Company.




5.6           Modification

or Assumption of Options.  Within

the limitations of the Plan, the Committee may modify, extend or assume

outstanding options.  The foregoing

notwithstanding, no modification of an Option shall, without the consent of the

Optionee, alter or impair his or her rights or obligations under such Option.




ARTICLE 6            PAYMENT FOR OPTION SHARES.




6.1           General

Rule.  The entire Exercise Price of

Common Shares issued upon exercise of Options shall be payable in cash at the

time when such Common Shares are purchased, except as follows.  The Exercise Price may be paid in such form

permitted in the Stock Option Agreement for such Options and the Committee may,

in its discretion at any time accept payment in any form(s) described in this

Article 6.




6.2           Surrender

of Stock.  To the extent that this

Section 6.2 is applicable, payment for all or any part of the Exercise

Price may be made with Common Shares which have already been owned by the

Optionee for more than six months.  Such

Common Shares shall be valued at their Fair Market Value on the date when the

new Common Shares are purchased under the Plan.




6.3           Exercise/Sale.  To the extent that this Section 6.3 is

applicable, payment may be made by the delivery (on a form prescribed by the

Company) of an irrevocable direction to a securities broker approved by the

Company to sell Common Shares and to deliver all or part of the sales proceeds

to the Company in payment of all or part of the Exercise Price and any

withholding taxes.




6.4           Exercise/Pledge.  To the extent that this Section 6.4 is

applicable, payment may be made by the delivery (on a form prescribed by the

Company) of an irrevocable direction to pledge Common Shares to a securities

broker or lender approved by the Company, as security for a loan, and to

deliver all or part of the loan proceeds to the Company in payment of all or

part of the Exercise Price and any withholding taxes.




6.5           Promissory

Note.  To the extent that this

Section 6.5 is applicable, payment may be made with a full-recourse

promissory note with interest at a rate to be determined by the Company;

provided that the par value of the Common Shares shall be paid in cash.




6.6           Other

Forms of Payment.  To the extent

that this Section 6.6 is applicable, payment may be made in any other form

that is consistent with applicable laws, regulations and rules.




ARTICLE 7            STOCK APPRECIATION RIGHTS.




7.1           SAR

Agreement.  Each grant of an SAR

under the Plan shall be evidenced by an SAR Agreement between the Optionee and

the Company.  Such SAR shall be subject

to all applicable terms of the Plan and may be subject to any other terms that

are not inconsistent with the Plan.  The

provisions of the various SAR Agreements entered into under the Plan need not

be identical.  SARs may be granted in

consideration of a reduction in the Optionee’s other compensation.




7.2           Number

of Shares.  Each SAR Agreement shall

specify the number of Common Shares to which the SAR pertains and shall provide

for the adjustment of such number in accordance with Article 10.  SARs granted to any Optionee in a single

calendar year shall in no event pertain to more than 250,000 Common Shares,

subject to adjustment in accordance with Article 10.




7.3           Exercise

Price.  Each SAR Agreement shall

specify the Exercise Price.  An SAR

Agreement may specify an Exercise Price that varies in accordance with a

predetermined formula while the SAR is outstanding.




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7.4           Exercisability

and Term.  Each SAR Agreement shall

specify the date when all or any installment of the SAR is to become

exercisable.  The SAR Agreement shall

also specify the term of the SAR.  An

SAR Agreement may provide for accelerated exercisability in the event of the

Optionee’s death, disability or retirement or other events and may provide for

expiration prior to the end of its term in the event of the termination of the

Optionee’s service.  SARs may also be

awarded in combination with Options, Restricted Shares or Stock Units, and such

an Award may provide that the SARs will not be exercisable unless the related

Options, Restricted Shares or Stock Units are forfeited.  An SAR may be included in an NSO at the time

of grant or thereafter.  An SAR granted

under the Plan may provide that it will be exercisable only in the event of a

Change in Control.




7.5           Effect

of Change in Control.  The Committee

may determine, at the time of granting an SAR or thereafter, that such SAR

shall become fully exercisable as to all Common Shares subject to such SAR in

the event that a Change in Control occurs with respect to the Company.




7.6           Exercise

of SARs.  The exercise of an SAR

shall be subject to the restrictions imposed by Rule 16b–3 (or its

successor) under the Exchange Act, if applicable.  If, on the date when an SAR expires, the Exercise Price under

such SAR is less than the Fair Market Value on such date but any portion of

such SAR has not been exercised or surrendered, then such SAR shall

automatically be deemed to be exercised as of such date with respect to such

portion.  Upon exercise of an SAR, the

Optionee (or any person having the right to exercise the SAR after his or her

death) shall receive from the Company (a) Common

Shares, (b) cash or (c) a

combination of Common Shares and cash, as the Committee shall determine.  The amount of cash and/or the Fair Market

Value of Common Shares received upon exercise of SARs shall, in the aggregate,

be equal to the amount by which the Fair Market Value (on the date of

surrender) of the Common Shares subject to the SARs exceeds the Exercise Price.




7.7           Modification

or Assumption of SARs.  Within the

limitations of the Plan, the Committee may modify, extend or assume outstanding

SARs or may accept the cancellation of outstanding SARs (whether granted by the

Company or by another issuer) in return for the grant of new SARs for the same

or a different number of shares and at the same or a different exercise

price.  The foregoing notwithstanding,

no modification of an SAR shall, without the consent of the Optionee, alter or

impair his or her rights or obligations under such SAR.




ARTICLE 8            RESTRICTED SHARES AND STOCK

UNITS.




8.1           Time,

Amount and Form of Awards.  Awards

under the Plan may be granted in the form of Restricted Shares, in the form of

Stock Units, or in any combination of both. 

Restricted Shares or Stock Units may also be awarded in combination with

NSOs or SARs, and such an Award may provide that the Restricted Shares or Stock

Units will be forfeited in the event that the related NSOs or SARs are

exercised.




8.2           Payment

for Awards.  To the extent that an

Award is granted in the form of newly issued Restricted Shares, the Award

recipient, as a condition to the grant of such Award, shall be required to pay

the Company in cash an amount equal to the par value of such Restricted Shares.  To the extent that an Award is granted in

the form of Restricted Shares from the Company’s treasury or in the form of

Stock Units, no cash consideration shall be required of the Award recipients.




8.3           Vesting

Conditions.  Each Award of

Restricted Shares or Stock Units shall become vested, in full or in

installments, upon satisfaction of the conditions specified in the Stock Award

Agreement.  A Stock Award Agreement may

provide for accelerated vesting in the event of the Participant’s death, disability

or retirement or other events.  The Committee

may determine, at the time of making an Award or thereafter, that such Award

shall become fully vested in the event that a Change in Control occurs with

respect to the Company.




8.4           Form

and Time of Settlement of Stock Units. 

Settlement of vested Stock Units may be made in the form of (a) cash, (b) Common

Shares or (c) any combination of both, as determined

by the Committee.  The actual number of

Stock Units eligible for settlement may be larger or smaller than the number

included in the original Award, based on predetermined performance

factors.  Methods of converting Stock

Units into cash may include (without limitation) a method based on the average

Fair Market Value of Common Shares over a series of trading days.  Vested Stock Units may be settled in a lump

sum or in installments.  The

distribution may occur or commence when all vesting conditions applicable to

the Stock Units have been satisfied or have lapsed, or it may be deferred to

any later 




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date.  The amount of a deferred distribution may be

increased by an interest factor or by dividend equivalents.  Until an Award of Stock Units is settled,

the number of such Stock Units shall be subject to adjustment pursuant to

Article 10.




8.5           Death

of Recipient.  Any Stock Units Award

that becomes payable after the recipient’s death shall be distributed to the

recipient’s beneficiary or beneficiaries. 

Each recipient of a Stock Units Award under the Plan shall designate one

or more beneficiaries for this purpose by filing the prescribed form with the

Company.  A beneficiary designation may

be changed by filing the prescribed form with the Company at any time before

the Award recipient’s death.  If no

beneficiary was designated or if no designated beneficiary survives the Award

recipient, then any Stock Units Award that becomes payable after the

recipient’s death shall be distributed to the recipient’s estate.




8.6           Creditors’

Rights.  A holder of Stock Units

shall have no rights other than those of a general creditor of the

Company.  Stock Units represent an

unfunded and unsecured obligation of the Company, subject to the terms and

conditions of the applicable Stock Award Agreement.




ARTICLE 9            VOTING AND DIVIDEND RIGHTS.




9.1           Restricted

Shares.  The holders of Restricted

Shares awarded under the Plan shall have the same voting, dividend and other

rights as the Company’s other stockholders. 

A Stock Award Agreement, however, may require that the holders of

Restricted Shares invest any cash dividends received in additional Restricted

Shares.  Such additional Restricted

Shares shall be subject to the same conditions and restrictions as the Award

with respect to which the dividends were paid. 

Such additional Restricted Shares shall not reduce the number of Common

Shares available under Article 3.




9.2           Stock

Units.  The holders of Stock Units

shall have no voting rights.  Prior to

settlement or forfeiture, any Stock Unit awarded under the Plan may, at the

Committee’s discretion, carry with it a right to dividend equivalents.  Such right entitles the holder to be

credited with an amount equal to all cash dividends paid on one Common Share

while the Stock Unit is outstanding. 

Dividend equivalents may be converted into additional Stock Units.  Settlement of dividend equivalents may be

made in the form of cash, in the form of Common Shares, or in a combination of

both.  Prior to distribution, any

dividend equivalents which are not paid shall be subject to the same conditions

and restrictions as the Stock Units to which they attach.




ARTICLE 10          PROTECTION AGAINST DILUTION.




10.1         Adjustments.  In the event of a subdivision of the

outstanding Common Shares, a declaration of a dividend payable in Common

Shares, a declaration of a dividend payable in a form other than Common Shares

in an amount that has a material effect on the price of Common Shares, a

combination or consolidation of the outstanding Common Shares (by

reclassification or otherwise) into a lesser number of Common Shares, a

recapitalization, a spinoff or a similar occurrence, the Committee shall make

such adjustments as it, in its sole discretion, deems appropriate in one or

more of (a) the number of Options, SARs, Restricted Shares and Stock Units

available for future Awards under Article 3, (b) the limitations set

forth in Sections 5.2 and 7.2, (c) the number of NSOs to be granted

to Outside Directors under Section 4.2, (d) the number of Stock Units

included in any prior Award which has not yet been settled, (e) the number

of Common Shares covered by each outstanding Option and SAR or (f) the

Exercise Price under each outstanding Option and SAR.  Except as provided in this Article 10, a Participant shall

have no rights by reason of any issue by the Company of stock of any class or

securities convertible into stock of any class, any subdivision or

consolidation of shares of stock of any class, the payment of any stock

dividend or any other increase or decrease in the number of shares of stock of

any class.




10.2         Reorganizations.  In the event that the Company is a party to

a merger or other reorganization, outstanding Options, SARs, Restricted Shares

and Stock Units shall be subject to the agreement of merger or

reorganization.  Such agreement may

provide, without limitation, for the assumption of outstanding Awards by the

surviving corporation or its parent, for their continuation by the Company (if

the Company is a surviving corporation), for accelerated vesting and

accelerated expiration, or for settlement in cash.




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ARTICLE 11          AWARDS UNDER OTHER PLANS.




The Company may grant awards under other plans or

programs.  Such awards may be settled in

the form of Common Shares issued under this Plan.  Such Common Shares shall be treated for all purposes under the

Plan like Common Shares issued in settlement of Stock Units and shall, when

issued, reduce the number of Common Shares available under Article 3.




ARTICLE 12          LIMITATION ON RIGHTS.




12.1         Retention

Rights.  Neither the Plan nor any

Award granted under the Plan shall be deemed to give any individual a right to

remain an employee, consultant or director of the Company, a Parent or a

Subsidiary.  The Company and its Parents

and Subsidiaries reserve the right to terminate the service of any employee,

consultant or director at any time, with or without cause, subject to

applicable laws, the Company’s certificate of incorporation and by-laws and a

written employment agreement (if any).




12.2         Stockholders’

Rights.  A Participant shall have no

dividend rights, voting rights or other rights as a stockholder with respect to

any Common Shares covered by his or her Award prior to the issuance of a stock

certificate for such Common Shares.  No

adjustment shall be made for cash dividends or other rights for which the

record date is prior to the date when such certificate is issued, except as

expressly provided in Articles 8, 9 and 10.




12.3         Regulatory

Requirements.  Any other provision

of the Plan notwithstanding, the obligation of the Company to issue Common

Shares under the Plan shall be subject to all applicable laws, rules and

regulations and such approval by any regulatory body as may be required.  The Company reserves the right to restrict,

in whole or in part, the delivery of Common Shares pursuant to any Award prior

to the satisfaction of all legal requirements relating to the issuance of such

Common Shares, to their registration, qualification or listing or to an

exemption from registration, qualification or listing.




ARTICLE 13          LIMITATION ON PAYMENTS.




13.1         Excise

Tax.   If any acceleration of the

vesting of a Participant’s Awards under this Plan  (“Acceleration”) would (i) constitute a “parachute payment”

within the meaning of Section 280G of the Internal Revenue Code of 1986, as

amended (the “Code”), and (ii) but for this sentence, be subject to the excise

tax imposed by Section 4999 of the Code (the “Excise Tax”), then such

Acceleration shall be reduced to the Reduced Amount.  The “Reduced Amount” shall be whichever of the following which

would provide the largest after-tax benefit to the Participant: (i) the largest

portion of the Acceleration that would result in no portion of the Acceleration

being subject to the Excise Tax or (ii) the largest portion, up to and

including the total, of the Acceleration, whichever amount, after taking into

account all applicable federal, state and local employment taxes, income taxes,

and the Excise Tax (all computed at the highest applicable marginal rate),

results in Participant’s receipt, on an after-tax basis, of the greater amount

of the Acceleration notwithstanding that all or some portion of the Payment may

be subject to the Excise Tax. In the event that the Acceleration is to be

reduced, such Acceleration shall be cancelled in the reverse order of the date

of grant of the Participant’s Awards unless the Participant elects in writing a

different order for cancellation.




The accounting

firm engaged by the Company for general audit purposes as of the day prior to

the effective date of the transaction triggering the Acceleration (“Triggering

Transaction”) shall perform the foregoing calculations.  If the accounting firm so engaged by the

Company is serving as accountant or auditor for the individual, entity or group

effecting the Triggering Transaction, the Company shall appoint a nationally

recognized accounting firm to make the determinations required hereunder.  The Company shall bear all expenses with

respect to the determinations by such accounting firm required to be made

hereunder.




13.2         Calculations.  The accounting firm engaged to make the

determinations hereunder shall provide its calculations, together with detailed

supporting documentation, to the Corporation and Participant within fifteen

(15) calendar days after the date on which Participant’s right to Acceleration

arises (if requested at that time by 




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the

Company or Participant) or at such other time as requested by the Company or

Participant.  If the accounting firm

determines that no Excise Tax is payable with respect to an Acceleration, either

before or after the application of the Reduced Amount, it shall furnish the

Company and Participant with an opinion reasonably acceptable to Participant

that no Excise Tax will be imposed with respect to such Acceleration.  Any good faith determination of the

accounting firm made hereunder shall be final, binding and conclusive upon the

Company and Participant.




13.3         Related

Corporations.  For purposes of this

Article 13, the term “Company” shall include affiliated corporations to

the extent determined by the Auditors in accordance with

section 280G(d)(5) of the Code.




ARTICLE 14          WITHHOLDING TAXES.




14.1         General.  To the extent required by applicable

federal, state, local or foreign law, a Participant or his or her successor

shall make arrangements satisfactory to the Company for the satisfaction of any

withholding tax obligations that arise in connection with the Plan.  The Company shall not be required to issue

any Common Shares or make any cash payment under the Plan until such

obligations are satisfied.




14.2         Share

Withholding.  The Committee may

permit a Participant to satisfy all or part of his or her withholding or income

tax obligations by having the Company withhold all or a portion of any Common

Shares that otherwise would be issued to him or her or by surrendering all or a

portion of any Common Shares that he or she previously acquired.  Such Common Shares shall be valued at their

Fair Market Value on the date when taxes otherwise would be withheld in cash.  Any payment of taxes by assigning Common Shares

to the Company may be subject to restrictions, including any restrictions

required by rules of the Securities and Exchange Commission.




ARTICLE 15          ASSIGNMENT OR TRANSFER OF AWARDS.




15.1         General.  An Award granted under the Plan shall not be

anticipated, assigned, attached, garnished, optioned, transferred or made

subject to any creditor’s process, whether voluntarily, involuntarily or by

operation of law, except as approved by the Committee.  However, this Article 15 shall not

preclude a Participant from designating a beneficiary who will receive any

outstanding Awards in the event of the Participant’s death, nor shall it

preclude a transfer of Awards by will or by the laws of descent and

distribution.




15.2         Trusts.  Neither this Article 15 nor any other

provision of the Plan shall preclude a Participant from transferring or

assigning Restricted Shares to (a) the trustee of a trust that is

revocable by such Participant alone, both at the time of the transfer or

assignment and at all times thereafter prior to such Participant’s death, or

(b) the trustee of any other trust to the extent approved in advance by

the Committee in writing.  A transfer or

assignment of Restricted Shares from such trustee to any person other than such

Participant shall be permitted only to the extent approved in advance by the

Committee in writing, and Restricted Shares held by such trustee shall be

subject to all of the conditions and restrictions set forth in the Plan and in

the applicable Stock Award Agreement, as if such trustee were a party to such

Agreement.




ARTICLE 16          FUTURE OF THE PLAN.




16.1         Term

of the Plan.  The Plan, as set forth

herein, was adopted on November 7, 2002, and became effective November 7,

2002.  The Plan shall remain in effect

until it is terminated under Section 16.2.




16.2         Amendment

or Termination.  The Board may, at

any time and for any reason, amend or terminate the Plan.  An amendment of the Plan shall be subject to

the approval of the Company’s stockholders only to the extent required by

applicable laws, regulations or rules or applicable stock exchange rules.  No Awards shall be granted under the Plan

after the termination thereof.  The

termination of the Plan, or any amendment thereof, shall not affect any Award

previously granted under the Plan.




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ARTICLE 17          DEFINITIONS.




17.1         “Award”

means any award of an Option, an SAR, a Restricted Share or a Stock Unit under

the Plan.




17.2          “Board”

means the Company’s Board of Directors, as constituted from time to time.




17.3          “Change

in Control” shall mean the occurrence of any of the following events:




(a)         The

consummation of a merger or consolidation of the Company with or into another

entity or any other corporate reorganization, if more than 50% of the combined

voting power of the continuing or surviving entity’s securities outstanding

immediately after such merger, consolidation or other reorganization is owned

by persons who were not stockholders of the Company immediately prior to such

merger, consolidation or other reorganization;




(b)         A

change in the composition of the Board, as a result of which fewer than

one-half of the incumbent directors are directors who either:




(A)          Had been directors of the Company

24 months prior to such change; or




(B)           Were elected, or nominated for

election, to the Board with the affirmative votes of at least a majority of the

directors who had been directors of the Company 24 months prior to such

change and who were still in office at the time of the election or nomination;

or




(c)         Any

“person” (as such term is used in sections 13(d) and 14(d) of the Exchange

Act) by the acquisition or aggregation of securities is or becomes the

beneficial owner, directly or indirectly, of securities of the Company

representing 50% or more of the combined voting power of the Company’s

then outstanding securities ordinarily (and apart from rights accruing under

special circumstances) having the right to vote at elections of directors (the

“Base Capital Stock”); except that any change in the relative beneficial

ownership of the Company’s securities by any person resulting solely from a

reduction in the aggregate number of outstanding shares of Base Capital Stock,

and any decrease thereafter in such person’s ownership of securities, shall be

disregarded until such person increases in any manner, directly or indirectly,

such person’s beneficial ownership of any securities of the Company.




The term “Change in Control” shall not include a

transaction, the sole purpose of which is to change the state of the Company’s

incorporation.




17.4          “Code”

means the Internal Revenue Code of 1986, as amended.




17.5          “Committee”

means a committee of the Board, as described in Article 2.




17.6         “Common

Share” means one share of the common stock of the Company.




17.7         “Company”

means Biosite Incorporated, a Delaware corporation.




17.8         “Eligible

Employee” means a common–law employee of the Company, a Parent or a

Subsidiary.




17.9         “Exchange

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




17.10       “Exercise

Price,” in the case of an Option, means the amount for which one Common

Share may be purchased upon exercise of such Option, as specified in the

applicable Stock Option Agreement.  ”Exercise Price,” in the case of

an SAR, means an amount, as specified in the applicable SAR Agreement, which is

subtracted from the Fair Market Value of one Common Share in determining the

amount payable upon exercise of such SAR.




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17.11       “Fair

Market Value” means the market price of Common Shares, determined by the

Committee as follows:




(a)         If

the Common Shares were traded over-the-counter on the date in question but was

not traded on the Nasdaq Stock Market or the Nasdaq National Market, then the

Fair Market Value shall be equal to the mean between the last reported

representative bid and asked prices quoted for such date by the principal

automated inter-dealer quotation system on which the Common Shares are quoted

or, if the Common Shares are not quoted on any such system, by the “Pink

Sheets” published by the National Quotation Bureau, Inc.;




(b)         If

the Common Shares were traded over-the-counter on the date in question and were

traded on the Nasdaq Stock Market or the Nasdaq National Market, then the Fair

Market Value shall be equal to the last-transaction price quoted for such date

by the Nasdaq Stock Market or the Nasdaq National Market;




(c)         If

the Common Shares were traded on a stock exchange on the date in question, then

the Fair Market Value shall be equal to the closing price reported by the

applicable composite transactions report for such date; and




(d)         If

none of the foregoing provisions is applicable, then the Fair Market Value

shall be determined by the Committee in good faith on such basis as it deems

appropriate.




Whenever possible, the determination of Fair Market

Value by the Committee shall be based on the prices reported in the Western

Edition of The Wall Street Journal. 

Such determination shall be conclusive and binding on all persons.




17.12       “ISO”

means an incentive stock option described in section 422(b) of the Code.




17.13       “NSO”

means a stock option not described in section 422 or 423 of the Code.




17.14       “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 there

thereunder and also means a person who holds a Vice President or higher

position with the Company.




17.15       “Option”

means a nonstatutory stock option granted under the Plan and entitling the

holder to purchase one Common Share. 

The term “Option” shall not include an incentive stock option described

section 422 of the Code.




17.16       “Optionee”

means an individual or estate who holds an Option or SAR.




17.17       “Outside

Director” shall mean a member of the Board who is not a common-law employee

of the Company, a Parent or a Subsidiary.




17.18       “Parent”

means any corporation (other than the Company) in an unbroken chain of

corporations ending with the Company, if each of the corporations other than

the Company owns stock possessing 50% or more of the total combined voting

power of all classes of stock in one of the other corporations in such

chain.  A corporation that attains the

status of a Parent on a date after the adoption of the Plan shall be considered

a Parent commencing as of such date.




17.19       “Participant”

means an individual or estate who holds an Award as provided in Section 4.2.




17.20       “Plan”

means this Biosite Incorporated 2002 Nonqualified Stock Incentive Plan, as

amended from time to time.




17.21       “Restricted Share”

means a Common Share awarded under the Plan.




17.22       “SAR”

means a stock appreciation right granted under the Plan.




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17.23       “SAR

Agreement” means the agreement between the Company and an Optionee which

contains the terms, conditions and restrictions pertaining to his or her SAR.




17.24       “Stock

Award Agreement” means the agreement between the Company and the recipient

of a Restricted Share or Stock Unit which contains the terms, conditions and

restrictions pertaining to such Restricted Share or Stock Unit.




17.25       “Stock

Option Agreement” means the agreement between the Company and an Optionee

which contains the terms, conditions and restrictions pertaining to his or her

Option.




17.26       “Stock

Unit” means a bookkeeping entry representing the equivalent of one Common

Share, as awarded under the Plan.




17.27       “Subsidiary”

means any corporation (other than the Company) in an unbroken chain of

corporations beginning with the Company, if each of the corporations other than

the last corporation in the unbroken chain owns stock possessing 50% or more of

the total combined voting power of all classes of stock in one of the other

corporations in such chain.  A

corporation that attains the status of a Subsidiary on a date after the

adoption of the Plan shall be considered a Subsidiary commencing as of such

date.




ARTICLE 18          EXECUTION.




To record the adoption of

the Plan by the Board, the Company has caused its duly authorized officer to

affix the corporate name and seal hereto.




	

  BIOSITE

  INCORPORATED


  
	

   


  
	

   


  
	

   


  
	

  By     /s/ 

  KIM D. BLICKENSTAFF


  





 




 




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