Exhibit 10.1


 


AMENDED
AND RESTATED


QUIDEL
CORPORATION

2001 EQUITY INCENTIVE PLAN


 


ARTICLE I

PURPOSE OF PLAN


 


The Company has adopted this Plan to promote the interests of the
Company and its stockholders by using investment interests in the Company to
attract, retain and motivate its management and other persons, to encourage and
reward their contributions to the performance of the Company, and to align
their interests with the interests of the Company’s stockholders.  Capitalized terms not otherwise defined
herein have the meanings ascribed to them in Article IX.


 


ARTICLE II

EFFECTIVE DATE AND TERM OF PLAN


 


2.1                               Term of Plan.


 


This Plan became effective as of the Effective Date and will continue
in effect until the earlier of (a) the Expiration Date, or (b) the
date of any Plan termination pursuant to the provisions in Section 8.1,
at which time this Plan will automatically terminate.


 


2.2                               Effect on Awards.


 


Awards may be granted only during the Plan Term, but each Award
properly granted during the Plan Term will remain in effect after the
Expiration Date until such Award has been exercised, terminated or expired in
accordance with its terms and the terms of this Plan.


 


ARTICLE III

SHARES SUBJECT TO PLAN


 


3.1                               Number of Shares.


 


The maximum number of shares of Common Stock that may be issued
pursuant to Awards under this Plan is 4,700,000, subject to adjustment as set
forth in Section 3.4.


 


3.2                               Source of Shares.


 


The Common Stock to be issued under this Plan will be made available,
at the discretion of the Administrator, either from authorized but unissued
shares of Common Stock or from previously issued shares of Common Stock
reacquired by the Company, including without limitation shares purchased on the
open market.


 


3.3                               Availability of Unused Shares.


 


Shares of Common Stock subject to unexercised portions of any Award
that expire, terminate or are canceled, and shares of Common Stock issued
pursuant to an Award that are reacquired by the Company pursuant to this Plan
or the terms of the Award under which such shares were issued, will again
become available for the grant of further Awards under this Plan as part of the
shares available under Section 3.1. 
However, if the exercise price of, or withholding taxes incurred in
connection with, an Award is paid with shares of Common Stock, or if shares of
Common Stock otherwise issuable pursuant to Awards are


 





















 


withheld by the Company in satisfaction of an exercise price or the
withholding taxes incurred in connection with any exercise or vesting of an
Award, then the number of shares of Common Stock available for issuance under
the Plan will be reduced by the gross number of shares for which the Award is
exercised or for which it vests, as applicable, and not by the net number of
shares of Common Stock issued to the holder of such Award.


 


3.4                               Adjustment Provisions.


 


(a)                                  Adjustments.  If the Company consummates any Reorganization
in which holders of shares of Common Stock are entitled to receive in respect
of such shares any additional shares or new or different shares or securities,
cash or other consideration (including, without limitation, a different number
of shares of Common Stock), or if the outstanding shares of Common Stock are
increased, decreased or exchanged for a different number or kind of shares or
other securities through merger, consolidation, sale or exchange of assets of
the Company, reorganization, recapitalization, reclassification, combination,
stock dividend, stock split, reverse stock split, spin-off, or similar
transaction then, subject to Section 8.1, an appropriate and
proportionate adjustment shall be made by the Administrator in its discretion
in:  (i) the maximum number and kind
of shares subject to this Plan as provided in Section 3.1; (ii) the
number and kind of shares or other securities subject to then outstanding
Awards; (iii) the price for each share or other unit of any other
securities subject to, or measurement criteria applicable to, then outstanding
Awards; and/or (iv) the number and kind of shares or other securities to
be issued as Non-Employee Director Options.


 


(b)                                 No
Fractional Interests.  No fractional interests will be issued under
the Plan resulting from any adjustments.


 


(c)                                  Adjustments
Related to Company Stock.  To the extent any adjustments relate to stock
or securities of the Company, such adjustments will be made by the
Administrator, whose determination in that respect will be final, binding and
conclusive.


 


(d)                                 Right
to Make Adjustment.  The grant of an Award will not affect in any
way the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merge or
to consolidate or to dissolve, liquidate or sell, or transfer all or any part
of its business or assets.


 


(e)                                  Limitations.  No adjustment to the terms of an Incentive
Stock Option may be made unless such adjustment either:  (i) would not cause the Option to lose
its status as an Incentive Stock Option; or (ii) is agreed to in writing
by the Administrator and the Recipient.


 


3.5                               Reservation of Shares.


 


The Company will at all times reserve and keep available shares of
Common Stock equaling at least the total number of shares of Common Stock
issuable pursuant to all outstanding Awards.


 


ARTICLE IV

ADMINISTRATION OF PLAN


 


4.1                               Administrator.


 


(a)                                  Plan
Administration.  Subject to the
provisions of Section 4.1(b), this Plan will be administered by the
Board and may also be administered by a Committee of the Board appointed
pursuant to Section 4.1(b).


 





















 


(b)                                 Administration
by Committee.  The Board in its sole
discretion may from time to time appoint a Committee of not less than two (2) Board members with authority
to administer this Plan in whole or part and, subject to applicable law, to
exercise any or all of the powers, authority and discretion of the Board under
this Plan.  As long as the Company has a
class of equity securities registered under Section 12 of the Exchange
Act, this Plan will be administered by a Committee of not less than two (2) Board
members appointed by the Board in its sole discretion from time to time, each
of whom is (i) a Non-Employee Director, and (ii) an “Outside Director”
as defined in the regulations adopted under Section 162(m) of the
IRC.  The Board may from time to time
increase or decrease (but not below two (2)) the number of members of the
Committee, remove from membership on the Committee all or any portion of its
members, and/or appoint such person or persons as it desires to fill any
vacancy existing on the Committee, whether caused by removal, resignation or otherwise.  Unless otherwise required by this Section 4.1(b),
the Board may disband the Committee at any time.


 


4.2                               Authority of Administrator.


 


(a)                                  Authority
to Interpret Plan.  Subject to the
express provisions of this Plan, the Administrator will have the power to
implement, interpret and construe this Plan and any Awards and Award Documents
or other documents defining the rights and obligations of the Company and
Recipients hereunder and thereunder, to determine all questions arising
hereunder and thereunder, and to adopt and amend such rules and
regulations for the administration hereof and thereof as it may deem
desirable.  The interpretation and
construction by the Administrator of any provisions of this Plan or of any
Award or Award Document, and any action taken by, or inaction of, the
Administrator relating to this Plan or any Award or Award Document, will be
within the discretion of the Administrator and will be conclusive and binding
upon all persons.  Subject only to
compliance with the express provisions hereof, the Administrator may act in its
discretion in matters related to this Plan and any and all Awards and Award
Documents.


 


(b)                                 Authority
to Grant Awards.  Subject to the
express provisions of this Plan, the Administrator may from time to time in its
discretion select the Eligible Persons to whom, and the time or times at which,
Awards will be granted or sold, the nature of each Award, the number of shares
of Common Stock or the number of rights that make up or underlie each Award,
the exercise price and period (if applicable) for the exercise of each Award,
and such other terms and conditions applicable to each individual Award as the
Administrator may determine.  Any and all
terms and conditions of Awards may be established by the Administrator without
regard to existing Awards or other grants and without incurring any obligation
of the Company in respect of subsequent Awards. 
The Administrator may grant at any time new Awards to an Eligible Person
who has previously received Awards or other grants (including other stock
options) regardless of the status of such other Awards or grants.  The Administrator may grant Awards singly or
in combination or in tandem with other Awards as it determines in its discretion.


 


(c)                                  Procedures.  Subject to the Company’s
charter or bylaws or any Board resolution conferring authority on the
Committee, any action of the Administrator with respect to the administration
of this Plan must be taken pursuant to a majority vote of the authorized number
of members of the Administrator or by the unanimous written consent of its
members; provided, however, that (i) if the
Administrator is the Committee and consists of two (2) members, then
actions of the Administrator must be unanimous, and (ii) actions taken by
the Board will be valid if approved in accordance with applicable law.


 





















 


4.3                               No Liability.


 


No member of the Board or the Committee or any designee thereof will be
liable for any action or inaction with respect to this Plan or any Award or any
transaction arising under this Plan or any Award except in circumstances
constituting bad faith of such member.


 


4.4                               Amendments.


 


(a)                                  Plan
Amendments.  The Administrator may at
any time and from time to time in its discretion, insofar as permitted by
applicable law, rule or regulation and subject to Section 4.4(c),
suspend or discontinue this Plan or revise or amend it in any respect
whatsoever, and this Plan as so revised or amended will govern all Awards,
including those granted before such revision or amendment.  Without limiting the generality of the
foregoing, the Administrator is authorized to amend this Plan to comply with or
take advantage of amendments to applicable laws, rules or regulations,
including the Securities Act, the Exchange Act, the IRC, or the rules of
any exchange or market system upon which the Common Stock is listed or trades,
or any rules or regulations promulgated thereunder.  No stockholder approval of any amendment or
revision will be required unless such approval is required by applicable law, rule or
regulation.


 


(b)                                 Award
Amendments.  The Administrator may at any time and from
time to time in its discretion, but subject to Section 4.4(c) and
compliance with applicable statutory or administrative requirements, accelerate
or extend the vesting or exercise period of any Award as a whole or in part,
and make such other modifications in the terms and conditions of an Award as it
deems advisable, provided, however,
that the Administrator may reduce the exercise price of a Stock Option (either
by cancellation of such Stock Option and the granting of a new Stock Option at
such modified exercise price or by amending the terms of the Stock Option to
reflect such a modified exercise price) only with stockholder approval.


 


(c)                                  Limitation.  Except as otherwise provided in this Plan or
in the applicable Award Document, no amendment, revision, suspension or
termination of this Plan or an outstanding Award that would cause an Incentive
Stock Option to cease to qualify as such or that would alter, impair or
diminish in any material respect any rights or obligations under any Award
theretofore granted under this Plan may be effected without the written consent
of the Recipient to whom such Award was granted.


 


4.5                               Other Compensation Plans.


 


On the Effective Date of this Plan, the Company’s 1998 Stock Incentive
Plan and the Company’s 1996 Non-Employee Directors Stock Option Plan, as
amended, will be terminated, but the adoption of this Plan will not affect any
other stock option, incentive or other compensation plans in effect from time
to time for the Company, and this Plan will not preclude the Company from
establishing any other forms of incentive or other compensation for employees,
directors, advisors or consultants of the Company, whether or not approved by
stockholders.  Notwithstanding the fact
that this Plan replaces the Company’s 1998 Stock Incentive Plan and the Company’s
1996 Non-Employee Directors Stock Option Plan, as amended, this Plan does not
affect in any way any outstanding award grants made under such plans and awards
granted under such plans will continue to be governed by the terms and
conditions of such plans.


 


4.6                               Plan Binding on Successors.


 


This Plan will be binding upon the successors and assigns of the
Company.


 


4.7                               References to Successor Statutes, Regulations and
Rules.


 


Any reference in this Plan to a particular statute, regulation or rule will
also refer to any successor provision of such statute, regulation or rule.


 





















 


4.8                               Invalid Provisions.


 


In the event that any provision of this Plan is found to be invalid or
otherwise unenforceable under any applicable law, such invalidity or
unenforceability is not to be construed as rendering any other provisions
contained herein invalid or unenforceable, and all such other provisions are to
be given full force and effect to the same extent as though the invalid and
unenforceable provision were not contained herein.


 


4.9                               Governing Law.


 


This Plan will be governed by and interpreted in accordance with the
internal laws of the State of Delaware, without giving effect to the principles
of the conflicts of laws thereof.


 


4.10                        Interpretation.


 


Headings herein are for convenience of reference only, do not
constitute a part of this Plan, and will not affect the meaning or
interpretation of this Plan.  References
herein to Sections or Articles are references to the referenced Section or
Article hereof, unless otherwise specified.


 


ARTICLE V

GENERAL AWARD PROVISIONS


 


5.1                               Participation in Plan.


 


(a)                                  Eligibility
to Receive Awards.  A person is
eligible to receive grants of Awards if, at the time of the grant of the Award,
such person is an Eligible Person or has received an offer of employment from
the Company, provided, however,
that only Non-Employee Directors are eligible to receive Non-Employee Director
Options, and provided further,
that Awards granted to a person who has received an offer of employment will
terminate and be forfeited without consideration if the employment offer is not
accepted within such time as may be specified by the Company.  Status as an Eligible Person will not be
construed as a commitment that any Award will be granted under this Plan to an
Eligible Person or to Eligible Persons generally.


 


(b)                                 Eligibility
to Receive Incentive Stock Options.  Incentive Stock Options may be granted only to
Eligible Persons meeting the employment requirements of Section 422 of the
IRC.


 


(c)                                  Awards
to Foreign Nationals. 
Notwithstanding anything to the contrary herein, the Administrator may,
in order to fulfill the purposes of this Plan, modify grants of Awards to
Recipients who are foreign nationals or employed outside of the United States
to recognize differences in applicable law, tax policy or local custom.


 


5.2                               Award Documents.


 


Each Award must be evidenced by an agreement duly executed on behalf of
the Company and by the Recipient or, in the Administrator’s discretion, a
confirming memorandum issued by the Company to the Recipient, setting forth
such terms and conditions applicable to the Award as the Administrator may in
its discretion determine.  Awards will
not be deemed made or binding upon the Company, and Recipients will have no
rights thereto, until such an agreement is entered into between the Company and
the Recipient or such a memorandum is delivered by the Company to the
Recipient, but an Award may have an effective date prior to the date of such an
agreement or memorandum.  Award Documents
may be (but need not be) identical and must comply with and be subject to the
terms and conditions of this Plan, a copy of which will be provided to each
Recipient and incorporated by reference into each Award Document.  Any Award Document may contain such other
terms, provisions and conditions not inconsistent with this Plan as may be
determined by the Administrator.  In case
of any conflict between this Plan and any Award Document, this Plan shall
control.


 





















 


5.3                               Payment For Awards.


 


(a)                                  Payment
of Exercise Price.  The exercise
price or other payment for an Award is payable upon the exercise of a Stock
Option or upon other purchase of shares pursuant to an Award granted hereunder
by delivery of legal tender of the United States or payment of such other
consideration as the Administrator may from time to time deem acceptable in any
particular instance; provided, however,
that the Administrator may, in the exercise of its discretion, allow exercise
of an Award in a broker-assisted or similar transaction in which the exercise
price is not received by the Company until promptly after exercise.


 


(b)                                 [Reserved]


 


(c)                                  Cashless
Exercise.  If permitted in any case
by the Administrator in its discretion, the exercise price for Awards may be
paid by capital stock of the Company delivered in transfer to the Company by or
on behalf of the person exercising the Award and duly endorsed in blank or
accompanied by stock powers duly endorsed in blank, with signatures guaranteed
in accordance with the Exchange Act if required by the Administrator; or
retained by the Company from the stock otherwise issuable upon exercise or
surrender of vested and/or exercisable Awards or other equity awards previously
granted to the Recipient and being exercised (if applicable) (in either case
valued at Fair Market Value as of the exercise date); or such other
consideration as the Administrator may from time to time in the exercise of its
discretion deem acceptable in any particular instance.


 


(d)                                 No
Precedent.  Recipients will have no
rights to the exercise techniques described in Section 5.3(c), and
the Company may offer or permit such techniques on an ad hoc
basis to any Recipient without incurring any obligation to offer or permit such
techniques on other occasions or to other Recipients.


 


5.4                               No Employment Rights.


 


Nothing contained in this Plan (or in Award Documents or in any other
documents related to this Plan or to Awards) will confer upon any Eligible
Person or Recipient any right to continue in the employ of or engagement by the
Company or any Affiliated Entity or constitute any contract or agreement of
employment or engagement, or interfere in any way with the right of the Company
or any Affiliated Entity to reduce such person’s compensation or other benefits
or to terminate the employment or engagement of such Eligible Person or
Recipient, with or without cause.  Except
as expressly provided in this Plan or in any statement evidencing the grant of
an Award, the Company has the right to deal with each Recipient in the same
manner as if this Plan and any such statement evidencing the grant of an Award
did not exist, including, without limitation, with respect to all matters
related to the hiring, discharge, compensation and conditions of the employment
or engagement of the Recipient.  Unless
otherwise set forth in a written agreement binding upon the Company or an
Affiliated Entity, all employees of the Company or an Affiliated Entity are “at
will” employees whose employment may be terminated by the Company or the
Affiliated Entity at any time for any reason or no reason, without payment or
penalty of any kind.  Any question(s) as
to whether and when there has been a termination of a Recipient’s employment or
engagement, the reason (if any) for such termination, and/or the consequences
thereof under the terms of this Plan or any statement evidencing the grant of
an Award pursuant to this Plan will be determined by the Administrator and the
Administrator’s determination thereof will be final and binding.


 


5.5                               Restrictions Under Applicable Laws and
Regulations.


 


(a)                                  Government
Approvals.  All Awards will be
subject to the requirement that, if at any time the Company determines, in its
discretion, that the listing, registration or qualification of the


 





















 


securities subject to Awards granted under this Plan
upon any securities exchange or interdealer quotation system or under any
federal, state or foreign law, or the consent or approval of any government or
regulatory body, is necessary or desirable as a condition of, or in connection
with, the granting of such an Award or the issuance, if any, or purchase of
shares in connection therewith, such Award may not be exercised as a whole or
in part unless and until such listing, registration, qualification, consent or
approval has been effected or obtained free of any conditions not acceptable to
the Company.  During the term of this
Plan, the Company will use its reasonable efforts to seek to obtain from the appropriate
governmental and regulatory agencies any requisite qualifications, consents,
approvals or authorizations in order to issue and sell such number of shares of
its Common Stock as is sufficient to satisfy the requirements of this Plan.  The inability of the Company to obtain any
such qualifications, consents, approvals or authorizations will relieve the
Company of any liability in respect of the nonissuance or sale of such stock as
to which such qualifications, consents, approvals or authorizations pertain.


 


(b)                                 No
Registration Obligation; Recipient Representations.  The Company will be under no obligation to
register or qualify the issuance of Awards or underlying securities under the
Securities Act or applicable state securities laws.  Unless the issuance of Awards and underlying
securities have been registered under the Securities Act and qualified or
registered under applicable state securities laws, the Company shall be under
no obligation to issue any Awards or underlying securities unless the Awards
and underlying securities may be issued pursuant to applicable exemptions from
such registration or qualification requirements.  In connection with any such exempt issuance,
the Administrator may require the Recipient to provide a written representation
and undertaking to the Company, satisfactory in form and scope to the Company,
that such Recipient is acquiring such Awards and underlying securities for such
Recipient’s own account as an investment and not with a view to, or for sale in
connection with, the distribution of any such securities, and that such person
will make no transfer of the same except in compliance with any rules and
regulations in force at the time of such transfer under the Securities Act and
other applicable law, and that if securities are issued without registration, a
legend to this effect (together with any other legends deemed appropriate by
the Administrator) may be endorsed upon the securities so issued, and to the
effect of any additional representations that are appropriate in light of
applicable securities laws and rules. 
The Company may also order its transfer agent to stop transfers of such
shares.  The Administrator may also
require the Recipient to provide the Company such information and other
documents as the Administrator may request in order to satisfy the
Administrator as to the investment sophistication and experience of the
Recipient and as to any other conditions for compliance with any such
exemptions from registration or qualification.


 


5.6                               Additional Conditions.


 


Any Award may be subject to such provisions (whether or not applicable
to any other Award or Recipient) as the Administrator deems appropriate,
including without limitation provisions for the forfeiture of or restrictions
on resale or other disposition of securities of the Company acquired under this
Plan, provisions giving the Company the right to repurchase securities of the
Company acquired under this Plan in the event the Recipient leaves the Company
for any reason or elects to effect any disposition thereof, and provisions to
comply with federal and state securities laws.


 


5.7                               No Privileges re Stock Ownership or Specific
Assets.


 


Except as otherwise set forth herein, a Recipient or a permitted
transferee of an Award will have no rights as a stockholder with respect to any
shares issuable or issued in connection with the Award until the Recipient has
delivered to the Company all amounts payable and performed all obligations
required to be performed in connection with exercise of the Award and the Company
has issued such shares.  No person will
have any right, title or interest in any fund or in any specific asset
(including shares of capital stock) of the Company by reason of any Award
granted hereunder.  Neither this Plan (or
any documents related hereto) nor any action taken pursuant hereto is to be
construed to create a trust of any kind or a fiduciary relationship between the
Company and any person.  To the extent
that any person acquires a right to


 





















 


receive an Award hereunder, such right shall be no greater than the
right of any unsecured general creditor of the Company.


 


5.8                               Nonassignability.


 


No Award is assignable or transferable except:  (a) by will or by the laws of descent
and distribution; or (b) subject to the final sentence of this Section 5.8,
upon dissolution of marriage pursuant to a qualified domestic relations order
or, in the discretion of the Administrator on a case-by-case basis and under
circumstances that would not adversely affect the interests of the Company,
transfers for estate planning purposes or pursuant to a nominal transfer that
does not result in a change in beneficial ownership.  Subject to the final sentence of this Section 5.8,
during the lifetime of a Recipient, an Award granted to such person will be
exercisable only by the Recipient (or the Recipient’s permitted transferee) or
such person’s guardian or legal representative. 
Notwithstanding the foregoing, Stock Options intended to be treated as
Incentive Stock Options (or other Awards subject to transfer restrictions under
the IRC) (i) may not be assigned or transferred in violation of Section 422(b)(5) of
the IRC or the regulations thereunder, and nothing herein is intended to allow
such assignment or transfer; and (ii) will be exercisable during a
Recipient’s lifetime only by the Recipient.


 


5.9                               Information To Recipients.


 


(a)                                  Provision
of Information.  The Administrator in its sole discretion may
determine what, if any, financial and other information is to be provided to
Recipients and when such financial and other information is to be provided
after giving consideration to applicable federal and state laws, rules and
regulations, including, without limitation, applicable federal and state
securities laws, rules and regulations.


 


(b)                                 Confidentiality.  The furnishing of financial and other
information that is confidential to the Company is subject to the Recipient’s
agreement to maintain the confidentiality of such financial and other
information, and not to use the information for any purpose other than
evaluating the Recipient’s position under this Plan.  The Administrator may impose other
restrictions on the access to and use of such confidential information and may
require a Recipient to acknowledge the Recipient’s obligations under this Section 5.9(b) (which
acknowledgment is not to be a condition to Recipient’s obligations under this Section 5.9(b)).


 


5.10                        Withholding Taxes.


 


Whenever the granting, vesting or exercise of any Award, or the
issuance of any Common Stock or other securities upon exercise of any Award or
transfer thereof, gives rise to tax or tax withholding liabilities or
obligations, the Administrator will have the right as a condition thereto to
require the Recipient to remit to the Company an amount sufficient to satisfy
any federal, state and local withholding tax requirements arising in connection
therewith.  The Administrator may, in the
exercise of its discretion, allow satisfaction of tax withholding requirements
by accepting delivery of stock of the Company or by withholding a portion of the
stock otherwise issuable in connection with an Award, in each case valued at
Fair Market Value as of the date of such delivery or withholding, as the case
may be.


 


5.11                        Legends on Awards and Stock Certificates.


 


Each Award Document and each certificate representing securities
acquired upon vesting or exercise of an Award must be endorsed with all
legends, if any, required by applicable federal and state securities and other
laws to be placed on the Award Document and/or the certificate.  The determination of which legends, if any,
will be placed upon Award Documents or the certificates will be made by the
Administrator in its discretion and such decision will be final and binding.


 





















 


5.12                        Effect of Termination of Employment on Awards.


 


(a)                                  Termination
of Vesting.  Notwithstanding anything
to the contrary herein, but subject to Section 5.12(b) Awards
will be exercisable by a Recipient (or the Recipient’s successor in interest)
following such Recipient’s termination of employment or service only to the
extent that installments thereof had become exercisable on or
prior to the date of such termination.


 


(b)                                 Alteration
of Vesting and Exercise Periods.  Notwithstanding anything to the contrary
herein, the Administrator may in its discretion (i) designate shorter or
longer periods following a Recipient’s termination of employment or service
during which Awards may vest or be exercised; provided,
however, that any shorter periods determined by the Administrator
will be effective only if provided for in this Plan or the instrument that
evidences the grant to the Recipient of the affected Award or if such shorter
period is agreed to in writing by the Recipient, and (ii) accelerate the
vesting of all or any portion of any Awards by increasing the number of shares
purchasable at any time.


 


(c)                                  Leave
of Absence.  In the case of any
employee on an approved leave of absence, the Administrator may make such
provision respecting continuance of Awards granted to such employee as the
Administrator in its discretion deems appropriate, except that in no event will
an Award be exercisable after the date such Award would expire in accordance
with its terms had the Recipient remained continuously employed.


 


(d)                                 General
Cessation.  Except as otherwise set
forth in this Plan or an Award Document or as determined by the Administrator
in its discretion, all Awards granted to a Recipient, and all of such Recipient’s
rights thereunder, will terminate upon termination for any reason of such
Recipient’s employment or service with the Company or any Affiliated Entity (or
cessation of any other service relationship between the Recipient and the
Company or any Affiliated Entity in place as of the date the Award was
granted).


 


5.13                        Lock-Up Agreements.


 


Each Recipient agrees as a condition to receipt of an Award that, in
connection with any public offering by the Company of its equity securities and
upon the request of the Company and the principal underwriter (if any) in such
public offering, any shares of Common Stock acquired or that may be acquired
upon exercise or vesting of an Award may not be sold, offered for sale,
encumbered, or otherwise disposed of or subjected to any transaction that will
involve any sales of securities of the Company, without the prior written
consent of the Company or such underwriter, as the case may be, for a period of
not more than 365 days after the effective date of the registration statement
for such public offering.  Each Recipient
will, if requested by the Company or the principal underwriter, enter into a
separate agreement to the effect of this Section 5.13.


 


5.14                        Restrictions on Common Stock and Other Securities.


 


Common Stock or other securities of the Company issued or issuable in
connection with any Award will be subject to all of the restrictions imposed under
this Plan upon Common Stock issuable or issued upon exercise of Stock Options,
except as otherwise determined by the Administrator.


 


5.15                        Limits on Awards to Eligible Persons.


 


Notwithstanding any other provision of this Plan, no one Eligible
Person shall be granted Awards with respect to more than 1,800,000 shares of
Common Stock in any one calendar year, provided,
however, that this limitation shall not apply if it is not required
in order for the compensation attributable to Awards hereunder to qualify as
Performance-Based Compensation. The limitation set forth in this Section 5.15
will be subject to adjustment as provided in Section 3.4 or under Article VIII,
but only to the extent such


 





















 


adjustment would not affect the status of compensation attributable to
Awards as Performance-Based Compensation.


 


ARTICLE VI

AWARDS


 


6.1                               Stock Options.


 


(a)                                  Nature
of Stock Options.  Stock Options may
be Incentive Stock Options or Nonqualified Stock Options.


 


(b)                                 Option
Exercise Price.  The exercise price
for each Stock Option will be determined by the Administrator as of the date
such Stock Option is granted.


 


(c)                                  Option
Period and Vesting.  Stock Options granted hereunder will vest and
may be exercised as determined by the Administrator, except that exercise of Stock
Options after termination of the Recipient’s employment or service shall be
subject to Section 5.12 and Section 6.1(e).  Each Stock Option granted hereunder and all
rights or obligations thereunder shall expire on such date as may be determined
by the Administrator, but not later than ten (10) years after the date the
Stock Option is granted and may be subject to earlier termination as provided
herein or in the Award Document.  Except
as otherwise provided herein, a Stock Option will become exercisable, as a
whole or in part, on the date or dates specified by the Administrator and
thereafter will remain exercisable until the exercise, expiration or earlier
termination of the Stock Option.


 


(d)                                 Exercise of Stock
Options.  The
exercise price for Stock Options will be paid as set forth in Section 5.3.  No Stock Option will be exercisable except in
respect of whole shares, and fractional share interests shall be
disregarded.  Not fewer than 100 shares
of Common Stock (or such other amount as may be set forth in the applicable
Award Document) may be purchased at one time and Stock Options must be
exercised in multiples of 100 unless the number purchased is the total number
of shares for which the Stock Option is exercisable at the time of exercise.  A Stock Option will be deemed to be exercised
when the Secretary or other designated official of the Company receives written
notice of such exercise from the Recipient in the form of Exhibit A
hereto or such other form as the Company may specify from time to time, together
with payment of the exercise price in accordance with Section 5.3
and any amounts required under Section 5.10 or, with permission of
the Administrator, arrangement for such payment.  Notwithstanding any other provision of this
Plan, the Administrator may impose, by rule and/or in Award Documents,
such conditions upon the exercise of Stock Options (including, without
limitation, conditions limiting the time of exercise to specified periods) as
may be required to satisfy applicable regulatory requirements, including,
without limitation, Rule 16b-3 and Rule 10b-5 under the Exchange Act,
and any amounts required under Section 5.10, or any applicable section of
or regulation under the IRC.


 


(e)                                  Termination
of Employment.


 


(i)                                     Termination
for Just Cause.  Subject to Section 5.12
and except as otherwise provided in a written agreement between the Company or
an Affiliated Entity and the Recipient, which may be entered into at any time
before or after termination of employment or service, in the event of a Just
Cause Dismissal of a Recipient all of the Recipient’s unexercised Stock
Options, whether or not vested, will expire and become unexercisable as of the
date of such Just Cause Dismissal.


 


(ii)                                  Termination
Other Than for Just Cause.  Subject
to Section 5.12 and except as otherwise provided in a written
agreement between the Company or an Affiliated Entity and the


 





















 


Recipient, which may be entered into at any time
before or after termination of employment or service, if a Recipient’s
employment or service with the Company or any Affiliated Entity terminates for:


 


(A)                              any
reason other than for Just Cause Dismissal, death, or Permanent Disability, the
Recipient’s Stock Options, whether or not vested, will expire and become
unexercisable as of the earlier of:  (1) the
date such Stock Options would expire in accordance with their terms had the
Recipient remained employed; and (2) 90 days after the date of termination
of employment or service.


 


(B)                                death
or Permanent Disability, the Recipient’s unexercised Stock Options will,
whether or not vested, expire and become unexercisable as of the earlier
of:  (1) the date such Stock Options
would expire in accordance with their terms had the Recipient remained
employed; and (2) one year after the date of termination of employment or
service.


 


(f)                                    Special
Provisions Regarding Incentive Stock Options.  Notwithstanding anything herein to the
contrary,


 


(i)                                     The
exercise price and vesting period of any Stock Option intended to be treated as
an Incentive Stock Option must comply with the provisions of Section 422
of the IRC and the regulations thereunder. 
As of the Effective Date, such provisions require, among other matters,
that:  (A) the exercise price must
not be less than the Fair Market Value of the underlying stock as of the date
the Incentive Stock Option is granted, and not less than 110% of the Fair
Market Value as of such date in the case of a grant to a Significant
Stockholder; and (B) that the Incentive Stock Option not be exercisable
after the expiration of ten (10) years from the date of grant or the
expiration of five (5) years from the date of grant in the case of an
Incentive Stock Option granted to a Significant Stockholder.


 


(ii)                                  The
aggregate Fair Market Value (determined as of the respective date or dates of
grant) of the Common Stock for which one or more Stock Options granted to any
Recipient under this Plan (or any other option plan of the Company or of any
Parent Corporation or Subsidiary Corporation) may for the first time become
exercisable as Incentive Stock Options under the federal tax laws during any
one calendar year may not exceed $100,000.


 


(iii)                               Any Stock Options
granted as Incentive Stock Options pursuant to this Plan that for any reason
fail or cease to qualify as such will be treated as Nonqualified Stock
Options.  If the limit described in Section 6.1(f)(ii) is
exceeded, the earliest granted Stock Options will be treated as Incentive Stock
Options, up to such limit.


 


(g)                                 Non-Employee Director Options.  Article VII
will govern Non-Employee Director Options to the extent inconsistent with this Section 6.1.


 


6.2                               Performance Awards.


 


(a)                                  Grant
of Performance Award.  The Administrator will determine in its
discretion the preestablished, objective performance goals (which need not be
identical and may be established on an individual or group basis) governing
Performance Awards, the terms thereof, and the form and time of payment of
Performance Awards.


 


(b)                                 Payment
of Award.  Upon satisfaction of the conditions applicable
to a Performance Award, payment will be made to the Recipient in cash, in
shares of Common Stock valued at Fair Market Value as of the date payment is
due, or in a combination of Common Stock and cash, as the Administrator in its
discretion may determine.


 





















 


(c)                                  Maximum
Amount of Compensation.  The maximum
amount payable pursuant to that portion of a Performance Award granted for any
calendar year to any Recipient that is intended to satisfy the requirements for
Performance-Based Compensation shall not exceed $1,000,000.


 


6.3                               Restricted Stock.


 


(a)                                  Award of
Restricted Stock.  The Administrator will determine the Purchase
Price (if any), the terms of payment of the Purchase Price, the restrictions
upon the Restricted Stock, and when such restrictions will lapse.


 


(b)                                 Requirements of
Restricted Stock.  All shares of
Restricted Stock granted or sold pursuant to this Plan will be subject to the
following conditions:


 


(i)                                     No
Transfer.  The shares may not be
sold, assigned, transferred, pledged, hypothecated or otherwise disposed of,
alienated or encumbered until the restrictions are removed or expire;


 


(ii)                                  Certificates.  The Administrator may require that the
certificates representing Restricted Stock granted or sold to a Recipient
remain in the physical custody of an escrow holder or the Company until all
restrictions are removed or expire;


 


(iii)                               Restrictive Legends.  Each certificate
representing Restricted Stock granted or sold to a Recipient pursuant to this
Plan will bear such legend or legends making reference to the restrictions
imposed upon such Restricted Stock as the Administrator in its discretion deems
necessary or appropriate to enforce such restrictions; and


 


(iv)                              Other
Restrictions.  The Administrator may
impose such other conditions on Restricted Stock as the Administrator may deem
advisable, including, without limitation, restrictions under the Securities
Act, under the Exchange Act, under the requirements of any stock exchange or
interdealer quotation system upon which such Restricted Stock or other
securities of the Company are then listed or traded and under any blue sky or
other securities laws applicable to such shares.


 


(c)                                  Lapse
of Restrictions.  The restrictions
imposed upon Restricted Stock will lapse in accordance with such terms or other
conditions as are determined by the Administrator.


 


(d)                                 Rights
of Recipient.  Subject to the
provisions of Section 6.3(b) and any restrictions imposed upon
the Restricted Stock, the Recipient will have all rights of a stockholder with
respect to the Restricted Stock granted or sold to such Recipient under this
Plan, including, without limitation, the right to vote the shares and receive
all dividends and other distributions paid or made with respect thereto.


 


(e)                                  Termination
of Employment.  Unless the Administrator in its discretion determines
otherwise, if a Recipient’s employment or service with the Company or any
Affiliated Entity terminates for any reason, all of the Recipient’s Restricted
Stock remaining subject to restrictions on the date of such termination of
employment or service will be repurchased by the Company at the Purchase Price
(if any) paid by the Recipient to the Company, without interest or premium, and
otherwise returned to the Company without consideration.


 


6.4                               Stock Appreciation Rights.


 


(a)                                  Granting
of Stock Appreciation Rights.  The
Administrator may at any time and from time to time approve the grant to
Eligible Persons of Stock Appreciation Rights, related or unrelated to Stock
Options.


 





















 


(b)                                 SARs
Related to Options.


 


(i)                                     A
Stock Appreciation Right related to a Stock Option will entitle the holder of
the related Stock Option, upon exercise of the Stock Appreciation Right, to
surrender such Stock Option, or any portion thereof to the extent previously
vested but unexercised, with respect to the number of shares as to which such
Stock Appreciation Right is exercised, and to receive payment of an amount
computed pursuant to Section 6.4(b)(iii).  Such Stock Option will, to the extent
surrendered, then cease to be exercisable.


 


(ii)                                  A
Stock Appreciation Right related to a Stock Option hereunder will be
exercisable at such time or times, and only to the extent that, the related
Stock Option is exercisable, and will not be transferable except to the extent
that such related Stock Option may be transferable (and under the same
conditions), will expire no later than the expiration of the related Stock
Option, and may be exercised only when the market price of the Common Stock
subject to the related Stock Option exceeds the exercise price of the Stock
Option.


 


(iii)                               Upon the exercise of a
Stock Appreciation Right related to a Stock Option, the Recipient will be
entitled to receive payment of an amount determined by multiplying: (A) the
difference obtained by subtracting the exercise price of a share
of Common Stock specified in the related Stock Option from the Fair Market
Value of a share of Common Stock on the date of exercise of such Stock
Appreciation Right (or as of such other date or as of the occurrence of such
event as may have been specified in the instrument evidencing the grant of the
Stock Appreciation Right), by (B) the number of shares as to which such
Stock Appreciation Right is exercised.


 


(c)                                  SARs
Unrelated to Options.  The Administrator may grant Stock Appreciation
Rights unrelated to Stock Options.  Section 6.4(b)(iii) will
govern the amount payable at exercise under such Stock Appreciation Right,
except that in lieu of an option exercise price the initial base amount
specified in the Award shall be used.


 


(d)                                 Limits.  Notwithstanding the foregoing, the Administrator,
in its discretion, may place a dollar limitation on the maximum amount that
will be payable upon the exercise of a Stock Appreciation Right.


 


(e)                                  Payments.  Payment of the amount determined under the
foregoing provisions may be made solely in whole shares of Common Stock valued
at their Fair Market Value on the date of exercise of the Stock Appreciation
Right or, alternatively, at the discretion of the Administrator, in cash or in
a combination of cash and shares of Common Stock as the Administrator deems
advisable.  The Administrator has full
discretion to determine the form in which payment of a Stock Appreciation Right
will be made and to consent to or disapprove the election of a Recipient to
receive cash in full or partial settlement of a Stock Appreciation Right.  If the Administrator decides to make full
payment in shares of Common Stock, and the amount payable results in a
fractional share, payment for the fractional share will be made in cash.


 


6.5                               Stock Payments.


 


The Administrator may approve Stock Payments to any Eligible Person on
such terms and conditions as the Administrator may determine.  Stock Payments will replace cash compensation
at the Fair Market Value of the Common Stock on the date payment is due.


 


6.6                               Dividend Equivalents.


 


The Administrator may grant Dividend Equivalents to any Recipient who
has received a Stock Option, SAR or other Award denominated in shares of Common
Stock.  Dividend Equivalents may be paid
in


 





















 


cash, Common Stock or other Awards; the amount of Dividend Equivalents
paid other than in cash will be determined by the Administrator by application
of such formula as the Administrator may deem appropriate to translate the cash
value of dividends paid to the alternative form of payment of the Dividend
Equivalent.  Dividend Equivalents will be
computed as of each dividend record date and will be payable to recipients
thereof at such time as the Administrator may determine.  Notwithstanding the foregoing, if it is
intended that an Award qualify as Performance-Based Compensation, and the
amount of compensation the Recipient could receive under the Award is based
solely on an increase in value of the underlying stock after the date of the
grant or award, then the payment of any Dividend Equivalents related to the Award
shall not be made contingent on the exercise of the Award.


 


6.7                               Stock Bonuses.


 


The Administrator may issue Stock Bonuses to Eligible Persons on such
terms and conditions as the Administrator may determine.


 


6.8                               Stock Sales.


 


The Administrator may sell to Eligible Persons shares of Common Stock
on such terms and conditions as the Administrator may determine.


 


6.9                               Phantom Stock.


 


The Administrator may grant Awards of Phantom Stock to Eligible
Persons.  Phantom Stock is a cash payment
measured by the Fair Market Value of a specified number of shares of Common
Stock on a specified date, or measured by the excess of such Fair Market Value
over a specified minimum, which may but need not include a Dividend Equivalent.


 


6.10                        Other Stock-Based Benefits.


 


The Administrator is authorized to grant Other Stock-Based
Benefits.  Other Stock-Based Benefits are
any arrangements granted under this Plan not otherwise described above
that:  (a) by their terms might
involve the issuance or sale of Common Stock or other securities of the
Company; or (b) involve a benefit that is measured, as a whole or in part,
by the value, appreciation, dividend yield or other features attributable to a
specified number of shares of Common Stock or other securities of the Company.


 


ARTICLE VII

NON-EMPLOYEE DIRECTOR OPTIONS


 


7.1                               Grants of Stock Options.


 


Immediately following each annual meeting of
stockholders of the Company, each Non-Employee Director who has served as a
director since his or her election or appointment and has been re-elected as a
director at such annual meeting shall automatically receive an option to
purchase up to 10,000 shares of the Company’s Common Stock.  Each Non-Employee Director who is appointed
or elected other than at an annual meeting of stockholders of the Company
(whether by replacing a director who retires, resigns or otherwise terminates
his or her service as a director prior to the expiration of his or her term or
otherwise) shall automatically receive an option to purchase shares of the
Company’s Common Stock as of the date of such appointment or election,
consisting of a number of shares of Company Common Stock determined by
multiplying 10,000 by a fraction, the numerator of which is the number of days
from the date of grant to the date of the next scheduled annual meeting of
stockholders of the Company and the denominator of which is 365 (exclusive of
fractional shares).  The exercise price
for all grants of options granted under this Section 7.1 shall be
equal to the Fair Market Value of the Company’s Common Stock on the date of
grant, subject to: (a) vesting as set forth in Section 7.2 and
(b) adjustment as set forth in this Plan.


 





















 


7.2                               Vesting.


 


All grants of options granted under Section 7.1 shall vest
and become exercisable 100% on the day prior to the date of the next annual
meeting of stockholders following the grant date if the Recipient has remained
a director for the entire period from the date of grant to such vesting
date.  Notwithstanding the foregoing, however,
all grants of options granted under Section 7.1 that have not
vested and become exercisable at the time the Recipient ceases to be a director
shall terminate.


 


7.3                               Exercise.


 


Non-Employee Director Options will be exercisable, and the exercise
price therefor shall be paid, in the same manner as provided herein for other
Stock Options.


 


7.4                               Term of Options and Effect of Termination.


 


Notwithstanding any other provision of the Plan, no Non-Employee
Director Option granted under the Plan shall be exercisable after the
expiration of ten years from the effective date of its grant.  In the event that the Recipient of any
Non-Employee Director Options granted under the Plan shall cease to be a
director of the Company, all grants of options granted under Section 7.1 of this
Plan to such Recipient shall be exercisable, to the extent already exercisable
at the date such Recipient ceases to be a director and regardless of the reason
the Recipient ceases to be a director, for a period of 365 days after that date
(or, if sooner, until the expiration of the option according to its terms), and
shall then terminate.  In the
event of the death of a Recipient while such Recipient is a director of the
Company or within the period after termination of such status during which he
or she is permitted to exercise an option, such option may be exercised by any
person or persons designated by the Recipient on a beneficiary designation form
adopted by the Plan administrator for such purpose or, if there is no effective
beneficiary designation form on file with the Company, by the executors or
administrators of the Recipient’s estate or by any person or persons who shall
have acquired the option directly from the Recipient by his or her will or the
applicable laws of descent and distribution.


 


7.5                               Amendment; Suspension.


 


The Administrator may at any time and from time to time in its
discretion (a) change the number of shares or vesting periods associated
with the Non-Employee Director Options, and (b) suspend and reactivate
this Article VII.


 


ARTICLE VIII

CHANGE IN CONTROL


 


8.1                               Provision for Awards Upon Change in Control.


 


Unless otherwise set forth in an Award Document or in this Section 8.1,
as of the effective time and date of any Change in Control, this Plan and any
then outstanding Awards (whether or not vested) will automatically terminate
unless:  (a) provision is made in
writing in connection with such transaction for the continuance of this Plan
and for the assumption of such Awards, or for the substitution for such Awards
of new awards covering the securities of a successor entity or an affiliate
thereof, with appropriate adjustments as to the number and kind of securities
and exercise prices or other measurement criteria, in which event this Plan and
such outstanding Awards will continue or be replaced, as the case may be, in
the manner and under the terms so provided; or (b) the Board otherwise
provides in writing for such adjustments as it deems appropriate in the terms
and conditions of the then-outstanding Awards (whether or not vested),
including, without limitation, (i) accelerating the vesting of outstanding
Awards, and/or (ii) providing for the cancellation of Awards and their
automatic conversion into the right to receive the securities, cash or other
consideration that a holder of the shares underlying such Awards would have
been entitled to receive upon consummation of such Change in Control had such
shares been issued and outstanding immediately prior to the effective date and
time of the Change in Control (net of the appropriate option exercise prices).  If, pursuant to the foregoing provisions of
this Section 8.1, this


 





















 


Plan and the Awards terminate by reason of the occurrence of a Change
in Control without provision for any of the action(s) described in clause (a) or
(b) hereof, then subject to Section 5.12 and Section 6.1(e),
any Recipient holding outstanding Awards will have the right, at such time
prior to the consummation of the Change in Control as the Board designates, to
exercise or receive the full benefit of the Recipient’s Awards to the full
extent not theretofore exercised, including any installments which have not yet
become vested.  Notwithstanding anything
to the contrary in this Section 8.1, the vesting provisions of Section 7.2
or any other provision in the Plan, all Non-Employee Director Options granted
under the Plan shall automatically vest and become exercisable immediately
prior to any Change in Control if the optionee is a director of the Company at
that time.


 


ARTICLE IX

DEFINITIONS


 


Capitalized terms used in this Plan and not otherwise defined have the
meanings set forth below:


 


“Administrator”
means the Board as long as no Committee has been appointed and is in effect and
also means the Committee to the extent that the Board has delegated authority
thereto.


 


“Affiliated Entity”
means any Parent Corporation of the Company or Subsidiary Corporation of the
Company or any other entity controlling, controlled by, or under common control
with the Company.


 


“Applicable Dividend Period”
means (i) the period between the date a Dividend Equivalent is granted and
the date the related Stock Option, SAR, or other Award is exercised,
terminates, or is converted to Common Stock, or (ii) such other time as
the Administrator may specify in the written instrument evidencing the grant of
the Dividend Equivalent.


 


“Award”
means any Stock Option, Performance Award, Restricted Stock, Stock Appreciation
Right, Stock Payment, Stock Bonus, Stock Sale, Phantom Stock, Dividend
Equivalent, or Other Stock-Based Benefit granted or sold to an Eligible Person
under this Plan, or any similar award granted by the Company prior to the
Effective Date and outstanding as of the Effective Date that is governed by
this Plan.


 


“Award Document”
means the agreement or confirming memorandum setting forth the terms and
conditions of an Award.


 


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


 


“Change in Control”
means the following and shall be deemed to occur if any of the following events
occurs:


 


(i)                                        Any
Person becomes the beneficial owner (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of fifty percent (50%) or more of either
the then outstanding shares of Common Stock or the combined voting power of the
Company’s then outstanding securities entitled to vote generally in the
election of directors; or


 


(ii)                                     Individuals
who, as of the effective date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at
least a majority of the Board, provided,
however, that any individual who becomes a director after the
effective date hereof whose election, or nomination for election by the Company’s
stockholders, is approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered to be a member of the
Incumbent Board unless that individual was nominated or elected by any person,
entity or group (as defined above) having the power to exercise, through
beneficial ownership,


 





















 


voting agreement and/or proxy, twenty percent
(20%) or more of either the outstanding shares of Common Stock or the combined
voting power of the Company’s then outstanding voting securities entitled to
vote generally in the election of directors, in which case that individual
shall not be considered to be a member of the Incumbent Board unless such
individual’s election or nomination for election by the Company’s stockholders
is approved by a vote of at least two-thirds of the directors then comprising
the Incumbent Board; or


 


(iii)                                  Consummation
by the Company of the sale or other disposition by the Company of all or
substantially all of the Company’s assets or a Reorganization of the Company
with any other person, corporation or other entity, other than


 


(A)                           a
Reorganization that would result in the voting securities of the Company
outstanding immediately prior thereto (or, in the case of a Reorganization that
is preceded or accomplished by an acquisition or series of related acquisitions
by any Person, by tender or exchange offer or otherwise, of voting securities
representing 5% or more of the combined voting power of all securities of the
Company, immediately prior to such acquisition or the first acquisition in such
series of acquisitions) continuing to represent, either by remaining
outstanding or by being converted into voting securities of another entity, more
than 50% of the combined voting power of the voting securities of the Company
or such other entity outstanding immediately after such Reorganization (or
series of related transactions involving such a Reorganization), or


 


(B)                             a
Reorganization effected to implement a recapitalization or reincorporation of
the Company (or similar transaction) that does not result in a material change
in beneficial ownership of the voting securities of the Company or its
successor; or


 


(iv)                                 Approval
by the stockholders of the Company or an order by a court of competent
jurisdiction of a plan of liquidation of the Company.


 


“Committee”
means any committee appointed by the Board to administer this Plan pursuant to Section 4.1.


 


“Common Stock”
means the common stock of the Company, $0.001 par value per share, as
constituted on the Effective Date, and as thereafter adjusted under Section 3.4.


 


“Company”
means Quidel Corporation, a Delaware corporation.


 


“Dividend Equivalent”
means a right granted by the Company under Section 6.6 to a holder
of a Stock Option, Stock Appreciation Right or other Award denominated in
shares of Common Stock to receive from the Company during the Applicable
Dividend Period payments equivalent to the amount of dividends payable to
holders of the number of shares of Common Stock underlying such Stock Option,
Stock Appreciation Right, or other Award.


 


“Effective Date”
means May 23, 2001, the date this Plan was approved and adopted by the
Company’s stockholders.


 


“Eligible Person”
includes directors, including Non-Employee Directors, officers, employees,
consultants and advisors of the Company or of any Affiliated Entity; provided, however, that in order to be
Eligible Persons, consultants and advisors must render bona fide services to the Company or any
Affiliated Entity that are not in connection with capital-raising.


 





















 


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


 


“Expiration Date”
means the tenth (10th) anniversary of the Effective Date.


 


“Fair Market Value”
of a share of the Company’s capital stock as of a particular date means: (i) if
the stock is listed on an established stock exchange or exchanges (including
for this purpose, the Nasdaq National Market), the closing sale price of the
stock for such date on the primary exchange upon which the stock trades, as
measured by volume, as published in The Wall Street Journal,
or, if no sale price was quoted for such date, then as of the next preceding
date on which such a sale price was quoted; or (ii) if the stock is not
then listed on an exchange or the Nasdaq National Market, the average of the
closing bid and asked prices per share for the stock in the over-the-counter
market on such date (in the case of (i) or (ii), subject to adjustment as
and if necessary and appropriate to set an exercise price not less than 100% of
the fair market value of the stock on the date an Award is granted); or (iii) if
the stock is not then listed on an exchange or quoted in the over-the-counter
market, an amount determined in good faith by the Administrator, provided, however, that (A) when appropriate, the
Administrator in determining Fair Market Value of capital stock of the Company
may take into account such other factors as it may deem appropriate under the
circumstances, and (B) if the stock is traded on the Nasdaq SmallCap
Market and both sales prices and bid and asked prices are quoted or available,
the Administrator may elect to determine Fair Market Value under either clause (i) or
(ii) above.  Notwithstanding the
foregoing, the Fair Market Value of capital stock for purposes of grants of
Incentive Stock Options must be determined in compliance with applicable
provisions of the IRC.  The Fair Market
Value of rights or property other than capital stock of the Company means the
fair market value thereof as determined by the Administrator on the basis of
such factors as it may deem appropriate.


 


“Incentive Stock Option”
means a Stock Option that qualifies as an incentive stock option under Section 422
of the IRC.


 


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


 


“Just Cause Dismissal”
means a termination of a Recipient’s employment for any of the following
reasons:  (i) the Recipient violates
any reasonable rule or regulation of the Board, the Company’s President or
Chief Executive Officer or the Recipient’s superiors that results in damage to
the Company or any Affiliated Entity or which, after written notice to do so,
the Recipient fails to correct within a reasonable time not exceeding 15 days; (ii) any
willful misconduct or gross negligence by the Recipient in the responsibilities
assigned to the Recipient; (iii) any willful failure to perform the
Recipient’s job as required to meet the objectives of the Company or any
Affiliated Entity; (iv) any wrongful conduct of a Recipient which has an adverse
impact on the Company or any Affiliated Entity or which constitutes a
misappropriation of assets of the Company or any Affiliated Entity; (v) the
Recipient’s performing services for any other person or entity that competes
with the Company while the Recipient is employed by the Company without the
written approval of the Chief Executive Officer of the Company; or (vi) any
other conduct that the Administrator reasonably determines constitutes Just
Cause for Dismissal; provided, however,
that if a Recipient is party to an employment agreement with the Company or any
Affiliated Entity providing for just cause dismissal (or some comparable
concept) of Recipient from Recipient’s employment with the Company or any
Affiliated Entity, “Just Cause Dismissal” for purposes of this Plan will have
the same meaning as ascribed thereto or to such comparable concept in such
employment agreement.


 


“Non-Employee
Director” means a director of the Company who
qualifies as a “Non-Employee Director” under Rule 16b-3 under the Exchange
Act.


 





















 


“Non-Employee Director Option” means a right to
purchase stock of the Company granted under Section 7.1 of this
Plan.


 


“Nonqualified Stock Option”
means a Stock Option that is not an Incentive Stock Option.


 


“Other Stock-Based Benefits”
means an Award granted under Section 6.10.


 


“Parent Corporation”
means any Parent Corporation as defined in Section 424(e) of the IRC.


 


“Performance Award” means
an Award under Section 6.2, payable in cash, Common Stock or a
combination thereof, that vests and becomes payable over a period of time upon
attainment of preestablished, objective performance goals established in
connection with the grant of the Award. 
For this purpose, a preestablished, objective performance goal may
include one or more of the following performance criteria:  (a) cash flow, (b) earnings per
share (including earnings before interest, taxes, and amortization), (c) return
on equity, (d) total Shareholder return, (e) return on capital, (f) return
on assets or net assets, (g) income or net income, (h) operating
income or net operating income, (i) operating margin, (j) return on
operating revenue, and (k) any other similar performance criteria.


 


“Performance-Based Compensation”
means performance-based compensation as described in Section 162(m) of the
IRC and the regulations issued thereunder. 
If the amount of compensation an Eligible Person will receive under any
Award is not based solely on an increase in the value of Common Stock after the
date of grant or award, the Administrator, in order to qualify an Award as
performance-based compensation under Section 162(m) of the IRC, can
condition the grant, award, vesting, or exercisability of such an Award on the
attainment of a preestablished, objective performance goal including, but not
limited to, those preestablished, objective performance goals described in the
definition of Performance Award above.


 


“Permanent Disability”
means that the Recipient becomes physically or mentally incapacitated or
disabled so that the Recipient is unable to perform substantially the same
services as the Recipient performed prior to incurring such incapacity or
disability (the Company, at its option and expense, being entitled to retain a
physician to confirm the existence of such incapacity or disability, and the
determination of such physician to be binding upon the Company and the
Recipient), and such incapacity or disability continues for a period of three
consecutive months or six months in any 12-month period or such other period(s)
as may be determined by the Administrator with respect to any Award, provided, however, that for purposes of
determining the period during which an Incentive Stock Option may be exercised
pursuant to Section 6.1(e), Permanent Disability shall mean “permanent
and total disability” as defined in Section 22(e) of the IRC.


 


“Person”
means any person, entity or group, within the meaning of Section 13(d) or
14(d) of the Exchange Act, but excluding (i) the Company and its
subsidiaries, (ii) any employee stock ownership or other employee benefit
plan maintained by the Company and (iii) an underwriter or underwriting
syndicate that has acquired the Company’s securities solely in connection with
a public offering thereof.


 


“Phantom Stock”
means an Award granted under Section 6.9.


 


“Plan”
means this 2001 Equity Incentive Plan of the Company.


 


“Plan Term”
means the period during which this Plan remains in effect (commencing the
Effective Date and ending on the Expiration Date).


 





















 


“Purchase Price”
means the purchase price (if any) to be paid by a Recipient for Restricted
Stock as determined by the Administrator (which price shall be at least equal
to the minimum price required under applicable laws and regulations for the
issuance of Common Stock which is nontransferable and subject to a substantial
risk of forfeiture until specific conditions are met).


 


“Recipient”
means a person who has received an Award.


 


“Reorganization”
means any merger, consolidation or other reorganization.


 


“Restricted Stock” means Common Stock that is the subject of an Award made
under Section 6.3 and that is nontransferable and subject to a
substantial risk of forfeiture until specific conditions are met, as set forth
in this Plan and in any statement evidencing the grant of such Award.


 


“Securities Act”
means the Securities Act of 1933, as amended.


 


“Significant Stockholder”
is an individual who, at the time a Stock Option is granted to such individual
under this Plan, owns more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or of any Parent Corporation or
Subsidiary Corporation (after application of the attribution rules set
forth in Section 424(d) of the IRC).


 


“Stock Appreciation Right”
or “SAR” means a right granted under Section 6.4
to receive a payment that is measured with reference to the amount by which the
Fair Market Value of a specified number of shares of Common Stock appreciates
from a specified date, such as the date of grant of the SAR, to the date of
exercise.


 


“Stock Bonus”
means an issuance or delivery of unrestricted or restricted shares of Common
Stock under Section 6.7 as a bonus for services rendered or for any
other valid consideration under applicable law.


 


“Stock Payment”
means a payment in shares of the Company’s Common Stock under Section 6.5
to replace all or any portion of the compensation or other payment (other than
base salary) that would otherwise become payable to the Recipient in cash.


 


“Stock Option” means a right to purchase stock of the Company granted
under Section 6.1 or Section 7.1 of this Plan.


 


“Stock Sale”
means a sale of Common Stock to an Eligible Person under Section 6.8.


 


“Subsidiary Corporation”
means any Subsidiary Corporation as defined in Section 424(f) of the
IRC.