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EXHIBIT 10.1






LA JOLLA PHARMACEUTICAL COMPANY




2004 EQUITY INCENTIVE PLAN





ARTICLE I




GENERAL PROVISIONS




1.01     Definitions.



     
Terms used herein and not otherwise defined shall have the
meanings set forth below:






		
	 	     
    (a) “Administrator” means the Board or a
    Committee that has been delegated the authority to administer
    the Plan.
	 
	 	     
    (b) “Award” means an Incentive Award or a
    Nonemployee Director’s Option.
	 
	 	     
    (c) “Award Document” means an award
    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.
	 
	 	     
    (d) “Board” means the Board of Directors
    of the Company.
	 
	 	     
    (e) “Change in Control” means the
    following and shall be deemed to occur if any of the following
    events occur:






		
	 	     
    (i) Except as provided by
    subsection (iii) hereof, the acquisition (other than
    from the Company) by any person, entity or “group,”
    within the meaning of Section 13(d)(3) or 14(d)(2) of the
    Exchange Act (excluding, for this purpose, the Company or its
    subsidiaries, or any employee benefit plan of the Company or its
    subsidiaries which acquires beneficial ownership of voting
    securities of the Company), of beneficial ownership (within the
    meaning of Rule 13d-3 promulgated under the Exchange Act)
    of forty percent (40%) or more of either the then 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; or
	 
	 	     
    (ii) Individuals who, as of the effective date of the Plan,
    constitute the Board (the “Incumbent Board”) cease for
    any reason to constitute at least a majority of the Board,
    provided that any person becoming a director subsequent to the
    date hereof whose election, or nomination for election by the
    Company’s stockholders, is or was approved by a vote of at
    least a majority of the directors then comprising the Incumbent
    Board (other than an election or nomination of an individual
    whose initial assumption of office is in connection with an
    actual or threatened election contest relating to the election
    of the directors of the Company, as such terms are used in
    Rule 14a-11 of Regulation 14A promulgated under the
    Exchange Act) shall be, for purposes of the Plan, considered as
    though such person were a member of the Incumbent Board; or
	 
	 	     
    (iii) Approval by the stockholders of the Company of a
    reorganization, merger or consolidation with any other person,
    entity or corporation, other than:






		
	 	     
    (A) a merger or consolidation which would result in the
    persons holding the voting securities of the Company outstanding
    immediately prior thereto continuing to hold more than fifty
    percent (50%) of the combined voting power of the voting
    securities of the Company or its successor which are outstanding
    immediately after such merger or consolidation, or
	 
	 	     
    (B) a merger or consolidation effected to implement a
    recapitalization of the Company (or similar transaction) in
    which no person acquires forty percent (40%) or more of the
    combined voting power of the Company’s then outstanding
    voting securities; or










 






		
	 	     
    (iv) Approval by the stockholders of the Company of a plan
    of complete liquidation of the Company or an agreement for the
    sale or other disposition by the Company of all or substantially
    all of the Company’s assets.






		
	 	     
    Notwithstanding the foregoing, a Change in Control shall not be
    deemed to have occurred (1) if the “person” is an
    underwriter or underwriting syndicate that has acquired the
    ownership of 50% or more of the combined voting power of the
    Company’s then outstanding voting securities solely in
    connection with a public offering of the Company’s
    securities, or (2) if the “person” is an employee
    stock ownership plan or other employee benefit plan maintained
    by the Company that is qualified under the provisions of the
    Employee Retirement Income Security Act of 1974, as amended.
	 
	 	     
    (f) “Code” means the Internal Revenue Code
    of 1986, as amended. Where the context so requires, a reference
    to a particular Code section shall also refer to any successor
    provision of the Code to such section.
	 
	 	     
    (g) “Committee” means the committee
    appointed by the Board to administer the Plan.
	 
	 	     
    (h) “Common Stock” means the common stock
    of the Company, $0.01 par value.
	 
	 	     
    (i) “Company” means La Jolla
    Pharmaceutical Company.
	 
	 	     
    (j) “Dividend Equivalent” means a right
    granted by the Company under Section 2.07 to a holder of an
    Option, Stock Appreciation Right, or other Incentive Award
    denominated in shares of Common Stock to receive from the
    Company during the Applicable Dividend Period (as defined in
    Section 2.07) payments equivalent to the amount of
    dividends payable to holders of the number of shares of Common
    Stock underlying such Option, Stock Appreciation Right, or other
    Incentive Award.
	 
	 	     
    (k) “Eligible Person” means any director,
    Employee or consultant of the Company or any Related Corporation.
	 
	 	     
    (l) “Employee” means an individual who is
    in the employ of the Company (or any Parent or Subsidiary)
    subject to the control and direction of the employer entity as
    to both the work to be performed and the manner and method of
    performance.
	 
	 	     
    (m) “Exchange Act” means the Securities
    Exchange Act of 1934, as amended. Where the context so requires,
    a reference to a particular section of the Exchange Act or rule
    thereunder shall also refer to any successor provision to such
    section or rule.
	 
	 	     
    (n) “Exercise Price” means the price at
    which the Holder may purchase shares of Common Stock underlying
    an Option.
	 
	 	     
    (o) “Fair Market Value” of capital stock
    of the Company shall be determined with reference to the closing
    price of such stock on the day in question (or, if such day is
    not a trading day in the U.S. securities markets, on the
    nearest preceding trading day), as reported with respect to the
    principal market or trading system on which such stock is then
    traded; or, if no such closing prices are reported, the mean
    between the high bid and low ask prices that day on the
    principal market or national quotation system on which such
    shares are then quoted; provided, however, that when
    appropriate, the Administrator in determining Fair Market Value
    of capital stock of the Company may take into account such other
    factors as may be deemed appropriate under the circumstances.
    Notwithstanding the foregoing, the Fair Market Value of capital
    stock for purposes of grants of Incentive Stock Options shall be
    determined in compliance with applicable provisions of the Code.
    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.
	 
	 	     
    (p) “Holder” means the Recipient of an
    Award or any permitted assignee holding the Award.
	 
	 	     
    (q) “Incentive Award” means any Option
    (other than a Nonemployee Director’s Option), Restricted
    Stock, Stock Appreciation Right, Stock Payment, Performance
    Award or Dividend Equivalent granted or sold to an Eligible
    Person under this Plan.



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    (r) “Incentive Stock Option” means an
    Option that qualifies as an incentive stock option under
    Section 422 (or any successor section) of the Code and the
    regulations thereunder.
	 
	 	     
    (s) “Just Cause Dismissal” shall mean a
    termination of a Recipient’s Service for any of the
    following reasons: (i) the Recipient violates any
    reasonable rule or regulation of the Company or the
    Recipient’s superiors or the Chief Executive Officer or
    President of the Company that (A) results in damage to the
    Company or (B) after written notice to do so, the Recipient
    fails to correct within a reasonable time; (ii) any willful
    misconduct or gross negligence by the Recipient in the
    responsibilities assigned to him or her; (iii) any willful
    failure to perform his or her job; (iv) any wrongful
    conduct of a Recipient which has an adverse impact on the
    Company or which constitutes fraud, embezzlement or dishonesty;
    (v) the Recipient’s performing services for any other
    person or entity which competes with the Company while he or she
    is providing Service, without the written approval of the Chief
    Executive Officer or President of the Company; or (vi) any
    other conduct that the Administrator determines constitutes Just
    Cause for Dismissal; provided, however, that if the term of
    concept has been defined in an employment agreement between the
    Company and the Recipient, then Just Cause Dismissal shall have
    the definition set forth in such employment agreement. The
    foregoing definition shall not in any way preclude or restrict
    the right of the Company or any Related Corporation to discharge
    or dismiss any Recipient or other person in the Service of the
    Company or any Related Corporation for any other acts or
    omissions but such other acts or omission shall not be deemed,
    for purposes of the Plan, to constitute grounds for Just Cause
    Dismissal.
	 
	 	     
    (t) “Nonemployee Director” means a
    director of the Company who is not an Employee of the Company or
    any of its Related Corporations.
	 
	 	     
    (u) “Nonemployee Director’s Option”
    means a Nonqualified Stock Option granted to a Nonemployee
    Director pursuant to Article III of the Plan.
	 
	 	     
    (v) “Nonqualified Stock Option” means an
    Option that does not qualify as an Incentive Stock Option.
	 
	 	     
    (w) “Option” means a right to purchase
    stock of the Company granted under this Plan, and can be an
    Incentive Stock Option or a Nonqualified Stock Option.
	 
	 	     
    (x) “Parent” means any corporation (other
    than the Company) in an unbroken chain of corporations ending
    with the Company, provided each corporation in the unbroken
    chain (other than the Company) owns, at the time of the
    determination, 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.
	 
	 	     
    (y) “Performance Award” means an award,
    payable in cash, Common Stock or a combination thereof, which
    vests and becomes payable over a period of time upon attainment
    of performance criteria established in connection with the grant
    of the award.
	 
	 	     
    (z) “Performance-Based Compensation” means
    performance-based compensation as described in
    Section 162(m) of the Code and the regulations thereunder.
    If the amount of compensation an Eligible Person will receive
    under any Incentive 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 Incentive Award as
    performance-based compensation under Section 162(m) of the
    Code and the regulations thereunder, can condition the grant,
    award, vesting, or exercisability of such an award on the
    attainment of a preestablished, objective performance goal. For
    this purpose, a preestablished, objective performance goal may
    include one or more of the following performance criteria:
    (i) cash flow, (ii) earnings per share (including
    earnings before interest, taxes, and amortization),
    (iii) return on equity, (iv) total stockholder return,
    (v) return on capital, (vi) return on assets or net
    assets, (vii) income or net income, (viii) operating
    margin, (ix) return on operating revenue,
    (x) attainment of stated goals related to the
    Company’s research and development or clinical trials
    programs, (xi) attainment of stated goals related to the
    Company’s capitalization, costs, financial condition, or
    results of operations, and (xii) any other similar
    performance criteria.



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    (aa) “Permanent Disability” shall mean the
    inability of the Recipient to engage in any substantial gainful
    activity by reason of any medically determinable physical or
    mental impairment which can be expected to result in death or
    has lasted or can be expected to last for a continuous period of
    twelve months or more.
	 
	 	     
    (bb) “Plan” means the La Jolla
    Pharmaceutical Company 2004 Equity Incentive Plan as set forth
    in this document.
	 
	 	     
    (cc) “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).
	 
	 	     
    (dd) “Recipient” means an Eligible Person
    who has received an Award hereunder.
	 
	 	     
    (ee) “Related Corporation” means either a
    Parent or Subsidiary.
	 
	 	     
    (ff) “Restricted Stock” means Common Stock
    that is the subject of an award made under Section 2.04 and
    which is nontransferable and subject to a substantial risk of
    forfeiture until specific conditions are met as set forth in
    this Plan and in any Award Document.
	 
	 	     
    (gg) “Securities Act” means the Securities
    Act of 1933, as amended.
	 
	 	     
    (hh) “Service” means the performance of
    services for the Company or its Related Corporations by a person
    in the capacity of an Employee, a director or a consultant,
    except to the extent otherwise specifically provided in the
    Award Document.
	 
	 	     
    (ii) “Stock Appreciation Right” means a
    right granted under Section 2.05 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 Stock Appreciation Right, to the date of exercise.
	 
	 	     
    (jj) “Stock Payment” means a payment in
    shares of Common Stock to replace all or any portion of the
    compensation (other than base salary) that would otherwise
    become payable to a Recipient.
	 
	 	     
    (kk) “Subsidiary” means any corporation
    (other than the Company) in an unbroken chain of corporations
    beginning with the Company, provided each corporation in the
    unbroken chain (other than the last corporation) owns, at the
    time of the determination, 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.




1.02     Purpose of the Plan.



     
The Board has adopted this Plan to advance the interests of the
Company and its stockholders by (a) providing Eligible
Persons with financial incentives to promote the success of the
Company’s business objectives, and to increase their
proprietary interest in the success of the Company, and
(b) giving the Company a means to attract and retain
Eligible Persons.




1.03     Common Stock Subject to the
Plan.



     
(a) Number of Shares. Subject to
Section 1.05(b), the maximum number of shares of Common
Stock that may be issued and outstanding or subject to
outstanding Awards under the Plan shall not exceed 20,800,000.



     
(b) 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 shares purchased on the
open market.



     
(c) Availability of Unused Shares. Shares of Common
Stock subject to unexercised portions of any Award granted under
this Plan that expire, terminate or are cancelled, and shares of
Common Stock issued pursuant to an Award under this Plan that
are reacquired by the Company pursuant to the terms of the Award



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under which such shares were issued, will again become available
for the grant of further Awards under this Plan.



     
(d) Grant Limits. Notwithstanding any other
provision of this Plan, no Eligible Person shall be granted
Awards with respect to more than 7,000,000 shares of Common
Stock in the aggregate 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.




1.04     Administration of the
Plan.



     
(a) The Administrator. The Plan will be administered
by a Committee, which will consist of two or more members of the
Board each of whom must be an “independent director”
as defined by applicable listing standards. Notwithstanding the
foregoing or any provision of the Plan to the contrary, the
Board may, in lieu of the Committee, exercise any authority
granted to the Committee pursuant to the provisions of the Plan.
To obtain the benefits of Rule 16b-3, Incentive Awards must
be granted by the entire Board or a Committee comprised entirely
of “non-employee directors” as such term is defined in
Rule 16b-3. In addition, if Incentive Awards are to be made
to persons subject to Section 162(m) of the Code and such
Awards are intended to constitute Performance-Based
Compensation, then such Incentive Awards must be granted by a
Committee comprised entirely of “outside directors” as
such term is defined in the regulations under
Section 162(m) of the Code.



     
(b) Authority of the Administrator. The
Administrator has authority in its discretion to select the
Eligible Persons to whom, and the time or times at which,
Incentive Awards shall be granted or sold, the nature of each
Incentive Award, the number of shares of Common Stock or the
number of rights that make up or underlie each Incentive Award,
the period for the exercise of each Incentive Award, the
performance criteria (which need not be identical) utilized to
measure the value of Performance Awards, and such other terms
and conditions applicable to each individual Incentive Award as
the Administrator shall determine. In addition, the
Administrator shall have all other powers granted to it in the
Plan.



     
(c) Interpretation. Subject to the express
provisions of the Plan, the Administrator has the authority to
interpret the Plan and any Award Documents, to determine the
terms and conditions of Incentive Awards and to make all other
determinations necessary or advisable for the administration of
the Plan. All interpretations, determinations and actions by the
Administrator shall be final, conclusive and binding upon all
parties. The Administrator has authority to prescribe, amend and
rescind rules and regulations relating to the Plan.



     
(d) Special Rules Regarding Nonemployee Director
Options. Notwithstanding anything herein to the contrary,
the Administrator shall have no authority or discretion as to
the selection of persons eligible to receive Nonemployee
Directors’ Options granted under the Plan, the number of
shares covered by Nonemployee Directors’ Options granted
under the Plan, the timing of such grants, or the Exercise Price
of Nonemployee Directors’ Options granted under the Plan,
which matters are specifically governed by the provisions of the
Plan.



     
(e) No Liability. The Administrator and its
delegates shall be indemnified by the Company to the fullest
extent provided for in the Company’s certificate of
incorporation and bylaws.




1.05     Other Provisions.



     
(a) Documentation. Each Award granted under the Plan
shall be evidenced by an Award Document which shall set forth
the terms and conditions applicable to the Award as the
Administrator may in its discretion determine consistent with
the Plan, provided that the Administrator shall exercise no
discretion with respect to Nonemployee Directors’ Options,
which shall reflect only the terms of the Award as set forth in
Article III and certain administrative matters dictated by
the Plan. Award Documents shall comply with and be subject to
the terms and conditions of the Plan. In case of any conflict
between the Plan and any Award Document, the Plan shall control.
Various Award Documents covering the same types of Awards may
but need not be identical.



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(b) Adjustment Provisions. Should any change be made
to the outstanding shares of Common Stock by reason of a merger,
consolidation, reorganization, recapitalization,
reclassification, combination of shares, stock dividend, stock
split, reverse stock split, exchange of shares or other change
affecting the outstanding Common Stock without the
Company’s receipt of consideration, an appropriate and
proportionate adjustment may be made in (i) the maximum
number and kind of shares subject to the Plan as provided in
Section 1.03, (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 then outstanding Awards and (iv) the
number and kind of shares or other securities subject to the
Nonemployee Director Options described in Section 3.01 and
3.02. In addition, the per person limitation set forth in
Section 1.03(d) shall also be subject to adjustment as
provided in this Section 1.05(b), but only to the extent
such adjustment would not affect the status of compensation
attributable to Awards hereunder as Performance-Based
Compensation. Such adjustments are to be effected in a manner
that shall preclude the enlargement or dilution of rights and
benefits under the Awards. In no event shall any adjustments be
made in connection with the conversion of preferred stock or
warrants into shares of Common Stock. No fractional interests
will be issued under the Plan resulting from any such
adjustments.



     
(c) Continuation of Service. Nothing contained in
this Plan (or in Award Documents or in any other documents
related to this Plan or to Awards granted hereunder) shall
confer upon any Eligible Person or Recipient any right to
continue in the Service of the Company or its Related
Corporations or constitute any contract or agreement of
employment or engagement, or interfere in any way with the right
of the Company or its Related Corporations to reduce such
person’s compensation or other benefits or to terminate the
Service of such Eligible Person or Recipient, with or without
cause. Except as expressly provided in the Plan or in any Award
Document, the Company shall have the right to deal with each
Recipient in the same manner as if the Plan and any Award
Document 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.



     
(d) Restrictions. All Awards granted under the Plan
shall be subject to the requirement that, if at any time the
Company shall determine, in its discretion, that the listing,
registration or qualification of the shares subject to Awards
granted under the Plan upon any securities exchange or under any
state or federal law, or the consent or approval of any
government 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 in whole
or in part unless such listing, registration, qualification,
consent or approval shall have been effected or obtained free of
any conditions not acceptable to the Company.



     
(e) Additional Conditions. Any Incentive Award may
also be subject to such other provisions (whether or not
applicable to any other Award or Recipient) as the Administrator
determines appropriate.



     
(f) Tax Withholding. The Company’s obligation
to deliver shares of Common Stock under the Plan shall be
subject to the satisfaction of all applicable income and
employment tax withholding requirements.



     
(g) Privileges of Stock Ownership. Except as
otherwise set forth herein, a Holder shall have no rights as a
stockholder of the Company with respect to any shares issuable
or issued in connection with the Award until the date of the
receipt by the Company of all amounts payable in connection with
exercise of the Award, performance by the Holder of all
obligations thereunder, and the Company issues a stock
certificate representing the appropriate number of shares.
Status as an Eligible Person shall not be construed as a
commitment that any Incentive Award will be granted under this
Plan to an Eligible Person or to Eligible Persons generally. No
person shall 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 shall 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.



     
(h) Effective Date and Duration of Plan; Amendment and
Termination of Plan. The Plan shall become effective upon
its approval by the Company’s stockholders. Unless
terminated by the Board prior to such time, the Plan shall
continue in effect until the 10th anniversary of the date
the Plan was adopted,



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whereupon the Plan shall terminate automatically. The Board may,
insofar as permitted by law, from time to time suspend or
terminate the Plan. No Awards may be granted during any
suspension of this Plan or after its termination. Any Award
outstanding after the termination of the Plan shall remain in
effect until such Award has been exercised or expires in
accordance with its terms and the terms of the Plan. The Board
may, insofar as permitted by law, from time to time revise or
amend the Plan in any respect except that no such amendment
shall adversely affect any rights or obligations of the Holder
under any outstanding Award previously granted under the Plan
without the consent of the Holder. Amendments shall be subject
to stockholder approval to the extent such approval is required
to comply with the listing requirements imposed by any exchange
or trading system upon which the Company’s securities trade
or applicable law.



     
(i) Amendment of Awards. The Administrator may make
any modifications in the terms and conditions of an outstanding
Incentive Award, provided that (i) the resultant provisions
are permissible under the Plan and (ii) the consent of the
Holder shall be obtained if the amendment will adversely affect
his or her rights under the Award. However, the outstanding
Options may not be repriced without stockholder approval.



     
(j) Nonassignability. No Incentive Stock Option
granted under the Plan shall be assignable or transferable
except by will or by the laws of descent and distribution. No
other Awards granted under the Plan shall be assignable or
transferable except (i) by will or by the laws of descent
and distribution, (ii) to one or more of the
Recipient’s family members (as such term is defined in the
instructions to Form S-8) or (iii) upon dissolution of
marriage pursuant to a qualified domestic relations order.
During the lifetime of a Recipient, an Award granted to him or
her shall be exercisable only by the Holder or his or her
guardian or legal representative.



     
(k) Other Compensation Plans. The adoption of the
Plan shall not affect any other stock option, incentive or other
compensation plans in effect for the Company, and the existence
of the Plan shall not preclude the Company from establishing any
other forms of incentive or other compensation for Eligible
Persons.



     
(l) Plan Binding on Successors. The Plan shall be
binding upon the successors and assigns of the Company.



     
(m) Participation by Foreign Employees.
Notwithstanding anything to the contrary herein, the
Administrator may, in order to fulfill the purposes of the Plan,
structure grants of Incentive 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.




ARTICLE II




INCENTIVE AWARDS




2.01     Grants of Incentive
Awards.



     
Subject to the express provisions of this Plan, the
Administrator may from time to time in its discretion select
from the class of Eligible Persons those individuals to whom
Incentive Awards may be granted pursuant to its authority as set
forth in Section 1.04(b). Each Incentive Award shall be
subject to the terms and conditions of the Plan and such other
terms and conditions established by the Administrator as are not
inconsistent with the provisions of the Plan.




2.02     Options.



     
(a) Nature of Options. The Administrator may grant
Incentive Stock Options and Nonqualified Stock Options under the
Plan. However, Incentive Stock Options may only be granted to
Employees of the Company or its Related Corporations.



     
(b) Option Price. The Exercise Price per share for
each Option (other than a Nonemployee Director’s Option)
shall be determined by the Administrator at the date such Option
is granted and shall not be less than the Fair Market Value of a
share of Common Stock (or other securities, as applicable) on
the date of grant,



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except that the Exercise Price for a Nonqualified Stock Option
may reflect a discount of up to 15% of the Fair Market Value at
the time of grant if the amount of such discount is expressly in
lieu of a reasonable amount of salary or cash bonus.
Notwithstanding the foregoing, however, in no event shall the
Exercise Price be less than the par value of the shares of
Common Stock.



     
(c) Option Period and Vesting. Options (other than
Nonemployee Directors’ Options) hereunder shall vest and
may be exercised as determined by the Administrator, except that
exercise of such Options after termination of the
Recipient’s Service shall be subject to
Section 2.02(g). Each Option granted hereunder (other than
a Nonemployee Directors Option) and all rights or obligations
thereunder shall expire on such date as shall be determined by
the Administrator, but not later than ten years after the date
the Option is granted and shall be subject to earlier
termination as herein provided.



     
(d) Exercise of Options. Except as otherwise
provided herein, an Option may become exercisable, in whole or
in part, on the date or dates specified by the Administrator
(or, in the case of Nonemployee Directors’ Options, the
Plan) at the time the Option is granted and thereafter shall
remain exercisable until the expiration or earlier termination
of the Option. No Option shall be exercisable except in respect
of whole shares, and fractional share interests shall be
disregarded. An Option shall be deemed to be exercised when the
Secretary of the Company receives written notice of such
exercise from the Holder, together with payment of the Exercise
Price made in accordance with Section 2.02(e). Upon proper
exercise, the Company shall deliver to the person entitled to
exercise the Option or his or her designee a certificate or
certificates for the shares of stock for which the Option is
exercised.



     
(e) Form of Exercise Price. The aggregate Exercise
Price shall be immediately due and payable upon the exercise of
an Option and shall, subject to the provisions of the Award
Document, be payable in one or more of the following:
(i) by delivery of legal tender of the United States,
(ii) by delivery of shares of Common Stock held for the
requisite period, if any, necessary to avoid a charge to the
Company’s earnings for financial reporting purposes, and/or
(iii) through a sale and remittance procedure pursuant to
which the Holder shall concurrently provide irrevocable
instructions to (A) a brokerage firm to effect the
immediate sale of the purchased shares and remit to the Company,
out of the sale proceeds available on the settlement date,
sufficient funds to cover the aggregate Exercise Price payable
for the purchased shares plus all applicable income and
employment taxes required to be withheld by the Company by
reason of such exercise and (B) the Company to deliver the
certificates for the purchased shares directly to such brokerage
firm in order to complete the sale. Any shares of Company stock
or other non-cash consideration assigned and delivered to the
Company in payment or partial payment of the Exercise Price will
be valued at Fair Market Value on the exercise date.



     
(f) Limitation on Exercise of Incentive Stock
Options. The aggregate Fair Market Value (determined as of
the respective date or dates of grant) of the Common Stock for
which one or more Options granted to any Recipient under the
Plan (or any other option plan of the Company or any of its
subsidiaries or affiliates) may for the first time become
exercisable as Incentive Stock Options under the Code during any
one calendar year shall not exceed $100,000. Any Options granted
as Incentive Stock Options pursuant to the Plan in excess of
such limitation shall be treated as Nonqualified Stock Options.
Options are to be taken into account in the order in which they
were awarded.



     
(g) Termination of Service.






		
	 	     
    (i) Termination for Cause. Except as otherwise
    provided by the Administrator, in the event of a Just Cause
    Dismissal of a Recipient, all of the outstanding Options granted
    to such Recipient shall expire and become unexercisable as of
    the date of such Just Cause Dismissal.
	 
	 	     
    (ii) Termination Other Than for Cause. Subject to
    subsection (i) above and except as otherwise provided by
    the Administrator, in the event of a Recipient’s
    termination of Service from the Company or its Related
    Corporations due to:






		
	 	     
    (A) any reason other than Just Cause Dismissal, death, or
    Permanent Disability, or normal retirement, the outstanding
    Options granted to such Recipient, whether or not vested, shall
    expire and become unexercisable as of the earlier of
    (1) the date such Options would expire in accordance



8







 


		
	 	
    with their terms if the Recipient had remained in Service or
    (2) three calendar months after the date the
    Recipient’s Service terminated in the case of Incentive
    Stock Options, or six months after the Recipient’s Service
    terminated, in the case of Nonqualified Stock Options.
	 
	 	     
    (B) death or Permanent Disability, the outstanding Options
    granted to such Recipient, whether or not vested, shall expire
    and become unexercisable as of the earlier of (1) the date
    such Options would expire in accordance with their terms if the
    Recipient had remained in Service or (2) twelve months
    after the date of termination.
	 
	 	     
    (C) normal retirement, the outstanding Options granted to
    such Recipient, whether or not vested, shall expire and become
    unexercisable as of the earlier of (A) the date such
    Options expire in accordance with their terms or
    (B) twenty-four months after the date of retirement.







		
	 	     
    (iii) Termination of Director Service. In the event
    that a Director shall cease to be a Nonemployee Director, all
    outstanding Options (other than a Nonemployee Director’s
    Option) granted to such Recipient shall be exercisable, to the
    extent already vested and exercisable on the date such Recipient
    ceases to be a Nonemployee Director and regardless of the reason
    the Recipient ceases to be a Nonemployee Director until the
    fifth anniversary of the date such Director ceases to be a
    Nonemployee Director; provided that the Administrator may extend
    such post-termination period to up to the expiration date of the
    Option.




2.03     Performance Awards.



     
(a) Grant of Performance Award. The Administrator
may grant Performance Awards under the Plan and shall determine
the performance criteria (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 timing
of payment of Performance Awards.



     
(b) Payment of Award; Limitation. Upon satisfaction
of the conditions applicable to a Performance Award, payment
will be made to the Holder in cash or in shares of Common Stock
valued at Fair Market Value or a combination of Common Stock and
cash, as the Administrator in its discretion may determine.
Notwithstanding any other provision of this Plan, no Eligible
Person shall be paid Performance Awards with a value in excess
of $1,000,000 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 the Performance Award
hereunder to qualify as Performance-Based Compensation.



     
(c) Expiration of Performance Award. If any
Recipient’s Service is terminated for any reason other than
normal retirement, death or Permanent Disability prior to the
time a Performance Award or any portion thereof becomes payable,
all of the Holder’s rights under the unpaid portion of the
Performance Award shall expire unless otherwise determined by
the Administrator. In the event of termination of Service by
reason of death, Permanent Disability or normal retirement, the
Administrator, in its discretion, may determine what portions,
if any, of the Performance Award should be paid to the Holder.




2.04     Restricted Stock.



     
(a) Award of Restricted Stock. The Administrator may
issue Restricted Stock under the Plan. The Administrator shall
determine the Purchase Price (if any), the forms of payment of
the Purchase Price (which shall be either cash or past
services), the restrictions upon the Restricted Stock, and when
such restrictions shall lapse.



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






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



9







 






		
	 	     
    (ii) Certificates. The Administrator may require
    that the certificates representing shares of Restricted Stock
    granted or sold to a Holder pursuant to the Plan 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 shares of Restricted Stock granted or sold to a
    Holder pursuant to the 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 upon which such
    Restricted Stock or shares of the same class are then listed and
    under any blue sky or other securities laws applicable to such
    shares.



     
(c) Rights of Holder. Subject to the provisions of
Section 2.04(b) and any additional restrictions imposed by
the Administrator, the Holder will have all rights of a
stockholder with respect to the Restricted Stock, including the
right to vote the shares and receive all dividends and other
distributions paid or made with respect thereto.



     
(d) Termination of Service. Unless the Administrator
in its discretion determines otherwise, upon a Recipient’s
termination of Service for any reason, all of the Restricted
Stock issued to the Recipient that remains subject to
restrictions imposed pursuant to the Plan on the date of such
termination of Service may be repurchased by the Company at the
Purchase Price (if any).



     
(e) Adjustments. Any new, substituted or additional
securities or other property which Holder may have the right to
receive with respect to the Holder’s shares of Restricted
Stock by reason of a merger, consolidation, reorganization,
recapitalization, reclassification, combination of shares, stock
dividend, stock split, reverse stock split, exchange of shares
or other change affecting the outstanding Common Stock without
the Company’s receipt of consideration shall be issued
subject to the same vesting requirements applicable to the
Holder’s shares of Restricted Stock and shall be treated as
if they had been acquired on the same date as such shares.




2.05     Stock Appreciation
Rights.



     
(a) Granting of Stock Appreciation Rights. The
Administrator may grant Stock Appreciation Rights, either
related or unrelated to Options, under the Plan.



     
(b) Stock Appreciation Rights Related to Options.






		
	 	     
    (i) A Stock Appreciation Right granted in connection with
    an Option granted under this Plan will entitle the holder of the
    related Option, upon exercise of the Stock Appreciation Right,
    to surrender such Option, or any portion thereof to the extent
    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 2.05(b)(iii). Such Option will, to the extent
    surrendered, then cease to be exercisable.
	 
	 	     
    (ii) A Stock Appreciation Right granted in connection with
    an Option hereunder will be exercisable at such time or times,
    and only to the extent that, the related Option is exercisable,
    and will not be transferable except to the extent that such
    related Option may be transferable.
	 
	 	     
    (iii) Upon the exercise of a Stock Appreciation Right
    related to an Option, the Holder will be entitled to receive
    payment of an amount determined by multiplying: (i) the
    difference obtained by subtracting the Exercise Price of a share
    of Common Stock specified in the related 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 (ii) the number of shares as to which such Stock
    Appreciation Right is exercised.



10







 



     
(c) Stock Appreciation Rights Unrelated to Options.
The Administrator may grant Stock Appreciation Rights unrelated
to Options to Eligible Persons. Section 2.05(b)(iii) shall
be used to determine the amount payable at exercise under such
Stock Appreciation Right, except that in lieu of the Exercise
Price specified in the related Option the initial base amount
specified in the Incentive 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 under the Plan.



     
(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, in cash or in a
combination of cash and shares of Common Stock as the
Administrator deems advisable. If permitted by the
Administrator, the Holder may elect 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.



     
(f) Termination of Service. Section 2.02(g)
will govern the treatment of Stock Appreciation Rights upon the
termination of a Recipient’s Service.




2.06     Stock Payments.



     
The Administrator may issue Stock Payments under the Plan for
all or any portion of the compensation (other than base salary)
or other payment that would otherwise become payable by the
Company to the Eligible Person in cash.




2.07     Dividend Equivalents.



     
The Administrator may grant Dividend Equivalents to any
Recipient who has received an Option, Stock Appreciation Right,
or other Incentive Award denominated in shares of Common Stock.
Such Dividend Equivalents shall be effective and shall entitle
the Recipients thereof to payments during the “Applicable
Dividend Period,” which shall be (a) the period
between the date the Dividend Equivalent is granted and the date
the related Option, Stock Appreciation Right, or other Incentive
Award is exercised, terminates, or is converted to Common Stock,
or (b) such other time as the Administrator may specify in
the Award Document. Dividend Equivalents may be paid in cash,
Common Stock, or other Incentive Awards; the amount of Dividend
Equivalents paid other than in cash shall 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 shall be computed as
of each dividend record date and shall be payable to Recipients
thereof at such time as the Administrator may determine.
Notwithstanding the foregoing, if it is intended that an
Incentive Award qualify as Performance-Based Compensation and
the amount of the compensation the Eligible Person could receive
under the award is based solely on an increase in value of the
underlying stock after the date of grant or award (i.e., the
grant, vesting, or exercisability of the award is not
conditioned upon the attainment of a preestablished, objective
performance goal described in Section 1.01(x)), then the
payment of any Dividend Equivalents related to the Award shall
not be made contingent on the exercise of the Award.




ARTICLE III




NONEMPLOYEE DIRECTOR’S OPTIONS




3.01     Grants of Initial
Options.



     
Each Nonemployee Director shall, upon first becoming a
Nonemployee Director, receive a one-time grant of a Nonqualified
Stock Option to purchase up to 40,000 shares of Common
Stock at an Exercise Price per share equal to the Fair Market
Value of the Common Stock on the date of grant. Options granted
under this Section 3.01 vest in accordance with
Section 3.04(a) hereof and are “Initial Options”
for purposes hereof.



11







 




3.02     Grants of Additional
Options.



     
On the date of the annual meeting of stockholders of the Company
next following a Nonemployee Director becoming such, and on the
date of each subsequent annual meeting of stockholders of the
Company, in each case if the Nonemployee Director has served as
a director since his or her election or appointment and has been
re-elected as a director at such annual meeting or is continuing
as a director without being re-elected due to the classification
of the Board, such Nonemployee Director shall automatically
receive a Nonqualified Stock Option to purchase up to
10,000 shares of Common Stock at an Exercise Price per
share equal to the Fair Market Value of Common Stock on the date
of grant. Options granted under this Section 3.02 vest in
accordance with Section 3.04(b) hereof and are
“Additional Options” for purposes hereof.
Notwithstanding the foregoing to the contrary, the first grant
of Additional Options shall be made to eligible Nonemployee
Directors on the date of the 2005 annual meeting of stockholders.




3.03     Exercise Price.



     
The Exercise Price for Nonemployee Directors’ Options shall
be payable as set forth in Section 2.02(e).




3.04     Vesting and Exercise.



     
(a) Initial Options shall vest and become exercisable with
respect to 25% of the underlying shares on the grant date and
with respect to an additional 25% of the underlying shares on
the dates of each of the first three anniversaries of the date
of grant provided the Recipient has remained a Nonemployee
Director for the entire period from the date of grant to such
date.



     
(b) Additional Options shall vest and become exercisable
upon the earlier of (i) the first anniversary of the grant
date or (ii) immediately prior to the annual meeting of
stockholders of the Company next following the grant date,
provided the Recipient has remained a Nonemployee Director for
the entire period from the date of grant to such earlier date.



     
(c) Notwithstanding the foregoing, however, Initial Options
and Additional Options that have not vested and become
exercisable at the time the Recipient ceases to be a Nonemployee
Director shall expire.




3.05     Term of Options and Effect
of Termination.



     
No Nonemployee Directors’ Option shall be exercisable after
the expiration of ten years from the date of its grant. In the
event that the Recipient of a Nonemployee Director’s Option
shall cease to be a Nonemployee Director, all outstanding
Nonemployee Directors’ Options granted to such Recipient
shall be exercisable, to the extent already vested and
exercisable on the date such Recipient ceases to be a
Nonemployee Director and regardless of the reason the Recipient
ceases to be a Nonemployee Director until the fifth anniversary
of the date such Director ceases to be a Nonemployee Director;
provided that the Administrator may extend such post-termination
period to the expiration date of the Option.




ARTICLE IV




RECAPITALIZATIONS AND REORGANIZATIONS




4.01     Corporate Transactions.



     
(a) Options. Unless the Administrator provides
otherwise in the Award Document or another written agreement, in
the event of a Change in Control, the Administrator shall
provide that all Options (other than Non-employee Director
Options) either (i) vest in full immediately preceding the
Change in Control and terminate upon the Change in Control,
(ii) are assumed or continued in effect in connection with
the Change in Control transaction, (iii) are cashed out for
an amount equal to the deal consideration per share less the
Exercise Price or (iv) are substituted for similar awards
of the surviving corporation. Each Option that is assumed or
otherwise continued in effect in connection with a Change in
Control shall be appropriately adjusted, immediately after such
Change in Control, to apply to the number and class of
securities which



12







 




would have been issuable to Recipient in consummation of such
Change in Control had the Recipient been exercised immediately
prior to such Change in Control. Appropriate adjustments to
reflect such Change in Control shall also be made to
(A) the Exercise Price payable per share under each
outstanding Option, provided the aggregate Exercise Price
payable for such securities shall remain the same, (B) the
maximum number and/or class of securities available for issuance
over the remaining term of the Plan, (C) the maximum number
and/or class of securities for which any one person may be
granted options and direct stock issuances pursuant to the Plan
per calendar year and (D) the number and/or class of
securities subject to Nonemployee Director’s Options. To
the extent the holders of Common Stock receive cash
consideration in whole or part for their Common Stock in
consummation of the Change in Control, the successor corporation
may, in connection with the assumption of the outstanding
Options, substitute one or more shares of its own common stock
with a fair market value equivalent to the cash consideration
paid per share of Common Stock in such Change in Control
transaction.



     
(b) Nonemployee Directors’ Options. Immediately
prior to a Change of Control, all outstanding Nonemployee
Directors’ Options shall vest in full.



     
(c) Other Incentive Awards. The Administrator may
specify the effect that a Change in Control has on an Incentive
Award (other than an Option) outstanding at the time such a
Change in Control occurs either in the applicable Award Document
or by subsequent modification of the Award.




4.02     No Restraint.



     
The grant of an Option pursuant to the Plan shall 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 of any part of its business
or assets.



13







 



Form of Option
Grant




	 	 	 	 	 
	
    Notice of Grant of Stock Options

    and Option Agreement	 	
    La Jolla Pharmaceutical Co.

     ID: 33-0361285

    6455 Nancy Ridge Drive

    San Diego, CA 92121

    (858) 452-6600
	
    
    Name:

    	 	
    Option Number:	 	 
	 	 	
    Plan:	 	
    2004
	
    
    Address:

    	 	
    ID:	 	 




     
Effective
                    ,
you have been granted a(n) Incentive Stock Option to buy
                     shares
of La Jolla Pharmaceutical Co. (the Company) stock at
$           per
share.



     
The total option price of the shares granted is
$          .



     
Shares in each period will become fully vested on the date shown.






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Shares		 	Vest Type		 	Full Vest		 	Expiration	
	 		 	 		 	 		 	 	




     
By your signature and the Company’s signature below, you
and the Company agree that these options are granted under and
governed by the terms and conditions of the Company’s Stock
Option Plan as amended and the Option Agreement, all of which
are attached and made a part of this document.




	 	 	 
	 
	 
La Jolla
    Pharmaceutical Company	 	 

    Date
	 	 	 
	
    
    Name

    	 	
    Date




14