Document:

Prepared by R.R. Donnelley Financial -- 2003 Stock Plan

 Exhibit 10.3A 
  
 TERCICA, INC. 
  
 2003 STOCK PLAN 
  
 SECTION 1 
 BACKGROUND AND PURPOSE OF THE PLAN 
  
 1.1 Background. The Plan permits the grant of Incentive Stock Option,
Nonstatutory Stock Options, Stock Purchase Rights, Restricted Stock, Stock Appreciation Rights, Performance Units and Performance Shares. 
  
 1.2 Purpose. The purposes of this Plan are (a) to attract and retain the best available personnel for positions of substantial responsibility, (b)
to provide additional incentive to Employees, Directors and Consultants, and (c) to promote the success of the Company’s business. 
  
 SECTION 2 
 DEFINITIONS

  
 As used herein, the following definitions will apply:

  
 2.1 “Administrator” means the Board or any
of its Committees as will be administering the Plan, in accordance with Section 4 of the Plan. 
  
 2.2 “Affiliated SAR” means an SAR that is granted in connection with a related Option, and which automatically will be deemed to be exercised at the same time that the related Option is exercised.

  
 2.3 “Applicable Laws” means the requirements
relating to the administration of stock option plans under U. S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of
any foreign country or jurisdiction where Awards are, or will be, granted under the Plan. 
  
 2.4 “Award” means, individually or collectively, a grant under the Plan of Options, SARs, Stock Purchase Rights, Restricted Stock, Performance Units or Performance Shares. 
  
 2.5 “Award Agreement” means the written agreement setting
forth the terms and provisions applicable to each Award granted under the Plan. The Award Agreement is subject to the terms and conditions of the Plan. 
  
 2.7 “Board” means the Board of Directors of the Company. 
  
 2.8 “Change in Control” means the occurrence of any of the following events: 
  
 2.8.1 Any “person” (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the total voting
power represented by the Company’s then outstanding voting securities; 

 2.8.2 The consummation of the sale or disposition by the Company of all or substantially
all of the Company’s assets; 
  
 2.8.3 A
change in the composition of the Board occurring within a two-year period, as a result of which fewer than a majority of the directors are Incumbent Directors. “Incumbent Directors” means directors who either (A) are Directors as of the
effective date of the Plan, or (B) are elected, or nominated for election, to the Board with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination (but will not include an individual whose
election or nomination is in connection with an actual or threatened proxy contest relating to the election of directors to the Company); or 
  
 2.8.4 The consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which
would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least fifty
percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger or consolidation. 
  
 2.9 “Code” means the Internal Revenue Code of 1986, as
amended. Any reference to a section of the Code herein will be a reference to any successor or amended section of the Code. 
  
 2.10 “Committee” means a committee appointed by the Board in accordance with Section 4 of the Plan. 
  
 2.11 “Common Stock” means the common stock of the Company.

  
 2.12 “Company” means Tercica, Inc., a
Delaware corporation, or any successor thereto. 
  
 2.13
“Consultant” means any person, including an advisor, engaged by the Company or a Parent or Subsidiary to render services to such entity. 
  
 2.14 “Director” means a member of the Board. 
  
 2.15 “Disability” means total and permanent disability as defined in Section 22(e)(3) of the Code, provided that in the case of Awards
other than Incentive Stock Options, the Administrator in its discretion may determine whether a permanent and total disability exists in accordance with uniform and non-discriminatory standards adopted by the Administrator from time to time.

  
 2.16 “Employee” means any person, including
Officers and Directors, employed by the Company or any Parent or Subsidiary of the Company. Neither service as a Director nor payment of a director’s fee by the Company will be sufficient to constitute “employment” by the Company.

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

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 2.18 “Exchange Program” means a program under which (a) outstanding Awards are
surrendered or cancelled in exchange for Awards of the same type (which may have lower exercise prices and different terms), Awards of a different type, and/or cash, and/or (b) the exercise price of an outstanding Award is reduced. The terms and
conditions of any Exchange Program will be determined by the Administrator in its sole discretion. 
  
 2.19 “Fair Market Value” means, as of any date, the value of Common Stock determined as follows: 
  
 2.19.1 If the Common Stock is listed on any established
stock exchange or a national market system, including without limitation the Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value will be the closing sales price for such stock (or the closing bid,
if no sales were reported) as quoted on such exchange or system on the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; 
  
 2.19.2 If the Common Stock is regularly quoted by a
recognized securities dealer but selling prices are not reported, the Fair Market Value of a Share of Common Stock will be the mean between the high bid and low asked prices for the Common Stock on the day of determination, as reported in The
Wall Street Journal or such other source as the Administrator deems reliable; or 
  
 2.19.3 In the absence of an established market for the Common Stock, the Fair Market Value will be determined in good faith by the
Administrator. 
  
 2.20 “Fiscal Year” means the
fiscal year of the Company. 
  
 2.22 “Freestanding
SAR” means a SAR that is granted independently of any Option. 
  
 2.24 “Incentive Stock Option” means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code and the regulations promulgated thereunder. 
  
 2.25 “Inside Director” means a Director who is an Employee.

  
 2.26 “Nonstatutory Stock Option” means an
Option not intended to qualify as an Incentive Stock Option. 
  
 2.27 “Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder. 
  
 2.28 “Option” means a stock option granted pursuant to the
Plan. 
  
 2.29 “Optioned Stock” means the Common
Stock subject to an Award. 
  
 2.30 “Outside
Director” means a Director who is not an Employee. 
  
 2.31 “Parent” means a “parent corporation,” whether now or hereafter existing, as defined in Section 424(e) of the Code. 
  

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 2.32 “Participant” means the holder of an outstanding Award granted under the Plan.

  
 2.33 “Performance Share” means an Award
granted to a Participant pursuant to Section 9. 
  
 2.34
“Performance Unit” means an Award granted to a Participant pursuant to Section 9. 
  
 2.33 “Period of Restriction” means the period during which the transfer of Shares of Restricted Stock are subject to restrictions and
therefore, the Shares are subject to a substantial risk of forfeiture. Such restrictions may be based on the passage of time, the achievement of target levels of performance, or the occurrence of other events as determined by the Administrator, in
its discretion. 
  
 2.35 “Plan” means this 2003
Stock Plan. 
  
 2.36 “Registration Date” means
the effective date of the first registration statement which is filed by the Company and declared effective pursuant to Section 12(g) of the Exchange Act, with respect to any class of the Company’s securities. 
  
 2.37 “Restricted Stock” means shares of Common Stock
acquired pursuant to a grant of Stock Purchase Rights under Section 6 of the Plan or issued pursuant to Section 7 of the Plan. 
  
 2.38 “Rule 16b-3” means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3, as in effect when discretion is being exercised
with respect to the Plan. 
  
 2.39 “Section 16(b)
“ means Section 16(b) of the Exchange Act. 
  
 2.40
“Service Provider” means an Employee, Director or Consultant. 
  
 2.41 “Share” means a share of the Common Stock, as adjusted in accordance with Section 3 of the Plan. 
  
 2.42 “Stock Appreciation Right” or “SAR” means an Award, granted alone or in connection with a related Option, that
pursuant to Section 8 is designated as an SAR. 
  
 2.43
“Stock Purchase Right” means the right to purchase Common Stock pursuant to Section 6 of the Plan. 
  
 2.44 “Subsidiary” means a “subsidiary corporation”, whether now or hereafter existing, as defined in Section 424(f) of the
Code. 
  
 2.45 “Tandem SAR” means an SAR that is
granted in connection with a related Option, the exercise of which will require forfeiture of the right to purchase an equal number of Shares under the related Option (and when a Share is purchased under the Option, the SAR will be canceled to the
same extent). 
  

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 SECTION 3 
 SHARES SUBJECT TO THE PLAN 
  
 3.1 Stock Subject to the Plan. The maximum aggregate number of Shares that may be optioned and sold under the Plan includes (a) any Shares which have been reserved but not issued under the Company’s 2002 Executive Stock Plan
(the “Executive Plan”), (b) any Shares which have been reserved but not issued under the Company’s 2002 Stock Plan (the “2002 Plan”), (c) any Shares returned to the Executive Plan or the 2002 Plan as a result of termination
of options or repurchase of Shares issued under either such plan, and (d) an annual increase to be added on the first day of the Company’s fiscal year beginning in 2005, equal to the lesser of (i) 1,250,000 Shares, (ii) 4% of the outstanding
Shares on such date or (iii) an amount determined by the Board. The Shares may be authorized, but unissued, or reacquired Common Stock. Shares shall not be deemed to have been issued pursuant to the Plan with respect to any portion of an Award that
is settled in cash. Upon payment in Shares pursuant to the exercise of an SAR, the number of Shares available for issuance under the Plan shall be reduced only by the number of shares actually issued in such payment. If the exercise price of an
Option is paid by tender to the Company, or attestation to the ownership, of Shares owned by the Participant, the number of shares available for issuance under the Plan shall be reduced by the gross number of shares for which the Option is
exercised. 
  
 3.2 Lapsed Awards. If an Award expires or
becomes unexercisable without having been exercised in full, or is surrendered pursuant to an Exchange Program, the unpurchased Shares which were subject thereto will become available for future grant or sale under the Plan (unless the Plan has
terminated); provided, however, that Shares that have actually been issued under the Plan, whether upon exercise or grant of an Award, will not be returned to the Plan and will not become available for future distribution under the Plan,
except that if unvested Shares are forfeited or repurchased by the Company at their original purchase price or, if less than their original purchase price, their fair market value, such Shares will become available for future grant under the Plan.

  
 3.3 Adjustments. In the event that any dividend or
other distribution (whether in the form of cash, Shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of
Shares or other securities of the Company, or other change in the corporate structure of the Company affecting the Shares such that an adjustment is determined by the Administrator (in its sole discretion) to be appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, then the Administrator may, in such manner as it may deem equitable, adjust the number and class of Shares which may be delivered under the
Plan, the number, class, and price of Shares covered by each outstanding Award, the numerical Share limits of Section 5 and the number of Shares issuable pursuant to Section10. 
  
 3.4 Share Reserve. The Company, during the term of this Plan, will at all times reserve and keep available such
number of Shares as will be sufficient to satisfy the requirements of the Plan. 
  

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 SECTION 4 
 ELIGIBILITY/ADMINISTRATION OF THE PLAN 
  
 4.1 Eligibility. Nonstatutory Stock Options, Stock Purchase Rights, Restricted Stock, Stock Appreciation Rights, Performance Units and Performance Shares may be granted to Service Providers. Incentive Stock
Options may be granted only to Employees. 
  
 4.2
Procedure. 
  
 4.2.1 Multiple
Administrative Bodies. Different Committees with respect to different groups of Service Providers may administer the Plan. 
  
 4.2.2 Section 162(m). To the extent that the Administrator determines it to be desirable to qualify Options granted hereunder as
“performance-based compensation” within the meaning of Section 162(m) of the Code, the Plan will be administered by a Committee of two or more “outside directors” within the meaning of Section 162(m) of the Code. 
  
 4.2.3 Rule 16b-3. To the extent desirable to qualify
transactions hereunder as exempt under Rule 16b-3, the transactions contemplated hereunder will be structured to satisfy the requirements for exemption under Rule 16b-3. 
  
 4.2.4 Other Administration. Other than as provided above, the Plan will be administered by (A) the
Board or (B) a Committee, which committee will be constituted to satisfy Applicable Laws. 
  
 4.3 Powers of the Administrator. Subject to the provisions of the Plan, and in the case of a Committee, subject to the specific duties delegated by the Board to such Committee, the Administrator will have the
authority, in its discretion: (a) to determine the Fair Market Value; (b) to select the Service Providers to whom Awards may be granted hereunder; (c) to determine the number of shares of Common Stock to be covered by each Award granted hereunder;
(d) to approve forms of agreement for use under the Plan; (e) to determine the terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder (such terms and conditions include, but are not limited to, the exercise
price, the time or times when Awards may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Award or the shares of Common Stock
relating thereto, based in each case on such factors as the Administrator, in its sole discretion, will determine); (f) to institute an Exchange Program; (g) to construe and interpret the terms of the Plan and awards granted pursuant to the Plan;
(h) to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for the purpose of satisfying applicable foreign laws; (i) to modify or amend each Award (subject to
Section 17.3 of the Plan), including the discretionary authority to extend the post-termination exercisability period of Options longer than is otherwise provided for in the Plan; (j) to allow Participants to satisfy withholding tax obligations by
electing to have the Company withhold from the Shares to be issued upon exercise of an Award that number of Shares having a Fair Market Value equal to the minimum amount required to be withheld (the Fair Market Value of the Shares to be withheld
will be determined on the date that the amount of tax to be withheld is to be determined and all elections by a Participant to have Shares withheld for this purpose will be made in such form and under such 

  

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conditions as the Administrator may deem necessary or advisable); (k) to authorize any person to execute on behalf of the Company any instrument required to
effect the grant of an Award previously granted by the Administrator; (l) allow a Participant to defer the receipt of the payment of cash or the delivery of Shares that would otherwise be due to such Participant under an Award, and (m) to make all
other determinations deemed necessary or advisable for administering the Plan. 
  
 4.4 Effect of Administrator’s Decision. The Administrator’s decisions, determinations and interpretations will be final and binding on all Participants and any other holders of Awards. 
  
 SECTION 5 
 STOCK OPTIONS 
  
 5.1 Limitations. 
  
 5.1.1 Incentive Stock Options may be granted only to Employees. 
  
 5.1.2 Each Option will be designated in the Award Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options are exercisable for the first time by the Participant during any calendar year (under all plans of the
Company and any Parent or Subsidiary) exceeds $100,000, such Options will be treated as Nonstatutory Stock Options. For purposes of this Section 5.1.2, Incentive Stock Options will be taken into account in the order in which they were granted. The
Fair Market Value of the Shares will be determined as of the time the Option with respect to such Shares is granted. 
  
 5.1.3 The following limitations will apply to grants of Options: 
  
 (a) No Service Provider will be granted, in any Fiscal Year, Options to purchase more than 500,000 Shares.

  
 (b) In connection with his or her initial
service as an Employee, a Service Provider may be granted Options to purchase up to an additional 250,000 Shares, which will not count against the limit set forth in subsection (a) above. 
  
 (c) The foregoing limitations will be adjusted
proportionately in connection with any change described in Section 3.3. 
  
 (d) If an Option is cancelled in the same Fiscal Year in which it was granted (other than in connection with a transaction described in Section 13), the cancelled Option will be counted against the limits set forth in
subsections (a) and (b) above. For this purpose, if the exercise price of an Option is reduced, the transaction will be treated as a cancellation of the Option and the grant of a new Option. 
  
 5.2 Term of Option. The term of each Option will be stated in the
Award Agreement. In the case of an Incentive Stock Option, the term will be ten (10) years from the date of grant or such shorter term as may be provided in the Award Agreement. Moreover, in the case of an Incentive Stock Option granted to a
Participant who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Incentive
Stock Option will be five (5) years from the date of grant or such shorter term as may be provided in the Award Agreement. 
  

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 5.3 Option Exercise Price and Consideration. 
  
 5.3.1 Exercise Price. The per share exercise price
for the Shares to be issued pursuant to exercise of an Option will be determined by the Administrator, subject to the following: 
  
 (a) In the case of an Incentive Stock Option 
  
 (i) granted to an Employee who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of
the voting power of all classes of stock of the Company or any Parent or Subsidiary, the per Share exercise price will be no less than 110% of the Fair Market Value per Share on the date of grant. 
  
 (ii) granted to any Employee other than an Employee
described in paragraph (i) immediately above, the per Share exercise price will be no less than 100% of the Fair Market Value per Share on the date of grant. 
  

(b) In the case of a Nonstatutory Stock Option, the per Share exercise price will be determined by the Administrator. In the case of a
Nonstatutory Stock Option intended to qualify as “performance-based compensation” within the meaning of Section 162(m) of the Code, the per Share exercise price will be no less than 100% of the Fair Market Value per Share on the date of
grant. 
  
 (c) Notwithstanding the foregoing,
Options may be granted with a per Share exercise price of less than 100% of the Fair Market Value per Share on the date of grant pursuant to a merger or other corporate transaction. 
  
 5.3.2 Waiting Period and Exercise Dates. At the time an Option is granted, the Administrator will fix
the period within which the Option may be exercised and will determine any conditions that must be satisfied before the Option may be exercised. 
  
 5.3.3 Form of Consideration. The Administrator will determine the acceptable form of consideration for exercising an Option,
including the method of payment. In the case of an Incentive Stock Option, the Administrator will determine the acceptable form of consideration at the time of grant. Such consideration may consist entirely of: (i) cash; (ii) check; (iii) promissory
note; (iv) other Shares which, in the case of Shares acquired from the Company, (A) have been owned by the Participant for more than six (6) months on the date of surrender, and (B) have a Fair Market Value on the date of surrender equal to the
aggregate exercise price of the Shares as to which said Option will be exercised; (v) consideration received by the Company under a cashless exercise program implemented by the Company in connection with the Plan; (vi) a reduction in the amount of
any Company liability to the Participant, including any liability attributable to the Participant’s participation in any Company-sponsored deferred compensation program or arrangement; (vii) any combination of the foregoing methods of payment;
or (viii) such other consideration and method of payment for the issuance of Shares to the extent permitted by Applicable Laws. 
  

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	5.4	Exercise of Option. 

  
 5.4.1 Procedure for Exercise; Rights as a Stockholder. Any Option granted hereunder will be exercisable according to the terms of
the Plan and at such times and under such conditions as determined by the Administrator and set forth in the Award Agreement. An Option may not be exercised for a fraction of a Share. 
  
 An Option will be deemed exercised when the Company receives: (i) written or electronic notice of exercise
(in accordance with the Award Agreement) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised. Full payment may consist of any consideration and method of payment
authorized by the Administrator and permitted by the Award Agreement and the Plan. Shares issued upon exercise of an Option will be issued in the name of the Participant or, if requested by the Participant, in the name of the Participant and his or
her spouse. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder will exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option. The Company will issue (or cause to be issued) such Shares promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the
record date is prior to the date the Shares are issued, except as provided in Section 3.3 of the Plan. 
  
 Exercising an Option in any manner will decrease the number of Shares thereafter available, both for purposes of the Plan and for sale
under the Option, by the number of Shares as to which the Option is exercised. 
  
 5.4.2 Termination of Relationship as a Service Provider. If a Participant ceases to be a Service Provider, other than upon the
Participant’s death or Disability, the Participant may exercise his or her Option within such period of time as is specified in the Award Agreement to the extent that the Option is vested on the date of termination (but in no event later than
the expiration of the term of such Option as set forth in the Award Agreement). In the absence of a specified time in the Award Agreement, the Option will remain exercisable for three (3) months following the Participant’s termination. If, on
the date of termination, the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will revert to the Plan. If, after termination, the Participant does not exercise his or her Option
within the time specified by the Administrator, the Option will terminate, and the Shares covered by such Option will revert to the Plan. 
  
 5.4.3 Disability of Participant. If a Participant ceases to be a Service Provider as a result of the Participant’s Disability,
the Participant may exercise his or her Option within such period of time as is specified in the Award Agreement to the extent the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as
set forth in the Award Agreement). In the absence of a specified time in the Award Agreement, the Option will remain exercisable for twelve (12) months following the Participant’s termination. If, on the date of termination, the Participant is
not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will revert to the Plan. If, after termination, the Participant does not exercise his or her Option within the time specified herein, the Option will
terminate, and the Shares covered by such Option will revert to the Plan. 
  

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 5.4.4 Death of Participant. If a Participant dies while a Service Provider, the
Option may be exercised following the Participant’s death within such period of time as is specified in the Award Agreement to the extent that the Option is vested on the date of death (but in no event may the option be exercised later than the
expiration of the term of such Option as set forth in the Award Agreement), by the Participant’s designated beneficiary, provided such beneficiary has been designated prior to Participant’s death in a form acceptable to the Administrator.
If no such beneficiary has been designated by the Participant, then such Option may be exercised by the personal representative of the Participant’s estate or by the person(s) to whom the Option is transferred pursuant to the Participant’s
will or in accordance with the laws of descent and distribution. In the absence of a specified time in the Award Agreement, the Option will remain exercisable for twelve (12) months following Participant’s death. If, at the time of death,
Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will immediately revert to the Plan. If the Option is not so exercised within the time specified herein, the Option will terminate,
and the Shares covered by such Option will revert to the Plan. 
  
 SECTION 6 
 STOCK PURCHASE RIGHTS 
  
 6.1 Rights to Purchase. Stock Purchase Rights may be issued either alone, in addition to, or in tandem with other
awards granted under the Plan and/or cash awards made outside of the Plan. After the Administrator determines that it will offer Stock Purchase Rights under the Plan, it will advise the offeree in writing or electronically, by means of an Award
Agreement, of the terms, conditions and restrictions related to the offer, including the number of Shares that the offeree will be entitled to purchase, the price to be paid, and the time within which the offeree must accept such offer. The offer
will be accepted by execution of an Award Agreement in the form determined by the Administrator. 
  
 6.2 Repurchase Option. Unless the Administrator determines otherwise, the Award Agreement will grant the Company a repurchase option exercisable
upon the voluntary or involuntary termination of the purchaser’s service with the Company for any reason (including death or Disability). The purchase price for Shares repurchased pursuant to the Award Agreement will be determined by the
Administrator and may be paid by cancellation of any indebtedness of the purchaser to the Company. The repurchase option will lapse at a rate determined by the Administrator. 
  
 6.3 Other Provisions. The Award Agreement will contain such other terms, provisions and conditions not inconsistent
with the Plan as may be determined by the Administrator in its sole discretion. 
  
 6.4 Rights as a Stockholder. Once the Stock Purchase Right is exercised, the purchaser will have the rights equivalent to those of a stockholder, and will be a stockholder when his or her purchase is entered
upon the records of the duly authorized transfer agent of the Company. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Stock Purchase Right is exercised, except as provided in Section 3.3
of the Plan. 
  

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 SECTION 7 
 RESTRICTED STOCK 
  
 7.1
Grant of Restricted Stock. Subject to the terms and provisions of the Plan, the Administrator, at any time and from time to time, may grant Shares of Restricted Stock to Service Providers in such amounts as the Administrator, in its sole
discretion, will determine. The Administrator, in its sole discretion, will determine the number of Shares to be granted to each Service Provider. 
  
 7.2 Restricted Stock Agreement. Each Award of Restricted Stock will be evidenced by an Award Agreement that will specify the Period of Restriction,
the number of Shares granted, and such other terms and conditions as the Administrator, in its sole discretion, will determine. Unless the Administrator determines otherwise, Shares of Restricted Stock will be held by the Company as escrow agent
until the restrictions on such Shares have lapsed. 
  
 7.3
Transferability. Except as provided in this Section 7, Shares of Restricted Stock may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until the end of the applicable Period of Restriction. 
  
 7.4 Other Restrictions. The Administrator, in its sole discretion, may
impose such other restrictions on Shares of Restricted Stock as it may deem advisable or appropriate. 
  
 7.5 Removal of Restrictions. Except as otherwise provided in this Section 7, Shares of Restricted Stock covered by each Restricted Stock grant made
under the Plan will be released from escrow as soon as practicable after the last day of the Period of Restriction. The Administrator, in its discretion, may accelerate the time at which any restrictions will lapse or be removed. 
  
 7.6 Voting Rights. During the Period of Restriction, Service Providers
holding Shares of Restricted Stock granted hereunder may exercise full voting rights with respect to those Shares, unless the Administrator determines otherwise. 
  
 7.7 Dividends and Other Distributions. During the Period of Restriction, Service Providers holding Shares of
Restricted Stock will be entitled to receive all dividends and other distributions paid with respect to such Shares unless otherwise provided in the Award Agreement. If any such dividends or distributions are paid in Shares, the Shares will be
subject to the same restrictions on transferability and forfeitability as the Shares of Restricted Stock with respect to which they were paid. 
  
 7.8 Return of Restricted Stock to Company. On the date set forth in the Award Agreement, the Restricted Stock for which restrictions have not
lapsed will revert to the Company and again will become available for grant under the Plan. 
  
 SECTION 8 
 STOCK APPRECIATION RIGHTS 
  
 8.1 Grant of SARs. Subject to the terms and conditions of the Plan, an
SAR may be granted to Service Providers at any time and from time to time as will be determined by the Administrator, in its sole discretion. The Administrator may grant Affiliated SARs, Freestanding SARs, Tandem SARs, or any combination thereof.

  

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 8.1.1 Number of Shares. The Administrator will have complete discretion to
determine the number of SARs granted to any Service Provider. 
  
 8.1.2 Exercise Price and Other Terms. The Administrator, subject to the provisions of the Plan, will have complete discretion to determine the terms and conditions of SARs granted under the Plan. However, the
exercise price of Tandem or Affiliated SARs will equal the Exercise Price of the related Option. 
  
 8.2 Exercise of Tandem SARs. Tandem SARs may be exercised for all or part of the Shares subject to the related Option upon the surrender of the
right to exercise the equivalent portion of the related Option. A Tandem SAR may be exercised only with respect to the Shares for which its related Option is then exercisable. With respect to a Tandem SAR granted in connection with an Incentive
Stock Option: (a) the Tandem SAR will expire no later than the expiration of the underlying Incentive Stock Option; (b) the value of the payout with respect to the Tandem SAR will be for no more than one hundred percent (100%) of the difference
between the Exercise Price of the underlying Incentive Stock Option and the Fair Market Value of the Shares subject to the underlying Incentive Stock Option at the time the Tandem SAR is exercised; and (c) the Tandem SAR will be exercisable only
when the Fair Market Value of the Shares subject to the Incentive Stock Option exceeds the Exercise Price of the Incentive Stock Option. 
  
 8.3 Exercise of Affiliated SARs. An Affiliated SAR will be deemed to be exercised upon the exercise of the related Option. The deemed exercise of
an Affiliated SAR will not necessitate a reduction in the number of Shares subject to the related Option. 
  
 8.4 Exercise of Freestanding SARs. Freestanding SARs will be exercisable on such terms and conditions as the Administrator, in its sole discretion,
will determine. 
  
 8.5 SAR Agreement. Each SAR grant will
be evidenced by an Award Agreement that will specify the exercise price, the term of the SAR, the conditions of exercise, and such other terms and conditions as the Administrator, in its sole discretion, will determine. 
  
 8.6 Expiration of SARs. An SAR granted under the Plan will expire upon
the date determined by the Administrator, in its sole discretion, and set forth in the Award Agreement. Notwithstanding the foregoing, the rules of Section 5.4 also will apply to SARs. 
  
 8.7 Payment of SAR Amount. Upon exercise of an SAR, a Participant will be entitled to receive payment from the
Company in an amount determined by multiplying: 
  
 (a) The difference between the Fair Market Value of a Share on the date of exercise over the exercise price; times 
  
 (b) The number of Shares with respect to which the SAR is exercised. 
  
 At the discretion of the Administrator, the payment upon SAR exercise may be in cash, in Shares of equivalent value, or in
some combination thereof. 
  

 -12- 

 SECTION 9 
 PERFORMANCE UNITS AND PERFORMANCE SHARES 
  
 9.1 Grant of Performance Units/Shares. Performance Units and Performance Shares may be granted to Service Providers at any time and from time to time, as will be determined by the Administrator, in its sole
discretion. The Administrator will have complete discretion in determining the number of Performance Units and Performance Shares granted to each Participant. 
  

9.2 Value of Performance Units/Shares. Each Performance Unit will have an initial value that is established by the Administrator on or before
the date of grant. Each Performance Share will have an initial value equal to the Fair Market Value of a Share on the date of grant. 
  
 9.3 Performance Objectives and Other Terms. The Administrator will set performance objectives in its discretion which, depending on the extent to
which they are met, will determine the number or value of Performance Units/Shares that will be paid out to the Service Providers. The time period during which the performance objectives must be met will be called the “Performance Period.”
Each Award of Performance Units/Shares will be evidenced by an Award Agreement that will specify the Performance Period, and such other terms and conditions as the Administrator, in its sole discretion, will determine. The Administrator may set
performance objectives based upon the achievement of Company-wide, divisional, or individual goals, applicable federal or state securities laws, or any other basis determined by the Administrator in its discretion. 
  
 9.4 Earning of Performance Units/Shares. After the applicable
Performance Period has ended, the holder of Performance Units/Shares will be entitled to receive a payout of the number of Performance Units/Shares earned by the Participant over the Performance Period, to be determined as a function of the extent
to which the corresponding performance objectives have been achieved. After the grant of a Performance Unit/Share, the Administrator, in its sole discretion, may reduce or waive any performance objectives for such Performance Unit/Share. 

 
 9.5 Form and Timing of Payment of Performance Units/Shares. Payment
of earned Performance Units/Shares will be made as soon as practicable after the expiration of the applicable Performance Period. The Administrator, in its sole discretion, may pay earned Performance Units/Shares in the form of cash, in Shares
(which have an aggregate Fair Market Value equal to the value of the earned Performance Units/Shares at the close of the applicable Performance Period) or in a combination thereof. 
  
 9.6 Cancellation of Performance Units/Shares. On the date set forth in the Award Agreement, all unearned or unvested
Performance Units/Shares will be forfeited to the Company, and again will be available for grant under the Plan. 
  

 -13- 

 SECTION 10 
 FORMULA OPTION GRANTS TO OUTSIDE DIRECTORS 
  
 All grants of Options to Outside Directors pursuant to this Section will be automatic and nondiscretionary and will be made in accordance with the following provisions: 
  
 10.1 Type of Option. All Options granted pursuant to this Section
will be Nonstatutory Stock Options and, except as otherwise provided herein, will be subject to the other terms and conditions of the Plan. 
  
 10.2 No Discretion. No person will have any discretion to select which Outside Directors will be granted Options under this Section or to determine
the number of Shares to be covered by such Options (except as provided in Section 3). Notwithstanding the foregoing, the Administrator, in its discretion, may grant an Option that is otherwise issuable to an Outside Director pursuant to this Section
10 to the Outside Director’s employer and such employer shall be deemed an Outside Director for purposes of the Plan. 
  
 10.3 First Option. Each person who first becomes an Outside Director following the Registration Date will be automatically granted an Option to
purchase 22,500 Shares (a “First Option”) on or about the date on which such person first becomes an Outside Director, whether through election by the stockholders of the Company or appointment by the Board to fill a vacancy; provided,
however, that an Inside Director who ceases to be an Inside Director but who remains a Director will not receive a First Option. 
  
 10.4 Subsequent Option. Each Outside Director who also is the Chairman of the Board will be automatically granted an Option to purchase 22,500
Shares and each Outside Director, other than the Chairman of the Board, will be automatically granted an Option to purchase 11,250 Shares (collectively referred to as a “Subsequent Option”) on each date of the annual meeting of the
stockholders of the Company beginning in 2004, if as of such date, he or she will have served on the Board for at least the preceding six (6) months. 
  
 10.5 Terms. The terms of each Option granted pursuant to this Section will be as follows: 
  
 10.5.1 The term of the Option will be ten (10) years.

  
 10.5.2 The exercise price per Share will be
100% of the Fair Market Value per Share on the date of grant of the Option. 
  
 10.5.3 Subject to Section 13, the First Option will vest and become exercisable as to 1/3 of the Shares subject to the Option on each anniversary of its date of grant, provided that the Participant continues to serve
as a Service Provider on such dates. 
  
 10.5.4
Subject to Section 13, the Subsequent Option will vest and become exercisable as to 100% of the Shares subject to the Option on the anniversary of its date of grant, provided that the Participant continues to serve as a Service Provider on such
date. 
  
 10.6 Amendment. The Administrator in its
discretion may change the number of Shares subject to the First Options and Subsequent Options. 
  

 -14- 

 SECTION 11 
 LEAVE OF ABSENCE 
  
 Unless
the Administrator provides otherwise, vesting of Awards granted hereunder will be suspended during any unpaid leave of absence. A Service Provider will not cease to be an Employee in the case of (i) any leave of absence approved by the Company or
(ii) transfers between locations of the Company or between the Company, its Parent, or any Subsidiary. For purposes of Incentive Stock Options, no such leave may exceed ninety days, unless reemployment upon expiration of such leave is guaranteed by
statute or contract. If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, then three (3) months following the 91st day of such leave any Incentive Stock Option held by the Participant will cease to be treated as an Incentive Stock Option and will be treated for tax purposes as a Nonstatutory Stock Option.

  
 SECTION 12 
 TRANSFERABILITY OF AWARDS 
  
 Unless determined otherwise by the Administrator, an Award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner
other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Participant, only by the Participant. If the Administrator makes an Award transferable, such Award will contain such additional terms and
conditions as the Administrator deems appropriate. 
  
 SECTION
13 
 DISSOLUTION OR LIQUIDATION OR CHANGE IN CONTROL 
  
 13.1 Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the
Administrator will notify each Participant as soon as practicable prior to the effective date of such proposed transaction. To the extent it has not been previously exercised, an Award will terminate immediately prior to the consummation of such
proposed action. 
  
 13.2 Change in Control. In the event
of a Change in Control, each outstanding Option, SAR and Stock Purchase Right will be assumed or an equivalent option or right substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. 
  
 In the event that the successor corporation refuses to assume
or substitute for the Option, SAR or Stock Purchase Right, the Participant will fully vest in and have the right to exercise the Option, SAR or Stock Purchase Right as to all of the Optioned Stock, including Shares as to which it would not otherwise
be vested or exercisable (subject to the consummation of the Change in Control). If an Option, SAR or Stock Purchase Right becomes fully vested and exercisable in lieu of assumption or substitution in the event of a Change in Control, the
Administrator will notify the Participant in writing or electronically that the Option, SAR or Stock Purchase Right will be fully vested and exercisable (subject to the consummation of the Change in Control) for a period of fifteen (15) days from
the date of such notice, and the Option, SAR or Stock Purchase Right will terminate upon the expiration of such period. 
  
 With respect to Options, SARs and/or Stock Purchase Rights granted to an Outside Director that are assumed or substituted for, if on the
date of or following such assumption or substitution the Participant’s status as a Director or a director of the successor corporation, as 
  

 -15- 

 
applicable, is terminated other than upon a voluntary resignation by the Participant, then the Participant will fully vest in and have the right to exercise
the Option, SAR and/or Stock Purchase Rights as to all of the Optioned Stock, including Shares as to which it would not otherwise be vested or exercisable. 
  
 For the purposes of this Section 13.2, the Option, SAR or Stock Purchase Right will be considered assumed if, following the Change in
Control, the option or right confers the right to purchase or receive, for each Share of Optioned Stock subject to the Option, SAR or Stock Purchase Right immediately prior to the Change in Control, the consideration (whether stock, cash, or other
securities or property) received in the Change in Control by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders
of a majority of the outstanding Shares); provided, however, that if such consideration received in the Change in Control is not solely common stock of the successor corporation or its Parent, the Administrator may, with the consent of the successor
corporation, provide for the consideration to be received upon the exercise of the Option, SAR or Stock Purchase Right, for each Share of Optioned Stock subject to the Option, SAR or Stock Purchase Right, to be solely common stock of the successor
corporation or its Parent equal in fair market value to the per share consideration received by holders of Common Stock in the Change in Control. 
  
 SECTION 14 
 NO EFFECT ON EMPLOYMENT
OR SERVICE 
  
 Neither the Plan nor any Award will confer upon
a Participant any right with respect to continuing the Participant’s relationship as a Service Provider with the Company, nor will they interfere in any way with the Participant’s right or the Company’s right to terminate such
relationship at any time, with or without cause, to the extent permitted by Applicable Laws. 
  
 SECTION 15 
 DATE OF GRANT 
  
 The date of grant of an Award will be, for all purposes, the date on which the Administrator makes the determination
granting such Award, or such other later date as is determined by the Administrator. Notice of the determination will be provided to each Participant within a reasonable time after the date of such grant. 
  
 SECTION 16 
 TERM OF PLAN 
  
 Subject to Section 20 of the Plan, the Plan will become effective upon its adoption by the Board. It will continue in effect for a term of ten (10) years unless terminated earlier under Section 17 of the Plan.

  
 SECTION 17 
 AMENDMENT AND TERMINATION OF THE PLAN 
  
 17.1 Amendment and Termination. The Administrator may at any time amend, alter, suspend or terminate the Plan. 
  

 -16- 

 17.2 Stockholder Approval. The Company will obtain stockholder approval of any Plan amendment to
the extent necessary and desirable to comply with Applicable Laws. 
  
 17.3 Effect of Amendment or Termination. No amendment, alteration, suspension or termination of the Plan will impair the rights of any Participant, unless mutually agreed otherwise between the Participant and the Administrator, which
agreement must be in writing and signed by the Participant and the Company. Termination of the Plan will not affect the Administrator’s ability to exercise the powers granted to it hereunder with respect to Awards granted under the Plan prior
to the date of such termination. 
  
 SECTION 18 

CONDITIONS UPON ISSUANCE OF SHARES 
  
 18.1 Legal Compliance. Shares will not be issued pursuant to the exercise of an Award unless the exercise of such Award and the issuance and
delivery of such Shares will comply with Applicable Laws and will be further subject to the approval of counsel for the Company with respect to such compliance. 
  

18.2 Investment Representations. As a condition to the exercise of an Award, the Company may require the person exercising such Award to
represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation
is required. 
  
 SECTION 19 
 INABILITY TO OBTAIN AUTHORITY 
  
 The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to
be necessary to the lawful issuance and sale of any Shares hereunder, will relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority will not have been obtained. 
  
 SECTION 20 
 STOCKHOLDER APPROVAL 
  
 The Plan will be subject to approval by the stockholders of the Company within twelve (12) months after the date the Plan is adopted. Such stockholder approval will be obtained in the manner and to the degree required
under Applicable Laws. 
  
 SECTION 21 
 WITHHOLDING 
  
 21.1 Withholding Requirements. Prior to the delivery of any Shares or cash pursuant to an Award (or exercise thereof), the Company will have the
power and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy federal, state, and local taxes (including the Participant’s FICA obligation) required to be withheld with respect to
such Award (or exercise thereof). 
  

 -17- 

 21.2 Withholding Arrangements. The Administrator, in its sole discretion and pursuant to such
procedures as it may specify from time to time, may permit a Participant to satisfy such tax withholding obligation, in whole or in part by (a) electing to have the Company withhold otherwise deliverable Shares, or (b) delivering to the Company
already-owned Shares having a Fair Market Value equal to the amount required to be withheld. The amount of the withholding requirement will be deemed to include any amount which the Administrator agrees may be withheld at the time the election is
made, not to exceed the amount determined by using the maximum federal, state or local marginal income tax rates applicable to the Participant with respect to the Award on the date that the amount of tax to be withheld is to be determined. The Fair
Market Value of the Shares to be withheld or delivered will be determined as of the date that the taxes are required to be withheld. 
  

 -18-Prepared by R.R. Donnelley Financial -- 2003 Employee Stock Purchase Plan

 Exhibit 10.4A 
  
 TERCICA, INC. 
  
 2003 EMPLOYEE STOCK PURCHASE PLAN 
  
 The following constitutes the provisions of the 2003 Employee Stock Purchase Plan of Tercica, Inc. 
  
 1. Purpose. The purpose of the Plan is to provide Employees with an
opportunity to purchase Common Stock through accumulated payroll deductions. It is the intention of the Company to have the Plan qualify as an “employee stock purchase plan” under Section 423 of the Code. The provisions of the Plan,
accordingly, shall be construed so as to extend and limit Plan participation in a manner that is consistent with the requirements of that section of the Code. 
  

2. Definitions. 
  
 (a) “Administrator” means the Board or any committee thereof designated by the Board in accordance with Section 14.

  
 (b) “Board” means the Board
of Directors of the Company. 
  
 (c)
“Change in Control” means the occurrence of any of the following events: 
  
 (i) Any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner”
(as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the total voting power represented by the Company’s then outstanding voting securities; or

  
 (ii) The consummation of the sale or
disposition by the Company of all or substantially all of the Company’s assets; or 
  
 (iii) The consummation of a merger or consolidation of the Company, with any other corporation, other than a merger or consolidation which
would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least fifty
percent (50%) of the total voting power represented by the voting securities of the Company, or such surviving entity or its parent outstanding immediately after such merger or consolidation. 
  
 (iv) A change in the composition of the Board, as a result
of which fewer than a majority of the Directors are Incumbent Directors. “Incumbent Directors” means Directors who either (A) are Directors as of the effective date of the Plan (pursuant to Section 23), or (B) are elected, or nominated for
election, to the Board with the affirmative votes of at least a majority of those Directors whose election or nomination was not in connection with any transaction described in subsections (i), (ii) or (iii) or in connection with an actual or
threatened proxy contest relating to the election of Directors of the Company. 

 (d) “Code” means the Internal Revenue Code of 1986, as amended. Any
reference to a section of the Code herein shall be a reference to any successor or amended section of the Code. 
  
 (e) “Common Stock” means the common stock of the Company. 
  
 (f) “Company” means Tercica, Inc., a Delaware corporation. 
  
 (g) “Compensation” means an Employee’s
base straight time gross earnings, commissions (to the extent such commissions are an integral, recurring part of compensation), overtime and shift premium, but exclusive of payments for incentive compensation, bonuses and other compensation.

  
 (h) “Designated Subsidiary”
means any Subsidiary that has been designated by the Administrator from time to time in its sole discretion as eligible to participate in the Plan. 
  
 (i) “Director” means a member of the Board. 
  
 (j) “Employee” means any individual who is a common law employee of an Employer and is
customarily employed for at least twenty (20) hours per week and more than five (5) months in any calendar year by the Employer. For purposes of the Plan, the employment relationship shall be treated as continuing intact while the individual is on
sick leave or other leave of absence approved by the Employer. Where the period of leave exceeds ninety (90) days and the individual’s right to reemployment is not guaranteed either by statute or by contract, the employment relationship shall
be deemed to have terminated on the 91st day of such leave. 
  
 (k) “Employer” means any one or all of the Company and its Designated Subsidiaries. 
  
 (l) “Enrollment Date” means the first Trading Day of each Offering Period. 
  
 (m) “Exchange Act” means the Securities
Exchange Act of 1934, as amended, including the rules and regulations promulgated thereunder. 
  
 (n) “Exercise Date” means the first Trading Day on or after May 15 and November 15 of each year. The first Exercise Date
under the Plan shall be May 17, 2004. 
  
 (o)
“Fair Market Value” means, as of any date, the value of Common Stock determined as follows: 
  
 (i) If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for the Common Stock (or the closing bid, if no sales were reported) as quoted on such exchange or system on the date of
determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable, or; 
  

 -2- 

 (ii) If the Common Stock is regularly quoted by a recognized securities dealer but
selling prices are not reported, its Fair Market Value shall be the mean of the closing bid and asked prices for the Common Stock on the date of determination, as reported in The Wall Street Journal or such other source as the Administrator
deems reliable, or; 
  
 (iii) In the absence of
an established market for the Common Stock, its Fair Market Value shall be determined in good faith by the Administrator, or; 
  
 (iv) For purposes of the Enrollment Date of the first Offering Period under the Plan, the Fair Market Value shall be the initial price to
the public as set forth in the final prospectus deemed to be included within the registration statement on Form S-1 filed with the Securities and Exchange Commission for the initial public offering of the Common Stock (the “Registration
Statement”). 
  
 (p) “Offering
Periods” means the periods of approximately twenty-four (24) months during which an option granted pursuant to the Plan may be exercised, commencing on the first Trading Day on or after May 15 and November 15 of each year and terminating on
the first Trading Day on or after the May 15 and November 15 Offering Period commencement date approximately twenty-four months later; provided, however, that the first Offering Period under the Plan shall commence with the first Trading Day on or
after the date on which the Securities and Exchange Commission declares the Company’s Registration Statement effective and ending on the first Trading Day on or after the earlier of (i) November 15, 2005 or (ii) twenty-seven (27) months from
the beginning of the first Offering Period; and provided, further, that the second Offering Period under the Plan shall commence on May 17, 2004. The duration and timing of Offering Periods may be changed pursuant to Section 4 of this Plan.

  
 (q) “Parent” means a
“parent corporation,” whether now or hereafter existing, as defined in Section 424(e) of the Code. 
  
 (r) “Plan” means this 2003 Employee Stock Purchase Plan. 
  
 (s) “Purchase Period” means the approximately six (6) month period commencing on one
Exercise Date and ending with the next Exercise Date, except that the first Purchase Period of any Offering Period shall commence on the Enrollment Date and end with the next Exercise Date. 
  
 (t) “Purchase Price” means an amount equal
to eighty-five percent (85%) of the Fair Market Value of a share of Common Stock on the Enrollment Date or on the Exercise Date, whichever is lower; provided however, that the Purchase Price may be adjusted by the Administrator pursuant to Section
20. 
  
 (u) “Subsidiary” means a
“subsidiary corporation,” whether now or hereafter existing, as defined in Section 424(f) of the Code. 
  
 (v) “Trading Day” means a day on which the U.S. national stock exchanges and the Nasdaq System are open for trading.

  

 -3- 

 3. Eligibility. 
  
 (a) First Offering Period. Any individual who is an Employee immediately prior to the first Offering
Period under the Plan shall be automatically enrolled in the first Offering Period. 
  
 (b) Subsequent Offering Periods. Any individual who is an Employee as of the Enrollment Date of any future Offering Period shall be
eligible to participate in such Offering Period, subject to the requirements of Section 5. 
  
 (c) Limitations. Any provisions of the Plan to the contrary notwithstanding, no Employee shall be granted an option under the Plan
(i) to the extent that, immediately after the grant, such Employee (or any other person whose stock would be attributed to such Employee pursuant to Section 424(d) of the Code) would own capital stock of the Company or any Parent or Subsidiary of
the Company and/or hold outstanding options to purchase such stock possessing five percent (5%) or more of the total combined voting power or value of all classes of the capital stock of the Company or of any Parent or Subsidiary of the Company, or
(ii) to the extent that his or her rights to purchase stock under all employee stock purchase plans (as defined in Section 423 of the Code) of the Company or any Parent or Subsidiary of the Company accrues at a rate which exceeds twenty-five
thousand dollars ($25,000) worth of stock (determined at the Fair Market Value of the stock at the time such option is granted) for each calendar year in which such option is outstanding at any time. 
  
 4. Offering Periods. The Plan shall be implemented by consecutive,
overlapping Offering Periods with a new Offering Period commencing on the first Trading Day on or after May 15 and November 15 of each year, or on such other date as the Administrator shall determine, and continuing thereafter until terminated in
accordance with Section 20; provided, however, that the first Offering Period under the Plan shall commence with the first Trading Day on or after the date on which the Securities and Exchange Commission declares the Company’s Registration
Statement effective and ending on the first Trading Day on or after the earlier of (i) November 15, 2005 or (ii) twenty-seven (27) months from the beginning of the first Offering Period; and provided, further, that the second Offering Period under
the Plan shall commence on May 17, 2004. The Administrator shall have the power to change the duration of Offering Periods (including the commencement dates thereof) with respect to future offerings without stockholder approval if such change is
announced prior to the scheduled beginning of the first Offering Period to be affected thereafter. 
  
 5. Participation. 
  
 (a) First Offering Period. An Employee who has become a participant in the first Offering Period under the Plan pursuant to Section
3(a) shall be entitled to continue his or her participation in such Offering Period only if he or she submits to the Company’s payroll office (or its designee) a properly completed subscription agreement authorizing payroll deductions in the
form provided by the Administrator for such purpose (i) no earlier than the effective date of the filing of the Company’s Registration Statement on Form S-8 with respect to the shares of Common Stock issuable under the Plan (the “Effective
Date”) and (ii) no later than five (5) business days from the Effective Date (the “Enrollment Window”). A participant’s failure to submit the subscription agreement during the Enrollment Window pursuant to this Section 5(a) shall
result in the automatic termination of his or her participation in the first Offering Period under the Plan. 
  

 -4- 

 (b) Subsequent Offering Periods. An Employee who is eligible to participate in the
Plan pursuant to Section 3(b) may become a participant by (i) submitting to the Company’s payroll office (or its designee), on or before a date prescribed by the Administrator prior to an applicable Enrollment Date, a properly completed
subscription agreement authorizing payroll deductions in the form provided by the Administrator for such purpose, or (ii) following an electronic or other enrollment procedure prescribed by the Administrator. 
  
 6. Payroll Deductions. 
  
 (a) At the time a participant enrolls in the Plan pursuant
to Section 5, he or she shall elect to have payroll deductions made on each payday during the Offering Period in an amount not exceeding 10% of the Compensation which he or she receives on each such payday. 
  
 (b) Payroll deductions authorized by a participant shall
commence on the first payday following the Enrollment Date and shall end on the last payday in the Offering Period to which such authorization is applicable, unless sooner terminated by the participant as provided in Section 10; provided, however,
that for the first Offering Period under the Plan, payroll deductions shall commence on the first payday on or following the end of the Enrollment Window. 
  
 (c) All payroll deductions made for a participant shall be credited to his or her account under the Plan and shall be withheld in whole
percentages only. A participant may not make any additional payments into such account. 
  
 (d) A participant may discontinue his or her participation in the Plan as provided in Section 10, or may change the rate of his or her
payroll deductions during the Offering Period by (i) properly completing and submitting to the Company’s payroll office (or its designee), on or before a date prescribed by the Administrator prior to an applicable Exercise Date, a new
subscription agreement authorizing the change in payroll deduction rate in the form provided by the Administrator for such purpose, or (ii) following an electronic or other procedure prescribed by the Administrator; provided, however, that a
participant may only make one payroll deduction change during each Purchase Period. If a participant has not followed such procedures to change the rate of payroll deductions, the rate of his or her payroll deductions shall continue at the
originally elected rate throughout the Offering Period and future Offering Periods (unless terminated as provided in Section 10). The Administrator may, in its sole discretion, limit the nature and/or number of payroll deduction rate changes that
may be made by participants during any Offering Period. Any change in payroll deduction rate made pursuant to this Section 6(d) shall be effective as of the first full payroll period following five (5) business days after the date on which the
change is made by the participant (unless the Administrator, in its sole discretion, elects to process a given change in payroll deduction rate more quickly). 
  

(e) Notwithstanding the foregoing, to the extent necessary to comply with Section 423(b)(8) of the Code and Section 3(c), a
participant’s payroll deductions may be decreased to zero percent (0%) at any time during a Purchase Period. Payroll deductions shall recommence at the rate originally elected by the participant effective as of the beginning of the first
Purchase Period which is scheduled to end in the following calendar year, unless terminated by the participant as provided in Section 10. 
  

 -5- 

 (f) At the time the option is exercised, in whole or in part, or at the time some or all
of the Company’s Common Stock issued under the Plan is disposed of, the participant must make adequate provision for the Company’s federal, state, or other tax withholding obligations, if any, which arise upon the exercise of the option or
the disposition of the Common Stock. At any time, the Company may, but shall not be obligated to, withhold from the participant’s compensation the amount necessary for the Company to meet applicable withholding obligations, including any
withholding required to make available to the Company any tax deductions or benefits attributable to the sale or early disposition of Common Stock by the Employee. 
  
 7. Grant of Option. On the Enrollment Date of each Offering Period, each Employee participating in such Offering
Period shall be granted an option to purchase on each Exercise Date during such Offering Period (at the applicable Purchase Price) up to a number of shares of Common Stock determined by dividing such participant’s payroll deductions accumulated
prior to such Exercise Date and retained in the participant’s account as of the Exercise Date by the applicable Purchase Price; provided that in no event shall a participant be permitted to purchase during each Purchase Period more than 1,000
shares of Common Stock (subject to any adjustment pursuant to Section 19), and provided further that such purchase shall be subject to the limitations set forth in Sections 3(c) and 13. The Employee may accept the grant of such option (i) with
respect to the first Offering Period under the Plan, by submitting a properly completed subscription agreement in accordance with the requirements of Section 5(a) on or before the last day of the Enrollment Window, and (ii) with respect to any
future Offering Period under the Plan, by electing to participate in the Plan in accordance with the requirements of Section 5(b). The Administrator may, for future Offering Periods, increase or decrease, in its absolute discretion, the maximum
number of shares of Common Stock that a participant may purchase during each Purchase Period of such Offering Period. Exercise of the option shall occur as provided in Section 8, unless the participant has withdrawn pursuant to Section 10. The
option shall expire on the last day of the Offering Period. 
  
 8.
Exercise of Option. 
  
 (a) Unless a
participant withdraws from the Plan as provided in Section 10, his or her option for the purchase of shares of Common Stock shall be exercised automatically on the Exercise Date, and the maximum number of full shares subject to option shall be
purchased for such participant at the applicable Purchase Price with the accumulated payroll deductions in his or her account. No fractional shares of Common Stock shall be purchased; any payroll deductions accumulated in a participant’s
account which are not sufficient to purchase a full share shall be retained in the participant’s account for the subsequent Purchase Period or Offering Period, subject to earlier withdrawal by the participant as provided in Section 10. Any
other monies left over in a participant’s account after the Exercise Date shall be returned to the participant. During a participant’s lifetime, a participant’s option to purchase shares hereunder is exercisable only by him or her.

  
 (b) Notwithstanding any contrary Plan
provision, if the Administrator determines that, on a given Exercise Date, the number of shares of Common Stock with respect to which options are to be exercised may exceed (i) the number of shares of Common Stock that were available for sale under
the Plan on the Enrollment Date of the applicable Offering Period, or (ii) the number of shares of Common Stock available for sale under the Plan on such Exercise Date, the Administrator may in its sole discretion (x) provide that the Company shall
make a pro rata allocation of the shares 
  

 -6- 

 
of Common Stock available for purchase on such Enrollment Date or Exercise Date, as applicable, in as uniform a manner as shall be practicable and as it
shall determine in its sole discretion to be equitable among all participants exercising options to purchase Common Stock on such Exercise Date, and continue all Offering Periods then in effect, or (y) provide that the Company shall make a pro rata
allocation of the shares of Common Stock available for purchase on such Enrollment Date or Exercise Date, as applicable, in as uniform a manner as shall be practicable and as it shall determine in its sole discretion to be equitable among all
participants exercising options to purchase Common Stock on such Exercise Date, and terminate any or all Offering Periods then in effect pursuant to Section 20. The Company may make pro rata allocation of the shares of Common Stock available on the
Enrollment Date of any applicable Offering Period pursuant to the preceding sentence, notwithstanding any authorization of additional shares of Common Stock for issuance under the Plan by the Company’s shareholders subsequent to such Enrollment
Date. 
  
 9. Delivery. As soon as administratively
practicable after each Exercise Date on which a purchase of shares of Common Stock occurs, the Company shall arrange the delivery to each participant, as appropriate, the shares purchased upon exercise of his or her option in a form determined by
the Administrator (in its sole discretion) and pursuant to rules established by the Administrator. No participant shall have any voting, dividend, or other shareholder rights with respect to shares of Common Stock subject to any option granted under
the Plan until such shares have been purchased and delivered to the participant as provided in this Section 9. 
  
 10. Withdrawal. 
  
 (a) Under procedures established by the Administrator, a participant may withdraw all but not less than all the payroll deductions
credited to his or her account and not yet used to exercise his or her option under the Plan at any time by (i) submitting to the Company’s payroll office (or its designee) a written notice of withdrawal in the form prescribed by the
Administrator for such purpose, or (ii) following an electronic or other withdrawal procedure prescribed by the Administrator. All of the participant’s payroll deductions credited to his or her account shall be paid to such participant as
promptly as practicable after the effective date of his or her withdrawal and such participant’s option for the Offering Period shall be automatically terminated, and no further payroll deductions for the purchase of shares shall be made for
such Offering Period. If a participant withdraws from an Offering Period, payroll deductions shall not resume at the beginning of the succeeding Offering Period unless the participant re-enrolls in the Plan in accordance with the provisions of
Section 5. 
  
 (b) A participant’s
withdrawal from an Offering Period shall not have any effect upon his or her eligibility to participate in any similar plan which may hereafter be adopted by the Company or in succeeding Offering Periods which commence after the termination of the
Offering Period from which the participant withdraws. 
  
 11.
Termination of Employment. Upon a participant’s ceasing to be an Employee, for any reason, he or she shall be deemed to have elected to withdraw from the Plan and the payroll deductions credited to such participant’s account during
the Offering Period but not yet used to purchase shares of Common Stock under the Plan shall be returned to such participant or, in the case of his or her death, to the person or persons entitled thereto under Section 15, and such participant’s
option shall be automatically terminated. The preceding sentence notwithstanding, a participant who 
  

 -7- 

 
receives payment in lieu of notice of termination of employment shall be treated as continuing to be an Employee for the participant’s customary number
of hours per week of employment during the period in which the participant is subject to such payment in lieu of notice. 
  
 12. Interest. No interest shall accrue on the payroll deductions of a participant in the Plan. 
  
 13. Stock. 
  
 (a) Subject to adjustment upon changes in capitalization of
the Company as provided in Section 19, the maximum number of shares of Common Stock which shall be made available for sale under the Plan shall be 100,000 shares of Common Stock plus an annual increase to be added on the first day of the
Company’s fiscal year beginning in fiscal year 2005 and ending on and including the date of the annual increase in fiscal year 2015, equal to the lesser of (i) 125,000 shares of Common Stock, (ii) 0.5% of the outstanding shares of Common Stock
on such date or (iii) an amount determined by the Board. 
  
 (b) Shares of Common Stock to be delivered to a participant under the Plan shall be registered in the name of the participant or in the name of the participant and his or her spouse. 
  
 14. Administration. The Board or a committee of members of the Board
who shall be appointed from time to time by, and shall serve at the pleasure of, the Board, shall administer the Plan. The Administrator shall have full and exclusive discretionary authority to construe, interpret and apply the terms of the Plan, to
determine eligibility, to adjudicate all disputed claims filed under the Plan and to establish such procedures that it deems necessary for administration of the Plan (including, without limitation, to adopt such procedures and sub-plans as are
necessary or appropriate to permit the participation in the Plan by employees who are foreign nationals or employed outside the United States). The Administrator, in its sole discretion and on such terms and conditions as it may provide, may
delegate to one or more individuals all or any part of its authority and powers under the Plan. Every finding, decision and determination made by the Administrator (or its designee) shall, to the full extent permitted by law, be final and binding
upon all parties. 
  
 15. Designation of Beneficiary.

  
 (a) A participant may designate a beneficiary
who is to receive any shares of Common Stock and cash, if any, from the participant’s account under the Plan in the event of such participant’s death subsequent to an Exercise Date on which the option is exercised but prior to delivery to
such participant of such shares and cash. In addition, a participant may designate a beneficiary who is to receive any cash from the participant’s account under the Plan in the event of such participant’s death prior to exercise of the
option. If a participant is married and the designated beneficiary is not the spouse, spousal consent shall be required for such designation to be effective. 
  

(b) Such designation of beneficiary may be changed by the participant at any time. In the event of the death of a participant and in
the absence of a beneficiary validly designated under the Plan who is living at the time of such participant’s death, the Company shall deliver such shares and/or cash to the executor or administrator of the estate of the participant, or if no
such executor or administrator has been appointed (to the knowledge of the Company), the Company, in its discretion, may deliver such shares and/or cash to the spouse or to any one or more dependents or relatives of the participant, or if no spouse,
dependent or relative is known to the Company, then to such other person as the Company may designate. 
  

 -8- 

 (c) All beneficiary designations under this Section 15 shall be made in such form and
manner as the Administrator may prescribe from time to time. 
  
 16. Transferability. Neither payroll deductions credited to a participant’s account nor any rights with regard to the exercise of an option or to receive shares of Common Stock under the Plan may be assigned, transferred,
pledged or otherwise disposed of in any way (other than by will, the laws of descent and distribution or as provided in Section 15) by the participant. Any such attempt at assignment, transfer, pledge or other disposition shall be without effect,
except that the Company may treat such act as an election to withdraw from an Offering Period in accordance with Section 10. 
  
 17. Use of Funds. All payroll deductions received or held by the Company under the Plan may be used by the Company for any corporate purpose, and
the Company shall not be obligated to segregate such payroll deductions. Until shares of Common Stock are issued under the Plan (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the
Company), a participant shall only have the rights of an unsecured creditor with respect to such shares. 
  
 18. Reports. Individual accounts shall be maintained for each participant in the Plan. Statements of account shall be given to participating
Employees at least annually, which statements shall set forth the amounts of payroll deductions, the Purchase Price, the number of shares of Common Stock purchased and the remaining cash balance, if any. 
  
 19. Adjustments, Dissolution, Liquidation or Change in Control.

  
 (a) Adjustments. In the event that any
dividend or other distribution (whether in the form of cash, Common Stock, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase,
or exchange of Common Stock or other securities of the Company, or other change in the corporate structure of the Company affecting the Common Stock such that an adjustment is determined by the Administrator (in its sole discretion) to be
appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, then the Administrator shall, in such manner as it may deem equitable, adjust the number and class of Common
Stock which may be delivered under the Plan, the Purchase Price per share and the number of shares of Common Stock covered by each option under the Plan which has not yet been exercised, and the numerical limits of Sections 7 and 13. 
  
 (b) Dissolution or Liquidation. In the event of the
proposed dissolution or liquidation of the Company, the Offering Period then in progress shall be shortened by setting a new Exercise Date (the “New Exercise Date”), and shall terminate immediately prior to the consummation of such
proposed dissolution or liquidation, unless provided otherwise by the Board. The New Exercise Date shall be before the date of the Company’s proposed dissolution or liquidation. The Board shall notify each participant in writing, at least ten
(10) business days prior to the New Exercise Date, that the Exercise Date for the participant’s option has been changed to the New Exercise Date and that the participant’s option shall be exercised automatically on the New Exercise Date,
unless prior to such date the participant has withdrawn from the Offering Period as provided in Section 10. 
  

 -9- 

 (c) Change in Control. In the event of a Change in Control, each outstanding
option shall be assumed or an equivalent option substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. In the event that the successor corporation refuses to assume or substitute for the option, any Purchase
Periods then in progress shall be shortened by setting a new Exercise Date (the “New Exercise Date”) and any Offering Periods then in progress shall end on the New Exercise Date. The New Exercise Date shall be before the date of the
Company’s proposed Change in Control. The Board shall notify each participant in writing, at least ten (10) business days prior to the New Exercise Date, that the Exercise Date for the participant’s option has been changed to the New
Exercise Date and that the participant’s option shall be exercised automatically on the New Exercise Date, unless prior to such date the participant has withdrawn from the Offering Period as provided in Section 10. 
  
 20. Amendment or Termination. 
  
 (a) The Administrator may at any time and for any reason
terminate or amend the Plan. Except as provided in Section 19, no such termination can affect options previously granted under the Plan, provided that an Offering Period may be terminated by the Administrator on any Exercise Date if the
Administrator determines that the termination or suspension of the Plan is in the best interests of the Company and its stockholders. Except as provided in Section 19 and this Section 20, no amendment may make any change in any option theretofore
granted which adversely affects the rights of any participant. To the extent necessary to comply with Section 423 of the Code (or any successor rule or provision or any other applicable law, regulation or stock exchange rule), the Company shall
obtain stockholder approval in such a manner and to such a degree as required. 
  
 (b) Without stockholder consent and without regard to whether any participant rights may be considered to have been “adversely
affected,” the Administrator shall be entitled to change the Offering Periods, limit the frequency and/or number of changes in the amount withheld during an Offering Period, establish the exchange ratio applicable to amounts withheld in a
currency other than U.S. dollars, permit payroll withholding in excess of the amount designated by a participant in order to adjust for delays or mistakes in the Company’s processing of properly completed withholding elections, establish
reasonable waiting and adjustment periods and/or accounting and crediting procedures to ensure that amounts applied toward the purchase of Common Stock for each participant properly correspond with amounts withheld from the participant’s
Compensation, and establish such other limitations or procedures as the Administrator determines in its sole discretion advisable which are consistent with the Plan. 
  
 (c) In the event the Administrator determines that the ongoing operation of the Plan may result in
unfavorable financial accounting consequences, the Board may, in its discretion and, to the extent necessary or desirable, modify or amend the Plan to reduce or eliminate such accounting consequence including, but not limited to: 
  
 (i) altering the Purchase Price for any Offering Period
including an Offering Period underway at the time of the change in Purchase Price; 
  

 -10- 

 (ii) shortening any Offering Period so that Offering Period ends on a new Exercise Date,
including an Offering Period underway at the time of the Board action; and 
  
 (iii) allocating shares. 
  
 Such modifications or
amendments shall not require stockholder approval or the consent of any Plan participants. 
  
 21. Notices. All notices or other communications by a participant to the Company under or in connection with the Plan shall be deemed to have been duly given when received in the form specified by the Company
at the location, or by the person, designated by the Company for the receipt thereof. 
  
 22. Conditions Upon Issuance of Shares. Shares of Common Stock shall not be issued with respect to an option under the Plan unless the exercise of such option and the issuance and delivery of such shares
pursuant thereto shall comply with all applicable provisions of law, domestic or foreign, including, without limitation, the Securities Act of 1933, as amended, including the rules and regulations promulgated thereunder, the Exchange Act and the
requirements of any stock exchange upon which the shares may then be listed, and shall be further subject to the approval of counsel for the Company with respect to such compliance. 
  
 As a condition to the exercise of an option, the Company may require the person exercising such option to represent and
warrant at the time of any such exercise that the shares are being purchased only for investment and without any present intention to sell or distribute such shares if, in the opinion of counsel for the Company, such a representation is required by
any of the aforementioned applicable provisions of law. 
  
 23.
Term of Plan. The Plan shall become effective upon the earlier to occur of its adoption by the Board or its approval by the stockholders of the Company. It shall continue in effect until terminated under Section 20. 
  
 24. Automatic Transfer to Low Price Offering Period. To the extent
permitted by any applicable laws, regulations, or stock exchange rules if the Fair Market Value of the Common Stock on any Exercise Date in an Offering Period is lower than the Fair Market Value of the Common Stock on the Enrollment Date of such
Offering Period, then all participants in such Offering Period shall be automatically withdrawn from such Offering Period immediately after the exercise of their option on such Exercise Date and automatically re-enrolled in the immediately following
Offering Period. 
  

 -11-

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