Document:

Prepared by R.R. Donnelley Financial -- Form of Stock Option Agreement under the 2002 Executive Stock Plan

 EXHIBIT 10.2B 
  
 TERCICA MEDICA, INC. 
  
 2002 EXECUTIVE STOCK PLAN 
  
 STOCK OPTION AGREEMENT 
  
 Unless otherwise defined herein, the terms defined in the 2002 Executive Stock Plan (a copy of which is attached hereto as Schedule I) shall have
the same defined meanings in this Stock Option Agreement. 
  

	 I.
	  	NOTICE OF STOCK OPTION GRANT
		
	 	  	

	 	  	Name
		
	 	  	

	 	  	

	 	  	Address

  
 The undersigned
Optionee has been granted an Option to purchase Common Stock of the Company, subject to the terms and conditions of the Plan and this Option Agreement, as follows: 
  

	 Date of Grant
	  	

		
	 Vesting Commencement Date
	  	

		
	 Exercise Price per Share
	  	 $

		
	 Total Number of Shares Granted
	  	

		
	 Total Exercise Price
	  	 $

		
	 Type of Option:
	  	                 Incentive Stock Option

		
	 	  	                 Nonstatutory Stock Option

		
	 Term/Expiration Date:
	  	

  
 Vesting
Schedule: 
  
 This Option shall vest and become
exercisable according to the following vesting schedule: 
  

	 	

 Termination Period: 
  
 This Option shall be exercisable for three (3) months after Optionee ceases to be a Service Provider. Upon Optionee’s
death or Disability, this Option may be exercised for one (1) year after Optionee ceases to be a Service Provider. In no event may Optionee exercise this Option after the Term/Expiration Date as provided above. 
  
 II.    AGREEMENT

  
 1.    Grant of
Option.    The Plan Administrator of the Company hereby grants to the Optionee named in the Notice of Grant (the “Optionee”), an option (the “Option”) to purchase the number of Shares set forth in
the Notice of Grant, at the exercise price per Share set forth in the Notice of Grant (the “Exercise Price”), and subject to the terms and conditions of the Plan, which is incorporated herein by reference. Subject to Section 15(c) of the
Plan, in the event of a conflict between the terms and conditions of the Plan and this Option Agreement, the terms and conditions of the Plan shall prevail. 
  
 If designated in the Notice of Grant as an Incentive Stock Option (“ISO”), this Option is intended to qualify as an Incentive Stock Option as
defined in Section 422 of the Code. Nevertheless, to the extent that it exceeds the $100,000 rule of Code Section 422(d), this Option shall be treated as a Nonstatutory Stock Option (“NSO”). 
  
 2.    Exercise of Option.

  
 (a)    Right to
Exercise.    This Option shall be exercisable during its term in accordance with the Vesting Schedule set out in the Notice of Grant and with the applicable provisions of the Plan and this Option Agreement. 

 
 (b)    Method of
Exercise.    This Option shall be exercisable by delivery of an exercise notice in the form attached as Exhibit A (the “Exercise Notice”) which shall state the election to exercise the
Option, the number of Shares with respect to which the Option is being exercised, and such other representations and agreements as may be required by the Company. The Exercise Notice shall be accompanied by payment of the aggregate Exercise Price as
to all Exercised Shares. This Option shall be deemed to be exercised upon receipt by the Company of such fully executed Exercise Notice accompanied by the aggregate Exercise Price. 
  
 No Shares shall be issued pursuant to the exercise of an Option unless such issuance and such exercise complies with
Applicable Laws. Assuming such compliance, for income tax purposes the Shares shall be considered transferred to the Optionee on the date on which the Option is exercised with respect to such Shares. 
  
 3.    Optionee’s
Representations.    In the event the Shares have not been registered under the Securities Act of 1933, as amended, at the time this Option is exercised, the Optionee shall, if required by the Company, concurrently with
the exercise of all or any portion of this Option, deliver to the Company his or her Investment Representation Statement in the form attached hereto as Exhibit B. 
  

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 4.    Lock-Up Period.    Optionee hereby
agrees that Optionee shall not offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of,
directly or indirectly, any Common Stock (or other securities) of the Company or enter into any swap, hedging or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any Common Stock (or
other securities) of the Company held by Optionee (other than those included in the registration) for a period specified by the representative of the underwriters of Common Stock (or other securities) of the Company not to exceed one hundred eighty
(180) days following the effective date of any registration statement of the Company filed under the Securities Act. 
  
 Optionee agrees to execute and deliver such other agreements as may be reasonably requested by the Company or the underwriter which are consistent with
the foregoing or which are necessary to give further effect thereto. In addition, if requested by the Company or the representative of the underwriters of Common Stock (or other securities) of the Company, Optionee shall provide, within ten (10)
days of such request, such information as may be required by the Company or such representative in connection with the completion of any public offering of the Company’s securities pursuant to a registration statement filed under the Securities
Act. The obligations described in this Section shall not apply to a registration relating solely to employee benefit plans on Form S-1 or Form S-8 or similar forms that may be promulgated in the future, or a registration relating solely to a
Commission Rule 145 transaction on Form S-4 or similar forms that may be promulgated in the future. The Company may impose stop-transfer instructions with respect to the shares of Common Stock (or other securities) subject to the foregoing
restriction until the end of said one hundred eighty (180) day period. Optionee agrees that any transferee of the Option or shares acquired pursuant to the Option shall be bound by this Section. 
  
 5.    Method of
Payment.    Payment of the aggregate Exercise Price shall be by any of the following, or a combination thereof, at the election of the Optionee: 
  
 (a)    cash or check; 
  
 (b)    consideration received by the Company under a formal cashless exercise program
adopted by the Company in connection with the Plan; or 
  
 (c)    surrender of other Shares which, (i) in the case of Shares acquired from the Company, either directly or indirectly, have been owned by the Optionee for more than six (6) months on the date of surrender, and (ii)
have a Fair Market Value on the date of surrender equal to the aggregate Exercise Price of the Exercised Shares. 
  
 6.    Restrictions on Exercise.    This Option may not be exercised until such time as the
Plan has been approved by the stockholders of the Company, or if the issuance of such Shares upon such exercise or the method of payment of consideration for such shares would constitute a violation of any Applicable Law. 
  
 7.    Non-Transferability of
Option.    This Option may not be transferred in any manner otherwise than by will or by the laws of descent or distribution and may be exercised during the 

  

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lifetime of Optionee only by Optionee. The terms of the Plan and this Option Agreement shall be binding upon the executors, administrators, heirs, successors
and assigns of the Optionee. 
  
 8.    Optionee Share Transfer Restrictions.    Optionee hereby acknowledges, understands and agrees to the share transfer restrictions set forth in Sections 5 and 6 of the
Exercise Notice attached hereto as Exhibit A. 
  
 9.    Term of Option.    This Option may be exercised only within the term set out in the Notice of Grant, and may be exercised during such term only in accordance with the Plan
and the terms of this Option. 
  
 10.    Tax Obligations. 
  
 (a)    Withholding Taxes.    Optionee agrees to make appropriate arrangements with the Company (or the Parent or Subsidiary employing or retaining Optionee)
for the satisfaction of all Federal, state, local and foreign income and employment tax withholding requirements applicable to the Option exercise. Optionee acknowledges and agrees that the Company may refuse to honor the exercise and refuse to
deliver Shares if such withholding amounts are not delivered at the time of exercise. 
  
 (b)    Notice of Disqualifying Disposition of ISO Shares.    If the Option
granted to Optionee herein is an ISO, and if Optionee sells or otherwise disposes of any of the Shares acquired pursuant to the ISO on or before the later of (1) the date two years after the Date of Grant, or (2) the date one year after the date of
exercise, the Optionee shall immediately notify the Company in writing of such disposition. Optionee agrees that Optionee may be subject to income tax withholding by the Company on the compensation income recognized by the Optionee. 
  
 11.    Entire Agreement; Governing
Law.    The Plan is incorporated herein by reference. The Plan and this Option Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all
prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof, and may not be modified adversely to the Optionee’s interest except by means of a writing signed by the Company and Optionee. This
agreement is governed by the internal substantive laws but not the choice of law rules of Delaware. 
  
 12.    No Guarantee of Continued Service.    OPTIONEE ACKNOWLEDGES AND AGREES THAT THE
VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER
ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING PERIOD, FOR
ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE IN ANY WAY WITH OPTIONEE’S RIGHT OR THE COMPANY’S RIGHT TO TERMINATE OPTIONEE’S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE. 
  

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 Optionee acknowledges receipt of a copy of the Plan and represents that he or she is familiar with the
terms and provisions thereof, and hereby accepts this Option subject to all of the terms and provisions thereof. Optionee has reviewed the Plan and this Option in their entirety, has had an opportunity to obtain the advice of counsel prior to
executing this Option and fully understands all provisions of the Option. Optionee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions arising under the Plan or this
Option. Optionee further agrees to notify the Company upon any change in the residence address indicated below. 
  

	OPTIONEE	 	 	 	Tercica Medica, Inc.
			
	 	 	 	 	 
	
	 	 	

	 Signature
	 	 	 	By
			
	
	 	 	 	

	 Print Name
	 	 	 	Title
			
	

	 	 	 	 
	 Residence Address
	 	 	 	 

  

 5 

 EXHIBIT A 
  
 2002 EXECUTIVE STOCK PLAN 
  
 EXERCISE NOTICE 
  
 Tercica Medica, Inc. 
 651 Gateway Boulevard, Suite 950 
 South San Francisco, CA 94080 
  
 Attention: Assistant Secretary 
  
 1.    Exercise of Option.    Effective as of today,             ,
            , the undersigned (“Optionee”) hereby elects to exercise Optionee’s option to purchase
             shares of the Common Stock (the “Shares”) of Tercica Medica, Inc. (the “Company”) under and pursuant to the 2002 Executive Stock Plan (the
“Plan”) and the Stock Option Agreement dated              (the “Option Agreement”). 
  
 2.    Delivery of Payment.    Purchaser herewith delivers to the Company the
full purchase price of the Shares, as set forth in the Option Agreement, and any and all withholding taxes due in connection with the exercise of the Option. 
  
 3.    Representations of Optionee.    Optionee acknowledges that Optionee has received, read and understood
the Plan and the Option Agreement and agrees to abide by and be bound by their terms and conditions. 
  
 4.    Rights as Stockholder.    Until the issuance of the Shares (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 shall exist with respect to the Optioned Stock, notwithstanding the exercise of the Option.
The Shares shall be issued to the Optionee as soon as practicable after the Option is exercised in accordance with the Option Agreement. No adjustment shall be made for a dividend or other right for which the record date is prior to the date of
issuance except as provided in Section 13 of the Plan. 
  
 5.    Optionee Share Transfer Restrictions.    Sections 5(b)-(c) shall only apply in the event Optionee is an Employee (as defined in the 2002 Executive Stock Plan) of Company on the Date of
Grant or at any time thereafter. 
  
 (a)    For purposes of this Section 5, the following terms shall have the following definitions: 
  
 (i)    ”Common Stock” shall mean the Common Stock of the Company. 

 (ii)    “Fully Diluted Basis” shall mean the then
outstanding shares of Common Stock, including all shares of Common Stock into which outstanding shares of preferred stock of the Company are then convertible, shares of Common Stock issuable upon exercise of outstanding options, warrants or other
convertible securities, and any Common Stock reserved for future issuance pursuant to plans approved by the Board of Directors. 
  
 (iii)    “Qualified IPO” shall mean the Company’s initial registration statement under the Securities
Act of 1933, as amended, with respect to a firm commitment public offering of securities of the Company (other than a registration statement relating either to the sale of securities to employees of the Company pursuant to a stock option, stock
purchase or similar plan or a Rule 145 transaction) pursuant to which (x) the per share offering price to the public (prior to the deduction of underwriter commissions and expenses) is equal to or exceeds $3.00 (as adjusted for stock splits, stock
dividends, reclassifications, subdivisions, combinations and the like) and (y) the aggregate proceeds to the Company is equal to or exceeds $35,000,000. 
  
 (b)    Optionee hereby agrees that in the event he or she shall at any time beneficially own shares of Common Stock
(excluding shares of Common Stock issuable or issued upon conversion of shares of preferred stock of the Company) representing that number of shares that is equal to or greater than 0.25% of the then-outstanding capital stock of the Company on a
Fully Diluted Basis, Optionee agrees not to dispose of any shares of the Company’s Common Stock owned by him or her (unless the Board of Directors, including a majority of the directors designated by the holders of Series A Preferred Stock,
consents to the proposed transfer), until the earliest to occur of the following: (i) there remain outstanding less than 10,000,000 shares of the Series A Preferred Stock purchased by investors in the Company’s Series A Preferred Stock
financing (which financing was consummated on May 16, 2002); (ii) the closing of the Company’s Qualified IPO; (iii) the closing of any liquidation, dissolution, or winding up of the Company whether voluntary or involuntary including any sale,
exchange, conveyance or other disposition of the capital stock of the Company in a transaction or series of related transactions in which more than fifty percent (50%) of the voting power of the Company is disposed of, or the sale of all or
substantially all of the Company’s assets (a “Change of Control Transaction”); and (iv) May 16, 2010 (the eighth anniversary of the Series A Financing transaction referenced above). 
  
 (c)    Notwithstanding the foregoing,
Optionee may transfer all or part of his or her shares of Common Stock without approval of the Board of Directors, subject to Section 6 below, in the following circumstances: 
  
 (i)    any transfer of shares of Common Stock to Optionee’s ancestors, descendants,
descendants of such ancestors, spouse or ex-spouse (in connection with divorce proceedings) or to a trust for their benefit; 
  
 (ii)    any pledge of the shares of Common Stock made by Optionee pursuant to a bona fide loan transaction which
creates a mere security interest; 
  
 (iii)    any sale or transfer of up to an aggregate of 5% of the shares of Common Stock held by Optionee; or 
  

 2 

 (iv)    any repurchase of shares of Common Stock by the Company
pursuant to agreements under which the Company has the option to repurchase such shares of Common Stock upon the occurrence of certain events, such as termination of employment, or in connection with the exercise by the Company of any rights of
first refusal; 
  
 provided, that (A) Optionee shall inform the Company of
such pledge or transfer prior to effecting it, and (B) with respect to sub-sections (i)-(iii) above, the pledgee or transferee shall furnish the Company with a written agreement to be bound by and comply with all provisions of this Exercise Notice,
the Option Agreement and the Investment Representation, as applicable to the Optionee. 
  
 (d)    In the event Optionee (i) is or becomes an executive officer of the Company, (ii) is or becomes a director of
the Company (excluding directors designated by the holders of Series A Preferred Stock), or (iii) at any time beneficially owns shares of Common Stock (excluding shares of Common Stock issuable or issued upon conversion of shares of preferred stock
of the Company) representing that number of shares that is greater than 1.75% of the Company’s capital stock on a Fully Diluted Basis, such Optionee hereby agrees to execute and become a Restricted Party under, and within the meaning of, the
Right of First Refusal and Co-Sale Agreement dated May 16, 2002 (as may be amended from time-to-time) (the “ROFR Agreement”), a copy of which is available for review by Optionee upon request made to the Assistant Secretary of the Company.

  
 6.    Company’s Right of First
Refusal.    Before any Shares held by Optionee or any transferee (either being sometimes referred to herein as the “Holder”) may be sold or otherwise transferred (including transfer by gift or operation of law), the
Company or its assignee(s) shall have a right of first refusal to purchase the Shares on the terms and conditions set forth in this Section (the “Right of First Refusal”); provided, however, that the provisions of this Section shall not
apply in the event Optionee is a Restricted Party under the ROFR Agreement. 
  
 (a)    Notice of Proposed Transfer.    The Holder of the Shares shall deliver to the Company a written notice (the “Notice”) stating: (i) the Holder’s bona
fide intention to sell or otherwise transfer such Shares; (ii) the name of each proposed purchaser or other transferee (“Proposed Transferee”); (iii) the number of Shares to be transferred to each Proposed Transferee; and (iv) the bona
fide cash price or other consideration for which the Holder proposes to transfer the Shares (the “Offered Price”), and the Holder shall offer the Shares at the Offered Price to the Company or its assignee(s). 
  
 (b)    Exercise of Right of First
Refusal.    At any time within thirty (30) days after receipt of the Notice, the Company and/or its assignee(s) may, by giving written notice to the Holder, elect to purchase all, but not less than all, of the Shares proposed
to be transferred to any one or more of the Proposed Transferees, at the purchase price determined in accordance with subsection (c) below. 
  
 (c)    Purchase Price.    The purchase price (“Purchase Price”) for the Shares
purchased by the Company or its assignee(s) under this Section shall be the Offered Price. If the Offered Price includes consideration other than cash, the cash equivalent value of the non-cash consideration shall be determined by the Board of
Directors of the Company in good faith. 
  

 3 

 (d)    Payment.    Payment of the Purchase
Price shall be made, at the option of the Company or its assignee(s), in cash (by check), by cancellation of all or a portion of any outstanding indebtedness of the Holder to the Company (or, in the case of repurchase by an assignee, to the
assignee), or by any combination thereof within thirty (30) days after receipt of the Notice or in the manner and at the times set forth in the Notice. 
  
 (e)    Holder’s Right to Transfer.    If all of the Shares proposed in the Notice to
be transferred to a given Proposed Transferee are not purchased by the Company and/or its assignee(s) as provided in this Section, then the Holder may, subject to Section 5 above (if applicable), sell or otherwise transfer such Shares to that
Proposed Transferee at the Offered Price or at a higher price, provided that such sale or other transfer is consummated within 120 days after the date of the Notice, that any such sale or other transfer is effected in accordance with any applicable
securities laws and that the Proposed Transferee agrees in writing that the provisions of this Exercise Notice shall continue to apply to the Shares in the hands of such Proposed Transferee. If the Shares described in the Notice are not transferred
to the Proposed Transferee within such period, a new Notice shall be given to the Company, and the Company and/or its assignees shall again be offered the Right of First Refusal before any Shares held by the Holder may be sold or otherwise
transferred. 
  
 (f)    Exception for Certain Family Transfers.    Anything to the contrary contained in this Section notwithstanding, the transfer of any or all of the Shares during the Optionee’s
lifetime or on the Optionee’s death by will or intestacy to the Optionee’s immediate family or a trust for the benefit of the Optionee’s immediate family shall be exempt from the provisions of this Section. “Immediate
Family” as used herein shall mean spouse, lineal descendant or antecedent, father, mother, brother or sister. In such case, the transferee or other recipient shall receive and hold the Shares so transferred subject to the provisions of this
Exercise Notice, and there shall be no further transfer of such Shares except in accordance with the terms of this Exercise Notice. 
  
 (g)    Termination of Right of First Refusal.    The Right of First Refusal shall terminate
as to any Shares upon the earlier of (i) the closing of the Company’s Qualified IPO, or (ii) the closing of a Change of Control Transaction (as described above). 
  
 7.    Tax Consultation.    Optionee understands that Optionee may suffer
adverse tax consequences as a result of Optionee’s purchase or disposition of the Shares. Optionee represents that Optionee has consulted with any tax consultants Optionee deems advisable in connection with the purchase or disposition of the
Shares and that Optionee is not relying on the Company for any tax advice. 
  
 8.    Restrictive Legends and Stop-Transfer Orders. 
  
 (a)    Legends.    Optionee understands and agrees that the Company shall cause the legends
set forth below or legends substantially equivalent thereto, to be placed upon any certificate(s) evidencing ownership of the Shares together with any other legends that may be required by the Company or by state or federal securities laws:

  
 THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE “ACT”) AND MAY NOT BE 

  

 4 

 
OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR, IN THE OPINION OF COMPANY COUNSEL SATISFACTORY
TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH. 
  
 THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND A RIGHT OF FIRST REFUSAL HELD BY THE ISSUER OR ITS
ASSIGNEE(S) AS SET FORTH IN THE EXERCISE NOTICE BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER RESTRICTIONS AND RIGHT OF FIRST REFUSAL ARE BINDING ON
TRANSFEREES OF THESE SHARES. 
  
 THE SHARES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON TRANSFER FOR A PERIOD NOT TO EXCEED 180 DAYS FOLLOWING THE EFFECTIVE DATE OF THE UNDERWRITTEN PUBLIC OFFERING OF THE COMPANY’S SECURITIES AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF BY THE HOLDER
WITHOUT THE CONSENT OF THE COMPANY OR THE MANAGING UNDERWRITER. 
  
 (b)    Stop-Transfer Notices.    Optionee agrees that, in order to ensure compliance with the restrictions referred to herein, the Company may issue appropriate
“stop transfer” instructions to its transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records. 
  
 (c)    Refusal to
Transfer.    The Company shall not be required (i) to transfer on its books any Shares that have been sold or otherwise transferred in violation of any of the provisions of this Exercise Notice or (ii) to treat as owner of
such Shares or to accord the right to vote or pay dividends to any purchaser or other transferee to whom such Shares shall have been so transferred. 
  
 9.    Successors and Assigns.    The Company may assign any of its rights under this Exercise Notice to
single or multiple assignees, and this Exercise Notice shall inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer herein set forth, this Exercise Notice shall be binding upon Optionee and his or
her heirs, executors, administrators, successors and assigns. 
  
 10.    Interpretation.    Any dispute regarding the interpretation of this Exercise Notice shall be submitted by Optionee or by the Company forthwith to the Administrator which shall review
such dispute at its next regular meeting. The resolution of such a dispute by the Administrator shall be final and binding on all parties. 
  

 5 

 11.    Governing Law; Severability.    This Exercise
Notice is governed by the internal substantive laws but not the choice of law rules, of Delaware. In the event that any provision hereof becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Option
Agreement will continue in full force and effect. 
  
 [Signature
Page Follows] 
  

 6 

 12.    Entire Agreement.    The Plan and Option Agreement
are incorporated herein by reference. This Exercise Notice, the Plan, the Option Agreement and the Investment Representation Statement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof, and may not be modified adversely to the Optionee’s interest except by means of a writing signed by the Company and Optionee.

  

	 Submitted by:
 OPTIONEE
	 	 	 	 Accepted by:
 Tercica Medica,
Inc.

			
	 	 	 	 	 
	
	 	 	

	Signature	 	 	 	By
			
	 	 	 	 	 
	
	 	 	

	Print Name	 	 	 	Title
			
	 Address:
	 	 	 	 Address:

	 	 	 	 	651 Gateway Boulevard, Suite 950
	
	 	 	 	South San Francisco, CA 94080
	 	 	 	 	 
	
	 	 	 	 
	 	 	 	 	 
	
	 	 	 	 
			
	 	 	 	 	
 Date Received

  

 7 

 EXHIBIT B 
  
 INVESTMENT REPRESENTATION STATEMENT 
  

	 OPTIONEE:
	  	 
		
	 COMPANY:
	  	TERCICA MEDICA, INC.
		
	 SECURITY:
	  	COMMON STOCK
		
	 AMOUNT:
	  	 
		
	 DATE:
	  	 

  
 In connection with the
purchase of the above-listed Securities, the undersigned Optionee represents to the Company the following: 
  
 (a)    Optionee is aware of the Company’s business affairs and financial condition and has acquired sufficient
information about the Company to reach an informed and knowledgeable decision to acquire the Securities. Optionee is acquiring these Securities for investment for Optionee’s own account only and not with a view to, or for resale in connection
with, any “distribution” thereof within the meaning of the Securities Act of 1933, as amended (the “Securities Act”). 
  
 (b)    Optionee acknowledges and understands that the Securities constitute “restricted securities” under
the Securities Act and have not been registered under the Securities Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of Optionee’s investment intent as expressed
herein. In this connection, Optionee understands that, in the view of the Securities and Exchange Commission, the statutory basis for such exemption may be unavailable if Optionee’s representation was predicated solely upon a present intention
to hold these Securities for the minimum capital gains period specified under tax statutes, for a deferred sale, for or until an increase or decrease in the market price of the Securities, or for a period of one year or any other fixed period in the
future. Optionee further understands that the Securities must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available. Optionee further acknowledges and understands
that the Company is under no obligation to register the Securities. Optionee understands that the certificate evidencing the Securities will be imprinted with any legend required under applicable state securities laws. 
  
 (c)    Optionee is familiar with the
provisions of Rule 701 and Rule 144, each promulgated under the Securities Act, which, in substance, permit limited public resale of “restricted securities” acquired, directly or indirectly from the issuer thereof, in a non-public offering
subject to the satisfaction of certain conditions. Rule 701 provides that if the issuer qualifies under Rule 701 at the time of the grant of the Option to the Optionee, the exercise will be exempt from registration under the Securities Act. In the
event the Company becomes subject to the reporting requirements of 

 
Section 13 or 15(d) of the Securities Exchange Act of 1934, ninety (90) days thereafter (or such longer period as any market stand-off agreement may require)
the Securities exempt under Rule 701 may be resold, subject to the satisfaction of certain of the conditions specified by Rule 144, including: (1) the resale being made through a broker in an unsolicited “broker’s transaction” or in
transactions directly with a market maker (as said term is defined under the Securities Exchange Act of 1934); and, in the case of an affiliate, (2) the availability of certain public information about the Company, (3) the amount of Securities being
sold during any three month period not exceeding the limitations specified in Rule 144(e), and (4) the timely filing of a Form 144, if applicable. 
  
 In the event that the Company does not qualify under Rule 701 at the time of grant of the Option, then the Securities may be resold in certain limited
circumstances subject to the provisions of Rule 144, which requires the resale to occur not less than one year after the later of the date the Securities were sold by the Company or the date the Securities were sold by an affiliate of the Company,
within the meaning of Rule 144; and, in the case of acquisition of the Securities by an affiliate, or by a non-affiliate who subsequently holds the Securities less than two years, the satisfaction of the conditions set forth in sections (1), (2),
(3) and (4) of the paragraph immediately above. 
  
 (d)    Optionee further understands that in the event all of the applicable requirements of Rule 701 or 144 are not satisfied, registration under the Securities Act, compliance with Regulation A, or some other
registration exemption will be required; and that, notwithstanding the fact that Rules 144 and 701 are not exclusive, the Staff of the Securities and Exchange Commission has expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise than pursuant to Rules 144 or 701 will have a substantial burden of proof in establishing that an exemption from registration is available for such offers or sales, and that such persons
and their respective brokers who participate in such transactions do so at their own risk. Optionee understands that no assurances can be given that any such other registration exemption will be available in such event. 
  

	Signature of Optionee:
	
	 
	

	 
	Date:                                     
                             ,          
 

  
  

 2Prepared 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. 
  

 2 

 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. 
  

 3 

 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). 
  

 4 

 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) 5,000,000 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. 
  

 5 

 SECTION 4 
 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 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 
  

 6 

 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 2,000,000 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 1,000,000 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. 
  

 7 

 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. 
  
 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 
  

 8 

 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. 
  
 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 
  

 9 

 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. 
  
 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 
  

 10 

 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. 
  
 8.1.1 Number of Shares. The Administrator will have complete discretion to determine the number of SARs granted to any Service Provider.

  

 11 

 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. 
  
 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 
  

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 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. 
  
 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, 
  

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 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 90,000 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 90,000
Shares and each Outside Director, other than the Chairman of the Board, will be automatically granted an Option to purchase 45,000 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. 
  
 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. 
  

 14 

 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 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 
  

 15 

 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. 
  
 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. 
  

 16 

 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). 
  
 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. 
  

 17

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