Document:

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                                                                  EXHIBIT 10.1.1

                                                         AS AMENDED AND RESTATED
                                                                OCTOBER 10, 1996

                                    EXHIBIT A
                               1992 STOCK PLAN OF
                                   IXSYS, INC.

      SECTION 1. ESTABLISHMENT AND PURPOSE.

      The Plan was established in 1992. The purpose of the Plan is to offer
selected employees, directors, advisors and consultants an opportunity to
acquire a proprietary interest in the success of the Company, or to increase
such interest, by purchasing Shares of the Company's Stock. The Plan was last
amended and restated effective as of October 10, 1996. The Plan provides both
for the direct award or sale of Shares and for the grant of Options to purchase
Shares. Options granted under the Plan may include Nonstatutory Options as well
as ISOs intended to qualify under section 422 of the Code.

      SECTION 2. DEFINITIONS.

      (a)   "Board of Directors" shall mean the Board of Directors of the
Company, as constituted from time to time.

      (b)   "Code" shall mean the Internal Revenue Code of 1986, as amended.

      (c)   "Committee" shall mean a committee of the Board of Directors, as
described in Section 3(a).

      (d)   "Company" shall mean Ixsys, Inc., a Delaware corporation.

      (e)   "Employee" shall mean (i) any individual who is a common-law
employee of the Company or of a Subsidiary, (ii) a member of the Board of
Directors or (iii) an independent contractor who performs services for the
Company or a Subsidiary. Service

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as a member of the Board of Directors or as an independent contractor shall be
considered employment for all purposes of the Plan except the second sentence of
Section 4(a).

      (f)   "Exercise Price" shall mean the amount for which one Share may be
purchased upon exercise of an Option, as specified by the Committee in the
applicable Stock Option Agreement.

      (g)   "Fair Market Value" shall mean the fair market value of a Share, as
determined by the Committee in good faith. Such determination shall be
conclusive and binding on all persons.

      (h)   "ISO" shall mean an employee incentive stock option described in
section 422(b) of the Code.

      (i)   "Nonstatutory Option" shall mean an employee stock option not
described in sections 422(b) or 423(b) of the Code.

      (j)   "Offeree" shall mean an individual to whom the Committee has offered
the right to acquire Shares under the Plan (other than upon exercise of an
Option).

      (k)   "Option" shall mean an ISO or Nonstatutory Option granted under the
Plan and entitling the holder to purchase Shares.

      (l)   "Optionee" shall mean an individual who holds an Option.

      (m)   "Plan" shall mean this 1992 Stock Plan of Ixsys, Inc.

      (n)   "Purchase Price" shall mean the consideration for which one Share
may be acquired under the Plan (other than upon exercise of an Option), as
specified by the Committee.

      (o)   "Service" shall mean service as an Employee.

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      (p)   "Share" shall mean one share of Stock, as adjusted in accordance
with Section 9 (if applicable).

      (q)   "Stock" shall mean the Common Stock ($.001 par value) of the
Company.

      (r)   "Stock Option Agreement" shall mean the agreement between the
Company and an Optionee which contains the terms, conditions and restrictions
pertaining to the Optionee's Option.

      (s)   "Stock Purchase Agreement" shall mean the agreement between the
Company and an Offeree who acquires Shares under the Plan which contains the
terms, conditions and restrictions pertaining to the acquisition of such Shares.

      (t)   "Subsidiary" shall mean any corporation, if the Company and/or one
or more other Subsidiaries own not less than 50 percent of the total combined
voting power of all classes of outstanding stock of such corporation. A
corporation that attains the status of a Subsidiary on a date after the adoption
of the Plan shall be considered a Subsidiary commencing as of such date.

      (u)   "Total and Permanent Disability" shall mean that the Optionee is
unable to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or which has lasted, or can be expected to last, for a continuous period
of not less than one year.

      SECTION 3. ADMINISTRATION.

      (a)   Committee Membership. The Plan shall be administered by one or more
Committees. Each Committee shall consist of one or more members of the Board of
Directors who have been appointed by the Board of Directors. If more than one
Committee has been appointed, each Committee shall have such authority and be

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responsible for such functions as the Board of Directors has assigned to it, and
a reference to the Committee in the Plan shall be construed as a reference to
the Committee to whom the Board of Directors has assigned the function in
question. If no Committee has been appointed, the entire Board of Directors
shall constitute the Committee.

      (b)   Committee Procedures. The Board of Directors shall designate one of
the members of the Committee as chairman. The Committee may hold meetings at
such times and places as it shall determine. The acts of a majority of the
Committee members present at meetings at which a quorum exists, or acts reduced
to or approved in writing by all Committee members, shall be valid acts of the
Committee.

      (c)   Committee Responsibilities. Subject to the provisions of the Plan,
the Committee shall have full authority and discretion to take the following
actions:

            (i)   To interpret the Plan and to apply its provisions;

            (ii)  To adopt, amend or rescind rules, procedures and forms
      relating to the Plan;

            (iii) To authorize any person to execute, on behalf of the Company,
      any instrument required to carry out the purposes of the Plan;

            (iv)  To determine when Shares are to be awarded or offered for sale
      and when Options are to be granted under the Plan;

            (v)   To select the Offerees and Optionees;

            (vi)  To determine the number of Shares to be offered to each
      Offeree or to be made subject to each Option;

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            (vii) To prescribe the terms and conditions of each award or sale of
      Shares, including (without limitation) the Purchase Price, and to specify
      the provisions of the Stock Purchase Agreement relating to such award or
      sale;

            (viii) To prescribe the terms and conditions of each Option,
      including (without limitation) the Exercise Price, to determine whether
      such Option is to be classified as an ISO or as a Nonstatutory Option and
      to specify the provisions of the Stock Option Agreement relating to such
      Option;

            (ix)  To amend any outstanding Stock Purchase Agreement or Stock
      Option Agreement, subject to applicable legal restrictions and to the
      consent of the Offeree or Optionee who entered into such agreement;

            (x)   To prescribe the consideration for the grant of each Option or
      other right under the Plan and to determine the sufficiency of such
      consideration; and

            (xi)  To take any other actions deemed necessary or advisable for
      the administration of the Plan.

All decisions, interpretations and other actions of the Committee shall be final
and binding on all Offerees, all Optionees and all persons deriving their rights
from an Offeree or Optionee. No member of the Committee shall be liable for any
action that such member has taken or has failed to take in good faith with
respect to the Plan, any Option or any right to acquire Shares under the Plan.

      (d)  Financial Reports. The Company each year shall furnish to Optionees,
Offerees and stockholders who have received Stock under the Plan its financial
statements and management's discussion and analysis of financial condition and
results of operations, unless such Optionees, Offerees or stockholders are key
Employees whose

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duties with the Company assure them access to equivalent information. Such
financial statements need not be audited.

      SECTION 4. ELIGIBILITY.

      (a)   General Rule. Only Employees, as defined in Section 2(e), shall be
eligible for designation as Optionees or Offerees by the Committee. In addition,
only individuals who are employed as common-law employees by the Company or a
Subsidiary shall be eligible for the grant of ISOs.

      (b)   Ten-Percent Stockholders. An Employee who owns more than 10 percent
of the total combined voting power of all classes of outstanding stock of the
Company or any of its Subsidiaries shall not be eligible for designation as an
Optionee or Offeree unless (i) the Exercise Price is at least 110 percent of the
Fair Market Value of a Share on the date of grant, (ii) the Purchase Price (if
any) is at least 100 percent of the Fair Market Value of a Share and (iii) in
the case of an ISO, such ISO by its terms is not exercisable after the
expiration of five years from the date of grant.

      (c)   Attribution Rules. For purposes of Subsection (b) above, in
determining stock ownership, an Employee shall be deemed to own the stock owned,
directly or indirectly, by or for such Employee's brothers, sisters, spouse,
ancestors and lineal descendants. Stock owned, directly or indirectly, by or for
a corporation, partnership, estate or trust shall be deemed to be owned
proportionately by or for its stockholders, partners or beneficiaries. Stock
with respect to which such Employee holds an option shall not be counted.

      (d)   Outstanding Stock. For purposes of Subsection (b) above,
"outstanding stock" shall include all stock actually issued and outstanding
immediately after the grant.

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"Outstanding stock" shall not include shares authorized for issuance under
outstanding options held by the Employee or by any other person.

      SECTION 5. STOCK SUBJECT TO PLAN.

      (a)   Basic Limitation. Shares offered under the Plan shall be authorized
but unissued Shares or treasury Shares. The aggregate number of Shares which may
be issued under the Plan (upon exercise of Options or other rights to acquire
Shares) shall not exceed 2,100,000 Shares, subject to adjustment pursuant to
Section 9. The number of Shares that are subject to Options or other rights
outstanding at any time under the Plan shall not exceed the number of Shares
that then remain available for issuance under the Plan. The Company, during the
term of the Plan, shall at all times reserve and keep available sufficient
Shares to satisfy the requirements of the Plan.

      (b)   Additional Shares. In the event that any outstanding Option or other
right for any reason expires or is canceled or otherwise terminated, the Shares
allocable to the unexercised portion of such Option or other right shall again
be available for the purposes of the Plan. In the event that Shares issued under
the Plan are reacquired by the Company pursuant to any forfeiture provision,
right of repurchase or right of first refusal, such Shares shall again be
available for the purposes of the Plan.

      SECTION 6. TERMS AND CONDITIONS OF AWARDS OR SALES.

      (a)   Stock Purchase Agreement. Each award or sale of Shares under the
Plan (other than upon exercise of an Option) shall be evidenced by a Stock
Purchase Agreement between the Offeree and the Company. Such award or sale shall
be subject to all applicable terms and conditions of the Plan and may be subject
to any other terms and conditions which are not inconsistent with the Plan and
which the Committee deems

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appropriate for inclusion in a Stock Purchase Agreement. The provisions of the
various Stock Purchase Agreements entered into under the Plan need not be
identical.

      (b)   Duration of Offers and Nontransferability of Rights. Any right to
acquire Shares under the Plan (other than an Option) shall automatically expire
if not exercised by the Offeree within 30 days after the grant of such right was
communicated to the Offeree by the Committee. Such right shall not be
transferable and shall be exercisable only by the Offeree to whom such right was
granted.

      (c)   Purchase Price. The Purchase Price of Shares to be offered under the
Plan shall not be less than 85 percent of the Fair Market Value of such Shares,
except as otherwise provided in Section 4(b). Subject to the preceding sentence,
the Purchase Price shall be determined by the Committee at its sole discretion.
The Purchase Price shall be payable in a form described in Section 8.

      (d)   Withholding Taxes. As a condition to the purchase of Shares, the
Offeree shall make such arrangements as the Committee may require for the
satisfaction of any federal, state, local or foreign withholding tax obligations
that may arise in connection with such purchase.

      (e)   Restrictions on Transfer of Shares. Any Shares awarded or sold under
the Plan shall be subject to such special forfeiture conditions, rights of
repurchase, rights of first refusal and other transfer restrictions as the
Committee may determine. Such restrictions shall be set forth in the applicable
Stock Purchase Agreement and shall apply in addition to any restrictions that
may apply to holders of Shares generally. Any service-based vesting conditions
shall not be less rapid than the schedule set forth in Section 7(e).

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      SECTION 7. TERMS AND CONDITIONS OF OPTIONS.

      (a)   Stock Option Agreement. Each grant of an Option under the Plan shall
be evidenced by a Stock Option Agreement between the Optionee and the Company.
Such Option shall be subject to all applicable terms and conditions of the Plan
and may be subject to any other terms and conditions which are not inconsistent
with the Plan and which the Committee deems appropriate for inclusion in a Stock
Option Agreement. The provisions of the various Stock Option Agreements entered
into under the Plan need not be identical.

      (b)   Number of Shares. Each Stock Option Agreement shall specify the
number of Shares that are subject to the Option and shall provide for the
adjustment of such number in accordance with Section 9. The Stock Option
Agreement shall also specify whether the Option is an ISO or a Nonstatutory
Option.

      (c)   Exercise Price. Each Stock Option Agreement shall specify the
Exercise Price. The Exercise Price of an ISO shall not be less than 100 percent
of the Fair Market Value of a Share on the date of grant, and a higher
percentage may be required by Section 4(b). The Exercise Price of a Nonstatutory
Option shall not be less than 85 percent of the Fair Market Value of a Share on
the date of grant, and a higher percentage may be required by Section 4(b).
Subject to the preceding two sentences, the Exercise Price under any Option
shall be determined by the Committee at its sole discretion. The Exercise Price
shall be payable in a form described in Section 8.

      (d)   Withholding Taxes. As a condition to the exercise of an Option, the
Optionee shall make such arrangements as the Committee may require for the
satisfaction of any federal, state, local or foreign withholding tax obligations
that may arise in

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connection with such exercise. The Optionee shall also make such arrangements as
the Committee may require for the satisfaction of any federal, state, local or
foreign withholding tax obligations that may arise in connection with the
disposition of Shares acquired by exercising an Option.

      (e)   Exercisability. Each Stock Option Agreement shall specify the date
when all or any installment of the Option is to become exercisable. An Option
shall become exercisable at least as rapidly as set forth in the following
schedule:

<TABLE>
<CAPTION>
     Anniversary of                                  Percentage of Shares
     Date of Grant                                       Exercisable
     --------------                                  --------------------
     <S>                                             <C>
        First.......................................         20%
        Second......................................         40%
        Third.......................................         60%
        Fourth......................................         80%
        Fifth.......................................        100%
</TABLE>

Subject to the preceding sentence, the vesting provisions of any Stock Option
Agreement shall be determined by the Committee at its sole discretion.

      (f)   Term. The Stock Option Agreement shall specify the term of the
Option. The term shall not exceed 10 years from the date of grant, except as
otherwise provided in Section 4(b). Subject to the preceding sentence, the
Committee at its sole discretion shall determine when an Option is to expire.

      (g)   Nontransferability. No Option shall be transferable by the Optionee
other than by will or by the laws of descent and distribution. An Option may be
exercised during the lifetime of the Optionee only by the Optionee or by the
Optionee's guardian or legal representative. No Option or interest therein may
be transferred, assigned, pledged or hypothecated by the Optionee during the
Optionee's lifetime, whether by operation of law or otherwise, or be made
subject to execution, attachment or similar process.

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      (h)   Termination of Service (Except by Death). If an Optionee's Service
terminates for any reason other than the Optionee's death, then the Optionee's
Option(s) shall expire on the earliest of the following occasions:

            (i)   The expiration date determined pursuant to Subsection (f)
      above;

            (ii)  The date 90 days after the termination of the Optionee's
      Service for any reason other than Total and Permanent Disability; or

            (iii) The date six months after the termination of the Optionee's
      Service by reason of Total and Permanent Disability.

The Optionee may exercise all or part of the Optionee's Option(s) at any time
before the expiration of such Option(s) under the preceding sentence, but only
to the extent that such Option(s) had become exercisable before the Optionee's
Service terminated. The balance of such Option(s) shall lapse when the
Optionee's Service terminates. In the event that the Optionee dies after the
termination of the Optionee's Service but before the expiration of the
Optionee's Option(s), all or part of such Option(s) may be exercised (prior to
expiration) by the executors or administrators of the Optionee's estate or by
any person who has acquired such Option(s) directly from the Optionee by bequest
or inheritance, but only to the extent that such Option(s) had become
exercisable before the Optionee's Service terminated.

      (i)   Leaves of Absence. For purposes of Subsection (h) above, Service
shall be deemed to continue while the Optionee is on military leave, sick leave
or other bona fide leave of absence (as determined by the Committee). The
foregoing notwithstanding, in the case of an ISO granted under the Plan, Service
shall not be deemed to continue

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beyond the first 90 days of such leave, unless the Optionee's reemployment
rights are guaranteed by statute or by contract.

      (j)   Death of Optionee. If an Optionee dies while the Optionee is in
Service, then the Optionee's Option(s) shall expire on the earlier of the
following dates:

            (i)   The expiration date determined pursuant to Subsection (f)
      above;

      or

            (ii)  The date six months after the Optionee's death.

All or part of the Optionee's Option(s) may be exercised at any time before the
expiration of such Option(s) under the preceding sentence by the executors or
administrators of the Optionee's estate or by any person who has acquired such
Option(s) directly from the Optionee by bequest or inheritance, but only to the
extent that such Option(s) had become exercisable before the Optionee's death.
The balance of such Option(s) shall lapse when the Optionee dies.

      (k)   No Rights as a Stockholder. An Optionee, or a transferee of an
Optionee, shall have no rights as a stockholder with respect to any Shares
covered by the Optionee's Option until such person is entitled, pursuant to the
terms of such Option, to receive such Shares. No adjustments shall be made,
except as provided in Section 9.

      (l)   Modification, Extension and Assumption of Options. Within the
limitations of the Plan, the Committee may modify, extend or assume outstanding
Options or may accept the cancellation of outstanding Options (whether granted
by the Company or another issuer) in return for the grant of new Options for the
same or a different number of Shares and at the same or a different Exercise
Price. The foregoing

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notwithstanding, no modification of an Option shall, without the consent of the
Optionee, impair the Optionee's rights or increase the Optionee's obligations
under such Option.

      (m)   Restrictions on Transfer of Shares. Any Shares issued upon exercise
of an Option shall be subject to such special forfeiture conditions, rights of
repurchase, rights of first refusal and other transfer restrictions as the
Committee may determine. Such restrictions shall be set forth in the applicable
Stock Option Agreement and shall apply in addition to any restrictions that may
apply to holders of Shares generally. Any service-based vesting conditions shall
not be less rapid than the schedule set forth in Subsection (e) above.

      SECTION 8. PAYMENT FOR SHARES.

      (a)   General Rule. The entire Purchase Price or Exercise Price of Shares
issued under the Plan shall be payable in lawful money of the United States of
America at the time when such Shares are purchased, except as provided in
Subsections (b), (c), (d), (e) and (f) below.

      (b)   Surrender of Stock. To the extent that a Stock Option Agreement so
provides, payment may be made all or in part with Shares which have already been
owned by the Optionee or the Optionee's representative for more than six months
and which are surrendered to the Company in good form for transfer. Such Shares
shall be valued at their Fair Market Value on the date when the new Shares are
purchased under the Plan. (c) Services Rendered. At the discretion of the
Committee, Shares may be awarded or exercised under the Plan in consideration of
services rendered to the Company or a Subsidiary prior to the award. If Shares
are awarded without the payment

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of a Purchase Price in cash, the Committee shall make a determination (at the
time of the award or prior to exercise of an option) of the value of the
services rendered by the Offeree and the sufficiency of the consideration to
meet the requirements of Section 6(c).

      (d)   Promissory Note. To the extent that a Stock Option Agreement or
Stock Purchase Agreement so provides, a portion of the Exercise Price or
Purchase Price (as the case may be) of Shares issued under the Plan may be paid
with a full-recourse promissory note, provided that (i) the par value of such
Shares must be paid in lawful money of the United States of America at the time
when such Shares are purchased, (ii) the Shares are pledged as security for
payment of the principal amount of the promissory note and interest thereon and
(iii) the interest rate payable under the terms of the promissory note shall not
be less than the minimum rate (if any) required to avoid the imputation of
additional interest under the Code. Subject to the foregoing, the Committee (at
its sole discretion) shall specify the term, interest rate, amortization
requirements (if any) and other provisions of such note.

      (e)   Exercise/Sale. To the extent that a Stock Option Agreement so
provides, payment may be made all or in part by the delivery (on a form
prescribed by the Company) of an irrevocable direction to a securities broker
approved by the Company to sell Shares and to deliver all or part of the sales
proceeds to the Company in payment of all or part of the Exercise Price and any
withholding taxes.

      (f)   Exercise/Pledge. To the extent that a Stock Option Agreement so
provides, payment may be made all or in part by the delivery (on a form
prescribed by the Company) of an irrevocable direction to pledge Shares to a
securities broker or lender approved by the Company, as security for a loan, and
to deliver all or part of the loan

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proceeds to the Company in payment of all or part of the Exercise Price and any
withholding taxes.

      SECTION 9. ADJUSTMENT OF SHARES.

      (a)   General. In the event of a subdivision of the outstanding Stock, a
declaration of a dividend payable in Shares, a declaration of a dividend payable
in a form other than Shares in an amount that has a material effect on the value
of Shares, a combination or consolidation of the outstanding Stock into a lesser
number of Shares, a recapitalization, a spinoff, a reclassification or a similar
occurrence, the Committee shall make appropriate adjustments in one or more of
(i) the number of Shares available for future grants under Section 5, (ii) the
number of Shares covered by each outstanding Option or (iii) the Exercise Price
under each outstanding Option.

      (b)   Mergers; Consolidations. In the event that the Company is a party to
a merger or consolidation, outstanding Options shall be subject to the agreement
of merger or consolidation. Such agreement may provide for the assumption of
outstanding Options by the surviving corporation or its parent or for their
continuation by the Company (if the Company is the surviving corporation). In
the event the Company is not the surviving corporation and the surviving
corporation will not assume the outstanding Options, the agreement of merger or
consolidation may provide for payment of a cash settlement for exercisable
Options equal to the difference between the amount to be paid for one Share
under such agreement and the Exercise Price and for the cancellation of Options
not exercised or settled, in either case without the Optionees' consent.

      (c)   Reservation of Rights. Except as provided in this Section 9, an
Optionee or Offeree shall have no rights by reason of (i) any subdivision or
consolidation of shares

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of stock of any class, (ii) the payment of any dividend or (iii) any other
increase or decrease in the number of shares of stock of any class. Any issue by
the Company of shares of stock of any class, or securities convertible into
shares of stock of any class, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number or Exercise Price of Shares
subject to an Option. The grant of an Option pursuant to the Plan shall not
affect in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure, to merge or consolidate or to dissolve, liquidate, sell or transfer
all or any part of its business or assets.

      SECTION 10. SECURITIES LAWS.

      Shares shall not be issued under the Plan unless the issuance and delivery
of such Shares comply with (or are exempt from) all applicable requirements of
law, including (without limitation) the Securities Act of 1933, as amended, the
rules and regulations promulgated thereunder, state securities laws and
regulations, and the regulations of any stock exchange on which the Company's
securities may then be listed.

      SECTION 11. NO EMPLOYMENT RIGHTS.

      No provision of the Plan, nor any right or Option granted under the Plan,
shall be construed to give any person any right to become, to be treated as, or
to remain an Employee. The Company and its Subsidiaries reserve the right to
terminate any person's Service at any time and for any reason.

      SECTION 12. DURATION AND AMENDMENTS.

      (a)   Term of the Plan. The Plan, as set forth herein, shall become
effective as of August 17, 1994, subject to the approval of the Company's
stockholders. In the event

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that the stockholders fail to approve the Plan on or before the date 12 months
after August 17, 1994, any ISOs already granted shall be treated as Nonstatutory
Options, and no additional ISOs shall be granted after such date. The Plan shall
terminate automatically 10 years after its initial adoption by the Board of
Directors on May 26, 1992, and may be terminated on any earlier date pursuant to
Subsection (b) below.

      (b)   Right to Amend or Terminate the Plan. The Board of Directors may
amend, suspend or terminate the Plan at any time and for any reason; provided,
however, that any amendment of the Plan which increases the number of Shares
available for issuance under the Plan (except as provided in Section 9), or
which materially changes the class of persons who are eligible for the grant of
ISOs, shall be subject to the approval of the Company's stockholders.
Stockholder approval shall not be required for any other amendment of the Plan.

      (c)   Effect of Amendment or Termination. No Shares shall be issued or
sold under the Plan after the termination thereof, except upon exercise of an
Option granted prior to such termination. The termination of the Plan, or any
amendment thereof, shall not affect any Share previously issued or any Option
previously granted under the Plan.

      SECTION 13. EXECUTION.

      To record the amendment and restatement of the Plan by the Board of
Directors on October 10, 1996, the Company has caused its authorized officer to
execute the same.

                                           IXSYS, INC.

                                           By ______________________________

                                      -17-
<PAGE>   18
                                  AMENDMENT TO
                       APPLIED MOLECULAR EVOLUTION, INC.
                                1992 STOCK PLAN

      Pursuant to Section 12(b) of Ixsys, Inc. 1992 Stock Plan (the "Plan"), the
Plan is hereby amended as follows:

      1.    The name of the Plan is hereby changed from Ixsys, Inc. 1992 Stock
            Plan to "Applied Molecular Evolution, Inc. 1992 Stock Plan."

      2.    Section 2 is hereby amended by adding a new subsection (b) which
            shall read as follows:

            (b)   "Change in Control" shall mean:

            (i)   The consummation of a merger or consolidation of the Company
            with or into another entity or any other corporate reorganization,
            if more than 50% of the combined voting power of the continuing or
            surviving entity's securities outstanding immediately after such
            merger, consolidation or other reorganization is owned by persons
            who were not stockholders of the Company immediately prior to such
            merger, consolidation or other reorganization; or

            (ii)  The sale, transfer or other disposition of all or
            substantially all of the Company's assets.

            A transaction shall not constitute a Change in Control if: (a) its
            sole purpose is to change the state of the Company's incorporation,
            (b) its sole purpose is to create a holding company that will be
            owned in substantially the same proportions by the persons who held
            the Company's securities immediately before such transaction or (c)
            such transaction constitutes the Company's initial public offering.

      3.    Section (2)(d) is hereby amended by replacing "Ixsys, Inc." with
            "Applied Molecular Evolution, Inc."

      4.    Section 2(m) is hereby amended by replacing "Ixsys, Inc." with
            "Applied Molecular Evolution, Inc."

      5.    Section 2 is hereby amended by adding a new subsection (o) which
            shall read as follows:

            (o)   "Rule 16b-3" shall mean 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.

<PAGE>   19

      6.    Section 3(b) is hereby amended by adding the following:

            (i)   Section 162(m): To the extent that the Committee 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 shall be administered by a
                  Committee of two or more "outside directors" within the
                  meaning of Section 162(m) of the Code.

            (ii)  Rule 16b-3: To the extent desirable to qualify transactions
                  hereunder as exempt under Rule 16b-3, the transactions
                  contemplated hereunder shall be structured to satisfy the
                  requirements for exemption under Rule 16b-3.

      7.    The last paragraph of Section 3(c) shall be deleted in its entirety
            and replaced with the following:

            Subject to the requirements of applicable law, the Committee may
            designate persons other than members of the Committee to carry out
            its responsibilities and may prescribe such conditions and
            limitations as it may deem appropriate, except that the Committee
            may not delegate its authority with regard to the selection for
            participation of or the granting of Options or other rights under
            the Plan to persons subject to Section 16 of the Exchange Act. All
            decisions, interpretations and other actions of the Committee shall
            be final and binding on all Offerees, all Optionees and all persons
            deriving their rights from an Offeree or Optionee. No member of the
            Committee shall be liable for any action that he has taken or has
            failed to take in good faith with respect to the Plan, any Option,
            or any right to acquire Shares under the Plan.

      8.    The first sentence in Section 3(d) is hereby amended by adding the
            following language to the beginning of such sentence, "To the extent
            required by applicable law[,]."

      9.    Section 5(a) is hereby amended by deleting "2,100,000 Shares" and
            replacing such language with "3,100,000 Shares."

      10.   The last sentence in Section 6(e) is hereby amended by adding the
            following language to the beginning of such sentence, "To the extent
            required by applicable law[,]."

      11.   The second sentence of Section 7(e) is hereby amended by adding the
            following language to the beginning of such sentence, "To the extent
            required by applicable law[,]."

                            [SIGNATURE PAGE FOLLOWS]

<PAGE>   20

IN WITNESS WHEREOF, Applied Molecular Evolution, Inc. has adopted this Amendment
to the Plan, effective, April 7, 2000. To record this Amendment of the Plan by
the Board of Directors on April 7, 2000, the Company has caused its authorized
officer to execute the same.

                                   APPLIED MOLECULAR EVOLUTION, INC.

                                   BY:   /S/ William D. Huse
                                         -------------------
                                   DATE: April 7, 2000
                                         -------------------<PAGE>   1

                                                                  EXHIBIT 10.1.2

THE OPTION GRANTED PURSUANT TO THIS INCENTIVE STOCK OPTION AGREEMENT (THE
"OPTION") AND THE SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE HEREOF HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND MAY NOT BE PLEDGED, HYPOTHECATED, SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR
THE OPTION OR THE SHARES UNDER THE SECURITIES ACT, OR AN OPINION OF COUNSEL,
WHICH IS SATISFACTORY TO THE CORPORATION AND ITS COUNSEL, THAT SUCH REGISTRATION
IS NOT REQUIRED.

IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS OPTION AND THE SHARES OF
COMMON STOCK ISSUABLE UPON EXERCISE HEREOF, OR ANY INTEREST THEREIN, OR TO
RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE
COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED IN
THE COMMISSIONER'S RULES.

                         1992 STOCK PLAN OF IXSYS, INC.:

                        INCENTIVE STOCK OPTION AGREEMENT

        THIS AGREEMENT, entered into as of __________ __, 199_, between IXSYS,
INC., a Delaware corporation (the "Company"), and _____________________________
(the "Optionee"),

                              W I T N E S S E T H:

        WHEREAS, the Company's Board of Directors has established the 1992 Stock
Plan of Ixsys, Inc. in order to provide selected Employees of the Company and
its Subsidiaries with an opportunity to acquire Stock of the Company; and

        WHEREAS, the Committee has determined that it would be in the best
interests of the Company and its stockholders to grant the Incentive Stock
Option described in this Agreement to the Optionee as an inducement to enter
into or remain in the Service of the Company and as an incentive for
extraordinary efforts during such Service:

        NOW, THEREFORE, it is agreed as follows:

                                      -1-
<PAGE>   2

        SECTION 1. GRANT OF OPTION.

        (a) Option. On the terms and conditions stated below, the Company hereby
grants to the Optionee the option to purchase ______________________________
(________) Shares for the sum of _____________________________ dollars ($___.__)
per Share, which is agreed to be __________ percent (___%) of the Fair Market
Value thereof on the Date of Grant.

        (b) Stock Plan. This option is granted pursuant to the Plan, a copy of
which the Optionee acknowledges having received, read and understood. The
provisions of the Plan are incorporated into this Agreement by this reference.

        SECTION 2. RIGHT TO EXERCISE.

        (a) Vesting. Subject to the conditions stated herein, the right to
exercise this option shall accrue on a daily basis over the four-year period
commencing on the Date of Grant. The percentage of the total number of Shares
subject to this option with respect to which this option is exercisable at any
time shall be equal to the product of 0.06844627% times the number of days that
have elapsed since the Date of Grant; provided, however, that this option shall
not be exercisable for any number of Shares until after the Optionee has
completed six months of Service from the Date of Grant (as determined by and in
accordance with the Plan). The resulting number of Shares shall be rounded to
the nearest integer.

        (b) Periods of Nonexercisability. Any other provision of this Agreement
notwithstanding, the Company shall have the right to designate one or more
periods of time, each of which shall not exceed 18 consecutive months in length,
during which this option shall not be exercisable if the Company determines (in
its sole discretion) that

                                      -2-
<PAGE>   3

such limitation on exercise could in any way facilitate a lessening of any
restriction on transfer pursuant to the Securities Act or any state securities
laws with respect to any issuance of securities by the Company, facilitate the
registration or qualification of any securities by the Company under the
Securities Act or any state securities laws, or facilitate the perfection of any
exemption from the registration or qualification requirements of the Securities
Act or any applicable state securities laws for the issuance or transfer of any
securities. Such limitation on exercise shall not alter the vesting schedule set
forth in Subsection (a) above other than to limit the periods during which this
option shall be exercisable. The Optionee shall be notified in writing in
advance of any such designation by the Company.

        (c) Stockholder Approval. Any other provision of this Agreement
notwithstanding, this option shall not be exercisable at any time prior to the
approval of the Plan by the Company's stockholders.

        SECTION 3. NO TRANSFER OR ASSIGNMENT OF OPTION.

        Except as otherwise provided in this Agreement, this option and the
rights and privileges conferred hereby shall not be transferred, assigned,
pledged or hypothecated in any way (whether by operation of law or otherwise)
and shall not be subject to sale under execution, attachment, levy or similar
process. Upon any attempt to transfer, assign, pledge, hypothecate or otherwise
dispose of this option, or of any right or privilege conferred hereby, contrary
to the provisions hereof, or upon any attempted sale under any execution,
attachment, levy or similar process upon the rights and privileges conferred
hereby, this option and the rights and privileges conferred hereby shall
immediately become null and void.

                                      -3-
<PAGE>   4

        SECTION 4. EXERCISE PROCEDURES.

        (a) Notice of Exercise. The Optionee or the Optionee's representative
may exercise this option by giving written notice to the Secretary of the
Company pursuant to Section 12(c). The notice shall specify the election to
exercise this option, the number of Shares for which it is being exercised and
the form of payment (if more than one form is available). The notice shall be
signed by the person exercising this option. In the event that this option is
being exercised by the representative of the Optionee, the notice shall be
accompanied by proof (satisfactory to the Company) of the representative's right
to exercise this option. The Optionee or the Optionee's representative shall
deliver to the Secretary of the Company, at the time of giving the notice,
payment in a form permissible under Section 5 for the full amount of the
Purchase Price.

        (b) Issuance of Shares. After receiving a proper notice of exercise, the
Company shall cause to be issued a certificate or certificates for the Shares as
to which this option has been exercised, registered in the name of the person
exercising this option (or in the names of such person and his or her spouse as
community property or as joint tenants with right of survivorship). The Company
shall cause such certificate or certificates to be delivered to or upon the
order of the person exercising this option.

        (c) Withholding Taxes. In the event that the Company determines that it
is required to withhold foreign, federal, state or local tax as a result of the
exercise of this option, the Optionee, as a condition to the exercise of this
option, shall make arrangements satisfactory to the Company to enable it to
satisfy all withholding requirements. The Optionee shall also make arrangements
satisfactory to the Company

                                      -4-
<PAGE>   5

to enable it to satisfy any withholding requirements that may arise in
connection with the disposition of Shares purchased by exercising this option.

        SECTION 5. PAYMENT FOR STOCK.

        (a) Cash. All or part of the Purchase Price may be paid in lawful money
of the United States of America.

        (b) Surrender of Stock. All or part of the Purchase Price may be paid by
the surrender of Shares in good form for transfer. Such Shares must have been
owned for more than six months by the Optionee or the Optionee's representative
and must have a fair market value (as determined by the Committee) on the date
of exercise of this option which, together with any amount paid in another form
permissible under this Section 5, is equal to the Purchase Price.

        (c) Exercise/Sale. All or part of the Purchase Price and any withholding
taxes may be paid by the delivery (on a form prescribed by the Company) of an
irrevocable direction to a securities broker approved by the Company to sell
Shares and to deliver all or part of the sales proceeds to the Company.

        (d) Exercise/Pledge. All or part of the Purchase Price and any
withholding taxes may be paid by the delivery (on a form prescribed by the
Company) of an irrevocable direction to pledge Shares to a securities broker or
lender approved by the Company, as security for a loan, and to deliver all or
part of the loan proceeds to the Company.

        SECTION 6. TERM AND EXPIRATION.

        (a) Basic Term. This option shall in any event expire on the date 10
years after the Date of Grant.

                                      -5-
<PAGE>   6

        (b) Termination of Service (Except by Death). If the Optionee's Service
terminates for any reason other than death, then this option shall expire on the
earliest of the following occasions:

                (i) The expiration date determined pursuant to Subsection (a)
        above;

                (ii) The date 90 days after the termination of the Optionee's
        Service for any reason other than Total and Permanent Disability; or

                (iii) The date six months after the termination of the
        Optionee's Service by reason of Total and Permanent Disability.

The Optionee may exercise all or part of this option at any time before its
expiration under the preceding sentence, but only to the extent that this option
had become exercisable before the Optionee's Service terminated. The balance of
this option shall lapse when the Optionee's Service terminates. In the event
that the Optionee dies after the termination of Service but before the
expiration of this option, all or part of this option may be exercised (prior to
expiration) by the executors or administrators of the Optionee's estate or by
any person who has acquired this option directly from the Optionee by bequest or
inheritance, but only to the extent that this option had become exercisable
before the Optionee's Service terminated.

        (c) Death of Optionee. If the Optionee dies as an Employee, then this
option shall expire on the earlier of the following dates:

                (i) The expiration date determined pursuant to Subsection (a)
        above; or

                (ii) The date six months after the Optionee's death.

All or part of this option may be exercised at any time before its expiration
under the

                                      -6-
<PAGE>   7

preceding sentence by the executors or administrators of the Optionee's estate
or by any person who has acquired this option directly from the Optionee by
bequest or inheritance, but only to the extent that this option had become
exercisable before the Optionee's death. The balance of this option shall lapse
when the Optionee dies.

        (d) Leaves of Absence. For purposes of this Section 6, the Employee
relationship shall be deemed to continue during any period when the Optionee is
on military leave, sick leave or other bona fide leave of absence (to be
determined in the sole discretion of the Committee). However, if the Optionee's
reemployment rights are not guaranteed by statute or by contract, then the
Employee relationship shall not be deemed to continue beyond the 90th day of
such period.

        SECTION 7. THE COMPANY'S RIGHT OF FIRST REFUSAL.

        (a) Right of First Refusal. In the event that the Optionee or a
Transferee proposes to sell, pledge or otherwise transfer to a third party any
Shares acquired under this Agreement, or any interest in such Shares, the
Company shall have the Right of First Refusal with respect to all (and not less
than all) of such Shares. If the Optionee or Transferee desires to transfer
Shares acquired under this Agreement, the Optionee or Transferee shall give a
written Transfer Notice to the Company describing fully the proposed transfer,
including the number of Shares proposed to be transferred, the proposed transfer
price, the name and address of the proposed new Transferee and proof
satisfactory to the Company that the proposed sale or transfer will not violate
any applicable federal or state securities laws. The Transfer Notice shall be
signed both by the Optionee or Transferee and by the proposed new Transferee and
must constitute a binding commitment of both parties to the transfer of the
Shares. The Company shall

                                      -7-
<PAGE>   8

have the right to purchase all, and not less than all, of the Shares on the
terms of the proposal described in the Transfer Notice (subject, however, to any
change in such terms permitted under Subsection (b) below) by delivery of a
notice of exercise of the Right of First Refusal within 30 days after the date
when the Transfer Notice was received by the Company. The Company's rights under
this Subsection (a) shall be freely assignable, in whole or in part.

        (b) Transfer of Shares. If the Company fails to exercise its Right of
First Refusal within 30 days after the date when it received the Transfer
Notice, the Optionee or Transferee may, not later than 90 days following receipt
of the Transfer Notice by the Company, conclude a transfer of the Shares subject
to the Transfer Notice on the terms and conditions described in the Transfer
Notice; provided that any such sale is made in compliance with applicable
federal and state securities laws and not in violation of any other contractual
restrictions to which the Optionee is bound. Any proposed transfer on terms and
conditions different from those described in the Transfer Notice, as well as any
subsequent proposed transfer by the Optionee or Transferee, shall again be
subject to the Right of First Refusal and shall require compliance with the
procedure described in Subsection (a) above. If the Company exercises its Right
of First Refusal, the parties shall consummate the sale of the Shares on the
terms set forth in the Transfer Notice within 60 days after the date when the
Company received the Transfer Notice (or within such longer period as may have
been specified in the Transfer Notice); provided, however, that in the event the
Transfer Notice provided that payment for the Shares was to be made in a form
other than lawful money paid at the time of transfer, the Company

                                      -8-
<PAGE>   9

shall have the option of paying for the Shares with lawful money equal to the
present value of the consideration described in the Transfer Notice.

        (c) Binding Effect. The Company's Right of First Refusal shall inure to
the benefit of its successors and assigns and shall be binding upon any
Transferee of the Shares.

        (d) Additional Shares or Substituted Securities. In the event of the
declaration of a stock dividend, the declaration of an extraordinary dividend
payable in a form other than stock, a stock split, an adjustment in conversion
ratio, a recapitalization or a similar transaction affecting the Company's
outstanding securities without receipt of consideration, any new, substituted or
additional securities or other property which are by reason of such transaction
distributed with respect to any Shares subject to this Section 7 or into which
such Shares thereby become convertible shall immediately be subject to this
Section 7. Appropriate adjustments to reflect the distribution of such
securities or property shall be made to the number and/or class of the Shares
subject to this Section 7.

        (e) Termination of Right of First Refusal. Any other provision of this
Section 7 notwithstanding, in the event that Stock is listed on an established
stock exchange or is quoted regularly on the NASDAQ System at the time when the
Optionee or Transferee desires to transfer Shares, the Company shall have no
Right of First Refusal, and the Optionee or Transferee shall have no obligation
to comply with the procedures prescribed by Subsections (a), (b) and (c) above.

        (f) Transfer by Will or Intestate Succession. This Section 7 shall not
apply to a transfer by will or intestate succession, provided that the
Transferee agrees in writing on a form prescribed by the Company to be bound by
this Agreement.

                                      -9-
<PAGE>   10

        (g) Transfer to Trust. The Optionee shall have the right to transfer all
or any portion of the Optionee's interest in the Shares issued and delivered
under this Agreement, to a trust established by the Optionee for the benefit of
the Optionee or the Optionee's spouse or children, without being subject to the
provisions of this Section 7, provided that the trustee on behalf of such trust
shall agree in writing on a form prescribed by the Company to be bound by this
Agreement.

        (h) Termination of Rights as Stockholder. If the Company makes
available, at the time and place and in the amount and form provided in this
Agreement, the consideration for the Shares to be purchased in accordance with
the provisions of this Section 7, then from and after such time the person from
whom such Shares are to be purchased shall no longer have any rights as a holder
of such Shares (other than the right to receive payment of such consideration in
accordance with this Agreement). Such Shares shall be deemed to have been
purchased in accordance with the applicable provisions hereof, whether or not
the certificate(s) therefor have been delivered as required by this Agreement.

        (i) Legend. All certificates representing Shares purchased under this
Agreement shall be endorsed with the following legend:

        "THE SHARES REPRESENTED HEREBY MAY NOT BE SOLD, ASSIGNED,
        TRANSFERRED, ENCUMBERED OR IN ANY MANNER DISPOSED OF, EXCEPT IN
        COMPLIANCE WITH THE TERMS OF A WRITTEN AGREEMENT BETWEEN THE
        COMPANY AND THE REGISTERED HOLDER OF THE SHARES (OR THE
        PREDECESSOR IN INTEREST TO THE SHARES). SUCH AGREEMENT GRANTS
        CERTAIN RIGHTS OF FIRST REFUSAL UPON AN ATTEMPTED TRANSFER OF
        THE SHARES. THE SECRETARY OF THE COMPANY WILL UPON WRITTEN
        REQUEST

                                  -10-
<PAGE>   11

        FURNISH A COPY OF SUCH AGREEMENT TO THE HOLDER HEREOF WITHOUT
        CHARGE."

        SECTION 8. LEGALITY OF INITIAL ISSUANCE.

        No Shares shall be issued upon the exercise of this option unless and
until the Company has determined that:

        (a) It and the Optionee have taken any actions required to register the
Shares under the Securities Act or to perfect an exemption from the registration
requirements thereof;

        (b) Any applicable listing requirement of any stock exchange on which
Stock is listed has been satisfied; and

        (c) Any other applicable provision of state or federal law has been
satisfied.

        SECTION 9. NO REGISTRATION RIGHTS.

        The Company may, but shall not be obligated to, register or qualify the
sale of Shares under the Securities Act or any other applicable law. The Company
shall not be obligated to take any affirmative action in order to cause the sale
of Shares under this Agreement to comply with any law.

        SECTION 10. SECURITIES LAW RESTRICTIONS ON TRANSFER.

        (a) Restrictions. Regardless of whether the offering and sale of Shares
under the Plan have been registered under the Securities Act or have been
registered or qualified under the securities laws of any state, the Company at
its discretion may impose restrictions upon the sale, pledge or other transfer
of such Shares (including the placement of appropriate legends on stock
certificates) if, in the judgment of the Company and its counsel, such
restrictions are necessary or desirable in order to achieve

                                      -11-
<PAGE>   12

compliance with the Securities Act, the securities laws of any state or any
other law or with restrictions imposed by the Company's underwriters.

        (b) Investment Intent at Grant. The Optionee represents and agrees that
the Shares to be acquired upon exercising this option will be acquired for
investment, and not with a view to the sale or distribution thereof.

        (c) Investment Intent at Exercise. In the event that the sale of Shares
under the Plan is not registered under the Securities Act but an exemption is
available which requires an investment representation or other representation,
the Optionee shall represent and agree at the time of exercise that the Shares
being acquired upon exercising this option are being acquired for investment,
and not with a view to the sale or distribution thereof, and shall make such
other representations as are deemed necessary or appropriate by the Company and
its counsel.

        (d) Legend. All certificates evidencing Shares acquired under this
Agreement in an unregistered transaction shall bear the following restrictive
legend (and such other restrictive legends as are required or deemed advisable
under the provisions of any applicable law):

        "THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
        THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
        PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE
        REGISTRATION THEREOF UNDER SUCH ACT OR AN OPINION OF COUNSEL,
        SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH
        REGISTRATION IS NOT REQUIRED."

        (e) Removal of Legends. If, in the opinion of the Company and its
counsel, any legend placed on a stock certificate representing Shares sold under
this Agreement is no longer required, the holder of such certificate shall be
entitled to exchange such

                                      -12-
<PAGE>   13

certificate for a certificate representing the same number of Shares but lacking
such legend.

        (f) Administration. Any determination by the Company and its counsel in
connection with any of the matters set forth in this Section 10 shall be
conclusive and binding on the Optionee and all other persons.

        SECTION 11. SHARES AND ADJUSTMENTS.

        (a) General. In the event of a subdivision of the outstanding Shares, a
declaration of a dividend payable in Shares, a declaration of a dividend payable
in a form other than Shares in an amount that has a material effect on the value
of Shares, a combination or consolidation of the outstanding Shares into a
lesser number of Shares, a recapitalization, a spinoff, a reclassification or a
similar occurrence, the Committee shall make appropriate adjustments in one or
both of (i) the number of Shares covered by this option or (ii) the Exercise
Price.

        (b) Mergers; Consolidations. In the event that the Company is a party to
a merger or consolidation, outstanding Options shall be subject to the agreement
of merger or consolidation. Such agreement may provide for the assumption of
outstanding Options by the surviving corporation or its parent or for their
continuation by the Company (if the Company is the surviving corporation). In
the event the Company is not the surviving corporation and the surviving
corporation will not assume the outstanding Options, the agreement of merger or
consolidation may provide for payment of a cash settlement for exercisable
Options equal to the difference between the amount to be paid for one Share
under such agreement and the Exercise Price and for the cancellation of Options
not exercised or settled, in either case without the Optionees' consent.

                                      -13-
<PAGE>   14

        (c) Reservation of Rights. Except as provided in this Section 11, the
Optionee shall have no rights by reason of (i) any subdivision or consolidation
of shares of stock of any class, (ii) the payment of any dividend or (iii) any
other increase or decrease in the number of shares of stock of any class. Any
issue by the Company of shares of stock of any class, or securities convertible
into shares of stock of any class, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number or Exercise Price of the
Shares subject to this option. The grant of this option shall not affect in any
way the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure, to merge or
consolidate or to dissolve, liquidate, sell or transfer all or any part of its
business or assets.

        SECTION 12. MISCELLANEOUS PROVISIONS.

        (a) Rights as a Stockholder. Neither the Optionee nor the Optionee's
representative shall have any rights as a stockholder with respect to any Shares
subject to this option until the Optionee or the Optionee's representative is
entitled, pursuant to the terms of this option, to receive such Shares.

        (b) No Employment Rights. Nothing in this Agreement shall be construed
as giving the Optionee the right to be retained as an Employee. The Company
reserves the right to terminate the Optionee's Service at any time, with or
without cause.

        (c) Notice. Any notice required or permitted by the terms of this
Agreement shall be given in writing and shall be deemed effective upon personal
delivery to the party to be notified (or upon the date of attempted delivery
where delivery is refused) or, if sent by telecopier, telex, telegram, or other
facsimile means, upon receipt of appropriate confirmation of receipt, or upon
deposit with the United States Postal

                                      -14-
<PAGE>   15

Service, by registered or certified mail, or next day air courier, with postage
and fees prepaid and addressed to the party entitled to such notice at the
address shown below such party's signature on this Agreement, or at such other
address as such party may designate by 10 days' advance written notice to the
other party to this Agreement.

        (d) Entire Agreement. This Agreement and the Plan constitute the entire
contract between the parties hereto with regard to the subject matter hereof.

        (e) Choice of Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of California, as such laws are applied
to contracts entered into and performed in such State.

        SECTION 13. DEFINITIONS.

        (a) "Agreement" shall mean this Incentive Stock Option Agreement.

        (b) "Board" shall mean the Board of Directors of the Company, as
constituted from time to time.

        (c) "Code" shall mean the Internal Revenue Code of 1986, as amended.

        (d) "Committee" shall mean the committee of the Board described in
section 3 of the Plan or, if none has been appointed, the full Board.

        (e) "Date of Grant" shall mean the date on which the Committee resolved
to grant this option, which is also the date as of which this Agreement is
entered into.

        (f) "Employee" shall mean any individual who is a common-law employee of
the Company or of a Subsidiary.

        (g) "Exercise Price" shall mean the amount for which one Share may be
purchased upon exercise of this option, as specified in Section 1(a).

                                      -15-
<PAGE>   16

        (h) "Fair Market Value" shall mean the fair market value of a Share, as
determined by the Committee in good faith. Such determination shall be
conclusive and binding on all persons.

        (i) "Incentive Stock Option" shall mean an employee incentive stock
option described in section 422(b) of the Code.

        (j) "Plan" shall mean the 1992 Stock Plan of Ixsys, Inc., as in effect
on the Date of Grant.

        (k) "Purchase Price" shall mean the Exercise Price multiplied by the
number of Shares with respect to which this option is being exercised.

        (l) "Right of First Refusal" shall mean the Company's right of first
refusal described in Section 7.

        (m) "Securities Act" shall mean the Securities Act of 1933, as amended.

        (n) "Service" shall mean service as an Employee.

        (o) "Share" shall mean one share of Stock, as adjusted in accordance
with Section 11 (if applicable).

        (p) "Stock" shall mean the Common Stock ($.001 par value) of the
Company.

        (q) "Subsidiary" shall mean any corporation, if the Company and/or one
or more other Subsidiaries own not less than 50% of the total combined voting
power of all classes of outstanding stock of such corporation.

        (r) "Total and Permanent Disability" shall mean that the Optionee is
unable to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or which has lasted, or can be expected to last, for a continuous period
of not less than one year.

                                      -16-
<PAGE>   17

        (s) "Transferee" shall mean any person to whom the Optionee has directly
or indirectly transferred any Share acquired under this Agreement.

        (t) "Transfer Notice" shall mean the notice of a proposed transfer of
Shares described in Section 7.

        IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
on its behalf by its officer duly authorized to act on behalf of the Committee,
and the Optionee has personally executed this Agreement.

OPTIONEE                            IXSYS, INC.

___________________________         By ___________________________

Optionee's Address:                 Company's Address:

___________________________         3550 General Atomics Court
                                    Suite L-103
___________________________         San Diego, CA 92121

                                      -17-
<PAGE>   18

                        ACKNOWLEDGMENT OF RECEIPT OF COPY

                            OF SECTION 260.141.11 OF

                            THE CALIFORNIA CORPORATE

                                SECURITIES RULES

        Pursuant to the grant to the undersigned of an option to purchase shares
of Common Stock of Ixsys, Inc., under that Incentive Stock Option Agreement
dated as of _____________, 199_, the undersigned hereby acknowledges that he or
she received a copy of section 260.141.11 of the California Corporation
Securities Rules as required by subsection (a) thereof, and that such receipt
occurred at the same time as the undersigned entered into the aforementioned
Incentive Stock Option Agreement.

                                                  ------------------------------

                                      -18-

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