Document:

Exhibit 10.3

    

      Exhibit
        10.3

      

      ARIAD
        PHARMACEUTICALS, INC. 2001 STOCK PLAN

      AS
        AMENDED AND RESTATED

      (EFFECTIVE
        AS OF SEPTEMBER 27, 2005)

       

      

        
          	
                  1.

                	
                  Definitions 

                	
                

        

      

       

      Unless
        otherwise specified or unless the context otherwise requires, the following
        terms, as used in this ARIAD Pharmaceuticals, Inc. 2001 Stock Plan, as amended
        and restated, have the following meanings:

      

      
        	 	
                a.

              	
                Administrator
                  means the Board of Directors, unless it has delegated power to
                  act on its
                  behalf to the Committee, in which case the Administrator means
                  the
                  Committee.

              

      

      

      
        	 	
                b.

              	
                Affiliate
                  means a corporation which, for purposes of Section 424 of the Code,
                  is a
                  parent or subsidiary of the Company, direct or
                  indirect.

              

      

      

      
        	 	
                c.

              	
                Board
                  of Directors
                  means the Board of Directors of the
                  Company.

              

      

      

      
        	 	
                d.

              	
                Certificate
                  means either an Option Certificate, Stock Grant Certificate or
                  Restricted
                  Stock Unit Certificate.

              

      

      

      
        	 	
                e.

              	
                Code
                  means the United States Internal Revenue Code of 1986, as
                  amended.

              

      

      

      
        	 	
                f.

              	
                Committee
                  means the Compensation Committee of the Board of Directors to which
                  the
                  Board of Directors has delegated power to act under or pursuant
                  to the
                  provisions of the Plan.

              

      

      

      
        	 	
                g.

              	
                Common
                  Stock
                  means shares of the Company’s common stock, $.001 par value per
                  share.

              

      

      

      
        	 	
                h.

              	
                Company
                  means ARIAD Pharmaceuticals, Inc., a Delaware
                  corporation.

              

      

      

      
        	 	
                i.

              	
                Disability
                  or
                  Disabled
                  means permanent and total disability as defined in Section 22(e)(3)
                  of the
                  Code.

              

      

      

      
        	 	
                j.

              	
                Fair
                  Market Value
                  of
                  a Share of Common Stock means:

              

      

       

      
        
          
            	
                    i.

                  	
                    If
                      the Common Stock is listed on a national securities exchange
                      or traded in
                      the over-the-counter market and sales prices are regularly
                      reported for
                      the Common Stock, the closing or last price of the Common Stock
                      on the
                      Composite Tape or other comparable reporting system for the
                      trading day
                      immediately preceding the applicable date;

                  
	 	 
	
                    ii.

                  	
                    If
                      the Common Stock is not traded on a national securities exchange
                      but is
                      traded on the over-the-counter market, if sales prices are
                      not regularly
                      reported for the Common Stock for the trading day referred
                      to in clause a,
                      and if bid and asked prices for the Common Stock are regularly
                      reported,
                      the mean between the bid and the asked price for the Common
                      Stock at the
                      close of trading in the over-the-counter market for the trading
                      day on
                      which Common Stock was traded immediately preceding the applicable
                      date;
                      and

                  
	 	 
	
                    iii.

                  	
                    If
                      the Common Stock is neither listed on a national securities
                      exchange nor
                      traded in the over-the-counter market, such value as the Administrator,
                      in
                      good faith, shall
                      determine.

                  

          

      

      
        	 	
                k.

              	
                ISO
                  means an option meant to qualify as an incentive stock option under
                  Section 422 of the Code.

              

      

       

      
        	 	
                l.

              	
                Key
                  Employee
                  means any employee of the Company or of an Affiliate (including,
                  without
                  limitation, an employee who is also serving as an officer or director
                  of
                  the Company or of an Affiliate), or otherwise designated by the
                  Administrator to be eligible to be granted one or more Stock Rights
                  under
                  the Plan.

              

      

       

       

      
        
          
          

        

        
          A-1

          
            

          

        

        
          
          

        

      

       

      
        	 	
                m.

              	
                Non-Qualified
                  Option
                  means an option which is not intended to qualify as an
                  ISO.

              

      

      

      
        	 	
                n.

              	
                Option
                  means an ISO or Non-Qualified Option granted under the
                  Plan.

              

      

      

      
        	 	
                o.

              	
                Option
                  Certificate
                  means a certificate delivered to the Participant by the Company
                  pursuant
                  to the Plan, in such form as the Administrator shall approve, which
                  sets
                  forth the terms and conditions of a Stock Option
                  Grant.

              

      

      

      
        	 	
                p.

              	
                Participant
                  means a Key Employee, director or consultant to whom one or more
                  Stock
                  Rights are granted under the Plan. As used herein, “Participant” shall
                  include “Participant’s Survivors” where the context
                  requires.

              

      

      

      
        	 	
                q.

              	
                Plan
                  means this ARIAD Pharmaceuticals, Inc. 2001 Stock Plan, as amended
                  and
                  restated.

              

      

      

      
        	 	
                r.

              	
                Restricted
                  Stock Unit
                  means a unit that represents the right to receive the Fair Market
                  Value of
                  one Share, payable in cash and/or Shares, as specified in the applicable
                  Restricted Stock Unit Certificate and which is subject to forfeiture
                  restrictions. 

              

      

       

      
        	 	
                s.

              	
                Restricted
                  Stock Unit Certificate
                  means a certificate delivered to the Participant by the Company
                  pursuant
                  to the Plan, in such form as the Administrator shall approve, which
                  sets
                  forth the terms and conditions of the grant of Restricted Stock
                  Units.

              

      

      

      
        	 	
                t.

              	
                Shares
                  means shares of the Common Stock as to which Stock Rights have
                  been or may
                  be granted under the Plan or any shares of capital stock into which
                  the
                  Shares are changed or for which they are exchanged within the provisions
                  of Paragraph 3 of the Plan. The Shares issued under the Plan may
                  be
                  authorized and unissued shares or shares held by the Company in
                  its
                  treasury, or both.

              

      

      

      
        	 	
                u.

              	
                Stock
                  Grant
                  means a grant by the Company of Shares under the
                  Plan.

              

      

      

      
        	 	
                v.

              	
                Stock
                  Option Grant
                  means a grant of an option to purchase Shares under the Plan in
                  either the
                  form of an ISO or Non-Qualified
                  Option.

              

      

      

      
        	 	
                w.

              	
                Stock
                  Grant Certificate
                  means a certificate delivered to the Participant by the Company
                  pursuant
                  to the Plan, in such form as the Administrator shall approve, which
                  sets
                  forth the terms and conditions of a Stock
                  Grant.

              

      

      

      
        	 	
                x.

              	
                Stock
                  Right
                  means a right to Shares of the Company granted pursuant to the
                  Plan (i.e.,
                  a Stock Option Grant, Stock Grant or Restricted Stock Unit
                  grant.)

              

      

      

      
        	 	
                y.

              	
                Survivors
                  means a deceased Participant’s legal representatives and/or any person or
                  persons who acquired the Participant’s rights to a Stock Right by will or
                  by the laws of descent and
                  distribution.

              

      

      

        
          	
                  2.

                	
                   Purposes
                    of
                    the Plan

                

        

      

       

      
        
          	
                  The
                    Plan is intended to encourage ownership of Shares by Key Employees
                    and
                    directors of and certain consultants to the Company in order
                    to attract
                    such people, to induce them to work for the benefit of the Company
                    or of
                    an Affiliate and to provide additional incentive for them to
                    promote the
                    success of the Company or of an Affiliate. The Plan provides
                    for the
                    granting of Stock Option Grants, Stock Grants and Restricted
                    Stock
                    Units.

                

        

      

       

       

      
        
          
          

        

        
          A-2

          
            

          

        

        
          
          

        

      

       

      
        
          
            	
                    3. 

                  	
                     Shares
                      Subject to the
                      Plan

                  

          

        

      

       

      
        	
                a.

              	
                The
                  number of Shares which may be issued from time to time pursuant
                  to this
                  Plan shall be five million nine hundred thirty thousand (5,930,000)
                  Shares, or the equivalent of such number of Shares after the
                  Administrator, in its sole discretion, has interpreted the effect
                  of any
                  stock split, stock dividend, combination, recapitalization or similar
                  transaction in accordance with Paragraph 23 of the
                  Plan;

              
	 	 
	
                b.

              	
                The
                  maximum number of Shares that may be issued as ISOs pursuant to
                  this Plan
                  shall be five million nine hundred thirty thousand (5,930,000)
                  Shares or
                  the equivalent of such number of Shares after the Administrator,
                  in its
                  sole discretion, has interpreted the effect of any stock split,
                  stock
                  dividend, combination, recapitalization or similar transaction
                  in
                  accordance with Paragraph 23 of the Plan; and

              
	 	 
	
                c.

              	
                If
                  an Option ceases to be “outstanding,” in whole or in part, or if the
                  Company shall reacquire any Shares issued pursuant to a Stock Grant
                  or a
                  grant of Restricted Stock Units or if any Restricted Stock Unit
                  grant is
                  forfeited, cancelled or otherwise terminated or otherwise results
                  in
                  Shares not being issued, the Shares which were subject to such
                  Option or
                  Restricted Stock Unit grant and any Shares so reacquired by the
                  Company
                  shall be available for the granting of other Stock Rights under
                  the Plan.
                  Any Option shall be treated as “outstanding” until such Option is
                  exercised in full, or terminates or expires under the provisions
                  of the
                  Plan, or by agreement of the parties to the pertinent Option
                  Certificate.

              

      

    

     

    
      
        
          
            	
                    
                      4. 

                    

                  	
                     Administration
                      of the Plan

                  

          

        

      

       

    

    The
      Administrator of the Plan will be the Board of Directors, except to the extent
      the Board of Directors delegates its authority to the Committee, in which case
      the Committee shall be the Administrator. Subject to the provisions of the
      Plan,
      the Administrator is authorized to:

     

    
      
        	
                a.

              	
                Interpret
                  the provisions of the Plan or of any Stock Option Grant, Stock
                  Grant or
                  Restricted Stock Unit grant and to make all rules and determinations
                  which
                  it deems necessary or advisable for the administration of the
                  Plan;

              
	 	 
	
                b.

              	
                Determine
                  which employees of the Company or of an Affiliate shall be designated
                  as
                  Key Employees and which of the Key Employees, directors and consultants
                  shall be granted Stock Rights;

              
	 	 
	
                c.

              	
                Determine
                  the number of Shares for which a Stock Right or Stock Rights shall
                  be
                  granted, provided, however, that in no event shall Stock Rights
                  with
                  respect to more than three hundred thousand (300,000) shares be
                  granted to
                  any Participant in any fiscal year; and

              
	 	 
	
                d.

              	
                Specify
                  the terms and conditions upon which a Stock Right(s) may be granted;
                  provided, however, that all such interpretations, rules, determinations,
                  terms and conditions shall be made and prescribed in the context
                  of
                  preserving the tax status under Section 422 of the Code of those
                  Options
                  which are designated as ISOs. Subject to the foregoing, the interpretation
                  and construction by the Administrator of any provisions of the
                  Plan or of
                  any Stock Right granted under it shall be final, unless otherwise
                  determined by the Board of Directors, if the Administrator is the
                  Committee.

              

      

    

    
       

      
        
          	
                  5.

                	
                   Eligibility
                    for
                    Participation

                

        

      

    

    

    The
      Administrator will, in its sole discretion, name the Participants in the Plan,
      provided, however, that each Participant must be a Key Employee, director or
      consultant of the Company or of an Affiliate at the time a Stock Right is
      granted. Notwithstanding the foregoing, the Administrator may authorize the
      grant of a Stock Right to a person not then an employee, director or consultant
      of the Company or of an Affiliate; provided, however, that the actual grant
      of
      such Stock Right shall be conditioned upon such person becoming eligible to
      become a Participant at or prior to the time of the delivery of the Certificate
      evidencing such Stock Right. ISOs may be granted only to Key Employees.
      Non-Qualified Options, Stock Grants and Restricted Stock Units may be granted
      to
      any Key Employee, director or consultant of the Company or an Affiliate. The
      granting of any Stock Right to any individual shall neither entitle that
      individual to, nor disqualify him or her from, participation in any other grant
      of Stock Rights.

     

    
      
        
        

      

      
        A-3

        
          

        

      

      
        
        

      

    

     

    
      
        	
                6.

              	
                 Terms
                  and Condition of
                  Options

              

      

    

     

    Each
      Stock Option Grant shall be set forth in writing in an Option Certificate,
      duly
      executed by the Company and, to the extent required by law or requested by
      the
      Company, by the Participant. The Administrator may provide that Options be
      granted subject to such terms and conditions, consistent with the terms and
      conditions specifically required under this Plan, as the Administrator may
      deem
      appropriate including, without limitation, subsequent approval by the
      shareholders of the Company of this Plan or any amendments thereto.

    

    
      	 	
              A.

            	
              Non-Qualified
                Options:
                Each Option intended to be a Non-Qualified Option shall be subject
                to the
                terms and conditions which the Administrator determines to be appropriate
                and in the best interest of the Company, subject to the following
                minimum
                standards for any such Non-Qualified
                Option:

            

    

    

      
        	
                a.

              	
                Option
                  Price: Each Option Certificate shall state the option price (per
                  share) of
                  the Shares covered by each Stock Option Grant, which option price
                  shall be
                  determined by the Administrator but shall not be less than 85%
                  of the Fair
                  Market Value per share of Common Stock;

              
	
                 

              	
                 

              
	
                b.

              	
                Each
                  Option Certificate shall state the number of Shares to which it
                  pertains;

              
	
                 

              	
                 

              
	
                c. 

              	
                Each
                  Option Certificate shall state the date or dates on which it first
                  is
                  exercisable and the date after which it may no longer be exercised,
                  and
                  may provide that the Option rights accrue or become exercisable
                  in
                  installments over a period of months or years, or upon the occurrence
                  of
                  certain conditions or the attainment of stated goals or events,
                  or through
                  other circumstances or programs approved by the Administrator (the
                  “Vesting Provisions”);

              
	 	 
	d.	
                The
                  provisions of Paragraph 6(A)(c) above notwithstanding, with the
                  consent of
                  the Administrator, the vesting provisions specified in a Participant’s
                  employment agreement shall be the Vesting Provisions that apply
                  to the
                  relevant non-qualified options; and

              
	 	 
	
                e.

              	
                Exercise
                  of any Option may be conditioned upon the Participant’s execution of a
                  Share purchase agreement in form satisfactory to the Administrator
                  providing for certain protections for the Company and its other
                  shareholders, including requirements
                  that:

              

      

    

     

    
      
        	
                 

              	
                i.

              	
                The
                  Participant’s or the Participant’s Survivors’ right to sell or transfer
                  the Shares may be restricted; and

              
	 	 	 
	
              	
                ii.

              	
                The
                  Participant or the Participant’s Survivors may be required to execute
                  letters of investment intent and must also acknowledge that the
                  Shares
                  will bear legends noting any applicable
                  restrictions.

              

      

    

     

    
      	 	
              B.

            	
              Incentive
                Stock Options:
                Each Option intended to be an Incentive Stock Option (“ISO”), in
                accordance with Section 422 of the Code, shall be issued only to
                a Key
                Employee and be subject to the following terms and conditions, with
                such
                additional restrictions or changes as the Administrator determines
                are
                appropriate but not in conflict with Section 422 of the Code and
                relevant
                regulations and rulings of the Internal Revenue
                Service:

            

    

     

     

    
      
        
        

      

      
        A-4

        
          

        

      

      
        
        

      

    

    
       

      
        
          	
                  
                    a.

                  

                	
                  
                    Minimum
                      standards: The ISO shall meet the minimum standards required
                      of
                      Non-Qualified Options, as described in Paragraph 6(A) above,
                      except clause
                      (a) thereunder;

                  

                
	 	 
	
                  
                    b.

                  

                	
                  Option
                    Price: Immediately before the ISO is granted, if the Participant
                    owns,
                    directly or by reason of the applicable attribution rules in
                    Section
                    424(d) of the Code:

                

        

      

    

     

    
      
        
          	
                   

                	
                  i.

                	
                  Ten
                    percent (10%) or less of the total combined voting power of all
                    classes of
                    stock of the Company or an Affiliate, the Option price per share
                    of the
                    Shares covered by each ISO shall not be less than one hundred
                    percent
                    (100%) of the Fair Market Value per share of the Shares on the
                    date of the
                    Stock Option Grant;

                
	 	 	 
	
                	
                  ii.

                	
                  More
                    than ten percent (10%) of the total combined voting power of
                    all classes
                    of stock of the Company or an Affiliate, the Option price per
                    share of the
                    Shares covered by each ISO shall not be less than one hundred
                    ten percent
                    (110%) of the said Fair Market Value on the date of the Stock
                    Option
                    Grant;

                

        

      

    

     

    
      
        	
                
                  c.

                

              	
                Term of Option: For Participants who
                  own:

              

      

       

      
        	
                 

              	
                i.

              	
                Ten
                  percent (10%) or less of the total combined voting power of all
                  classes of
                  stock of the Company or an Affiliate, each ISO shall terminate
                  not more
                  than ten (10) years from the date of the Stock Option Grant or
                  at such
                  earlier time as the Option Certificate may provide; or

              
	 	 	 
	
              	
                ii.

              	
                More
                  than ten percent (10%) of the total combined voting power of all
                  classes
                  of stock of the Company or an Affiliate, each ISO shall terminate
                  not more
                  than five (5) years from the date of the Stock Option Grant or
                  at such
                  earlier time as the Option Certificate may
                  provide;

              

      

       

    

    
      	
              
                d.

              

            	Limitation
              on Yearly
              Exercise: The Option Certificates shall restrict the amount of ISOs
              which
              may be exercisable in any calendar year (under this or any other ISO
              plan
              of the Company or an Affiliate) so that the aggregate Fair Market Value
              (determined at the time each ISO is granted) of the stock with respect
              to
              which ISOs are exercisable for the first time by the Participant in
              any
              calendar year does not exceed one hundred thousand dollars ($100,000),
              provided that this subparagraph (d) shall have no force or effect if
              its
              inclusion in the Plan is not necessary for Options issued as ISOs to
              qualify as ISOs pursuant to Section 422(d) of the Code;
              and

    

     

    
      	
              
                e.

              

            	Intention
              to be Treated
              as an ISO: It is the Company’s intent that an ISO qualify for the
              favorable tax treatment provided to holders of Options that meet the
              standards of Section 422 of the Code. Any provision of this Plan, an
              Option Certificate or any other relevant document which conflicts with
              the
              Code so that an Option intended to be an ISO would not be deemed an
              ISO is
              null and void and any ambiguities shall be resolved so that the Option
              qualifies as an ISO. Nonetheless, if the Option is determined not to
              be an
              ISO, the Participant shall be deemed to acknowledge and agree that
              neither
              the Company nor any Affiliate is responsible to compensate him or her
              or
              otherwise make up for the treatment of the Option as a Non-Qualified
              Option and not as an ISO. The Participant is deemed to have been advised
              to consult with his or her own tax advisors regarding the tax effects
              of
              the Option and the requirements necessary to obtain favorable tax
              treatment under Section 422 of the Code, including, but not limited
              to,
              holding period requirements.

    

     

    

      
        	
                7.

              	
                 Terms
                  and Conditions of Stock Grants and Restricted Stock
                  Units

              

      

    

     

    Each
      offer of a Stock Grant or grant of Restricted Stock Units to a Participant
      shall
      state the principal terms of each Stock Grant or grant of Restricted Stock
      Units
      and shall be set forth in a Certificate, duly executed by the Company and,
      to
      the extent required by law or requested by the Company, by the Participant.
      The
      Certificate shall be in a form approved by the Administrator and shall contain
      terms and conditions which the Administrator determines to be appropriate and
      in
      the best interest of the Company, subject to the following minimum
      standards:

     

    
      
        
        

      

      
        A-5

        
          

        

      

      
        
        

      

    

     

    

    
      	
              a.

            	
              Each
                Stock Grant or Restricted Stock Unit Certificate shall state the
                purchase
                price (per share), if any, of the Shares covered by each Stock Grant
                or
                grant of Restricted Stock Units, which purchase price shall be determined
                by the Administrator but shall not be less than the minimum consideration
                required by the Delaware General Corporation Law on the date of the
                grant
                of the Stock Grant or issuance of Shares pursuant to the grant of
                Restricted Stock Units;

            
	 	 
	
              b.

            	
              Each
                Certificate shall state the number of Shares to which the Stock Grant
                or
                grant of Restricted Stock Units pertains; and

            
	 	 
	
              c.

            	
              Each
                Certificate shall include the terms of any right of the Company to
                reacquire the Shares subject to the Stock Grant or grant of Restricted
                Stock Units, including the time and events upon which such rights
                shall
                accrue and the purchase price thereof, if any.

            
	 	 
	
              d.

            	
              Each
                Restricted Stock Unit Certificate shall state the termination and
                forfeiture provisions applicable to each grant, the date or dates
                on which
                the Shares and/or cash shall be issued, and may provide that rights
                accrue
                in installments over a period of months or years, or upon the occurrence
                of certain conditions or the attainment of stated goals or events,
                or
                through other circumstances or programs approved by the
                Administrator.

            
	 	 
	
              e.

            	
              Issuance
                of Shares pursuant to the grant of Restricted Stock Units may be
                conditioned upon the Participant’s execution of a Share purchase agreement
                in form satisfactory to the Administrator providing for certain
                protections for the Company and its other shareholders, including
                requirements that:

            

    

     

    
      	
               

            	
              i.

            	
              The
                Participant’s or the Participant’s Survivors’ right to sell or transfer
                the Shares may be restricted; and

            
	 	 	 
	
            	
              ii.

            	
              The
                Participant or the Participant’s Survivors may be required to execute
                letters of investment intent and must also acknowledge that the Shares
                will bear legends noting any applicable
                restrictions.

            

    

    

      
        	
                8.
                  

              	
                 Exercise
                  of Options and Issue of
                  Shares

              

      

    

     

    An
      Option
      (or any part or installment thereof) shall be exercised by giving written notice
      to the Company at its principal executive office address, together with
      provision for payment of the full purchase price in accordance with this
      Paragraph for the Shares as to which the Option is being exercised, and upon
      compliance with any other condition(s) set forth in the Option Certificate.
      Such
      written notice shall be signed by the person exercising the Option, shall state
      the number of Shares with respect to which the Option is being exercised and
      shall contain any representation required by the Plan or the Option Certificate.
      Payment of the purchase price for the Shares as to which such Option is being
      exercised shall be made (a) in United States dollars in cash or by check, or
      (b)
      at the discretion of the Administrator, through delivery of shares of Common
      Stock having a Fair Market Value equal as of the date of the exercise to the
      cash exercise price of the Option, or (c) at the discretion of the
      Administrator, by having the Company retain from the shares otherwise issuable
      upon exercise of the Option, a number of shares having a Fair Market Value
      equal
      as of the date of exercise to the exercise price of the Option, or (d) at the
      discretion of the Administrator, by delivery of the grantee’s personal recourse
      note bearing interest payable not less than annually at no less than 100% of
      the
      applicable Federal rate, as defined in Section 1274(d) of the Code, or (e)
      at
      the discretion of the Administrator, in accordance with a cashless exercise
      program established with a securities brokerage firm, and as approved by the
      Administrator, or (f) at the discretion of the Administrator, by any combination
      of (a), (b), (c), (d) and (e) above. Notwithstanding the foregoing, the
      Administrator shall accept only such payment on exercise of an ISO as is
      permitted by Section 422 of the Code.

     

    
      
        
        

      

      
        A-6

        
          

        

      

      
        
        

      

    

     

    The
      Company shall then reasonably promptly deliver the Shares as to which such
      Option was exercised to the Participant (or to the Participant’s Survivors, as
      the case may be). In determining what constitutes “reasonably promptly,” it is
      expressly understood that the issuance and delivery of the Shares may be delayed
      by the Company in order to comply with any law or regulation (including, without
      limitation, state securities or “blue sky” laws) which requires the Company to
      take any action with respect to the Shares prior to their issuance. The Shares
      shall, upon delivery, be evidenced by an appropriate certificate or certificates
      for fully paid, non-assessable Shares.

     

    The
      Administrator shall have the right to accelerate the date of exercise of any
      installment of any Option; provided that the Administrator shall not accelerate
      the exercise date of any installment of any Option granted to any Key Employee
      as an ISO (and not previously converted into a Non-Qualified Option pursuant
      to
      Paragraph 26) if such acceleration would violate the annual vesting limitation
      contained in Section 422(d) of the Code, as described in Paragraph
      6.B.d.

     

    The
      Administrator may, in its discretion, amend any term or condition of an
      outstanding Stock Option Grant provided (i) such term or condition as amended
      is
      permitted by the Plan, (ii) any such amendment shall be made only with the
      consent of the Participant to whom the Option was granted, or in the event
      of
      the death of the Participant, the Participant’s Survivors, if the amendment is
      adverse to the Participant, and (iii) any such amendment of any ISO shall be
      made only after the Administrator, after consulting the counsel for the Company,
      determines whether such amendment would constitute a “modification” of any
      Option which is an ISO (as that term is defined in Section 424(h) of the Code)
      or would cause any adverse tax consequences for the holder of such
      ISO.

     

    
      
        	
                9.

              	
                 Acceptance
                  of Stock Grants and Restricted Stock Unit Grants and Issue of
                  Shares

              

      

       

    

    A
      Stock
      Grant or grant of Restricted Stock Units (or any part or installment thereof)
      shall be accepted by executing the applicable Certificate and delivering it
      to
      the Company at its principal office address, together with provision for payment
      of the full purchase price, if any, in accordance with this Paragraph for the
      Shares, and upon compliance with any other conditions set forth in the
      applicable Certificate. Payment of the purchase price for the Shares shall
      be
      made (a) in United States dollars in cash or by check, or (b) at the discretion
      of the Administrator, through delivery of shares of Common Stock having a fair
      market value equal as of the date of acceptance of the Stock Grant or issuance
      of Shares pursuant to the grant of Restricted Stock Units to the purchase price
      of the Stock Grant or grant of Shares pursuant to the grant of Restricted Stock
      Units determined in good faith by the Administrator, or (c) at the discretion
      of
      the Administrator, by delivery of the grantee’s personal recourse note bearing
      interest payable not less than annually at no less than 100% of the applicable
      Federal rate, as defined in Section 1274(d) of the Code, or (d) at the
      discretion of the Administrator, by any combination of (a), (b) and (c)
      above.

     

    The
      Company shall then, if required by the applicable Certificate, reasonably
      promptly deliver the Shares to the Participant (or to the Participant’s
      Survivors, as the case may be), subject to any escrow provision set forth in
      the
      applicable Certificate. In determining what constitutes “reasonably promptly,”
      it is expressly understood that the issuance and delivery of the Shares may
      be
      delayed by the Company in order to comply with any law or regulation (including,
      without limitation, state securities or “blue sky” laws) which requires the
      Company to take any action with respect to the Shares prior to their
      issuance.

     

    The
      Administrator may, in its discretion, amend any term or condition of an
      outstanding Stock Grant, grant of Restricted Stock Units or applicable
      Certificate provided (i) such term or condition as amended is permitted by
      the
      Plan, and (ii) any such amendment shall be made only with the consent of the
      Participant to whom the Stock Grant or grant of Restricted Stock Units was
      made,
      if the amendment is adverse to the Participant.

     

    
      
        
        

      

      
        A-7

        
          

        

      

      
        
        

      

    

    

      
        	
                10.

              	
                 Rights
                  as a Shareholder

              

      

    

    

    No
      Participant to whom a Stock Right has been granted shall have rights as a
      shareholder with respect to any Shares covered by such Stock Right, except
      after
      due exercise of the Option or acceptance of the Stock Grant or issuance of
      Shares pursuant to the grant of Restricted Stock Units or as set forth in any
      Certificate and tender of the full purchase price, if any, for the Shares being
      purchased pursuant to such exercise or acceptance and registration of the Shares
      in the Company’s share register in the name of the Participant.

     

    
      
        	11.  	Assignability
                and
                Transferability of Stock
                Rights

      

    

     

    By
      its
      terms, a Stock Right granted to a Participant shall not be transferable by
      the
      Participant other than (i) by will or by the laws of descent and distribution,
      or (ii) as approved by the Administrator in its sole discretion and set forth
      in
      the applicable Certificate, or (iii) if approved by the Administrator in its
      sole discretion, through establishment of blind trusts, family limited
      partnerships, or other estate planning vehicles wherein the Participant or
      his
      direct descendants are the primary beneficiary, (iv) if approved by the
      Administrator in its sole discretion, in accordance with the division of
      property rights set forth in an authorized settlement agreement arising from
      the
      Participant’s divorce, or (v) under any other circumstances that are approved by
      the Administrator in its sole discretion. Notwithstanding the foregoing, an
      ISO
      transferred in accordance with subsections 11(ii)-(v) above shall no longer
      qualify as an incentive stock option under Section 422 of the Code. The
      designation of a beneficiary of a Stock Right by a Participant, with the prior
      approval of the Administrator and in such form as the Administrator shall
      prescribe, shall not be deemed a transfer prohibited by this Paragraph. Except
      as provided above, during the Participant’s lifetime, a Stock Right shall only
      be exercisable or may only be accepted by such Participant (or by his or her
      legal representative) and shall not be assigned, pledged or hypothecated in
      any
      way (whether by operation of law or otherwise) and shall not be subject to
      execution, attachment or similar process. Any attempted transfer, assignment,
      pledge, hypothecation or other disposition of any Stock Right or of any rights
      granted thereunder contrary to the provisions of this Plan, or the levy of
      any
      attachment or similar process upon a Stock Right, shall be null and
      void.

     

    The
      Participant is required to notify the Company in writing immediately after
      the
      Participant makes a Disqualifying Disposition of any of the Shares acquired
      pursuant to the exercise of the Option. A Disqualifying Disposition is defined
      in Section 424(c) of the Code and includes any disposition (including any sale)
      of such Shares before the later of (a) two years after the date the Participant
      was granted the Option or (b) one year after the date the Participant acquired
      Shares by exercising the Option, except as otherwise provided in Section 424(c)
      of the Code. If the Participant has died before the Shares are sold, these
      holding period requirements do not apply and no Disqualifying Disposition can
      occur thereafter.

    

    
      
        	
                12.

              	
                 Effect
                  on Options of Termination of Service other than “For Cause” or Death or
                  Disability

              

      

    

    

    Except
      as
      otherwise provided in the pertinent Option Certificate in the event of a
      termination of service (whether as an employee, director or consultant) with
      the
      Company or an Affiliate before the Participant has exercised an Option, the
      following rules apply:

     

    
      
        	
                a.

              	
                A
                  Participant who ceases to be an employee, director or consultant
                  of the
                  Company or of an Affiliate (for any reason other than termination
“for
                  cause,” Disability, or death for which events there are special rules
                  in
                  Paragraphs 13, 14, and 15, respectively), may exercise any Option
                  granted
                  to him or her (i) within three (3) months of such termination to
                  the
                  extent that the Option is exercisable on the date of such termination
                  of
                  service, but only if the Administrator has so designated in the
                  pertinent
                  Option Certificate, or (ii) over such other term as the Administrator
                  shall determine in its sole
                  discretion;

              

      

    

    
       

      
        	
                
                  b.

                

              	
                Except
                  as provided in Subparagraph (c) below, or Paragraph 14 or 15, in
                  no event
                  may an Option Certificate provide, if an Option is intended to
                  be an ISO,
                  that the time for exercise be later than three (3) months after
                  the
                  Participant’s termination of
                  employment;

              

      

    

     

     

    
      
        
        

      

      
        A-8

        
          

        

      

      
        
        

      

    

    

      
        	
                c.

              	
                The
                  provisions of this Paragraph, and not the provisions of Paragraph
                  14 or
                  15, shall apply to a Participant who subsequently becomes Disabled
                  or dies
                  after the termination of employment, director status or consultancy
                  in all
                  cases with the Company or an Affiliate, provided, however, in the
                  case of
                  a Participant’s Disability or death within three (3) months after the
                  termination of employment, director status or consultancy, the
                  Participant
                  or the Participant’s Survivors may exercise the Option within one (1) year
                  after the date of the Participant’s termination of employment, but in no
                  event after the date of expiration of the term of the
                  Option;

              
	 	 
	
                d.

              	
                Notwithstanding
                  anything herein to the contrary, if subsequent to a Participant’s
                  termination of employment, termination of director status or termination
                  of consultancy, but prior to the exercise of an Option, the Board
                  of
                  Directors determines that, either prior or subsequent to the Participant’s
                  termination, the Participant engaged in conduct which would constitute
                  “cause,” then such Participant shall forthwith cease to have any right
                  to
                  exercise any Option;

              
	 	 
	
                e.

              	
                A
                  Participant to whom an Option has been granted under the Plan who
                  is
                  absent from work with the Company or with an Affiliate because
                  of
                  temporary disability (any disability other than a permanent and
                  total
                  Disability as defined in Paragraph 1 hereof), or who is on leave
                  of
                  absence for any purpose, shall not, during the period of any such
                  absence,
                  be deemed, by virtue of such absence alone, to have terminated
                  such
                  Participant’s employment, director status or consultancy with the Company
                  or with an Affiliate, except as the Administrator may otherwise
                  expressly
                  provide; and

              
	 	 
	
                f.

              	
                Except
                  as required by law or as set forth in the pertinent Option Certificate,
                  Options granted under the Plan shall not be affected by any change
                  of a
                  Participant’s status within or among the Company and any Affiliates, so
                  long as the Participant continues to be an employee, director or
                  consultant of the Company or any
                  Affiliate.

              

      

    

     

    
      
        	
                13.

              	
                 Effect
                  on Options of Termination of Service “For
                  Cause”

              

      

    

     

    Except
      as
      otherwise provided in the pertinent Option Certificate, the following rules
      apply if the Participant’s service (whether as an employee, director or
      consultant) with the Company or an Affiliate is terminated “for cause” prior to
      the time that all his or her outstanding Options have been
      exercised:

     

    
      	
              a.

            	
              All
                outstanding and unexercised Options as of the time the Participant
                is
                notified his or her service is terminated “for cause” will immediately be
                forfeited;

            
	 	 
	
              b.

            	
              In
                addition to any definition of the term “for cause” set forth in any
                employment agreement between the Company and the Participant, for
                purposes
                of this Plan, the term “cause” shall include, without limitation (i) the
                failure of the Participant to perform any of his material duties
                to the
                Company or any of its Affiliates, (ii) the conviction of the Participant
                of any felony involving moral turpitude, (iii) any acts of fraud
                or
                embezzlement by the Participant involving the Company or any of its
                Affiliates, (iv) violation of any federal, state or local law, or
                administrative regulation related to the business of the Company
                or any of
                its Affiliates, (v) a conflict of interest, (vi) conduct that could
                result
                in publicity reflecting unfavorably on the Company or any of its
                Affiliates in a material way, (vii) failure to comply with the policies
                of
                the Company or any of its Affiliates, (viii) the unauthorized disclosure
                of confidential information, or (ix) a breach of the terms of any
                employment agreement, confidentiality agreement, non-competition
                and
                non-solicitation agreement or any other agreement between the Participant
                and the Company or any of its Affiliates, after giving effect to
                the
                notification provisions, if any, and the mechanisms to remedy or
                cure a
                breach, if appropriate, as described in any such agreement. The
                determination of the Administrator as to the existence of “cause” will be
                conclusive on the Participant and the Company;
                and

            

    

     

    
      
        
        

      

      
        A-9

        
          

        

      

      
        
        

      

    

    

      
        	
                c.

              	
                “Cause”
                  is not limited to events which have occurred prior to a Participant’s
                  termination of service, nor is it necessary that the Administrator’s
                  finding of “cause” occur prior to termination. If the Administrator
                  determines, subsequent to a Participant’s termination of service but prior
                  to the exercise of an Option, that either prior or subsequent to
                  the
                  Participant’s termination the Participant engaged in conduct which would
                  constitute “cause,” then the right to exercise any Option is
                  forfeited.

              

      

    

     

    
      
        	
                14.

              	
                 Effect
                  on Options of Termination of Service for
                  Disability

              

      

    

    

    Except
      as
      otherwise provided in the pertinent Option Certificate, a Participant who ceases
      to be an employee, director or consultant of the Company or of an Affiliate
      by
      reason of Disability may exercise any outstanding Option granted to such
      Participant:

     

    
      
        	
                a.

              	
                To
                  the extent that the Option has become exercisable according to
                  the vesting
                  period of such Option as of the date of Disability; and

              
	 	 
	
                b.

              	
                To
                  the extent of a pro rata portion through the date of Disability
                  of any
                  additional Options that would have become exercisable on the next
                  vesting
                  date had the Participant not become Disabled. The proration shall
                  be based
                  upon the number of days accrued in the current vesting period prior
                  to the
                  date of Disability.

              

      

    

     

    A
      Disabled Participant may exercise such rights only within the period ending
      one
      (1) year after the date of the Participant’s termination of employment,
      directorship or consultancy, as the case may be, notwithstanding that the
      Participant might have been able to exercise the Option as to some or all of
      the
      Shares on a later date if the Participant had not become disabled and had
      continued to be an employee, director or consultant or, if earlier, within
      the
      originally prescribed term of the Option.

    

    The
      Administrator shall make the determination both of whether Disability has
      occurred and the date of its occurrence (unless a procedure for such
      determination is set forth in another agreement between the Company and such
      Participant, in which case such procedure shall be used for such determination).
      If requested, the Participant shall be examined by a physician selected or
      approved by the Administrator, the cost of which examination shall be paid
      for
      by the Company.

    

    
      
        	
                15.

              	
                 Effect
                  on Options of Death While an Employee, Director or
                  Consultant

              

      

    

    

    Except
      as
      otherwise provided in the pertinent Option Certificate, in the event of the
      death of a Participant while the Participant is an employee, director or
      consultant of the Company or of an Affiliate, the Participant’s Survivors may
      exercise any outstanding Option granted to the Participant:

     

    
      
        	
                a.

              	
                To
                  the extent that the Option has become exercisable according to
                  the vesting
                  period of such Option as of the date of death; and

              
	 	 
	
                b.

              	
                To
                  the extent of a pro rata portion through the date of death of any
                  additional Options that would have become exercisable on the next
                  vesting
                  date had the Participant not died. The proration shall be based
                  upon the
                  number of days accrued in the current vesting period prior to the
                  date of
                  death.

              

      

    

    

    If
      the
      Participant’s Survivors wish to exercise the Option, they must take all
      necessary steps to exercise the Option within one (1) year after the date of
      death of such Participant, notwithstanding that the decedent might have been
      able to exercise the Option as to some or all of the Shares on a later date
      if
      he or she had not died and had continued to be an employee, director or
      consultant or, if earlier, within the originally prescribed term of the
      Option.

     

     

    
      
        
        

      

      
        A-10

        
          

        

      

      
        
        

      

    

    
       

    

     

    
      
        	
                16.

              	
                 Effect
                  of Termination of Service on Stock
                  Grants

              

      

    

    

    In
      the
      event of a termination of service (whether as an employee, director or
      consultant) with the Company or an Affiliate for any reason before the
      Participant has accepted a Stock Grant, such offer shall terminate.

     

    For
      purposes of this Paragraph 16 and Paragraph 17 below, a Participant to whom
      a
      Stock Grant has been offered under the Plan who is absent from work with the
      Company or with an Affiliate because of temporary disability (any disability
      other than a permanent and total Disability as defined in Paragraph 1 hereof),
      or who is on leave of absence for any purpose, shall not, during the period
      of
      any such absence, be deemed, by virtue of such absence alone, to have terminated
      such Participant’s employment, director status or consultancy with the Company
      or with an Affiliate, except as the Administrator may otherwise expressly
      provide.

     

    In
      addition, for purposes of this Paragraph 16 and Paragraph 17 below, any change
      of employment or other service within or among the Company and any Affiliates
      shall not be treated as a termination of employment, director status or
      consultancy so long as the Participant continues to be an employee, director
      or
      consultant of the Company or any Affiliate.

     

    
      
        	
                17.

              	
                 Effect
                  of Stock Grants of Termination of Service Other than “For Cause” or Death
                  or Disability

              

      

    

    

    Except
      as
      otherwise provided in the pertinent Stock Grant Certificate, in the event of
      a
      termination of service (whether as an employee, director or consultant), other
      than termination “for cause,” Disability, or death for which events there are
      special rules in Paragraphs 18, 19, and 20, respectively, before all Company
      rights of repurchase shall have lapsed, then the Company shall have the right
      to
      repurchase that number of Shares subject to a Stock Grant as to which the
      Company’s repurchase rights have not lapsed.

    

    
      
        	
                18.

              	
                 Effect
                  on Stock Grants of Termination of Service “For
                  Cause”

              

      

    

     

    Except
      as
      otherwise provided in the pertinent Stock Grant Certificate, the following
      rules
      apply if the Participant’s service (whether as an employee, director or
      consultant) with the Company or an Affiliate is terminated “for
      cause”:

     

    
      
        	
                a.

              	
                All
                  Shares subject to any Stock Grant shall be immediately subject
                  to
                  repurchase by the Company at the purchase price, if any,
                  thereof;

              
	 	 
	
                b.

              	
                In
                  addition to any definition of the term “for cause” set forth in any
                  employment agreement between the Company and the Participant, for
                  purposes
                  of this Plan, the term “cause” shall include, without limitation (i) the
                  failure of the Participant to perform any of his material duties
                  to the
                  Company or any of its Affiliates, (ii) the conviction of the Participant
                  of any felony involving moral turpitude, (iii) any acts of fraud
                  or
                  embezzlement by the Participant involving the Company or any of
                  its
                  Affiliates, (iv) violation of any federal, state or local law,
                  or
                  administrative regulation related to the business of the Company
                  or any of
                  its Affiliates, (v) a conflict of interest, (vi) conduct that could
                  result
                  in publicity reflecting unfavorably on the Company or any of its
                  Affiliates in a material way, (vii) failure to comply with the
                  policies of
                  the Company or any of its Affiliates, (viii) the unauthorized disclosure
                  of confidential information, or (ix) a breach of the terms of any
                  employment agreement, confidentiality agreement, non-competition
                  and
                  non-solicitation agreement or any other agreement between the Participant
                  and the Company or any of its Affiliates, after giving effect to
                  the
                  notification provisions, if any, and the mechanisms to remedy or
                  cure a
                  breach, if appropriate, as described in any such agreement. The
                  determination of the Administrator as to the existence of “cause” will be
                  conclusive on the Participant and the Company; and

              
	 	 
	
                c.

              	
                “Cause”
                  is not limited to events which have occurred prior to a Participant’s
                  termination of service, nor is it necessary that the Administrator’s
                  finding of “cause” occur prior to termination. If the Administrator
                  determines, subsequent to a Participant’s termination of service, that
                  either prior or subsequent to the Participant’s termination the
                  Participant engaged in conduct which would constitute “cause,” then the
                  Company’s right to repurchase all of such Participant’s Shares shall
                  apply.

              

      

    

     

     

    
      
        
        

      

      
        A-11

        
          

        

      

      
        
        

      

    

    
       

    

     

    
      
        	
                19.

              	
                 Effect
                  on Stock Grants of Termination of Service for
                  Disability

              

      

    

    

    Except
      as
      otherwise provided in the pertinent Stock Grant Certificate, the following
      rules
      apply if a Participant ceases to be an employee, director or consultant of
      the
      Company or of an Affiliate by reason of Disability: to the extent the Company’s
      rights of repurchase have not lapsed on the date of Disability, they shall
      be
      exercisable; provided, however, that in the event such rights of repurchase
      lapse periodically, such rights shall lapse to the extent of a pro rata portion
      of the Shares subject to such Stock Grant as would have lapsed had the
      Participant not become Disabled prior to the end of the vesting period which
      next ends following the date of Disability. The proration shall be based upon
      the number of days of such vesting period prior to the date of
      Disability.

    

    The
      Administrator shall make the determination both of whether Disability has
      occurred and the date of its occurrence (unless a procedure for such
      determination is set forth in another agreement between the Company and such
      Participant, in which case such procedure shall be used for such determination).
      If requested, the Participant shall be examined by a physician selected or
      approved by the Administrator, the cost of which examination shall be paid
      for
      by the Company.

     

    
      
        	
                20.

              	
                 Effect
                  on Stock Grants of Death While an Employee, Director or
                  Consultant

              

      

    

    

    Except
      as
      otherwise provided in the pertinent Stock Grant Certificate, the following
      rules
      apply in the event of the death of a Participant while the Participant is an
      employee, director or consultant of the Company or of an Affiliate: to the
      extent the Company’s rights of repurchase have not lapsed on the date of death,
      they shall be exercisable; provided, however, that in the event such rights
      of
      repurchase lapse periodically, such rights shall lapse to the extent of a pro
      rata portion of the Shares subject to such Stock Grant as would have lapsed
      had
      the Participant not died prior to the end of the vesting period which next
      ends
      following the date of death. The proration shall be based upon the number of
      days of such vesting period prior to the Participant’s death.

    

    
      
        	
                21.

              	
                 Purchase
                  for Investment

              

      

    

    

    Unless
      the offering and sale of the Shares to be issued upon the particular exercise
      or
      acceptance of a Stock Right shall have been effectively registered under the
      Securities Act of 1933, as now in force or hereafter amended (the “1933 Act”),
      the Company shall be under no obligation to issue the Shares covered by such
      exercise unless and until the following conditions have been
      fulfilled:

     

    
      
        	
                a.

              	
                The
                  person(s) who exercise(s) or accept(s) such Stock Right shall warrant
                  to
                  the Company, prior to the receipt of such Shares, that such person(s)
                  are
                  acquiring such Shares for their own respective accounts, for investment,
                  and not with a view to, or for sale in connection with, the distribution
                  of any such Shares, in which event the person(s) acquiring such
                  Shares
                  shall be bound by the provisions of the following legend which
                  shall be
                  endorsed upon the certificate(s) evidencing their Shares issued
                  pursuant
                  to such exercise or such grant:

              

      

       

      
        
          	
                  “The
                    shares represented by this certificate have been taken for investment,
                    and
                    they may not be sold or otherwise transferred by any person,
                    including a
                    pledgee, unless (1) either (a) a Registration Statement with
                    respect to
                    such shares shall be effective under the Securities Act of 1933,
                    as
                    amended, or (b) the Company shall have received an opinion of
                    counsel
                    satisfactory to it that an exemption from registration under
                    such Act is
                    then available, and (2) there shall have been compliance with
                    all
                    applicable state securities laws”;
                    and

                

        

      

    

     

    
      
        
        

      

      
        A-12

        
          

        

      

      
        
        

      

    

     

    
      
        	
                b.

              	
                At
                  the discretion of the Administrator, the Company shall have received
                  an
                  opinion of its counsel that the Shares may be issued upon such
                  particular
                  exercise or acceptance in compliance with the 1933 Act without
                  registration thereunder.

              

      

    

     

    

    
      
        	
                22.
                  

              	
                 Dissolution
                  or Liquidation of the
                  Company

              

      

    

    

    Upon
      the
      dissolution or liquidation of the Company, all Options granted under this Plan
      which as of such date shall not have been exercised and all Stock Grants and
      grants of Restricted Stock Units which have not been accepted will terminate
      and
      become null and void; provided, however, that if the rights of a Participant
      or
      a Participant’s Survivors have not otherwise terminated and expired, the
      Participant or the Participant’s Survivors will have the right immediately prior
      to such dissolution or liquidation to exercise or accept any Stock Right to
      the
      extent that the Stock Right is exercisable or subject to acceptance as of the
      date immediately prior to such dissolution or liquidation. Upon the dissolution
      or liquidation of the Company, any outstanding Restricted Stock Units shall
      immediately terminate unless otherwise determined by the Administrator or
      specifically set forth in the Restricted Stock Unit Certificate.

    

    
      
        	
                23.

              	
                 Adjustments

              

      

    

     

    Upon
      the
      occurrence of any of the following events, a Participant’s rights with respect
      to any Stock Right granted to him or her hereunder shall be adjusted as
      hereinafter provided, unless otherwise specifically provided in the pertinent
      Certificate or, subject to the consent of the Administrator, as otherwise
      specified in an employment or other agreement between the Company and the
      Participant:

    
 

    
      
        	
                A.

              	
                Stock
                  Dividends and Stock Splits. If
                  (i) the shares of Common Stock shall be subdivided or combined
                  into a
                  greater or smaller number of shares or if the Company shall issue
                  any
                  shares of Common Stock as a stock dividend on its outstanding Common
                  Stock, or (ii) additional shares or new or different shares or
                  other
                  securities of the Company or other non-cash assets are distributed
                  with
                  respect to such shares of Common Stock, the number of shares of
                  Common
                  Stock deliverable upon the exercise or acceptance of such Stock
                  Right may
                  be appropriately increased or decreased proportionately, and appropriate
                  adjustments may be made in the purchase price per share to reflect
                  such
                  events. The number of Shares subject to the limitation in Paragraph
                  4(c)
                  shall also be proportionately adjusted upon the occurrence of such
                  events.

              
	 	 
	
                B.

              	
                Consolidations
                  or Mergers.
                  If
                  the Company is to be consolidated with or acquired by another entity
                  in a
                  merger, sale of all or substantially all of the Company’s assets or
                  otherwise (an “Acquisition”), the Administrator or the board of directors
                  of any entity assuming the obligations of the Company hereunder
                  (the
                  “Successor Board”), shall, as to outstanding Options, either (i) make
                  appropriate provision for the continuation of such Options by substituting
                  on an equitable basis for the Shares then subject to such Options,
                  including without limitation any provisions relating to the acceleration
                  of vesting, either the consideration payable with respect to the
                  outstanding shares of Common Stock in connection with the Acquisition
                  or
                  securities of any successor or acquiring entity; or (ii) upon written
                  notice to the Participants, provide that all vested Options must
                  be
                  exercised (either to the extent then exercisable, including Options
                  subject to accelerated vesting provisions, or, at the discretion
                  of the
                  Administrator, all Options being made fully exercisable for purposes
                  of
                  this Subparagraph) at the end of which period the Options shall
                  terminate;
                  or (iii) terminate all Options in exchange for a cash payment equal
                  to the
                  excess of the Fair Market Value of the Shares subject to such Options
                  (either to the extent then exercisable, including Options subject
                  to
                  accelerated vesting provisions, or, at the discretion of the
                  Administrator, all Options being made fully exercisable for purposes
                  of
                  this Subparagraph) over the exercise price
                  thereof.

              

      

    

     

    
       

      
        
          
          

        

        
          A-13

          
            

          

        

        
          
          

        

      

    

     

    
      
        	
                With
                  respect to outstanding Stock Grants, the Administrator or the Successor
                  Board, shall either (i) make appropriate provisions for the continuation
                  of such Stock Grants by substituting on an equitable basis for
                  the Shares
                  then subject to such Stock Grants either the consideration payable
                  with
                  respect to the outstanding Shares of Common Stock in connection
                  with the
                  Acquisition or securities of any successor or acquiring entity;
                  or (ii)
                  upon written notice to the Participants, provide that all Stock
                  Grants
                  must be accepted (to the extent then subject to acceptance) within
                  a
                  specified number of days of the date of such notice, at the end
                  of which
                  period the offer of the Stock Grants shall terminate; or (iii)
                  terminate
                  all Stock Grants in exchange for a cash payment equal to the excess
                  of the
                  Fair Market Value of the Shares subject to such Stock Grants over
                  the
                  purchase price thereof, if any. In addition, in the event of an
                  Acquisition, the Administrator may waive any or all Company repurchase
                  rights with respect to outstanding Stock
                  Grants.

              

      

    

     

    
      
        	
                C.

              	
                Recapitalization
                  or Reorganization.
                  In
                  the event of a recapitalization or reorganization of the Company
                  (other
                  than a transaction described in Subparagraph B above) pursuant
                  to which
                  securities of the Company or of another corporation are issued
                  with
                  respect to the outstanding shares of Common Stock, a Participant
                  upon
                  exercising or accepting a Stock Right shall be entitled to receive
                  for the
                  purchase price, if any, paid upon such exercise or acceptance the
                  securities which would have been received if such Stock Right had
                  been
                  exercised or accepted prior to such recapitalization or
                  reorganization.

              
	 	 
	
                D.

              	
                Modification
                  of ISOs.
                  Notwithstanding the foregoing, any adjustments made pursuant to
                  Subparagraph A, B or C above with respect to ISOs shall be made
                  only after
                  the Administrator, after consulting with counsel for the Company,
                  determines whether such adjustments would constitute a “modification” of
                  such ISOs (as that term is defined in Section 424(h) of the Code)
                  or would
                  cause any adverse tax consequences for the holders of such ISOs.
                  If the
                  Administrator determines that such adjustments made with respect
                  to ISOs
                  would constitute a modification of such ISOs, it may refrain from
                  making
                  such adjustments, unless the holder of an ISO specifically requests
                  in
                  writing that such adjustment be made and such writing indicates
                  that the
                  holder has full knowledge of the consequences of such “modification” on
                  his or her income tax treatment with respect to the
                  ISO.

              
	 	 
	
                E.

              	
                Upon
                  the happening of any of the events described in Subparagraphs A,
                  B or C
                  above, any outstanding Restricted Stock Units shall be appropriately
                  adjusted to reflect the events described in such Subparagraphs.
                  The
                  Administrator or the Successor Board shall determine the specific
                  adjustments to be made under this Paragraph 23, including, but
                  not limited
                  to the effect, if any, of a change of control of the Company and,
                  subject
                  to Paragraph 4, its determination shall be
                  conclusive.

              

      

    

     

    
      
        	
                24.

              	
                 Issuances
                  of Securities

              

      

    

    

    Except
      as
      expressly provided herein, no issuance by the Company of shares of stock of
      any
      class, or securities convertible into shares of stock of any class, shall
      affect, and no adjustment by reason thereof shall be made with respect to,
      the
      number or price of shares subject to Stock Rights. Except as expressly provided
      herein, no adjustments shall be made for dividends paid in cash or in property
      (including without limitation, securities) of the Company prior to any issuance
      of Shares pursuant to a Stock Right.

    

    
      
        	
                25.

              	
                 Fractional
                  Shares

              

      

       

    

    No
      fractional shares shall be issued under the Plan, and the person exercising
      a
      Stock Right shall receive from the Company cash in lieu of such fractional
      shares equal to the Fair Market Value thereof.

    

    
      
        	
                26.

              	
                 Conversion
                  of ISOs into Non-Qualified Options; Termination of
                  ISOs

              

      

    

    

    The
      Administrator, at the written request of any Participant, may in its discretion
      take such actions as may be necessary to convert such Participant’s ISOs (or any
      portions thereof) that have not been exercised on the date of conversion into
      Non-Qualified Options at any time prior to the expiration of such ISOs,
      regardless of whether the Participant is an employee of the Company or an
      Affiliate at the time of such conversion. Such actions may include, but not
      be
      limited to, extending the exercise period or reducing the exercise price of
      the
      appropriate installments of such Options. At the time of such conversion, the
      Administrator (with the consent of the Participant) may impose such conditions
      on the exercise of the resulting Non-Qualified Options as the Administrator
      in
      its discretion may determine, provided that such conditions shall not be
      inconsistent with this Plan. Nothing in the Plan shall be deemed to give any
      Participant the right to have such Participant’s ISOs converted into
      Non-Qualified Options, and no such conversion shall occur until and unless
      the
      Administrator takes appropriate action. The Administrator, with the consent
      of
      the Participant, may also terminate any portion of any ISO that has not been
      exercised at the time of such conversion.

     

    
      
        
        

      

      
        A-14

        
          

        

      

      
        
        

      

    

     

    
      
        	
                27.

              	
                 Withholding

              

      

    

     

    
      In
        the
        event that any federal, state, or local income taxes, employment taxes, Federal
        Insurance Contributions Act (“F.I.C.A.”) withholdings or other amounts are
        required by applicable law or governmental regulation to be withheld from
        the
        Participant’s salary, wages or other remuneration in connection with the
        exercise or acceptance of a Stock Right or in connection with a Disqualifying
        Disposition (as defined in Paragraph 28) or upon the lapsing of any right
        of
        repurchase, the Company may withhold from the Participant’s compensation, if
        any, or may require that the Participant advance in cash to the Company,
        or to
        any Affiliate of the Company which employs or employed the Participant, the
        statutory minimum amount of such withholdings unless a different withholding
        arrangement, including the use of shares of the Company’s Common Stock or a
        promissory note, is authorized by the Administrator (and permitted by law).
        For
        purposes hereof, the fair market value of the shares withheld for purposes
        of
        payroll withholding shall be determined in the manner provided in Paragraph
        1
        above, as of the most recent practicable date prior to the date of exercise.
        If
        the fair market value of the shares withheld is less than the amount of payroll
        withholdings required, the Participant may be required to advance the difference
        in cash to the Company or the Affiliate employer. The Administrator in its
        discretion may condition the exercise of an Option for less than the then
        Fair
        Market Value on the Participant’s payment of such additional withholding.

    

     

    
      
        	
                28.

              	
                 Notice
                  to Company of Disqualifying
                  Disposition

              

      

    

    

    Each
      Key
      Employee who receives an ISO must agree to notify the Company in writing
      immediately after the Key Employee makes a Disqualifying Disposition of any
      shares acquired pursuant to the exercise of an ISO. A Disqualifying Disposition
      is any disposition (including any sale) of such shares before the later of
      (a)
      two years after the date the Key Employee was granted the ISO, or (b) one year
      after the date the Key Employee acquired Shares by exercising the ISO. If the
      Key Employee has died before such stock is sold, these holding period
      requirements do not apply, and no Disqualifying Disposition can occur
      thereafter.

    

    
      
        	
                29.

              	
                Termination
                  of the Plan

              

      

    

     

    The
      Plan
      will terminate on the date which is ten (10) years from the earlier of the
      date
      of approval by the stockholders or formal adoption by vote of the Board of
      Directors. The Plan may be terminated at an earlier date by vote of the
      shareholders of the Company; provided, however, that any such earlier
      termination shall not affect any Certificates executed prior to the effective
      date of such termination.

    

    
      
        	
                30.

              	
                 Amendment
                  of the Plan and
                  Agreements

              

      

    

    

    The
      Plan
      may be amended by the shareholders of the Company. The Plan may also be amended
      by the Administrator, including, without limitation, to the extent necessary
      to
      qualify any or all outstanding Stock Rights granted under the Plan or Stock
      Rights to be granted under the Plan for favorable federal income tax treatment
      (including deferral of taxation upon exercise) as may be afforded incentive
      stock options under Section 422 of the Code, and to the extent necessary to
      qualify the shares issuable upon exercise or acceptance of any outstanding
      Stock
      Rights granted, or Stock Rights to be granted, under the Plan for listing on
      any
      national securities exchange or quotation in any national automated quotation
      system of securities dealers. Any amendment approved by the Administrator which
      the Administrator determines is of a scope that requires shareholder approval
      shall be subject to obtaining such shareholder approval. Any modification or
      amendment of the Plan shall not, without the consent of a Participant, adversely
      affect his or her rights under a Stock Right previously granted to him or her.
      With the consent of the Participant affected, the Administrator may amend
      outstanding Certificates in a manner which may be adverse to the Participant
      but
      which is not inconsistent with the Plan. In the discretion of the Administrator,
      outstanding Certificates may be amended by the Administrator in a manner which
      is not adverse to the Participant.

     

     

    
      
        
        

      

      
        A-15

        
          

        

      

      
        
        

      

    

    
 

    
      
        	
                31.

              	
                 Employment
                  or Other
                  Relationship

              

      

    

    

    Nothing
      in this Plan or any Certificate shall be deemed to prevent the Company or an
      Affiliate from terminating the employment, consultancy or director status of
      a
      Participant, nor to prevent a Participant from terminating his or her own
      employment, consultancy or director status or to give any Participant a right
      to
      be retained in employment or other service by the Company or any Affiliate
      for
      any period of time.

    

    
      
        	
                32.

              	
                Governing
                  Law

              

      

    

     

    This
      Plan
      shall be construed and enforced in accordance with the law of the State of
      Delaware.

     

    
 

    
      
        
        

      

      
        A-16Exhibit 10.4

    Exhibit
      10.4

    

    EXECUTIVE
      BONUS AND STOCK OPTION ARRANGEMENTS

    

    Each
      year, the Compensation Committee of the Board of Directors determines whether
      to
      award our executive officers a deferred bonus, based on pre-established
      individual and corporate performance objectives, and also whether to award
      our
      executive officers stock options. 

    

    Listed
      below are the deferred bonuses and stock option grants awarded to our executive
      officers as approved by the Compensation Committee on October 4, 2005.

    

    
      	
              Executive
                Officer

            	 	
              2005

              Deferred
                

              Bonus

            	 	
              2005

              Stock
                

              Options

            	 
	 	 	 	 	 	 
	
              Harvey
                J. Berger, M.D.

              Chairman
                of the Board of Directors, Chief Executive Officer and
                President 

            	 	 	
              --

            	 	 	
              150,000

            	 
	
              Laurie
                A. Allen, Esq.

              Senior
                Vice President, Legal and Business Development, Chief Legal Officer
                and
                Secretary 

            	 	
              $

            	
              110,000

            	 	 	
              60,000

            	 
	
              Camille
                L. Bedrosian, M.D.

              Vice
                President, Chief Medical Officer

            	 	
              $

            	
              110,000

            	 	 	
              70,000

            	 
	
              David
                L. Berstein, Esq.

              Senior
                Vice President, Chief Patent Counsel

            	 	
              $

            	
              110,000

            	 	 	
              60,000

            	 
	
              Timothy
                P. Clackson, Ph.D.

              Senior
                Vice President, Chief Scientific Officer

            	 	
              $

            	
              100,000

            	 	 	
              57,500

            	 
	
              Edward
                M. Fitzgerald

              Senior
                Vice President, Finance and Corporate Operations, Chief Financial
                Officer
                and Treasurer

            	 	
              $

            	
              110,000

            	 	 	
              60,000

            	 
	
              John
                D. Iuliucci, Ph.D.

              Senior
                Vice President, Chief Development Officer 

            	 	
              $

            	
              115,000

            	 	 	
              70,000

            	 

    

    

    The
      deferred bonuses were granted under the terms of our 2005 Executive Compensation
      Plan, or the Compensation Plan. The deferred bonuses will vest 25% annually
      over
      four years and will be payable in installments on the fourth anniversary and
      fifth anniversary of the date of the grant, subject to later payment at the
      executive's election. Vesting and payment are subject to termination,
      distribution and forfeiture provisions as set forth in the Compensation
      Plan.

    

    The
      stock
      options were granted under the terms of our Amended and Restated 2001 Stock
      Plan. The stock options have a term of ten years and vest 25% annually over
      four
      years. The exercise price is $7.56 per share, which was the closing price of
      our
      common stock on October 4, 2005.

     

     

    
      
         

      

      
        26

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