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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 
 

EXHIBIT 4.1    
  

RELEASE AGREEMENT

This
Release Agreement ("Agreement"), dated and effective as of July 27, 2001 (the "Effective Date"), is by and between IntraBiotics Pharmaceuticals, Inc., a Delaware corporation,
("IntraBiotics"), and Diversa Corporation, a Delaware corporation ("Diversa," and, together with IntraBiotics, the "Parties"). Defined terms used but not otherwise defined hereunder shall have the
meanings given them in that certain Drug Discovery, Development, and License Agreement, dated as of January 6, 2001, between Diversa and IntraBiotics ("License Agreement"). 

RECITALS  

        WHEREAS, Diversa and IntraBiotics entered into the License Agreement as of January 6, 2001; and 

        WHEREAS, Diversa and IntraBiotics entered into that certain binding term sheet (the "Term Sheet") dated as of June 27, 2001
relating to the termination of the License Agreement and the mutual release of the obligations of both IntraBiotics and Diversa under such License Agreement; and 

        WHEREAS, the Term Sheet contemplated that the Parties would subsequently execute and deliver a definitive termination agreement,
containing the terms and conditions set forth in the Term Sheet and other terms and conditions consistent the Term Sheet, that would supersede the Term Sheet; and 

        WHEREAS, the Parties desire to set forth herein the terms governing such definitive termination agreement. 

        NOW, THEREFORE, in consideration of the mutual covenants set forth in this Agreement, the receipt and sufficiency of which the Parties
hereby acknowledge, the Parties hereby agree as follows: 

        1.    Payments by IntraBiotics to Diversa.    On [*], IntraBiotics
paid Diversa the non-refundable, non-creditable sum of [*]. On [*], IntraBiotics shall pay Diversa the
non-refundable, non-creditable sum of [*] via wire transfer in immediately available funds in accordance with the following information: 

	 	 	Bank of America

[*]

[*]

450 B Street

San Diego, CA 92101

        2.    Issuance of Warrants to Diversa.    On the date hereof, IntraBiotics shall issue to
Diversa warrants to purchase 700,000 shares of common stock of IntraBiotics of (collectively, the "Warrants") pursuant to the form of Warrant attached as Exhibit A hereto. The shares of
IntraBiotics's common stock into which the Warrants are exercisable are subject to a Registration Rights Agreement between IntraBiotics and Diversa in the form attached as Exhibit B hereto. 

        3.    Ownership of R&D Program Data & Materials.    Diversa shall solely own all of the
data and materials generated by the research activities performed by employees and consultants of Diversa pursuant to the R&D Program. 

        4.    Assignment of IntraBiotics's Assays to Diversa.    Diversa shall solely own each and
every primary, secondary, and tertiary assay used or discussed in the Work Plan, which assays are described in Exhibit C hereto (the "Assays"). To that end, IntraBiotics hereby assigns to
Diversa such right, title in interest in and to the Assays as IntraBiotics may have. 

 

        5.    Mutual Releases.    

        a.    Diversa Release.    In consideration of the obligations, warranties and representations of Diversa contained
hereunder and contingent upon the timely performance by IntraBiotics of its obligations hereunder, Diversa hereby releases, acquits, and forever discharges IntraBiotics, its parents and subsidiaries,
and their officers, directors, agents, servants, employees, attorneys, shareholders, partners, successors, assigns, affiliates, customers, and clients of and from any and all claims liabilities,
demands, causes of action, costs, expenses, attorneys' fees, damages, indemnities and obligations of every kind and nature, in law, equity, or otherwise, known and unknown, suspected and unsuspected,
disclosed and undisclosed, arising out of or in any way related to agreements, acts or conduct at any time prior to the date of this Term Sheet, including, but not limited to: all such claims and
demands directly or indirectly arising out of or in any way connected with the License Agreement; and claims pursuant to any federal, state or local law or cause of action including, but not limited
to, tort law; contract law; fraud; defamation; and breach of the implied covenant of good faith and fair dealing. In giving this release, which includes claims which may be unknown to Diversa at
present, Diversa hereby acknowledges that it has read and understands Section 1542 of the Civil Code of the State of California which reads as follows: 

        "A
general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have
materially affected his settlement with the debtor." 

        Diversa hereby expressly waives and relinquishes all rights and benefits under Section 1542 of the Civil Code of the State of California and any law or
legal principle of similar effect in any jurisdiction with respect to claims released hereby.

        b.    IntraBiotics Release.    In consideration of the obligations, warranties and representations of IntraBiotics
contained hereunder, IntraBiotics hereby releases, acquits, and forever discharges Diversa, its parents and subsidiaries, and their officers, directors, agents, servants, employees, attorneys,
shareholders, partners, successors, assigns, affiliates, customers, and clients of and from any and all claims liabilities, demands, causes of action, costs, expenses, attorneys' fees, damages,
indemnities and obligations of every kind and nature, in law, equity, or otherwise, known and unknown, suspected and unsuspected, disclosed and undisclosed, arising out of or in any way related to
agreements, acts or conduct at any time prior to the date of this Term Sheet, including, but not limited to: all such claims and demands
directly or indirectly arising out of or in any way connected with the License Agreement; and claims pursuant to any federal, state or local law or cause of action including, but not limited to, tort
law; contract law; fraud; defamation; and breach of the implied covenant of good faith and fair dealing. In giving this release, which includes claims which may be unknown to IntraBiotics at present,
IntraBiotics hereby acknowledges that it has read and understands Section 1542 of the Civil Code of the State of California which reads as follows: 

        "A
general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have
materially affected his settlement with the debtor." 

        IntraBiotics hereby expressly waives and relinquishes all rights and benefits under Section 1542 of the Civil Code of the State of California and any law
or legal principle of similar effect in any jurisdiction with respect to claims released hereby.

        6.    Termination; Survival of Obligations.    Except as set forth herein, the License
Agreement is terminated. Only the confidentiality provisions of Sections 7.1, 7.2, and 7.3 of the License Agreement (and any applicable provisions of the Confidential Disclosure Agreement between
Diversa and IntraBiotics executed on July 17, 2000 that do not contradict the terms of Sections 7.1, 7.2 or 7.3 of the License Agreement) shall survive for a period of ten (10) years. 

2

 

        7.    No Admission of Liability.    Diversa and IntraBiotics hereby acknowledge that this is a
compromise settlement of various matters, and that the payments in consideration of this Agreement shall not be construed to be an admission of any liability or obligation by either party to the other
party or to any other person whomsoever. 

        8.    Publicity; Regulatory Filings.    Diversa and IntraBiotics each acknowledge and agree
that neither the Term Sheet or this Agreement nor the terms contained therein or herein shall be considered ether confidential or "Confidential Information" as such term is defined in the License
Agreement; provided, however, that information regarding the Assays shall be considered Confidential Information under the terms of the License
Agreement and, notwithstanding the exception in Section 7.3.3 of the License Agreement, IntraBiotics shall have the obligations of a Receiving Party with respect to information regarding the
Assays and Diversa shall be considered a Disclosing Party with respect to information regarding the Assays as such terms are defined in the License Agreement. Accordingly, each of Diversa and
IntraBiotics shall be permitted to disclose the existence of the Term Sheet or this Agreement and the terms thereof or hereof, except disclosures by IntraBiotics with respect to the Assays, in such
communications as such party shall determine in its sole discretion, including, without limitation (i) in one or more press releases and (ii) in one or more filings with the Securities
and Exchange Commission (or any other governmental agency, such as the Federal Trade Commission, with which the License Agreement, Term Sheet, and/or Agreement is required to be provided or filed by
Diversa and/or
IntraBiotics); provided, however, that IntraBiotics shall not issue any press release regarding the Term Sheet, this Agreement, or the termination of the License Agreement without the express written
consent of Diversa to the content of such press release. 

        9.    General Terms.    This Agreement shall be governed by and construed in accordance with
the laws of the State of California without regard to provisions governing conflicts of law. This Agreement is not assignable in part or in whole by any party without the prior written consent of the
other party; provided, however, that either party may assign this Agreement to its affiliates or to a successor by merger or sale of all or substantially all of its business to which this Agreement
relates. The terms of this Agreement shall inure to the benefit of and be binding upon the parties and their respective successors and assigns. The terms and conditions of this Agreement constitute
the entire agreement between Diversa and IntraBiotics and supersede all previous negotiations or agreements, either oral or written, between the parties with respect to the subject matter of this
Agreement, including, without limitation, the Term Sheet and the License Agreement. This Agreement shall not be amended, supplemented or abrogated other than by a written instrument signed by the
authorized representative of each Party. The failure of either Party to enforce at any time any of the provisions of this Agreement, or any rights in respect of it, or to exercise any election
provided in it, shall in no way be considered to be a waiver of such provisions, rights or elections, and shall in no way affect the validity of this Agreement. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to reasonable attorneys' fees, costs and necessary disbursements in addition to any other relief
to which such party may be entitled. In the event that any provision of this Agreement is, for any reason, held to be invalid or unenforceable in any respect, such invalidity or unenforceability shall
not affect any other provision hereof, and the parties shall negotiate in good faith to modify this Agreement to preserve (to the extent possible) their original intent. Each party warrants that it
has the authority to enter into this Agreement on the basis of the terms and conditions herein and that it has not made any other agreement inconsistent with its obligations under this Agreement. This
Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. 

(signature page follows)

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        IN WITNESS WHEREOF, the undersigned have duly executed and delivered this Agreement effective as of the date first above written. 

	 	 	DIVERSA CORPORATION
	

 	
 	
By:	

/s/ Karin Eastham

	

 	
 	

Name:	

Karin Eastham

	

 	
 	

Title:	

Senior Vice President, Finance and

Chief Financial Officer

	

 	
 	
INTRABIOTICS PHARMACEUTICALS, INC.
	

 	

 	

 By:	

/s/ Kenneth J. Kelley

	

 	
 	

Name:	

Kenneth J. Kelley

	

 	
 	

Title:	

President and Chief Executive Officer

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Exhibit A    
  

No. CW—4  

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF ANY
STATE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS, PURSUANT
TO REGISTRATION OR EXEMPTION THEREFROM. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED
TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

WARRANT TO PURCHASE 700,000 SHARES

OF COMMON STOCK OF

INTRABIOTICS PHARMACEUTICALS, INC.

(Void after July 27, 2005)  

        This certifies that DIVERSA CORPORATION, a Delaware corporation, or its permitted assigns (the "Holder"), for
value received, is entitled to purchase from INTRABIOTICS PHARMACEUTICALS, INC., a Delaware corporation (the "Company"), having a place of
business at 1245 Terra Bella Avenue, Mountain View, California 94043, a maximum of Seven Hundred Thousand (700,000) fully paid and nonassessable shares of the Company's Common Stock ("Common Stock")
of the same class that currently is traded on the National Association of Securities Dealers Automated Quotation System ("Nasdaq") National Market for cash at a price equal to $2.00 per share (the
"Stock Purchase Price") at any time or from time to time up to and including 5:00 p.m. (Pacific time) on July 27, 2005 (the "Expiration Date") upon surrender to the Company at its
principal office (or at such other location as the Company may advise the Holder in writing) of this Warrant properly endorsed with the Form of Subscription attached hereto duly filled in and signed
and upon payment in cash or wire transfer of the
aggregate Stock Purchase Price for the number of shares for which this Warrant is being exercised determined in accordance with the provisions hereof. The Stock Purchase Price and the number of shares
purchasable hereunder are subject to adjustment as provided in Section 3 of this Warrant. 

        This
Warrant is subject to the following terms and conditions: 

1.    EXERCISE; ISSUANCE OF CERTIFICATES; PAYMENT FOR SHARES.  

        1.1    General.    This Warrant is exercisable at the option of the holder of record hereof, at any time or from time
to time, up to the Expiration Date for all or any part of the shares of Common Stock (but not for a fraction of a share) which may be purchased hereunder. The Company agrees that the shares of Common
Stock purchased under this Warrant shall be and are deemed to be issued to the Holder hereof as the record owner of such shares as of the close of business on the date on which this Warrant shall have
been surrendered, properly endorsed, the completed, executed Form of Subscription delivered and payment made for such shares. Certificates for the shares of Common Stock so purchased, together with
any other securities or property to which the Holder hereof is entitled upon such exercise, shall be delivered to the Holder hereof by the Company at the Company's expense within a reasonable time
after the rights represented by this Warrant have been so exercised. In case of a purchase of less than all the shares which may be purchased under this Warrant, the Company shall cancel this Warrant
and execute and deliver a new Warrant or Warrants of like tenor for the balance of the shares purchasable under the Warrant surrendered upon such purchase to the Holder hereof within a reasonable
time. Each stock certificate so delivered shall be in such denominations of Common Stock 

2

 

as may be requested by the Holder hereof and shall be registered in the name of such Holder or in the name of Holder's affiliate and/or subsidiary as may be requested by the Holder. 

        1.2    Net Issue Exercise.    Notwithstanding any provisions herein to the contrary, if the fair market value of one
share of the Company's Common Stock is greater than the Stock Purchase Price (at the date of calculation as set forth below), in lieu of exercising this Warrant for cash, the Holder may elect to
receive shares equal to the value (as determined below) of this Warrant (or the portion thereof being canceled) by surrender of this Warrant at the principal office of the Company together with the
properly endorsed Form of Subscription with notice of such election in which event the Company shall issue to the Holder a number of shares of Common Stock computed using the following formula: 

	 	 	X =	 	Y (A-B)
 A	 	 

        Where
X = the number of shares of Common Stock to be issued to the Holder 

	 	 	Y = the number of shares of Common Stock purchasable under the Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being canceled (at the date of such calculation)
	

 	
 	

A = the fair market value of one share of the Company's Common Stock (at the date of such calculation)
	

 	
 	

B = Stock Purchase Price (as adjusted to the date of such calculation)

        For
purposes of the above calculation, if the Common Stock is traded on any established stock exchange or traded on the Nasdaq National Market or the Nasdaq SmallCap Market, then the
fair market value of one share of Common Stock shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or market (or the exchange or
market with the greatest volume of trading in the Common Stock) on the last market trading day prior to the day of determination, as reported in The Wall Street
Journal or, if not reported in The Wall Street Journal, then such other source as the Company's Board of Directors reasonably
deems reliable. In the absence of such markets for Common Stock, the fair market value of one share of Common Stock shall be determined by the Company's Board of Directors and the Holder in good
faith. 

2.    SHARES TO BE FULLY PAID; RESERVATION OF SHARES.    The Company covenants and agrees that all shares of Common Stock which may
be issued upon the exercise of the rights represented by this Warrant will, upon issuance, be duly authorized, validly issued, fully paid and nonassessable and free from all preemptive rights of any
stockholder and free of all taxes, liens and charges with respect to the issue thereof. The Company further covenants and agrees that, during the period within which the rights represented by this
Warrant may be exercised, the Company will at all times have authorized and reserved, for the purpose of issue or transfer upon exercise of the subscription rights evidenced by this Warrant, a
sufficient number of shares of authorized but unissued Common Stock, or other securities and property, when and as required to provide for the exercise of the rights represented by this Warrant. The
Company will take all such action as may be necessary to assure that such shares of Common Stock may be issued as provided herein without violation of any applicable law or regulation, or of any
requirements of any securities exchange upon which the Common Stock may be listed; provided, however, that the Company shall not be required to effect a
registration under federal or state
securities laws solely because of such exercise. The Company will not take any action which would result in any adjustment of the Stock Purchase Price (as set forth in Section 3 hereof) if the
total number of shares of Common Stock issuable after such action upon exercise of all outstanding warrants, together with all shares of Common Stock then outstanding and all shares of Common Stock
then issuable upon exercise of all options and upon the conversion of all convertible securities then 

3

 

outstanding, would exceed the total number of shares of Common Stock then authorized by the Company's Certificate of Incorporation. 

3.    ADJUSTMENT OF STOCK PURCHASE PRICE AND NUMBER OF SHARES.    The Stock Purchase Price and the number of shares purchasable upon
the exercise of this Warrant shall be subject to adjustment from time to time upon the occurrence of certain events described in this Section 3. Upon each adjustment of the Stock Purchase
Price, the Holder of this Warrant shall thereafter be entitled to purchase, at the Stock Purchase Price resulting from such adjustment, the number of shares obtained by multiplying the Stock Purchase
Price in effect immediately prior to such adjustment by the number of shares purchasable pursuant hereto immediately prior to such adjustment, and dividing the product thereof by the Stock Purchase
Price resulting from such adjustment. 

        3.1    Subdivision or Combination of Stock.    In case the Company shall at any time subdivide its outstanding shares
of Common Stock into a greater number of shares, the Stock Purchase Price in effect immediately prior to such subdivision shall be proportionately reduced, and conversely, in case the outstanding
shares of Common Stock of the Company shall be combined into a smaller number of shares, the Stock Purchase Price in effect immediately prior to such combination shall be proportionately increased. 

        3.2    Dividends in Common Stock, Other Stock, Property, Reclassification.    If at any time or from time to time the
holders of Common Stock (or any shares of stock or other securities at the time receivable upon the exercise of this Warrant) shall have received or become entitled to receive, without payment
therefor, 

        (a)  Common Stock or any shares of stock or other securities which are at any time directly or indirectly convertible into or
exchangeable for Common Stock, or any rights or options to subscribe for, purchase or otherwise acquire any of the foregoing by way of dividend or other distribution, 

        (b)  any cash paid or payable otherwise than as a cash dividend, or 

        (c)  Common Stock or additional stock or other securities or property (including cash) by way of spinoff,
split-up, reclassification, combination of shares or similar corporate rearrangement, (other than shares of Common Stock issued as a stock split or adjustments in respect of which shall be
covered by the terms of Section 3.1 above), 

        then
and in each such case, the Holder hereof shall, upon the exercise of this Warrant, be entitled to receive, in addition to the number of shares of Common Stock receivable thereupon,
and without payment of any additional consideration therefor, the amount of stock and other securities and property (including cash in the cases referred to in clauses (b) and (c) above)
which such Holder would hold on the date of such exercise had he been the holder of record of such Common Stock as of the date on which holders of Common Stock received or became entitled to receive
such shares or all other additional stock and other securities and property. 

        3.3    Reorganization, Reclassification, Consolidation, Merger or Sale.    If any recapitalization, reclassification
or reorganization of the capital stock of the Company, or any consolidation or merger of the Company with another corporation, or the sale of all or substantially all of its assets or other
transaction shall be effected in such a way that holders of Common Stock shall be entitled to receive stock, securities, or other assets or property (an "Organic Change"), then, as a condition of such
Organic Change, lawful and adequate provisions shall be made by the Company whereby the Holder hereof shall thereafter have the right to purchase and receive (in lieu of the shares of the Common Stock
of the Company immediately theretofore purchasable and receivable upon the exercise of the rights represented hereby) such shares of stock, securities or other assets or property as may be issued or
payable with respect to or in exchange for a number of outstanding shares of such Common Stock equal to the number of shares of such stock immediately theretofore purchasable and receivable upon 

4

 

the exercise of the rights represented hereby. In the event of any Organic Change, appropriate provision shall be made by the Company with respect to the rights and interests of the Holder of this
Warrant to the end that the provisions hereof (including, without limitation, provisions for adjustments of the Stock Purchase Price and of the number of shares purchasable and receivable upon the
exercise of this Warrant) shall thereafter be applicable, in relation to any shares of stock, securities or assets thereafter deliverable upon the exercise hereof. The Company will not effect any such
consolidation, merger or sale unless, prior to the consummation thereof, the successor corporation (if other than the Company) resulting from such consolidation or the corporation purchasing such
assets shall assume by written instrument the obligation to deliver to such Holder such shares of stock, securities or assets as, in accordance with the foregoing provisions, such Holder may be
entitled to purchase. 

        3.4    Certain Events.    If any change in the outstanding Common Stock of the Company or any other event occurs as to
which the other provisions of this Section 3 are not strictly applicable or if strictly applicable would not fairly protect the purchase rights of the Holder of the Warrant in accordance with
such provisions, then the Board of Directors of the Company shall make an adjustment in the number and class of shares available under the Warrant, the Stock Purchase Price or the application of such
provisions, so as to protect such purchase rights as aforesaid. The adjustment shall be such as will give the Holder of the Warrant upon exercise for the same aggregate Stock Purchase Price the total
number, class and kind of shares as such Holder would have owned had the Warrant been exercised prior to the event and had such Holder continued to hold such shares until after the event requiring
adjustment. 

        3.5    Notices of Change.    

        (a)  Immediately upon any adjustment in the number or class of shares subject to this Warrant and of the Stock Purchase Price,
the Company shall give written notice thereof to the Holder, setting forth in reasonable detail and certifying the calculation of such adjustment. 

        (b)  The Company shall give written notice to the Holder at least 15 calendar days prior to the date on which the Company
closes its books or takes a record for determining rights to receive any dividends or distributions or any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any
other securities or property, or to receive any other right. 

        (c)  The Company shall give written notice to the Holder at least 20 calendar days prior to the date on which an Organic
Change shall take place, including in such notice the date as of which the Organic Change is expected to become effective and the date as of which it is expected that holders of Common Stock of record
shall be entitled to exchange their shares of Common Stock for securities or other property, if any, deliverable upon such Organic Change. 

        (d)  The Company shall initiate the delivery of written notice to the Holder of any voluntary or involuntary dissolution,
liquidation or winding-up of the Company (the "Dissolution") on the date such Dissolution is publicly announced, including in such notice the date as of which the Dissolution is expected
to become effective and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities or other property, if any. 

4.    LISTING.    The Company shall file any forms and do any acts as shall be required from time to time to secure the listing or
quotation of the Common Stock issuable upon exercise of the Warrant with each national securities exchange or automated quotation system, if any, upon which shares of such securities are then listed
or traded and shall maintain, so long as any other shares of such securities shall be so listed or traded, such listing or quotation of all securities issued or issuable upon the exercise of this
Warrant. 

5.    ISSUE TAX.    The issuance of certificates for shares of Common Stock upon the exercise of the Warrant shall be made without
charge to the Holder of the Warrant for any issue tax (other than any 

5

 

applicable income taxes) in respect thereof; provided, however, that the Company shall not be required to pay any tax which may be payable in respect
of any transfer involved in the issuance and delivery of any certificate in a name other than that of the then Holder of the Warrant being exercised. 

6.    CLOSING OF BOOKS.    The Company will at no time close its transfer books against the transfer of any warrant or of any shares
of Common Stock issued or issuable upon the exercise of any warrant in any manner which interferes with the timely exercise of this Warrant. 

7.    NO VOTING OR DIVIDEND RIGHTS; LIMITATION OF LIABILITY.    Nothing contained in this Warrant shall be construed as conferring
upon the Holder hereof the right to vote or to consent or to receive notice as a stockholder of the Company or any other matters or any rights whatsoever as a stockholder of the Company. No dividends
or interest shall be payable or accrued in respect of this Warrant or the interest represented hereby or the shares purchasable hereunder until, and only to the extent that, this Warrant shall have
been exercised. No provisions hereof, in the absence of affirmative action by the holder to purchase shares of Common Stock, and no mere enumeration herein of the rights or privileges of the holder
hereof, shall give rise to any liability of such Holder for the Stock Purchase Price or as a stockholder of the Company, whether such liability is asserted by the Company or by its creditors. 

8.    REPRESENTATIONS OF HOLDER.    Holder represents that by reason of its own, or of its management's, knowledge and experience in
financial and business matters, Holder is capable of evaluating the merits and risks of its investment in the Company and has the capacity to protect its own interests in connection with the issuance
of this Warrant and the shares of Common Stock issuable upon the exercise thereof. Holder represents that it is acquiring such securities for its own account for investment only, and not with a view
towards their distribution. 

9.    WARRANTS TRANSFERABLE.    This Warrant is not transferable except to an affiliate or a subsidiary of Holder;  provided that Holder provides prior written notice of such transfer to the Company, such transferee agrees to be bound by the obligations hereunder, and
the Company may treat such transferee as the absolute owner hereof for any purpose and as the person entitled to exercise the rights represented by this Warrant. 

10.    RIGHTS AND OBLIGATIONS SURVIVE EXERCISE OF WARRANT.    The rights and obligations of the Company, of the holder of this
Warrant and of the holder of shares of Common Stock issued upon exercise of this Warrant, shall survive the exercise of this Warrant. 

11.    MODIFICATION AND WAIVER.    This Warrant and any provision hereof may be changed, waived, discharged or terminated only by an
instrument in writing signed by the party against which enforcement of the same is sought. 

12.    NOTICES.    Any notice, request or other document required or permitted to be given or delivered to the holder hereof or the
Company shall be in writing, shall refer specifically to this Warrant and shall be personally delivered or shall be sent by certified mail or internationally recognized overnight courier, postage
prepaid, to Holder at its address as shown on the signature page hereto or to the Company at the address indicated therefor in the first paragraph of this Warrant or such other address as either
may from time to time provide to the other in writing. Any delivery, notice, request or other document given in conformity with this Section 12 shall be deemed to be effective when received by
the addressee. 

13.    BINDING EFFECT ON SUCCESSORS.    This Warrant shall be binding upon any corporation succeeding the Company by merger,
consolidation or acquisition of all or substantially all of the Company's assets. All of the obligations of the Company relating to the Common Stock issuable upon the exercise of this Warrant shall
survive the exercise and termination of this Warrant. All of the covenants and agreements of the Company shall inure to the benefit of the successors and assigns of the Holder hereof. 

6

 

14.    DESCRIPTIVE HEADINGS AND GOVERNING LAW.    The description headings of the several sections and paragraphs of this Warrant
are inserted for convenience only and do not constitute a part of this Warrant. This Warrant shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the
laws of the State of California. 

15.    LOST WARRANTS.    The Company represents and warrants to the Holder hereof that upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction, or mutilation of this Warrant and, in the case of any such loss, theft or destruction, upon receipt of an indemnity reasonably satisfactory
to the Company, or in the case of any such mutilation upon surrender and cancellation of such Warrant, the Company, at its expense, will make and deliver a new Warrant, of like tenor, in lieu of the
lost, stolen, destroyed or mutilated Warrant. 

16.    FRACTIONAL SHARES.    No fractional shares shall be issued upon exercise of this Warrant. The Company shall, in lieu of
issuing any fractional share, pay the holder entitled to such fraction a sum in cash equal to such fraction multiplied by the then effective Stock Purchase Price. 

[THIS
SPACE INTENTIONALLY LEFT BLANK] 

7

        IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by its officers, thereunto duly authorized this 27 day
of July, 2001. 

	 	 	INTRABIOTICS PHARMACEUTICALS, INC.
	

 	
 	

By:	

/s/ Kenneth Kelley,
 Kenneth Kelley, President and CEO

HOLDER:

	DIVERSA CORPORATION	 	 
	

By:	

/s/ Karin Easthman
 Karin Eastham

Senior Vice President, Finance and

Chief Financial Officer	
 	

 
	

Address:    4955 Directors Place

                  San Diego, CA 92121	
 	

 

SUBSCRIPTION FORM  

	 	 	Date:                                ,
200  

IntraBiotics
Pharmaceuticals, Inc.

1245 Terra Bella Avenue

Mountain View, CA 94043

Attn: President 

Ladies
and Gentlemen: 

	o
	The
undersigned hereby elects to exercise the warrant issued to it by IntraBiotics Pharmaceuticals, Inc. (the "Company") and dated
July 27, 2001 Warrant No. CW-4 (the "Warrant") and to purchase thereunder                        shares of the Common Stock
of the Company (the "Shares") at a purchase price of $2.00 per
Share or an aggregate purchase price of                        Dollars
($                        ) (the "Purchase Price").

	o
	The
undersigned hereby elects to convert                        percent (    %) of the value of the Warrant
pursuant to the provisions
of Section 1.2 of the Warrant. 

Pursuant
to the terms of the Warrant the undersigned has delivered the Purchase Price herewith in full in cash or wire transfer. 

	 	 	Very truly yours,
	  

    	 	 	 
	

 	
 	

Print Entity Name, if applicable
	

 	
 	

By:	

    

	

 	
 	

Print Name:	

    

	

 	
 	

Title:	

    

  

 
 

Exhibit B    
  

REGISTRATION RIGHTS AGREEMENT  

        This REGISTRATION RIGHTS AGREEMENT (the "Agreement") is entered into as of the 27th day of July, 2001, by and
between INTRABIOTICS PHARMACEUTICALS, INC., a Delaware corporation (the "Company"), and DIVERSA
CORPORATION, a Delaware corporation (the "Holder"). 

RECITALS

        WHEREAS, pursuant to that certain Release Agreement by and between the Company and Holder, dated as of July 27, 2001 (the "Release
Agreement"), the Company has issued a warrant (the "Warrant"), to purchase up to 700,000 shares of common stock of the Company (the "Warrant Shares") to Holder; and 

        WHEREAS, in connection with the Release Agreement and issuance of the Warrant, the Company has agreed to extend to Holder certain
registration rights for such Warrant Shares. 

AGREEMENT  

        NOW THEREFORE, in consideration of the mutual agreements, covenants and conditions set forth herein, the parties
to this Agreement agree as follows: 

	1.
	DEFINITIONS.    The following terms shall have the following meanings for purposes of this Agreement: 

        1.1    "Act" shall mean the Securities Act of 1933, as amended. 

        1.2    "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. 

        1.3    "Holder" shall mean the holder of Registrable Securities. 

        1.4    "Investors Rights Agreement" shall mean that certain Amended and Restated Investors Rights Agreement by and between the
Company and the investors named therein, dated as of October 15, 1999, as the same may from time to time be amended, modified, supplemented or restated. 

        1.5    "Register," "registered" and
"registration" refer to a registration effected by preparing and filing a registration statement or similar document in compliance with the Act, and the
declaration or ordering of effectiveness of such registration statement or document. 

        1.6    "Registrable Securities" shall mean the Warrant Shares issuable or issued to the Holder upon exercise of the Warrant. 

        1.7    "Rule 144" shall mean Rule 144 under the Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the SEC (excluding Rule 144A). 

        1.8    "SEC" shall mean the Securities and Exchange Commission. 

	2.
	REGISTRATION RIGHTS.  

        2.1    Company Registration.    If (but without any obligation to do so) the Company proposes
to register (including for this purpose a registration effected by the Company for stockholders other than the Holder) any of its stock or other securities under the Act in connection with the public
offering of such securities solely for cash (other than a registration relating solely to the sale of securities to participants in a Company stock plan, a registration on any form which does not
include substantially the same information as would be required to be included in a registration statement covering the sale of the Registrable Securities or a registration in which the only common
stock being registered is common stock issuable upon conversion of debt securities which are also being registered), the 

1

 

Company shall, at such time, promptly give Holder written notice of such registration. Upon the written request of Holder given within twenty (20) days after mailing of such notice by the
Company in accordance with Section 3.6, the Company shall, subject to the provisions of Section 2.5, cause to be registered under the Act all of the Registrable Securities that Holder
has requested to be registered. 

        2.2    Obligations of the Company.    Whenever required under this Agreement to effect the registration of any
Registrable Securities, the Company shall, as expeditiously as reasonably possible: 

        (a)  Prepare and file with the SEC a registration statement with respect to such Registrable Securities and use its best
efforts to cause such registration statement to become effective, and, upon the request of the Holder, keep such registration statement effective for a period of up to one hundred twenty
(120) days or until the distribution contemplated in the registration statement has been completed; provided, however, that (i) such
120-day period shall be extended for a period of time equal to the period the Holder refrains from selling any securities included in such registration at the request of an underwriter of
common stock (or other securities) of the Company; and (ii) in the case of any registration of Registrable Securities on Form S-3 which are intended to be offered on a
continuous or delayed basis, such 120-day period shall be extended, if necessary, to keep the registration statement effective until all such Registrable Securities are sold, provided that
Rule 415, or any successor rule under the Act, permits an offering on a continuous or delayed basis, and provided further that applicable rules under the Act governing the obligation to
file a post-effective amendment permit, in lieu of filing a post-effective amendment which (I) includes any prospectus required by Section 10(a)(3) of the
Act or (II) reflects facts or events representing a material of fundamental change in the information set forth in the registration statement, the incorporation by reference of information
required to be included in (I) and (II) above to be contained in periodic reports filed pursuant to Section 13 or 15(d) of the Exchange Act in the registration statement. 

        (b)  Prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to comply with the provisions of the Act with respect to the disposition of all securities covered by such registration statement. 

        (c)  Furnish to the Holder such numbers of copies of a prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as Holder may reasonably request in order to facilitate the disposition of Registrable Securities owned by it. 

        (d)  Use its best efforts to register and qualify the securities covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as shall be reasonably requested by the Holder; provided that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions, unless the Company is already
subject to service in such jurisdiction and except as may be required by the Act. 

        (e)  In the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement,
in usual and customary form, with the managing underwriter of such offering. If Holder participates in such underwriting, it shall also enter into and perform its obligations under such an agreement. 

        (f)    Notify Holder at any time when a prospectus relating to the registration statement is required to be delivered under the
Act of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing. 

2

 

        (g)  Cause all such Registrable Securities registered pursuant hereto to be listed on each securities exchange on which
similar securities issued by the Company are then listed. 

        (h)  Provide a transfer agent and registrar for all Registrable Securities registered pursuant hereto and a CUSIP number for
all such Registrable Securities, in each case not later than the effective date of such registration. 

        (i)    Furnish, at the request of Holder requesting registration of Registrable Securities pursuant to this Section 2, on
the date that such Registrable Securities are delivered to the underwriters for sale in connection with a registration pursuant to this Section 2, if such securities are being sold through
underwriters, or, if such securities are not being sold through underwriters, on the date that the registration statement with respect to such securities becomes effective, (i) an opinion,
dated such date, of the counsel representing the Company for the purposes of such registration, in form and substance as is customarily given to underwriters in an underwritten public offering,
addressed to the underwriters, if any, and to the Holder and (ii) a letter dated such date, from the independent certified public accountants of the Company, in form and substance as is
customarily given by independent certified public accountants to underwriters in an underwritten public offering, addressed to the underwriters, if any, and to the Holder. 

        2.3    Furnish Information.    It shall be a condition precedent to the obligations of the Company to take any action
pursuant to this Section 2 with respect to the Registrable Securities that Holder shall furnish to the Company such information regarding itself, the Registrable Securities held by it, and the
intended method of disposition of such securities as shall be required to effect the registration of Holder's Registrable Securities. 

        2.4    Expenses of Company Registration.    The Company shall bear and pay all expenses incurred in connection with
any registration, filing or qualification of the Registrable Securities with respect to the registration pursuant to Section 2.1 for Holder (which right may be assigned as provided in
Section 2.10), including (without limitation) all registration, filing and qualification fees, printers and accounting fees relating or apportionable thereto and the fees and disbursements of
one counsel for the selling stockholders included in such registration selected by them, but excluding underwriting discounts and commissions relating to the Registrable Securities. 

        2.5    Underwriting Requirements.    In connection with any offering involving an underwriting of shares of the
Company's capital stock, the Company shall not be required under Section 2.1 to include any of the Holder's securities in such underwriting unless Holder accepts the terms of the underwriting
as agreed upon between the Company and the underwriters selected by it (or by other persons entitled to select the underwriters), and then only in such quantity as the underwriters determine in their
sole discretion will not jeopardize the success of the offering by the Company. If the total amount of securities, including Registrable Securities, requested by stockholders to be included in such
offering exceeds the amount of securities sold other than by the Company that the underwriters determine in their sole discretion is compatible with the success of the offering, then the Company shall
be required to include in the offering only that number of such securities, including Registrable Securities, which the underwriters determine in their sole discretion will not jeopardize the success
of the offering (the securities so included to be apportioned pro rata among the selling stockholders according to the total amount of securities entitled to be included therein owned by each selling
stockholder or in such other proportions as shall mutually be agreed to by such selling stockholders) but in no event shall (i) the amount of securities of all selling stockholders included in
the offering be reduced below twenty percent (20%) of the total amount of securities included in such offering, or (ii) notwithstanding (i) above, any shares being sold by a stockholder
exercising a demand registration right similar to that granted in Section 1.2 of the Investors Rights Agreement be excluded from such offering. For purposes of the preceding subsections
concerning apportionment, for any selling stockholder which is a holder of registrable securities under this Agreement or the Investors Rights Agreement and which is a 

3

 

partnership or corporation, the partners, retired partners and stockholders of such holder, or the estates and family members of any such partners and retired partners and any trusts for the benefit
of any of the foregoing persons shall be deemed to be a single "selling stockholder," and any pro-rata reduction with respect to such "selling stockholder," shall be based upon the
aggregate amount of shares carrying registration rights owned by all entities and individuals included in such "selling stockholder," as defined in this sentence. 

        2.6    Delay of Registration.    Holder shall not have any right to obtain or seek an injunction restraining or
otherwise delaying any such registration as the result of any controversy that might arise with respect to the interpretation or implementation of this Section 2. 

        2.7    Indemnification.    In the event any Registrable Securities are included in a registration statement under this
Section 2: 

        (a)  To the extent permitted by law, the Company will indemnify and hold harmless Holder, any underwriter (as defined in the
Act) for Holder and each person, if any, who controls such Holder or underwriter within the meaning of the Act or the Exchange Act, against any losses, claims, damages or liabilities (joint or
several) to which they may become subject under the Act, the Exchange Act or other federal or state law, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon any of the following statements, omissions or violations (each, a "Violation"): (i) any untrue statement or alleged untrue statement of a material fact contained in
such registration statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto, (ii) the omission or alleged omission to state
therein a material fact required to be stated therein, or necessary to make the statements therein not misleading, or (iii) any violation or alleged violation by the Company of the Act, the
Exchange Act, any state securities law or any rule or regulation promulgated under the Act, or the Exchange Act or any state securities law; and the Company will pay to such Holder, underwriter or
controlling person, as incurred, any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action;  provided, however, that the indemnity agreement contained in this subsection 2.7(a) shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld), nor shall the Company be liable in any such
case for any such loss, claim, damage, liability or action to the extent that it arises out of or is based upon a Violation which occurs in reliance upon and in conformity with written information
furnished expressly for use in connection with such registration by any such Holder, underwriter or controlling person. 

        (b)  To the extent permitted by law, Holder will indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the registration statement, each person, if any, who controls the Company within the meaning of the Act, any underwriter, any other holder selling securities in such
registration statement and any controlling person of any such underwriter or other holder, against any losses, claims, damages or liabilities (joint or several) to which any of the foregoing persons
may become subject, under the Act, or the Exchange Act or other federal or state law, insofar as such losses, claims, damages or liabilities (or actions in respect thereto) arise out of or are based
upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with written information furnished by Holder expressly for use in
connection with such registration; and such Holder will pay, as incurred, any legal or other expenses reasonably incurred by any person intended to be indemnified pursuant to this subsection 2.7(b),
in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the indemnity agreement
contained in this subsection 2.7(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Holder, 

4

 

which consent shall not be unreasonably withheld; provided, that, in no event shall any indemnity under this subsection 2.7(b) exceed the gross
proceeds from the offering received by the Holder. 

        (c)  Promptly after receipt by an indemnified party under this Section 2.7 of notice of the commencement of any action
(including any governmental action), such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 2.7, deliver to the indemnifying
party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties;
provided, however, that an indemnified party (together with all other indemnified parties which may be represented without conflict by one counsel) shall have the right to retain one separate counsel,
with the fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or
potential differing interests between such indemnified party and any other party represented by such counsel in such proceeding. The failure to deliver written notice to the indemnifying party within
a reasonable time of the commencement of any such action, if prejudicial to its ability to defend such action, shall relieve such indemnifying party of any liability to the indemnified party under
this Section 2.7, but the omission so to deliver written notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under
this Section 2.7. 

        (d)  If the indemnification provided for in this Section 2.7 is held by a court of competent jurisdiction to be
unavailable to an indemnified party with respect to any loss, liability, claim, damage or expense referred to therein, then the indemnifying party, in lieu of indemnifying such indemnified party
hereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such loss, liability, claim, damage or expense in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the statements or omissions that resulted in such loss, liability, claim, damage
or expense as well as any other relevant equitable considerations. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the
parties' relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission. 

        (e)  Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the
underwriting agreement entered into in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control. 

        (f)    The obligations of the Company and Holder under this Section 2.7 shall survive the completion of any offering of
Registrable Securities in a registration statement under this Section 2 and otherwise. 

        2.8    Reports under Securities Exchange Act of 1934.    With a view to making available to the Holder the benefits of
Rule 144 promulgated under the Act and any other rule or regulation of the SEC that may at any time permit Holder to sell securities of the Company to the public without registration or
pursuant to a registration on Form S-3, the Company agrees to: 

        (a)  make and keep public information available, as those terms are understood and defined in SEC Rule 144; 

        (b)  take such action, including the voluntary registration of its common stock under Section 12 of the Exchange Act,
as is necessary to enable the Holder to utilize Form S-3 for the 

5

 

sale of its Registrable Securities, such action to be taken as soon as practicable after the end of the fiscal year in which the first registration statement filed by the Company for the offering of
its securities to the general public is declared effective; 

        (c)  file with the SEC in a timely manner all reports and other documents required of the Company under the Act and the
Exchange Act; and 

        (d)  furnish to Holder, so long as the Holder owns any Registrable Securities, forthwith upon request (i) a written
statement by the Company that it has complied with the reporting requirements of SEC Rule 144, the Act and the Exchange Act, or that it qualifies as a registrant whose securities may be resold
pursuant to Form S-3 (at any time after it so qualifies), (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so
filed by the Company, and (iii) such other information as may be reasonably requested in availing Holder of any rule or regulation of the SEC which permits the selling of any such securities
without registration or pursuant to such form. 

        2.9    Form S-3 Registration.    In case the Company shall receive from Holder a written request
that the Company effect a registration on Form S-3 and any related qualification or compliance with respect to all or a part of the Registrable Securities owned by Holder, the
Company will: 

        (a)  as soon as practicable, effect such registration and all such qualifications and compliances as may be so requested and
as would permit or facilitate the sale and distribution of all or such portion of Holder's Registrable Securities as are specified in such request; provided,
however, that the Company shall not be obligated to effect any such registration, qualification or compliance, pursuant to this Section 2.9: (1) if
Form S-3 is not available for such offering by Holder; (2) if Holder, together with the holders of any other securities of the Company entitled to inclusion in such
registration, proposes to sell Registrable Securities and such other securities (if any) at an aggregate price to the public (net of any underwriters' discounts or commissions) of less than
$1,000,000; (3) if the Company shall furnish to Holder a certificate signed by the President of the Company stating that, in the good faith judgment of the Board of Directors of the Company, it
would be seriously detrimental to the Company and its stockholders for such Form S-3 registration to be effected at such time, in which event the Company shall have the right to
defer the filing of the Form S-3 registration statement for a period of not more than sixty (60) days after receipt of the request of Holder under this Section 2.9;  provided, however,
that the Company shall not utilize this right more than once in any twelve-month period; (4) if the Company has already
effected three registrations on Form S-3 for the Holder pursuant to this Section 2 or holders of registrable securities pursuant to Section 1.12 of the Investors
Rights Agreement; or (5) in any particular jurisdiction in which the Company would be required to qualify to do business or to execute a general consent to service of process in effecting such
registration, qualification or compliance. 

        (b)  Subject to the foregoing, the Company shall file a registration statement covering the Registrable Securities as
soon as practicable after receipt of the request of Holder. All expenses incurred in connection with a registration requested pursuant to this Section 2.9, including (without limitation) all
registration, filing, qualification, printer's and accounting fees and the reasonable fees and disbursements of one counsel for the selling stockholders participating in such registration and counsel
for the Company, but excluding any underwriters' discounts or commissions associated with Registrable Securities, shall be borne by the Company. Registrations effected pursuant to this
Section 2.9 shall not be counted as registrations effected pursuant to Section 2.1. 

        (c)  Following the effectiveness of a registration statement filed pursuant to this section 2.9, the Company may, at
any time, suspend the effectiveness of such registration statement for up to 60 days, as appropriate (a "Suspension Period"), by giving notice to Holder, if the Company shall have determined
that the Company may be required to disclose any material corporate development which disclosure may have a material adverse effect on the Company. 

6

 

Notwithstanding the foregoing, no more than one Suspension Period may occur in any 12-month period. The period of any such suspension of the registration statement shall be added to the
period of time the Company agrees to keep the registration statement effective as provided in Section 2.2. Company shall use its reasonable efforts to limit the duration and number of any
Suspension Periods. Holder agrees that, upon receipt of any notice from the Company of a Suspension Period, such Holder shall forthwith discontinue disposition of shares covered by such registration
statement or prospectus until such Holder (i) is advised in writing by the Company that the use of the applicable prospectus may be resumed, (ii) has received copies of a supplemental or
amended prospectus, if applicable, and (iii) has received copies of any additional or supplemental filings which are incorporated or deemed to be incorporated by reference in such prospectus. 

        2.10    Assignment of Registration Rights.    The rights to cause the Company to register Registrable Securities
pursuant to this Agreement may be assigned (but only with all related obligations) by Holder to a transferee or assignee of all of the Registrable Securities (subject to appropriate adjustment for
stock splits, stock dividends, combinations and other recapitalizations); provided that (a) the Company is, within a reasonable time after such
transfer, furnished with written notice of the name and address of such transferee or assignee and the securities with respect to which such registration rights are being assigned; (b) such
transferee or assignee agrees in writing to be bound by and subject to the terms and conditions of this Agreement; and (c) such assignment shall be effective only if immediately following such
transfer the further disposition of such securities by the transferee or assignee is restricted under the Act. For the purposes of determining the number of shares of Registrable Securities held by a
transferee or assignee, the holdings of transferees and assignees of Holder which are wholly-owned subsidiaries or affiliates of Holder shall be aggregated together and with Holder;  provided that all
assignees and transferees who would not qualify individually for assignment of registration rights shall have a single
attorney-in-fact for the purpose of exercising any rights, receiving notices or taking any action under this Agreement. 

        2.11    Termination or Suspension of Registration Rights.    

        (a)  Holder shall not be entitled to exercise any right provided for in this Agreement after July 27, 2005. 

        (b)  In addition, the right of Holder to request registration or inclusion in any registration pursuant to this Agreement
shall be suspended during any period of time when all shares of Registrable Securities held or entitled to be held upon conversion by Holder may immediately be sold under Rule 144 during any
90-day period; provided, however, that the provisions of this Section 2.11(b) shall not apply to Holder if Holder owns more than one
percent (1%) of the Company's outstanding stock until such time as Holder owns less than one percent (1%) of the outstanding stock of the Company. 

3.    MISCELLANEOUS. 

        3.1    Governing Law.    The Agreement shall be governed by and construed under the laws of the State of California as
applied to agreements among California residents entered into and to be performed entirely within California. 

        3.2    Successors and Assigns.    Except as otherwise expressly provided herein, the provisions hereof shall inure to
the benefit of, and be binding upon, the successors, assigns, heirs, executors, and administrators of the parties hereto and shall inure to the benefit of and be enforceable by each person who shall
be a holder of Registrable Securities from time to time; provided however, that prior to the receipt by the Company of adequate written notice of the
transfer of any Registrable Securities specifying the full name and address of the transferee, the Company may deem and treat the person listed as the holder of such shares in its records as the
absolute owner and holder of such shares for all purposes. 

7

 

        3.3    Entire Agreement.    This Agreement constitutes the full and entire understanding and agreement between the
parties with regard to the subjects hereof and supersedes any prior agreements by the Company for the benefit of any party hereto regarding the registration of securities. No party shall be liable or
bound to any other in any manner by any representations, warranties, covenants and agreements except as specifically set forth herein. 

        3.4    Severability.    In case any provision of the Agreement shall be invalid, illegal, or unenforceable, the
validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. 

        3.5    Amendments and Waivers.    Any term of this Agreement may be amended and the observance of any term of this
Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the holders of a majority of the
Registrable Securities. Any amendment or waiver effected in accordance with this paragraph shall be binding upon Holder, any future holder of Registrable Securities and the Company. 

        3.6    Notices.    All notices required or permitted hereunder shall be in writing and shall be deemed effectively
given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed facsimile if sent during normal business hours of the recipient; if not, then on the next
business day, (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) day after deposit with a
nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the party to be notified at the address or facsimile
number set forth below or at such other address as such party may designate by ten (10) days advance written notice to the other parties hereto: 

	 	if to the Company:	 
	 	 	IntraBiotics Pharmaceuticals, Inc.

1245 Terra Bella Avenue

Mountain View, CA 94043

Attention: Kenneth Kelley, President

Telephone: (650) 526-6800

Facsimile: (650) 969-0663
	

 	
if to the Holder:	

 
	 	 	Diversa Corporation

4955 Directors Place

San Diego, CA 92121

Attention: Karin Eastham, Senior Vice President, Finance

    and Chief Financial Officer

Telephone: (858) 526-5000

Facsimile: (858) 526-5050

        3.7    Attorneys' Fees.    In the event that any dispute among the parties to this Agreement should result in
litigation, the prevailing party in such dispute shall be entitled to recover from the losing party all fees, costs and expenses of enforcing any right of such prevailing party under or with respect
to this Agreement, including without limitation, such reasonable fees and expenses of attorneys and accountants, which shall include, without limitation, all fees, costs and expenses of appeals. 

        3.8    Titles and Subtitles.    The titles of the sections and subsections of this Agreement are for convenience of
reference only and are not to be considered in construing this Agreement. 

8

 

        3.9    Counterparts.    This Agreement may be executed in any number of counterparts, each of which shall be an
original, but all of which together shall constitute one instrument. 

[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK] 

9

   
        IN WITNESS WHEREOF, the parties hereto have executed this Registration Rights Agreement as of the date set forth in the first paragraph
hereof. 

	COMPANY:	 	HOLDER:
	
INTRABIOTICS PHARMACEUTICALS, INC.	
 	
DIVERSA CORPORATION
	

By:	

/s/ Kenneth J. Kelley
 Kenneth J. Kelley

President and Chief Executive Officer	

 	

By:	

/s/ Karin Eastham
 Karin Eastham

Senior Vice President, Finance and

Chief Financial Officer

1

  

 
 

Exhibit C    
  

Assays Assigned to Diversa

[*]  

[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

C-1

QuickLinks

EXHIBIT 4.1

Exhibit A

Exhibit B

Exhibit C<Page>

                                                                    Exhibit 10.1

                        CITADEL BROADCASTING CORPORATION

                        2002 STOCK OPTION AND AWARD PLAN

                            (As Adopted June 4, 2002)

<Page>

                        CITADEL BROADCASTING CORPORATION
                        2002 STOCK OPTION AND AWARD PLAN

         1.       PURPOSE.

                  The purpose of this Plan is to strengthen Citadel Broadcasting
Corporation, a Delaware corporation (the "Company") and its Subsidiaries, by
providing an incentive to its employees, officers, consultants and directors and
thereby encouraging them to devote their abilities and industry to the success
of the Company's business enterprise. It is intended that this purpose be
achieved by extending to employees (including future employees who have received
a formal written offer of employment), officers, consultants and directors of
the Company and its Subsidiaries an added long-term incentive for high levels of
performance and unusual efforts through the grant of Incentive Stock Options,
Nonqualified Stock Options, Stock Appreciation Rights, Performance Units and
Performance Shares, Share Awards, Phantom Stock and Restricted Stock (as each
term is herein defined).

         2.       DEFINITIONS.

                  For purposes of the Plan:

                  2.1 "Affiliate" means any entity, directly or indirectly,
controlled by, controlling or under common control with the Company or any
corporation or other entity acquiring, directly or indirectly, all or
substantially all the assets and business of the Company, whether by operation
of law or otherwise.

                  2.2 "Agreement" means the written agreement between the
Company and an Optionee or Grantee evidencing the grant of an Option or Award
and setting forth the terms and conditions thereof.

                  2.3 "Award" means a grant of Restricted Stock, Phantom Stock,
a Stock Appreciation Right, a Performance Award, a Share Award or any or all of
them.

                  2.4      "Board" means the Board of Directors of the Company.

                  2.5      "Cause" means:

                           (a) in the case of an Optionee or Grantee whose
employment with the Company or a Subsidiary is subject to the terms of an
employment agreement between such Optionee or Grantee and the Company or
Subsidiary, which employment agreement includes a definition of "Cause," the
term "Cause" as used in this Plan or any Agreement shall have the meaning set
forth in such employment agreement during the period that such employment
agreement remains in effect; and

                                      -1-
<Page>

                           (b) in all other cases, (i) intentional failure to
perform reasonably assigned duties, (ii) dishonesty or willful misconduct in the
performance of duties, (iii) involvement in a transaction in connection with the
performance of duties to the Company or any of its Subsidiaries which
transaction is adverse to the interests of the Company or any of its
Subsidiaries and which is engaged in for personal profit or (iv) willful
violation of any law, rule or regulation in connection with the performance of
duties (other than traffic violations or similar offenses); PROVIDED, HOWEVER,
that following a Change in Control clause (i) of this Section 2.5(b) shall not
constitute "Cause."

                  2.6 "Change in Capitalization" means any increase or reduction
in the number of Shares, or any change (including, but not limited to, in the
case of a spin-off, dividend or other distribution in respect of Shares, a
change in value) in the Shares or exchange of Shares for a different number or
kind of shares or other securities of the Company or another corporation, by
reason of a reclassification, recapitalization, merger, consolidation,
reorganization, spin-off, split-up, issuance of warrants or rights or
debentures, stock dividend, stock split or reverse stock split, cash dividend,
property dividend, combination or exchange of shares, repurchase of shares,
change in corporate structure or otherwise.

                  2.7 A "Change in Control" shall mean the occurrence of any of
the following:

                           (a) An acquisition (other than directly from the
Company) of any voting securities of the Company (the "Voting Securities") by
any "Person" (as the term "person" is used for purposes of Section 13(d) or
14(d) of the Exchange Act), other than any of the Forstmann Little Partnerships
or any of their Affiliates, immediately after which such Person has "Beneficial
Ownership" (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of more than fifty percent (50%) of the then-outstanding Shares or the combined
voting power of the Company's then-outstanding Voting Securities; PROVIDED,
HOWEVER, that in determining whether a Change in Control has occurred pursuant
to this Section 2.7(a), the acquisition of Shares or Voting Securities in a
"Non-Control Acquisition" (as hereinafter defined) shall not constitute a Change
in Control. A "Non-Control Acquisition" shall mean an acquisition by (i) an
employee benefit plan (or a trust forming a part thereof) maintained by (A) the
Company or (B) any corporation or other Person the majority of the voting power,
voting equity securities or equity interest of which is owned, directly or
indirectly, by the Company (for purposes of this definition, a "Related
Entity"), (ii) the Company or any Related Entity, or (iii) any Person in
connection with a "Non-Control Transaction" (as hereinafter defined);

                           (b) The individuals who, as of immediately following
the completion of the Initial Public Offering, are members of the Board (the
"Incumbent Board"), cease for any reason to constitute at least a majority of
the members of the Board

                                      -2-
<Page>

or, following a Merger (as hereinafter defined), the board of directors of (x)
the corporation resulting from such Merger (the "Surviving Corporation"), if
fifty percent (50%) or more of the combined voting power of the then-outstanding
voting securities of the Surviving Corporation is not Beneficially Owned,
directly or indirectly, by another Person (a "Parent Corporation") or (y) if
there is one or more than one Parent Corporation, the ultimate Parent
Corporation; PROVIDED, HOWEVER, that, if the election, or nomination for
election by the Company's common stockholders, of any new director was approved
by a vote of at least two-thirds of the Incumbent Board, such new director
shall, for purposes of the Plan, be considered a member of the Incumbent Board;
and PROVIDED, FURTHER, HOWEVER, that no individual shall be considered a member
of the Incumbent Board if such individual initially assumed office as a result
of an actual or threatened solicitation of proxies or consents by or on behalf
of a Person other than the Board (a "Proxy Contest"), including by reason of any
agreement intended to avoid or settle any Proxy Contest; or

                           (c)      The consummation of:

                                    (i) A merger, consolidation or
reorganization (1) with or into the Company or a direct or indirect subsidiary
of the Company or (2) in which securities of the Company are issued (a
"Merger"), unless such Merger is a "Non-Control Transaction." A "Non-Control
Transaction" shall mean a Merger in which:

                                            (A) the stockholders of the Company
immediately before such Merger own directly or indirectly immediately following
such Merger at least fifty percent (50%) of the combined voting power of the
outstanding voting securities of (x) the Surviving Corporation, if there is no
Parent Corporation or (y) if there is one or more than one Parent Corporation,
the ultimate Parent Corporation; and

                                            (B) the individuals who were members
of the Incumbent Board immediately prior to the execution of the agreement
providing for such Merger constitute at least a majority of the members of the
board of directors of (x) the Surviving Corporation, if there is no Parent
Corporation, or (y) if there is one or more than one Parent Corporation, the
ultimate Parent Corporation;

                                    (ii) A complete liquidation or dissolution
of the Company; or

                                    (iii) The sale or other disposition of all
or substantially all of the assets of the Company and its Subsidiaries taken as
a whole to any Person (other than (x) a transfer to a Related Entity, (y) a
transfer under conditions that would constitute a Non-Control Transaction, with
the disposition of assets being regarded as a Merger for this purpose or (z) the
distribution to the Company's stockholders of the stock of a Related Entity or
any other assets).

                                      -3-
<Page>

                  Notwithstanding the foregoing, a Change in Control shall not
be deemed to occur solely because any Person (the "Subject Person") acquired
Beneficial Ownership of more than the permitted amount of the then outstanding
Shares or Voting Securities as a result of the acquisition of Shares or Voting
Securities by the Company which, by reducing the number of Shares or Voting
Securities then outstanding, increases the proportional number of shares
Beneficially Owned by the Subject Persons; PROVIDED that if a Change in Control
would occur (but for the operation of this sentence) as a result of the
acquisition of Shares or Voting Securities by the Company and, after such share
acquisition by the Company, the Subject Person becomes the Beneficial Owner of
any additional Shares or Voting Securities and such Beneficial Ownership
increases the percentage of the then outstanding Shares or Voting Securities
Beneficially Owned by the Subject Person, then a Change in Control shall occur.

                  If an Eligible Individual's employment is terminated by the
Company without Cause prior to the date of a Change in Control, but the Eligible
Individual reasonably demonstrates that the termination (A) was at the request
of a third party that has indicated an intention or taken steps reasonably
calculated to effect a Change in Control or (B) otherwise arose in connection
with, or in anticipation of, a Change in Control that has been threatened or
proposed, such termination shall be deemed to have occurred after such Change in
Control for purposes of the Plan, so long as such Change in Control shall
actually have occurred.

                  2.8 "Code" means the Internal Revenue Code of 1986, as
amended.

                  2.9 "Committee" means a committee, as described in Section
3.1, appointed by the Board from time to time to administer the Plan and to
perform the functions set forth herein.

                  2.10 "Company" means Citadel Broadcasting Corporation, and any
successor thereto.

                  2.11 "Director" means a director of the Company.

                  2.12 "Disability" means:

                           (a) in the case of an Optionee or Grantee whose
employment with the Company or a Subsidiary is subject to the terms of an
employment agreement between such Optionee or Grantee and the Company or
Subsidiary, which employment agreement includes a definition of "Disability",
the term "Disability" as used in this Plan or any Agreement shall have the
meaning set forth in such employment agreement during the period that such
employment agreement remains in effect; or

                                      -4-
<Page>

                           (b) the term "Disability" as used in the Company's
long-term disability plan, if any; or

                           (c) in all other cases, the term "Disability" as used
in this Plan or any Agreement shall mean a physical or mental infirmity which
impairs the Optionee's or Grantee's ability to perform substantially his or her
duties for a period of one hundred eighty (180) consecutive days.

                  2.13 "Division" means any of the operating units or divisions
of the Company designated as a Division by the Committee.

                  2.14 "Dividend Equivalent Right" means a right to receive all
or some portion of the cash dividends that are or would be payable with respect
to Shares.

                  2.15 "Eligible Director" means any individual who is a
Director as of the pricing of the Shares in an Initial Public Offering or who
has consented to become a Director immediately following the completion of an
Initial Public Offering and who is neither (1) an officer or employee of the
Company or any of its Subsidiaries nor (2) a general partner of any
partnership affiliated with the Forstmann Little Partnerships.

                  2.16 "Eligible Individual" means any of the following
individuals who is designated by the Committee as eligible to receive Options or
Awards subject to the conditions set forth herein: (a) any director, officer or
employee of the Company or a Subsidiary, (b) any individual to whom the Company
or a Subsidiary has extended a formal, written offer of employment, or (c) any
consultant or advisor of the Company or a Subsidiary.

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

                  2.18 "Fair Market Value" on any date means (a) the closing
price in the primary trading session for a Share on such date on the stock
exchange, if any, on which Shares are primarily traded (or if no Shares were
traded on such date, then on the most recent previous date on which any Shares
were so traded), (b) if clause (a) is not applicable, the closing price of the
Shares on such date on The Nasdaq Stock Market at the close of the primary
trading session (or if no Shares were traded on such date, then on the most
recent previous date on which any Shares were so traded) or (c) if neither
clause (a) nor clause (b) is applicable, the value of a Share for such date as
established by the Committee, using any reasonable method of valuation.

                  2.19 "Forstmann Little Partnerships" shall mean Forstmann
Little & Co. Equity Partnership-VI, L.P.; Forstmann Little & Co. Equity
Partnership-VII, L.P.; Forstmann Little & Co. Subordinated Debt and Equity
Management Buyout Partnership-

                                      -5-
<Page>

VII, L.P.; and Forstmann Little & Co. Subordinated Debt and Equity Management
Buyout Partnership-VIII, L.P.

                  2.20 "Grantee" means a person to whom an Award has been
granted under the Plan.

                  2.21 "Incentive Stock Option" means an Option satisfying the
requirements of Section 422 of the Code and designated by the Committee as an
Incentive Stock Option.

                  2.22 "Initial Public Offering" means the consummation of the
first public offering of Shares pursuant to a registration statement (other than
a Form S-8 or successor forms) filed with, and declared effective by, the
Securities and Exchange Commission.

                  2.23 "Nonemployee Director" means a director of the Company
who is a "nonemployee director" within the meaning of Rule 16b-3 promulgated
under the Exchange Act.

                  2.24 "Nonqualified Stock Option" means an Option which is not
an Incentive Stock Option.

                  2.25 "Option" means a Nonqualified Stock Option, an Incentive
Stock Option, or either or both of them.

                  2.26 "Optionee" means a person to whom an Option has been
granted under the Plan.

                  2.27 "Outside Director" means a director of the Company who is
an "outside director" within the meaning of Section 162(m) of the Code and the
regulations promulgated thereunder.

                  2.28 "Parent" means any corporation which is a parent
corporation within the meaning of Section 424(e) of the Code with respect to the
Company.

                  2.29 "Performance Awards" means Performance Units, Performance
Shares or either or both of them.

                  2.30 "Performance-Based Compensation" means any Option or
Award that is intended to constitute "performance based compensation" within the
meaning of Section 162(m)(4)(C) of the Code and the regulations promulgated
thereunder.

                  2.31 "Performance Cycle" means the time period specified by
the Committee at the time Performance Awards are granted during which the
performance of the Company, a Subsidiary or a Division will be measured.

                                      -6-
<Page>

                  2.32 "Performance Objectives" has the meaning set forth in
Section 8.

                  2.33 "Performance Shares" means Shares issued or transferred
to an Eligible Individual under Section 8.

                  2.34 "Performance Units" means Performance Units granted to an
Eligible Individual under Section 8.

                  2.35 "Phantom Stock" means a right granted to an Eligible
Individual under Section 9 representing a number of hypothetical Shares.

                  2.36 "Plan" means this Citadel Broadcasting Corporation 2002
Stock Option and Award Plan, as amended and restated from time to time.

                  2.37 "Restricted Stock" means Shares issued or transferred to
an Eligible Individual pursuant to Section 7.

                  2.38 "Share Award" means an Award of Shares granted pursuant
to Section 9.

                  2.39 "Shares" means the Class A common stock, par value $.01
per share, of the Company, and any other securities into which such shares are
changed or for which such shares are exchanged.

                  2.40 "Stock Appreciation Right" means a right to receive all
or some portion of the increase in the value of the Shares as provided in
Section 6 hereof.

                  2.41 "Subsidiary" means (a) except as provided in subsection
(b) below, any corporation which is a subsidiary corporation within the meaning
of Section 424(f) of the Code with respect to the Company, and (b) in relation
to the eligibility to receive Options or Awards other than Incentive Stock
Options and continued employment for purposes of Options and Awards (unless the
Committee determines otherwise), any entity, whether or not incorporated, in
which the Company directly or indirectly owns 50% or more of the outstanding
equity or other ownership interests.

                  2.42 "Successor Corporation" means a corporation, or a Parent
or Subsidiary thereof within the meaning of Section 424(a) of the Code, which
issues or assumes a stock option in a transaction to which Section 424(a) of the
Code applies.

                  2.43 "Ten-Percent Stockholder" means an Eligible Individual,
who, at the time an Incentive Stock Option is to be granted to him or her, owns
(within the meaning of Section 422(b)(6) of the Code) stock possessing more than
ten percent (10%) of the total combined voting power of all classes of stock of
the Company, or of a Parent or a Subsidiary.

                                      -7-
<Page>

                  2.44 "Transition Period" means the period beginning with the
Initial Public Offering and ending as of the earlier of (i) the date of the
first annual meeting of shareholders of the Company at which directors are to be
elected that occurs after the close of the third calendar year following the
calendar year in which the Initial Public Offering occurs, or (ii) the
expiration of the "reliance period" under Treasury Regulation ss.
1.162-27(f)(2).

         3.       ADMINISTRATION.

                  3.1 The Plan shall be administered by the Committee, which
shall hold meetings at such times as may be necessary for the proper
administration of the Plan. The Committee shall keep minutes of its meetings. If
the Committee consists of more than one (1) member, a quorum shall consist of
not fewer than two (2) members of the Committee and a majority of a quorum may
authorize any action. Any decision or determination reduced to writing and
signed by a majority of all of the members of the Committee shall be as fully
effective as if made by a majority vote at a meeting duly called and held. The
Committee shall consist of at least one (1) Director and may consist of the
entire Board; PROVIDED, HOWEVER, that from and after the date of an Initial
Public Offering, (A) if the Committee consists of less than the entire Board,
then with respect to any Option or Award to an Eligible Individual who is
subject to Section 16 of the Exchange Act, the Committee shall consist of at
least two (2) Directors each of whom shall be a Nonemployee Director and (B) to
the extent necessary for any Option or Award intended to qualify as
Performance-Based Compensation to so qualify, the Committee shall consist of at
least two (2) Directors, each of whom shall be an Outside Director. For purposes
of the preceding sentence, if one or more members of the Committee is not a
Nonemployee Director and an Outside Director but recuses himself or herself or
abstains from voting with respect to a particular action taken by the Committee,
then the Committee, with respect to that action, shall be deemed to consist only
of the members of the Committee who have not recused themselves or abstained
from voting. Subject to applicable law and Section 3.4 of the Plan, the
Committee may delegate its authority under the Plan to any other person or
persons.

                  3.2 No member of the Committee shall be liable for any action,
failure to act, determination or interpretation made in good faith with respect
to this Plan or any transaction hereunder. The Company hereby agrees to
indemnify each member of the Committee for all costs and expenses and, to the
extent permitted by applicable law, any liability incurred in connection with
defending against, responding to, negotiating for the settlement of or otherwise
dealing with any claim, cause of action or dispute of any kind arising in
connection with any actions in administering this Plan or in authorizing or
denying authorization to any transaction hereunder.

                  3.3 Subject to the express terms and conditions set forth
herein, the Committee shall have the power from time to time to:

                                      -8-
<Page>

                           (a) determine those Eligible Individuals to whom
Options shall be granted under the Plan and the number of such Options to be
granted and to prescribe the terms and conditions (which need not be identical)
of each such Option, including the exercise price per Share, the vesting
schedule and the duration of each Option, and make any amendment or modification
to any Option Agreement consistent with the terms of the Plan;

                           (b) select those Eligible Individuals to whom Awards
shall be granted under the Plan and to determine the number of Shares in respect
of which each Award is granted, the terms and conditions (which need not be
identical) of each such Award, and make any amendment or modification to any
Award Agreement consistent with the terms of the Plan;

                           (c) to construe and interpret the Plan and the
Options and Awards granted hereunder and to establish, amend and revoke rules
and regulations for the administration of the Plan, including, but not limited
to, correcting any defect or supplying any omission, or reconciling any
inconsistency in the Plan or in any Agreement, in the manner and to the extent
it shall deem necessary or advisable, including so that the Plan and the
operation of the Plan complies with Rule 16b-3 under the Exchange Act, the Code
to the extent applicable and other applicable law, and otherwise to make the
Plan fully effective. All decisions and determinations by the Committee in the
exercise of this power shall be final, binding and conclusive upon the Company,
its Subsidiaries, the Optionees and Grantees, and all other persons having any
interest therein;

                           (d) to determine the duration and purposes for leaves
of absence which may be granted to an Optionee or Grantee on an individual basis
without constituting a termination of employment or service for purposes of the
Plan;

                           (e) to exercise its discretion with respect to the
powers and rights granted to it as set forth in the Plan; and

                           (f) generally, to exercise such powers and to perform
such acts as are deemed necessary or advisable to promote the best interests of
the Company with respect to the Plan.

                  3.4 The Board may delegate to one or more officers of the
Company the authority (a) to designate the officers and employees who shall be
Eligible Individuals and (b) to determine the Options or Awards to be granted to
any such Eligible Individuals; PROVIDED HOWEVER, that no officer of the Company
shall have the authority to grant Options or Awards to himself or herself. Any
such delegation shall be made by resolution of the Board, and such resolution
shall set forth the total number of Options and Awards subject to such
delegation.

                                      -9-
<Page>

         4.       STOCK SUBJECT TO THE PLAN; GRANT LIMITATIONS.

                  4.1 The maximum number of Shares that may be made the subject
of Options and Awards granted under the Plan is five million (5,000,000). The
Company shall reserve, for the purposes of the Plan, such number of Shares out
of its authorized but unissued Shares or out of Shares held in the Company's
treasury, or partly out of each.

                  4.2 Upon the granting of an Option or an Award, the number of
Shares available under Section 4.1 for the granting of further Options and
Awards shall be reduced as follows:

                           (a) In connection with the granting of an Option or
an Award (other than the granting of a Performance Unit denominated in dollars),
the number of Shares shall be reduced by the number of Shares in respect of
which the Option or Award is granted or denominated; PROVIDED, HOWEVER, that if
any Option is exercised by tendering Shares, either actually or by attestation,
to the Company as full or partial payment of the exercise price, the maximum
number of Shares available under Section 4.1 shall be increased by the number of
Shares so tendered.

                           (b) In connection with the granting of a Performance
Unit denominated in dollars, the number of Shares shall be reduced by an amount
equal to the quotient of (i) the dollar amount in which the Performance Unit is
denominated, divided by (ii) the Fair Market Value of a Share on the date the
Performance Unit is granted.

                  4.3 Whenever any outstanding Option or Award or portion
thereof, expires, is canceled, is settled in cash (including the settlement of
tax withholding obligations using Shares) or is otherwise terminated for any
reason without having been exercised or payment having been made in respect of
the entire Option or Award, the Shares allocable to the expired, canceled,
settled or otherwise terminated portion of the Option or Award may again be the
subject of Options or Awards granted hereunder.

                  4.4 In no event may more than fifty thousand (50,000) Shares
be issued upon the exercise of Incentive Stock Options granted under the Plan.

         5.       OPTION GRANTS FOR ELIGIBLE INDIVIDUALS.

                  5.1 AUTHORITY OF COMMITTEE. Subject to the provisions of the
Plan, the Committee shall have full and final authority to select those Eligible
Individuals who will receive Options, and the terms and conditions of the grant
to such Eligible Individuals shall be set forth in an Agreement. Incentive Stock
Options may be granted only to Eligible Individuals who are employees of the
Company or any Subsidiary.

                  5.2 EXERCISE PRICE. The purchase price or the manner in which
the exercise price is to be determined for Shares under each Option shall be
determined by

                                      -10-
<Page>

the Committee and set forth in the Agreement; PROVIDED, HOWEVER, that the
exercise price per Share under each Incentive Stock Option shall not be less
than 100% of the Fair Market Value of a Share on the date the Option is granted
(110% in the case of an Incentive Stock Option granted to a Ten-Percent
Stockholder).

                  5.3 MAXIMUM DURATION. Options granted hereunder shall be for
such term as the Committee shall determine, provided that an Incentive Stock
Option shall not be exercisable after the expiration of ten (10) years from the
date it is granted (five (5) years in the case of an Incentive Stock Option
granted to a Ten-Percent Stockholder) and a Nonqualified Stock Option shall not
be exercisable after the expiration of ten (10) years from the date it is
granted; PROVIDED, HOWEVER, that unless the Committee provides otherwise, an
Option (other than an Incentive Stock Option) may, upon the death of the
Optionee prior to the expiration of the Option, be exercised for up to one (1)
year following the date of the Optionee's death even if such period extends
beyond ten (10) years from the date the Option is granted. The Committee may,
subsequent to the granting of any Option, extend the term thereof, but in no
event shall the term as so extended exceed the maximum term provided for in the
preceding sentence.

                  5.4 VESTING. Each Option shall become exercisable in such
installments (which need not be equal) and at such times as may be designated by
the Committee and set forth in the Agreement. To the extent not exercised,
installments shall accumulate and be exercisable, in whole or in part, at any
time after becoming exercisable, but not later than the date the Option expires.
The Committee may accelerate the exercisability of any Option or portion thereof
at any time.

                  5.5 DEFERRED DELIVERY OF OPTION SHARES. The Committee may, in
its discretion permit Optionees to elect to defer the issuance of Shares upon
the exercise of one or more Nonqualified Stock Options granted pursuant to the
Plan. The terms and conditions of such deferral shall be determined at the time
of the grant of the Option or thereafter and shall be set forth in the Agreement
evidencing the Option.

                  5.6 LIMITATIONS ON INCENTIVE STOCK OPTIONS. To the extent that
the aggregate Fair Market Value (determined as of the date of the grant) of
Shares with respect to which Incentive Stock Options granted under the Plan and
"incentive stock options" (within the meaning of Section 422 of the Code)
granted under all other plans of the Company or its Subsidiaries (in either case
determined without regard to this Section 5.6) are exercisable by an Optionee
for the first time during any calendar year exceeds $100,000, such Incentive
Stock Options shall be treated as Nonqualified Stock Options. In applying the
limitation in the preceding sentence in the case of multiple Option grants,
Options which were intended to be Incentive Stock Options shall be treated as
Nonqualified Stock Options according to the order in which they were granted
such that the most recently granted Options are first treated as Nonqualified
Stock Options.

                                      -11-
<Page>

                  5.7 NON-TRANSFERABILITY. No Option shall be transferable by
the Optionee otherwise than by will or by the laws of descent and distribution
or, in the case of an Option other than an Incentive Stock Option, pursuant to a
domestic relations order (within the meaning of Rule 16a-12 promulgated under
the Exchange Act), and an Option shall be exercisable during the lifetime of
such Optionee only by the Optionee or his or her guardian or legal
representative. Notwithstanding the foregoing, the Committee may set forth in
the Agreement evidencing an Option (other than an Incentive Stock Option) at the
time of grant or thereafter, that the Option may be transferred to members of
the Optionee's immediate family, to trusts solely for the benefit of such
immediate family members and to partnerships in which such family members and/or
trusts are the only partners, and for purposes of this Plan, a transferee of an
Option shall be deemed to be the Optionee. For this purpose, immediate family
means the Optionee's spouse, parents, children, stepchildren and grandchildren
and the spouses of such parents, children, stepchildren and grandchildren. The
terms of an Option shall be final, binding and conclusive upon the
beneficiaries, executors, administrators, heirs and successors of the Optionee.

                  5.8 METHOD OF EXERCISE. The exercise of an Option shall be
made only by a written notice delivered in person or by mail to the Secretary of
the Company at the Company's principal executive office, specifying the number
of Shares to be exercised and, to the extent applicable, accompanied by payment
therefor and otherwise in accordance with the Agreement pursuant to which the
Option was granted; PROVIDED, HOWEVER, that Options may not be exercised by an
Optionee for twelve months following a hardship distribution to the Optionee, to
the extent such exercise is prohibited under Treasury Regulation Sections
1.401(k)-1(d)(2)(iv)(B)(4). The exercise price for any Shares purchased pursuant
to the exercise of an Option shall be paid in (a) cash or (b) if permitted by
the Committee in its discretion, through the transfer, either actually or by
attestation, to the Company of Shares that have been held by the Optionee for at
least six (6) months (or such lesser period as may be permitted by the
Committee) prior to the exercise of the Option, such transfer to be upon such
terms and conditions as determined by the Committee. In addition, Options may be
exercised through a registered broker-dealer pursuant to such cashless exercise
procedures which are, from time to time, deemed acceptable by the Committee. Any
Shares transferred to the Company as payment of the exercise price under an
Option shall be valued at their Fair Market Value on the day of exercise of such
Option. If requested by the Committee, the Optionee shall deliver the Agreement
evidencing the Option to the Secretary of the Company who shall endorse thereon
a notation of such exercise and return such Agreement to the Optionee. No
fractional Shares (or cash in lieu thereof) shall be issued upon exercise of an
Option and the number of Shares that may be purchased upon exercise shall be
rounded to the nearest number of whole Shares.

                                      -12-
<Page>

                  5.9 RIGHTS OF OPTIONEES. No Optionee shall be deemed for any
purpose to be the owner of any Shares subject to any Option unless and until (a)
the Option shall have been exercised pursuant to the terms thereof, (b) the
Company shall have issued and delivered Shares to the Optionee, and (c) the
Optionee's name shall have been entered as a stockholder of record on the books
of the Company. Thereupon, the Optionee shall have full voting, dividend and
other ownership rights with respect to such Shares, subject to such terms and
conditions as may be set forth in the applicable Agreement.

         6.       STOCK APPRECIATION RIGHTS.

                  The Committee may in its discretion, either alone or in
connection with the grant of an Option, grant Stock Appreciation Rights in
accordance with the Plan, the terms and conditions of which shall be set forth
in an Agreement. If granted in connection with an Option, a Stock Appreciation
Right shall cover the same Shares covered by the Option (or such lesser number
of Shares as the Committee may determine) and shall, except as provided in this
Section 6, be subject to the same terms and conditions as the related Option.

                  6.1 TIME OF GRANT. A Stock Appreciation Right may be granted
(a) at any time if unrelated to an Option, or (b) if related to an Option,
either at the time of grant or at any time thereafter during the term of the
Option.

                  6.2 STOCK APPRECIATION RIGHT RELATED TO AN OPTION.

                           (a) EXERCISE. A Stock Appreciation Right granted in
connection with an Option shall be exercisable at such time or times and only to
the extent that the related Options are exercisable, and will not be
transferable except to the extent the related Option may be transferable. A
Stock Appreciation Right granted in connection with an Incentive Stock Option
shall be exercisable only if the Fair Market Value of a Share on the date of
exercise exceeds the exercise price specified in the related Incentive Stock
Option Agreement.

                           (b) AMOUNT PAYABLE. Upon the exercise of a Stock
Appreciation Right related to an Option, the Grantee shall be entitled to
receive an amount determined by multiplying (i) the excess of the Fair Market
Value of a Share on the date of exercise of such Stock Appreciation Right over
the per Share exercise price under the related Option, by (ii) the number of
Shares as to which such Stock Appreciation Right is being exercised.
Notwithstanding the foregoing, the Committee may limit in any manner the amount
payable with respect to any Stock Appreciation Right by including such a limit
in the Agreement evidencing the Stock Appreciation Right at the time it is
granted.

                           (c) TREATMENT OF RELATED OPTIONS AND STOCK
APPRECIATION RIGHTS UPON EXERCISE. Upon the exercise of a Stock Appreciation
Right granted in connection

                                      -13-
<Page>

with an Option, the Option shall be canceled to the extent of the number of
Shares as to which the Stock Appreciation Right is exercised, and upon the
exercise of an Option granted in connection with a Stock Appreciation Right, the
Stock Appreciation Right shall be canceled to the extent of the number of Shares
as to which the Option is exercised or surrendered.

                  6.3 STOCK APPRECIATION RIGHT UNRELATED TO AN OPTION. The
Committee may grant to Eligible Individuals Stock Appreciation Rights unrelated
to Options. Stock Appreciation Rights unrelated to Options shall contain such
terms and conditions as to exercisability, vesting and duration as the Committee
shall determine, but in no event shall they have a term of greater than ten (10)
years; PROVIDED, HOWEVER, that the Committee may provide that Stock Appreciation
right may, upon the death of the Grantee, be exercised for up to one (1) year
following the date of the Grantee's death even if such period extends beyond ten
(10) years from the date the Stock Appreciation Right is granted. Upon exercise
of a Stock Appreciation Right unrelated to an Option, the Grantee shall be
entitled to receive an amount determined by multiplying (a) the excess of the
Fair Market Value of a Share on the date of exercise of such Stock Appreciation
Right over the Fair Market Value of a Share on the date the Stock Appreciation
Right was granted, by (b) the number of Shares as to which the Stock
Appreciation Right is being exercised. Notwithstanding the foregoing, the
Committee may limit in any manner the amount payable with respect to any Stock
Appreciation Right by including such a limit in the Agreement evidencing the
Stock Appreciation Right at the time it is granted.

                  6.4 NON-TRANSFERABILITY. No Stock Appreciation Right shall be
transferable by the Grantee otherwise than by will or by the laws of descent and
distribution or pursuant to a domestic relations order (within the meaning of
Rule 16a-12 promulgated under the Exchange Act), and such Stock Appreciation
Right shall be exercisable during the lifetime of such Grantee only by the
Grantee or his or her guardian or legal representative. The terms of such Stock
Appreciation Right shall be final, binding and conclusive upon the
beneficiaries, executors, administrators, heirs and successors of the Grantee.

                  6.5 METHOD OF EXERCISE. Stock Appreciation Rights shall be
exercised by a Grantee only by a written notice delivered in person or by mail
to the Secretary of the Company at the Company's principal executive office,
specifying the number of Shares with respect to which the Stock Appreciation
Right is being exercised. If requested by the Committee, the Grantee shall
deliver the Agreement evidencing the Stock Appreciation Right being exercised
and the Agreement evidencing any related Option to the Secretary of the Company
who shall endorse thereon a notation of such exercise and return such Agreement
to the Grantee.

                  6.6 FORM OF PAYMENT. Payment of the amount determined under
Sections 6.2(b) or 6.3 may be made in the discretion of the Committee solely in
whole

                                      -14-
<Page>

Shares in a number determined at their Fair Market Value on the date of exercise
of the Stock Appreciation Right, or solely in cash, or in a combination of cash
and Shares. If the Committee decides to make full payment in Shares and the
amount payable results in a fractional Share, payment for the fractional Share
will be made in cash.

         7.       RESTRICTED STOCK.

                  7.1 GRANT. The Committee may grant Awards to Eligible
Individuals of Restricted Stock, which shall be evidenced by an Agreement
between the Company and the Grantee. Each Agreement shall contain such
restrictions, terms and conditions as the Committee may, in its discretion,
determine and (without limiting the generality of the foregoing) such Agreements
may require that an appropriate legend be placed on Share certificates. Awards
of Restricted Stock shall be subject to the terms and provisions set forth below
in this Section 7.

                  7.2 RIGHTS OF GRANTEE. Shares of Restricted Stock granted
pursuant to an Award hereunder shall be issued in the name of the Grantee as
soon as reasonably practicable after the Award is granted provided that the
Grantee has executed an Agreement evidencing the Award, the appropriate blank
stock powers and, in the discretion of the Committee, an escrow agreement and
any other documents which the Committee may require as a condition to the
issuance of such Shares. If a Grantee shall fail to execute the Agreement
evidencing a Restricted Stock Award, or any documents which the Committee may
require within the time period prescribed by the Committee at the time the Award
is granted, the Award shall be null and void. At the discretion of the
Committee, Shares issued in connection with a Restricted Stock Award shall be
deposited together with the stock powers with an escrow agent (which may be the
Company) designated by the Committee. Unless the Committee determines otherwise
and as set forth in the Agreement, upon delivery of the Shares to the escrow
agent, the Grantee shall have all of the rights of a stockholder with respect to
such Shares, including the right to vote the Shares and to receive all dividends
or other distributions paid or made with respect to the Shares.

                  7.3 NON-TRANSFERABILITY. Until all restrictions upon the
Shares of Restricted Stock awarded to a Grantee shall have lapsed in the manner
set forth in Section 7.4, such Shares shall not be sold, transferred or
otherwise disposed of and shall not be pledged or otherwise hypothecated.

                  7.4 LAPSE OF RESTRICTIONS. Restrictions upon Shares of
Restricted Stock awarded hereunder shall lapse at such time or times and on such
terms and conditions as the Committee may determine. The Agreement evidencing
the Award shall set forth any such restrictions.

                                      -15-
<Page>

                  7.5 TREATMENT OF DIVIDENDS. At the time an Award of Shares of
Restricted Stock is granted, the Committee may, in its discretion, determine
that the payment to the Grantee of dividends, or a specified portion thereof,
declared or paid on such Shares by the Company shall be (a) deferred until the
lapsing of the restrictions imposed upon such Shares and (b) held by the Company
for the account of the Grantee until such time. In the event that dividends are
to be deferred, the Committee shall determine whether such dividends are to be
reinvested in Shares (which shall be held as additional Shares of Restricted
Stock) or held in cash. If deferred dividends are to be held in cash, there may
be credited at the end of each year (or portion thereof) interest on the amount
of the account at the beginning of the year at a rate per annum as the
Committee, in its discretion, may determine. Payment of deferred dividends in
respect of Shares of Restricted Stock (whether held in cash or as additional
Shares of Restricted Stock), together with interest accrued thereon, if any,
shall be made upon the lapsing of restrictions imposed on the Shares in respect
of which the deferred dividends were paid, and any dividends deferred (together
with any interest accrued thereon) in respect of any Shares of Restricted Stock
shall be forfeited upon the forfeiture of such Shares.

                  7.6 DELIVERY OF SHARES. Upon the lapse of the restrictions on
Shares of Restricted Stock, the Committee shall cause a stock certificate to be
delivered to the Grantee with respect to such Shares, free of all restrictions
hereunder.

         8.       PERFORMANCE AWARDS.

                  8.1 PERFORMANCE UNITS. The Committee, in its discretion, may
grant Awards of Performance Units to Eligible Individuals, the terms and
conditions of which shall be set forth in an Agreement between the Company and
the Grantee. Performance Units may be denominated in Shares or a specified
dollar amount and, contingent upon the attainment of specified Performance
Objectives within the Performance Cycle, represent the right to receive payment
as provided in Section 8.3(c) of (a) in the case of Share-denominated
Performance Units, the Fair Market Value of a Share on the date the Performance
Unit was granted, the date the Performance Unit became vested or any other date
specified by the Committee, (b) in the case of dollar-denominated Performance
Units, the specified dollar amount or (c) a percentage (which may be more than
100%) of the amount described in clause (a) or (b) depending on the level of
Performance Objective attainment; PROVIDED, HOWEVER, that, the Committee may at
the time a Performance Unit is granted specify a maximum amount payable in
respect of a vested Performance Unit. Each Agreement shall specify the number of
Performance Units to which it relates, the Performance Objectives which must be
satisfied in order for the Performance Units to vest and the Performance Cycle
within which such Performance Objectives must be satisfied.

                           (a) VESTING AND FORFEITURE. Subject to Sections
8.3(c), a Grantee shall become vested with respect to the Performance Units to
the extent that the

                                      -16-
<Page>

Performance Objectives set forth in the Agreement are satisfied for the
Performance Cycle.

                           (b) PAYMENT OF AWARDS. Subject to Section 8.3(c),
payment to Grantees in respect of vested Performance Units shall be made as soon
as practicable after the last day of the Performance Cycle to which such Award
relates unless the Agreement evidencing the Award provides for the deferral of
payment, in which event the terms and conditions of the deferral shall be set
forth in the Agreement. Such payments may be made entirely in Shares valued at
their Fair Market Value, entirely in cash, or in such combination of Shares and
cash as the Committee in its discretion shall determine at any time prior to
such payment; PROVIDED, HOWEVER, that if the Committee in its discretion
determines to make such payment entirely or partially in Shares of Restricted
Stock, the Committee must determine the extent to which such payment will be in
Shares of Restricted Stock and the terms of such Restricted Stock at the time
the Award is granted.

                  8.2 PERFORMANCE SHARES. The Committee, in its discretion, may
grant Awards of Performance Shares to Eligible Individuals, the terms and
conditions of which shall be set forth in an Agreement between the Company and
the Grantee. Each Agreement may require that an appropriate legend be placed on
Share certificates. Awards of Performance Shares shall be subject to the
following terms and provisions:

                           (a) RIGHTS OF GRANTEE. The Committee shall provide at
the time an Award of Performance Shares is made the time or times at which the
actual Shares represented by such Award shall be issued in the name of the
Grantee; PROVIDED, HOWEVER, that no Performance Shares shall be issued until the
Grantee has executed an Agreement evidencing the Award, the appropriate blank
stock powers and, in the discretion of the Committee, an escrow agreement and
any other documents which the Committee may require as a condition to the
issuance of such Performance Shares. If a Grantee shall fail to execute the
Agreement evidencing an Award of Performance Shares, the appropriate blank stock
powers and, in the discretion of the Committee, an escrow agreement and any
other documents which the Committee may require within the time period
prescribed by the Committee at the time the Award is granted, the Award shall be
null and void. At the discretion of the Committee, Shares issued in connection
with an Award of Performance Shares shall be deposited together with the stock
powers with an escrow agent (which may be the Company) designated by the
Committee. Except as restricted by the terms of the Agreement, upon delivery of
the Shares to the escrow agent, the Grantee shall have, in the discretion of the
Committee, all of the rights of a stockholder with respect to such Shares,
including the right to vote the Shares and to receive all dividends or other
distributions paid or made with respect to the Shares.

                           (b) NON-TRANSFERABILITY. Until any restrictions upon
the Performance Shares awarded to a Grantee shall have lapsed in the manner set
forth in Sections 8.2(c), such Performance Shares shall not be sold, transferred
or otherwise

                                      -17-
<Page>

disposed of and shall not be pledged or otherwise hypothecated, nor shall they
be delivered to the Grantee. The Committee may also impose such other
restrictions and conditions on the Performance Shares, if any, as it deems
appropriate.

                           (c) LAPSE OF RESTRICTIONS. Subject to Sections
8.3(c), restrictions upon Performance Shares awarded hereunder shall lapse and
such Performance Shares shall become vested at such time or times and on such
terms, conditions and satisfaction of Performance Objectives as the Committee
may, in its discretion, determine at the time an Award is granted.

                           (d) TREATMENT OF DIVIDENDS. At the time the Award of
Performance Shares is granted, the Committee may, in its discretion, determine
that the payment to the Grantee of dividends, or a specified portion thereof,
declared or paid on Shares represented by such Award which have been issued by
the Company to the Grantee shall be (i) deferred until the lapsing of the
restrictions imposed upon such Performance Shares and (ii) held by the Company
for the account of the Grantee until such time. In the event that dividends are
to be deferred, the Committee shall determine whether such dividends are to be
reinvested in shares of Stock (which shall be held as additional Performance
Shares) or held in cash. If deferred dividends are to be held in cash, there may
be credited at the end of each year (or portion thereof) interest on the amount
of the account at the beginning of the year at a rate per annum as the
Committee, in its discretion, may determine. Payment of deferred dividends in
respect of Performance Shares (whether held in cash or in additional Performance
Shares), together with interest accrued thereon, if any, shall be made upon the
lapsing of restrictions imposed on the Performance Shares in respect of which
the deferred dividends were paid, and any dividends deferred (together with any
interest accrued thereon) in respect of any Performance Shares shall be
forfeited upon the forfeiture of such Performance Shares.

                           (e) DELIVERY OF SHARES. Upon the lapse of the
restrictions on Performance Shares awarded hereunder, the Committee shall cause
a stock certificate to be delivered to the Grantee with respect to such Shares,
free of all restrictions hereunder.

                  8.3      PERFORMANCE OBJECTIVES

                           (a) ESTABLISHMENT. Performance Objectives for
Performance Awards may be expressed in terms of (i) earnings per Share, (ii)
Share price, (iii) pre-tax profits, (iv) net earnings, (v) return on equity or
assets, (vi) sales, (vii) any combination of the foregoing or (viii) prior to
the end of the Transition Period, such other criteria as the Committee may
determine. Performance Objectives may be in respect of the performance of the
Company, any of its Subsidiaries, any of its Divisions or any combination
thereof. Performance Objectives may be absolute or relative (to prior
performance of the Company or to the performance of one or more other entities
or external indices) and may be expressed in terms of a progression within a
specified range. The Performance

                                      -18-
<Page>

Objectives with respect to a Performance Cycle shall be established in writing
by the Committee by the earlier of (x) the date on which a quarter of the
Performance Cycle has elapsed or (y) the date which is ninety (90) days after
the commencement of the Performance Cycle, and in any event while the
performance relating to the Performance Objectives remain substantially
uncertain.

                           (b) EFFECT OF CERTAIN EVENTS. At the time of the
granting of a Performance Award, or at any time thereafter, in either case to
the extent permitted under Section 162(m) of the Code and the regulations
thereunder without adversely affecting the treatment of the Performance Award as
Performance-Based Compensation, the Committee may provide for the manner in
which performance will be measured against the Performance Objectives (or may
adjust the Performance Objectives) to reflect the impact of specified corporate
transactions, accounting or tax law changes and other extraordinary or
nonrecurring events.

                           (c) DETERMINATION OF PERFORMANCE. Prior to the
vesting, payment, settlement or lapsing of any restrictions with respect to any
Performance Award that is intended to constitute Performance-Based Compensation
made to a Grantee who is subject to Section 162(m) of the Code, the Committee
shall certify in writing that the applicable Performance Objectives have been
satisfied to the extent necessary for such Award to qualify as Performance Based
Compensation.

                  8.4 NON-TRANSFERABILITY. Until the vesting of Performance
Units or the lapsing of any restrictions on Performance Shares, as the case may
be, such Performance Units or Performance Shares shall not be sold, transferred
or otherwise disposed of and shall not be pledged or otherwise hypothecated.

         9.       OTHER SHARE-BASED AWARDS.

                  9.1 SHARE AWARDS. The Committee may grant a Share Award to any
Eligible Individual on such terms and conditions as the Committee may determine
in its sole discretion. Share Awards may be made as additional compensation for
services rendered by the Eligible Individual or may be in lieu of cash or other
compensation to which the Eligible Individual is entitled from the Company.

                  9.2      PHANTOM STOCK AWARDS.

                           (a) GRANT. The Committee may, in its discretion,
grant shares of Phantom Stock to any Eligible Individuals. Such Phantom Stock
shall be subject to the terms and conditions established by the Committee and
set forth in the applicable Agreement.

                                      -19-
<Page>

                           (b) PAYMENT OF AWARDS. Upon the vesting of a Phantom
Stock Award, the Grantee shall be entitled to receive a cash payment in respect
of each share of Phantom Stock which shall be equal to the Fair Market Value of
a Share as of the date the Phantom Stock Award was granted, or such other date
as determined by the Committee at the time the Phantom Stock Award was granted.
The Committee may, at the time a Phantom Stock Award is granted, provide a
limitation on the amount payable in respect of each share of Phantom Stock. In
lieu of a cash payment, the Committee may settle Phantom Stock Awards with
Shares having a Fair Market Value equal to the cash payment to which the Grantee
has become entitled.

         10.      EFFECT OF A TERMINATION OF EMPLOYMENT.

                  The Agreement evidencing the grant of each Option and each
Award shall set forth the terms and conditions applicable to such Option or
Award upon a termination or change in the status of the employment of the
Optionee or Grantee by the Company, a Subsidiary or a Division (including a
termination or change by reason of the sale of a Subsidiary or a Division),
which shall be as the Committee may, in its discretion, determine at the time
the Option or Award is granted or thereafter.

         11.      ADJUSTMENT UPON CHANGES IN CAPITALIZATION.

                           (a) In the event of a Change in Capitalization, the
Committee shall conclusively determine the appropriate adjustments, if any, to
(i) the maximum number and class of Shares or other stock or securities with
respect to which Options or Awards may be granted under the Plan, (ii) the
number and class of Shares or other stock or securities which are subject to
outstanding Options or Awards granted under the Plan and the exercise price
therefor, if applicable, (iii) the maximum number and class of Shares or other
stock or securities with respect to which Incentive Stock Options may be granted
to any Eligible Individual during any calendar year and (iv) the Performance
Objectives.

                           (b) Any such adjustment in the Shares or other stock
or securities (i) subject to outstanding Incentive Stock Options (including any
adjustments in the exercise price) shall be made in such manner as not to
constitute a modification as defined by Section 424(h)(3) of the Code and only
to the extent otherwise permitted by Sections 422 and 424 of the Code, or (ii)
subject to outstanding Options or Awards that are intended to qualify as
Performance-Based Compensation shall be made in such a manner as not to
adversely affect the treatment of the Option or Award as Performance-Based
Compensation.

                           (c) If, by reason of a Change in Capitalization, a
Grantee of an Award shall be entitled to, or an Optionee shall be entitled to
exercise an Option with respect to, new, additional or different shares of stock
or securities of the Company or any

                                      -20-
<Page>

other corporation, such new, additional or different shares shall thereupon be
subject to all of the conditions, restrictions and performance criteria which
were applicable to the Shares subject to the Award or Option, as the case may
be, prior to such Change in Capitalization.

         12.      EFFECT OF CERTAIN TRANSACTIONS.

                  The Committee may, at the time an Option or Award is granted
or at any time thereafter, determine the effect of a Change in Control on the
Option or Award. In addition, in the event of (a) the liquidation or dissolution
of the Company or (b) a merger or consolidation of the Company (a
"Transaction"), the Plan and the Options and Awards issued hereunder shall
continue in effect in accordance with their respective terms, except that
following a Transaction either (i) each outstanding Option or Award shall be
treated as provided for in the agreement entered into in connection with the
Transaction or (ii) if not so provided in such agreement, each Optionee and
Grantee shall be entitled to receive in respect of each Share subject to any
outstanding Options or Awards, as the case may be, upon exercise of any Option
or payment or transfer in respect of any Award, the same number and kind of
stock, securities, cash, property or other consideration that each holder of a
Share was entitled to receive in the Transaction in respect of a Share;
PROVIDED, HOWEVER, that such stock, securities, cash, property, or other
consideration shall remain subject to all of the conditions, restrictions and
performance criteria which were applicable to the Options and Awards prior to
such Transaction. The treatment of any Option or Award as provided in this
Section 12 shall be conclusively presumed to be appropriate for purposes of
Section 11.

         13.      INITIAL PUBLIC OFFERING OPTION GRANTS FOR ELIGIBLE DIRECTORS.

                  13.1 GRANT. Effective as of the pricing of shares in an
Initial Public Offering, each Eligible Director shall be granted an Option (the
"IPO Option") in respect of fifty thousand (50,000) Shares. The IPO Option shall
be evidenced by an Agreement containing the terms set forth in this Section 13
and such other terms not inconsistent therewith as determined by the Committee.

                  13.2 PURCHASE PRICE. The purchase price for Shares under each
IPO Option shall be equal to the Initial Public Offering price.

                  13.3 EXERCISABILITY. Subject to Section 13.4, each IPO Option
shall become fully exercisable with respect to one-third of the Shares subject
thereto on each of the first through third anniversaries of the date of grant so
long as the Optionee continues to serve as a Director as of each such date.

                  13.4 DURATION. Each IPO Option shall terminate on the date
which is the tenth anniversary of the date of grant, unless terminated earlier
as follows:

                                      -21-
<Page>

                           (a) If an Optionee's service as a Director terminates
for any reason other than Disability, death or Cause, the Optionee may for a
period of three (3) months after such termination exercise the IPO Option
granted to the Optionee hereunder to the extent, and only to the extent, that
such Option or portion thereof was exercisable as of the date the Optionee's
service as a Director terminated, after which time the IPO Option shall
automatically terminate in full to the extent unexercised.

                           (b) If an Optionee's service as a Director terminates
by reason of the Optionee's resignation or removal from the Board due to
Disability, the Optionee may for a period of twelve (12) months after such
termination exercise the IPO Option granted to the Optionee hereunder to the
extent, and only to the extent, that such IPO Option or portion thereof was
exercisable as of the date the Optionee's service as Director terminated, after
which time the IPO Option shall automatically terminate in full to the extent
unexercised.

                           (c) If an Optionee's service as a Director terminates
for Cause, the IPO Option granted to the Optionee hereunder shall immediately
terminate in full to the extent unexercised.

                           (d) If an Optionee dies while a Director or within
three (3) months after termination of service as a Director as described in
Section 13.4(a) or within twelve (12) months after termination of service as a
Director as described in Section 13.4(b), the IPO Option granted to the Optionee
hereunder which has not then automatically terminated pursuant to this Section
13 may be exercised at any time within twelve (12) months after the Optionee's
death by the person or persons to whom such rights under the Option shall pass
by will, or by the laws of descent or distribution, after which time the Option
shall terminate in full to the extent unexercised.

         14.      INTERPRETATION.

                  Following the required registration of any equity security of
the Company pursuant to Section 12 of the Exchange Act:

                           (a) The Plan and each Option and Award under the Plan
are intended to comply with Rule 16b-3 promulgated under the Exchange Act, and
the Committee shall interpret and administer the provisions of the Plan or any
Agreement in a manner consistent therewith. Any provisions inconsistent with
such Rule shall be inoperative and shall not affect the validity of the Plan.

                           (b) Unless otherwise expressly stated in the relevant
Agreement, each Option, Stock Appreciation Right and Performance Award granted
under the Plan is intended to be Performance-Based Compensation. The Committee
shall not have the ability to exercise any discretion, and shall not exercise
any discretion otherwise

                                      -22-
<Page>

authorized hereunder with respect to such Options or Awards if the ability to
exercise such discretion or the exercise of such discretion itself would cause
the compensation attributable to such Options or Awards to fail to qualify as
Performance-Based Compensation.

                           (c) To the extent that any legal requirement of
Section 16 of the Exchange Act or Section 162(m) of the Code as set forth in the
Plan ceases to be required under Section 16 of the Exchange Act or Section
162(m) of the Code, that Plan provision shall cease to apply.

         15.      TERMINATION AND AMENDMENT OF THE PLAN OR MODIFICATION OF
                  OPTIONS AND AWARDS.

                  15.1 PLAN AMENDMENT OR TERMINATION. The Plan shall terminate
on the day preceding the tenth anniversary of the date of its adoption by the
Board and no Option or Award may be granted thereafter. The Board may sooner
terminate the Plan and the Board may at any time and from time to time amend,
modify or suspend the Plan; PROVIDED, HOWEVER, that:

                           (a) no such amendment, modification, suspension or
termination shall impair or adversely alter any Options or Awards theretofore
granted under the Plan, except with the consent of the Optionee or Grantee, nor
shall any amendment, modification, suspension or termination deprive any
Optionee or Grantee of any Shares which he or she may have acquired through or
as a result of the Plan; and

                           (b) to the extent necessary under any applicable law,
regulation or exchange requirement no amendment shall be effective unless
approved by the stockholders of the Company in accordance with applicable law,
regulation or exchange requirement.

                  15.2 MODIFICATION OF OPTIONS AND AWARDS. Subject to Section
12, no modification of an Option or Award shall adversely alter or impair any
rights or obligations under the Option or Award without the consent of the
Optionee or Grantee, as the case may be.

         16.      NON-EXCLUSIVITY OF THE PLAN.

                  The adoption of the Plan by the Board shall not be construed
as amending, modifying or rescinding any previously approved incentive
arrangement or as creating any limitations on the power of the Board to adopt
such other incentive arrangements as it may deem desirable, including, without
limitation, the granting of stock options otherwise than under the Plan, and
such arrangements may be either applicable generally or only in specific cases.

                                      -23-
<Page>

         17.      LIMITATION OF LIABILITY.

                  As illustrative of the limitations of liability of the
Company, but not intended to be exhaustive thereof, nothing in the Plan shall be
construed to:

                           (a) give any person any right to be granted an Option
or Award other than at the sole discretion of the Committee;

                           (b) give any person any rights whatsoever with
respect to Shares except as specifically provided in the Plan;

                           (c) limit in any way the right of the Company or any
Subsidiary to terminate the employment of any person at any time; or

                           (d) be evidence of any agreement or understanding,
expressed or implied, that the Company will employ any person at any particular
rate of compensation or for any particular period of time.

         18.      REGULATIONS AND OTHER APPROVALS; GOVERNING LAW.

                  18.1 Except as to matters of federal law, the Plan and the
rights of all persons claiming hereunder shall be construed and determined in
accordance with the laws of the State of Delaware without giving effect to
conflicts of laws principles thereof.

                  18.2 The obligation of the Company to sell or deliver Shares
with respect to Options and Awards granted under the Plan shall be subject to
all applicable laws, rules and regulations, including all applicable federal and
state securities laws, and the obtaining of all such approvals by governmental
agencies as may be deemed necessary or appropriate by the Committee.

                  18.3 The Board may make such changes as may be necessary or
appropriate to comply with the rules and regulations of any government
authority, or to obtain for Eligible Individuals granted Incentive Stock Options
the tax benefits under the applicable provisions of the Code and regulations
promulgated thereunder.

                  18.4 Each Option and Award is subject to the requirement that,
if at any time the Committee determines, in its discretion, that the listing,
registration or qualification of Shares issuable pursuant to the Plan is
required by any securities exchange or under any state or federal law, or the
consent or approval of any governmental regulatory body is necessary or
desirable as a condition of, or in connection with, the grant of an Option or
Award or the issuance of Shares, no Options or Awards shall be granted or
payment made or Shares issued, in whole or in part, unless listing,
registration, qualification, consent or approval has been effected or obtained
free of any conditions as acceptable to the Committee.

                                      -24-
<Page>

                  18.5 Notwithstanding anything contained in the Plan or any
Agreement to the contrary, in the event that the disposition of Shares acquired
pursuant to the Plan is not covered by a then current registration statement
under the Securities Act of 1933, as amended (the "Securities Act"), and is not
otherwise exempt from such registration, such Shares shall be restricted against
transfer to the extent required by the Securities Act and Rule 144 or other
regulations thereunder. The Committee may require any individual receiving
Shares pursuant to an Option or Award granted under the Plan, as a condition
precedent to receipt of such Shares, to represent and warrant to the Company in
writing that the Shares acquired by such individual are acquired without a view
to any distribution thereof and will not be sold or transferred other than
pursuant to an effective registration thereof under said Act or pursuant to an
exemption applicable under the Securities Act or the rules and regulations
promulgated thereunder. The certificates evidencing any of such Shares shall be
appropriately amended or have an appropriate legend placed thereon to reflect
their status as restricted securities as aforesaid.

         19.      MISCELLANEOUS.

                  19.1 MULTIPLE AGREEMENTS. The terms of each Option or Award
may differ from other Options or Awards granted under the Plan at the same time,
or at some other time. The Committee may also grant more than one Option or
Award to a given Eligible Individual during the term of the Plan, either in
addition to, or in substitution for, one or more Options or Awards previously
granted to that Eligible Individual.

                  19.2     WITHHOLDING OF TAXES.

                           (a) At such times as an Optionee or Grantee
recognizes wages in connection with the receipt of Shares or cash hereunder (a
"Taxable Event"), the Optionee or Grantee shall pay to the Company an amount
equal to the federal, state and local income taxes, employment taxes and other
amounts as may be required by law to be withheld by the Company in connection
with the Taxable Event (the "Withholding Taxes"). The Company shall have the
right to deduct from any payment of cash to an Optionee or Grantee an amount
equal to the Withholding Taxes in satisfaction of the obligation to pay
Withholding Taxes. The Committee may provide in the Agreement at the time of
grant, or at any time thereafter, that the Optionee or Grantee, in satisfaction
of the obligation to pay Withholding Taxes, may elect to have withheld a portion
of the Shares then issuable to him or her having an aggregate Fair Market Value
equal to the Withholding Taxes.

                           (b) If an Optionee makes a disposition, within the
meaning of Section 424(c) of the Code and regulations promulgated thereunder, of
any Share or Shares issued to such Optionee pursuant to the exercise of an
Incentive Stock Option within the two-year period commencing on the day after
the date of the grant or within the one-year period commencing on the day after
the date of transfer of such Share or Shares

                                      -25-
<Page>

to the Optionee pursuant to such exercise, the Optionee shall, within ten (10)
days of such disposition, notify the Company thereof, by delivery of written
notice to the Company at its principal executive office.

                  19.3 EFFECTIVE DATE. The effective date of this Plan shall be
as determined by the Board, subject only to the approval by the holders of a
majority of the securities of the Company entitled to vote thereon, in
accordance with applicable law, within twelve (12) months of the adoption of the
Plan by the Board.

                  19.4 POST-TRANSITION PERIOD. Following the Transition Period,
any Option, Stock Appreciation Right or Performance Award granted under the Plan
which is intended to be Performance-Based Compensation, shall be subject to the
approval of the material terms of the Plan by a majority of the shareholders of
the Company in accordance with Section 162(m) of the Code and the regulations
promulgated thereunder.

                                      -26-

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