Document:

The Company's Incentive Stock Compensation Plan 2000

  
 EXHIBIT 4.4 

 
 LUFKIN INDUSTRIES, INC. 
  
 INCENTIVE STOCK COMPENSATION PLAN 2000 
  
 SECTION 1. Purpose of the Plan. 
  
 The Lufkin Industries, Inc. Incentive Stock Compensation Plan 2000 (the
“Plan”) is intended to promote the interests of Lufkin Industries, Inc., a Delaware corporation (the “Company”), by encouraging officers, employees, directors and consultants of the Company and its Affiliates to acquire or
increase their equity interest in the Company and to provide a means whereby they may develop a sense of proprietorship and personal involvement in the development and financial success of the Company, and to encourage them to remain with and devote
their best efforts to the business of the Company thereby advancing the interests of the Company and its stockholders. The Plan is also contemplated to enhance the ability of the Company and its Affiliates to attract and retain the services of
individuals who are essential for the growth and profitability of the Company. 
  
 SECTION 2. Definitions. 
  
 As used in the Plan, the following terms shall have the meanings set forth below: 
  
 “Affiliate” shall mean (i) any “parent corporation” of the Company (as defined in Section 424(e) of the Code) and any “subsidiary corporation” of any such corporation (as defined in
Section 424(f) of the Code), (ii) any entity that, directly or through one or more intermediaries, is controlled by the Company, and (iii) any entity in which the Company has a significant equity interest, as determined by the Committee. 

 
 “Award” shall mean any Option, Restricted Stock, Performance
Award, Phantom Shares, Bonus Shares, Other Stock-Based Award or Cash Award. 
  
 “Award Agreement” shall mean any agreement, contract, or other instrument or document (written or electronic) evidencing any Award, which may, but need not, be executed or acknowledged by a Participant.

  
 “Board” shall mean the Board of Directors of the
Company. 
  
 “Bonus Shares” shall mean an award of
Shares granted pursuant to Section 6(d) of the Plan. 
  
 “Cash Award” shall mean an award payable in cash granted pursuant to Section 6(f) of the Plan. 
  
 “Change in Control” shall mean the occurrence of any one of the following events: 
  
 (a) any “person,” as such term is used in Section 13(d) and 14(d) of the Exchange Act (other than
the Company, any trustee or other fiduciary holding securities under an executive benefit plan of the Company, or any company owned, directly or indirectly, by the shareholders of the 

  

 
Company in substantially the same proportions as their ownership of stock of the Company) together with its “Affiliates” and
“Associates”, as such term is defined in Rule 12b-2 of the Exchange Act, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing
25% or more of the Company’s common stock or of the combined voting power of the Company’s then outstanding securities entitled to vote generally in the election of directors; 
  
 (b) during any period of two consecutive years, individuals who at the beginning of such period constitute
the Board, and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in clause (a), (c) or (d) of this definition) whose election by the Board or
nomination for election by the Company’s shareholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute at least a majority thereof; 
  
 (c) the shareholders of the Company approve a merger or consolidation of the Company with any other company other than (A) a merger or
consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than
65% of the combined voting power of the voting securities of the Company (or such surviving entity) outstanding immediately after such merger or consolidation, or (B) a merger or consolidation effected to implement a recapitalization of the Company
(or similar transaction) in which no “person” (as hereinabove defined) acquires more than 25% of the combined voting power of the Company’s then outstanding securities; or 
  
 (d) the shareholders of the Company adopt a plan of complete liquidation of the Company or approve an
agreement for the sale, exchange or disposition by the Company of “all or a significant portion of the Company’s assets,” which for this purpose shall mean a sale or other disposition transaction or series of related transactions
involving assets of the Company or any subsidiary (including the stock of any subsidiary) in which the value of the assets or stock being sold or otherwise disposed of (as measured by the purchase price being paid therefor or by such other method as
the Board determines is appropriate in a case where there is no readily ascertainable purchase price) constitutes more than 35% of the fair market value of the Company (as hereinafter defined). For purposes of the preceding sentence, the “fair
market value of the Company” shall be the aggregate market value of the outstanding shares of common stock of the Company (on a fully diluted basis) plus the aggregate market value of the Company’s other outstanding equity securities. The
aggregate market value of the shares of common stock of the Company shall be determined by multiplying the number of shares of the Company’s common stock (on a fully diluted basis) outstanding on the date of the execution and delivery of a
definitive agreement with respect to the transaction or series of related transactions (the “Transaction Date”) by the market value per share immediately preceding the Transaction Date or by such other method as the Board shall reasonably
determine is appropriate. The aggregate market value of any other equity securities of the Company shall be determined in a manner similar to that prescribed in the immediately preceding sentence for determining the aggregate market value of the
shares of common stock of the Company or by such other method as the Board shall reasonably determine is appropriate. 
  

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 “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, and the
rules and regulations thereunder. 
  
 “Committee” shall
mean the committee appointed by the Board to administer the Plan or, if none, the Board. 
  
 “Consultant” shall mean any individual, other than a Director or an Employee, who renders consulting services to the Company or an Affiliate for a fee. 
  
 “Director” shall mean a “non-employee director” of the
Company, as defined in Rule 16b-3. 
  
 “Employee” shall
mean any employee of the Company or an Affiliate. 
  
 “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended. 
  
 “Fair Market Value” shall mean, with respect to Shares, the closing sales price of a Share on the applicable date (or if there is no trading in the Shares on such date, on the next preceding date on which
there was trading) as reported in The Wall Street Journal (or other reporting service approved by the Committee). In the event the Shares are not publicly traded at the time a determination of its fair market value is required to be made
hereunder, the determination of fair market value shall be made in good faith by the Committee. 
  
 “Option” shall mean an option granted under Section 6(a) of the Plan. Options granted under the Plan may constitute “incentive stock
options” for purposes of Section 422 of the Code or nonqualified stock options. 
  
 “Other Stock-Based Award” shall mean an award granted pursuant to Section 6(g) of the Plan that is not otherwise specifically provided for, the value of which is based in whole or in part upon the value of a
Share. 
  
 “Participant” shall mean any Director,
Employee or Consultant granted an Award under the Plan. 
  
 “Performance Award” shall mean any right granted under Section 6(c) of the Plan. 
  
 “Performance Objectives” means the objectives, if any, established by the Committee that are to be achieved with respect to an Award granted
under this Plan, which may be described in terms of Company-wide objectives, in terms of objectives that are related to performance of a division, subsidiary, department or function within the Company or an Affiliate in which the Participant
receiving the Award is employed or in individual or other terms, and which will relate to the period of time determined by the Committee. The Performance Objectives intended to qualify under Section 162(m) of the Code shall be with respect to one or
more of the following: earnings per share; earnings before interest, taxes, depreciation and amortization expenses (“EBITDA”); earnings before interest and taxes (“EBIT”); EBITDA, EBIT or earnings before taxes and unusual or
nonrecurring items as measured either against the annual budget or as a ratio to revenue; 

  

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market share; sales; costs; return on equity; operating cash flow; discretionary cash flow; return on net capital employed; and stock price performance.
Which objectives to use with respect to an Award, the weighting of the objectives if more than one is used, and whether the objective is to be measured against a Company-established budget or target, an index or a peer group of companies, shall be
determined by the Committee in its discretion at the time of grant of the Award. A Performance Objective need not be based on an increase or a positive result and may include, for example, maintaining the status quo or limiting economic losses.

  
 “Person” shall mean individual, corporation,
partnership, association, joint-stock company, trust, unincorporated organization, government or political subdivision thereof or other entity. 
  
 “Phantom Shares” shall mean an Award of the right to receive Shares issued at the end of a Restricted Period which is granted pursuant to
Section 6(e) of the Plan. 
  
 “Restricted Period” shall
mean the period established by the Committee with respect to an Award during which the Award either remains subject to forfeiture or is not exercisable by the Participant. 
  
 “Restricted Stock” shall mean any Share, prior to the lapse of restrictions thereon, granted under Sections 6(b)
of the Plan. 
  
 “Rule 16b-3” shall mean Rule 16b-3
promulgated by the SEC under the Exchange Act, or any successor rule or regulation thereto as in effect from time to time. 
  
 “SEC” shall mean the Securities and Exchange Commission, or any successor thereto. 
  
 “Shares” or “Common Shares” or “Common Stock” shall mean the common stock of the Company,
$1.00 par value, and such other securities or property as may become the subject of Awards under the Plan. 
  

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 SECTION 3. Administration. 
  
 The Plan shall be administered by the Committee. A majority of the Committee shall constitute a quorum, and the acts of the
members of the Committee who are present at any meeting thereof at which a quorum is present, or acts unanimously approved by the members of the Committee in writing, shall be the acts of the Committee. Subject to the following, the Committee, in
its sole discretion, may delegate any or all of its powers and duties under the Plan, including the power to grant Awards under the Plan, to the Chief Executive Officer of the Company, subject to such limitations on such delegated powers and duties
as the Committee may impose. Upon any such delegation all references in the Plan to the “Committee”, other than in Section 7, shall be deemed to include the Chief Executive Officer; provided, however, that such delegation shall not limit
the Chief Executive Officer’s right to receive Awards under the Plan. Notwithstanding the foregoing, the Chief Executive Officer may not grant Awards to, or take any action with respect to any Award previously granted to, a person who is an
officer or a member of the Board. Subject to the terms of the Plan and applicable law, and in addition to other express powers and authorizations conferred on the Committee by the Plan, the Committee shall have full power and authority to: (i)
designate Participants; (ii) determine the type or types of Awards to be granted to a Participant; (iii) determine the number of Shares to be covered by, or with respect to which payments, rights, or other matters are to be calculated in connection
with, Awards; (iv) determine the terms and conditions of any Award; (v) determine whether, to what extent, and under what circumstances Awards may be settled or exercised in cash, Shares, other securities, other Awards or other property, or
canceled, forfeited, or suspended and the method or methods by which Awards may be settled, exercised, canceled, forfeited, or suspended; (vi) determine whether, to what extent, and under what circumstances cash, Shares, other securities, other
Awards, other property, and other amounts payable with respect to an Award shall be deferred either automatically or at the election of the holder thereof or of the Committee; (vii) interpret and administer the Plan and any instrument or agreement
relating to an Award made under the Plan; (viii) establish, amend, suspend, or waive such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan; and (ix) make any other determination and
take any other action that the Committee deems necessary or desirable for the administration of the Plan. Unless otherwise expressly provided in the Plan, all designations, determinations, interpretations, and other decisions under or with respect
to the Plan or any Award shall be within the sole discretion of the Committee, may be made at any time and shall be final, conclusive, and binding upon all Persons, including the Company, any Affiliate, any Participant, any holder or beneficiary of
any Award, any stockholder and any Employee. 
  
 SECTION 4.
Shares Available for Awards. 
  
 (a) Shares
Available. Subject to adjustment as provided in Section 4(c), the number of Shares with respect to which Awards may be granted under the Plan shall be 900,000. If any Award is exercised, paid, forfeited, terminated or canceled without the
delivery of Shares, then the Shares covered by such Award, to the extent of such payment, exercise, forfeiture, termination or cancellation, shall again be Shares with respect to which Awards may be granted. 
  
 (b) Sources of Shares Deliverable Under Awards. Any Shares delivered
pursuant to an Award may consist, in whole or in part, of authorized and unissued Shares or of treasury Shares. 
  

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 (c) Adjustments. In the event that the Committee determines that any dividend or other
distribution (whether in the form of cash, Shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Shares or
other securities of the Company, issuance of warrants or other rights to purchase Shares or other securities of the Company, or other similar corporate transaction or event affects the Shares such that an adjustment is determined by the Committee to
be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, then the Committee shall, in such manner as it may deem equitable, adjust any or all of (i) the number and
type of Shares (or other securities or property) with respect to which Awards may be granted, (ii) the number and type of Shares (or other securities or property) subject to outstanding Awards, and (iii) the grant or exercise price with respect to
any Award or, if deemed appropriate, make provision for a cash payment to the holder of an outstanding Award. 
  
 SECTION 5. Eligibility. 
  
 Any Employee, Director or Consultant shall be eligible to be designated a Participant and receive an Award under the Plan. 
  
 SECTION 6. Awards. 
  
 (a) Options. Subject to the provisions of the Plan, the Committee
shall have the authority to determine the Participants to whom Options shall be granted, the number of Shares to be covered by each Option, the purchase price therefor and the conditions and limitations applicable to the exercise of the Option,
including the following terms and conditions and such additional terms and conditions, as the Committee shall determine, that are not inconsistent with the provisions of the Plan. 
  
 (i) Exercise Price. The purchase price per Share purchasable under an Option shall be determined by
the Committee at the time the Option is granted, but shall not be less than the Fair Market Value per Share on such grant date. 
  
 (ii) Time and Method of Exercise. The Committee shall determine the time or times at which an Option may be exercised in whole or
in part (which may include the achievement of one or more Performance Objectives), and the method or methods by which, and the form or forms (which may include, without limitation, cash, check acceptable to the Company, Shares already-owned for more
than six months, outstanding Awards, Shares that would otherwise be acquired upon exercise of the Option, a “cashless-broker” exercise through procedures approved by the Company, other securities or other property, loans, notes approved by
the Committee, or any combination thereof, having a Fair Market Value on the exercise date equal to the relevant exercise price) in which payment of the exercise price with respect thereto may be made or deemed to have been made. 
  
 (iii) Incentive Stock Options. The terms of any
Option granted under the Plan intended to be an incentive stock option shall comply in all respects with the provisions of Section 422 of the Code, or any successor provision, and any regulations promulgated thereunder. Incentive stock options may
be granted only to employees of the Company and its parent corporation and subsidiary 

  

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corporations, within the meaning of Section 424 of the Code. To the extent the aggregate Fair Market Value of the Shares (determined as of the date of grant)
of an Option to the extent exercisable for the first time during any calendar year (under all plans of the Company and its parent and subsidiary corporations) exceeds $100,000, such Option Shares in excess of $100,000 shall be nonqualified stock
options. 
  
 (iv) Limits. The maximum
number of Options that may be granted to any Participant during any calendar year shall not exceed 300,000 Shares. 
  
 (b) Restricted Stock. Subject to the provisions of the Plan, the Committee shall have the authority to determine the Participants to whom
Restricted Stock shall be granted, the number of Shares of Restricted Stock to be granted to each such Participant, the duration of the Restricted Period during which, and the conditions, including Performance Objectives, if any, under which if not
achieved, the Restricted Stock may be forfeited to the Company, and the other terms and conditions of such Awards. Unless subject to the achievement of Performance Objectives or a special determination is made by the Committee as to a shorter
Restricted Period, the Restricted Period shall not be less than three years. 
  
 (i) Dividends. Dividends paid on Restricted Stock may be paid directly to the Participant, may be subject to risk of forfeiture and/or transfer restrictions during any period established by the Committee or
sequestered and held in a bookkeeping cash account (with or without interest) or reinvested on an immediate or deferred basis in additional shares of Common Stock, which credit or shares may be subject to the same restrictions as the underlying
Award or such other restrictions, all as determined by the Committee in its discretion. 
  
 (ii) Registration. Any Restricted Stock may be evidenced in such manner as the Committee shall deem appropriate, including, without
limitation, book-entry registration or issuance of a stock certificate or certificates. In the event any stock certificate is issued in respect of Restricted Stock granted under the Plan, such certificate shall be registered in the name of the
Participant and shall bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Restricted Stock. 
  
 (iii) Forfeiture and Restrictions Lapse. Except as otherwise determined by the Committee or the terms of the Award that granted the
Restricted Stock, upon termination of a Participant’s employment (as determined under criteria established by the Committee) for any reason during the applicable Restricted Period, all Restricted Stock shall be forfeited by the Participant and
reacquired by the Company. Unrestricted Shares, evidenced in such manner as the Committee shall deem appropriate, shall be issued to the holder of Restricted Stock promptly after the applicable restrictions have lapsed or otherwise been satisfied.

  
 (iv) Transfer Restrictions. During the
Restricted Period, Restricted Stock will be subject to the limitations on transfer as provided in Section 6(h)(iii). 
  
 (v) Limits. The maximum number of Shares of Restricted Stock that may be granted to any Participant during any calendar year shall
not exceed 150,000 Shares. 
  

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 (c) Performance Awards. The Committee shall have the authority to determine the Participants who
shall receive a Performance Award, which shall be denominated as a cash amount (e.g., $100 per award unit) at the time of grant and confer on the Participant the right to receive payment of such Award, in whole or in part, upon the achievement of
such Performance Objectives during such performance periods as the Committee shall establish with respect to the Award. 
  
 (i) Terms and Conditions. Subject to the terms of the Plan and any applicable Award Agreement, the Committee shall determine the
Performance Objectives to be achieved during any performance period, the length of any performance period, the amount of any Performance Award and the amount of any payment or transfer to be made pursuant to any Performance Award. 
  
 (ii) Payment of Performance Awards. Performance
Awards, to the extent earned, shall be paid (in cash and/or in Shares, in the sole discretion of the Committee) in a lump sum following the close of the performance period. 
  
 (iii) Limits. The maximum value of Performance Awards that may be granted to any Participant during
any calendar year shall not exceed $1,000,000. 
  
 (d) Bonus
Shares. The Committee shall have the authority, in its discretion, to grant Bonus Shares to Participants. Each Bonus Share shall constitute a transfer of an unrestricted Share to the Participant, without other payment therefor, as additional
compensation for the Participant’s services to the Company. Bonus Shares shall be in lieu of a cash bonus that otherwise would be granted to the Participant. 
  
 (e) Phantom Shares. The Committee shall have the authority to grant Awards of Phantom Shares to Participants upon
such terms and conditions as the Committee may determine. 
  
 (i) Terms and Conditions. Each Phantom Share Award shall constitute an agreement by the Company to issue or transfer a specified number of Shares or pay an amount of cash equal to a specified number of Shares,
or a combination thereof to the Participant in the future, subject to the fulfillment during the Restricted Period of such conditions, including Performance Objectives, if any, as the Committee may specify at the date of grant. During the Restricted
Period, the Participant shall not have any right to transfer any rights under the subject Award, shall not have any rights of ownership in the Phantom Shares and shall not have any right to vote such shares. 
  
 (ii) Dividends. Any Phantom Share award may provide
that amount equal to any or all dividends or other distributions paid on Shares during the Restricted Period be credited in a cash bookkeeping account (without interest) or that equivalent additional Phantom Shares be awarded, which account or
shares may be subject to the same restrictions as the underlying Award or such other restrictions as the Committee may determine. 
  
 (iii) Limits. The maximum number of Phantom Shares that may be granted to any Participant during any calendar year shall not exceed
150,000. 
  

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 (f) Cash Awards. The Committee shall have the authority to determine the Participants to whom Cash
Awards shall be granted, the amount, and the terms or conditions, if any, as additional compensation for the Participant’s services to the Company or its Affiliates. A Cash Award may be granted (simultaneously or subsequently) separately or in
tandem with another Award and may entitle a Participant to receive a specified amount of cash from the Company upon such other Award becoming taxable to the Participant, which cash amount may be based on a formula relating to the anticipated taxable
income associated with such other Award and the payment of the Cash Award. 
  
 (g) Other Stock-Based Awards. The Committee may grant to Participants an Other Stock-Based Award, which shall consist of a right which is an Award denominated or payable in, valued in whole or in part by
reference to, or otherwise based on or related to, Shares as is deemed by the Committee to be consistent with the purposes of the Plan. Subject to the terms of the Plan, including the Performance Objectives, if any, applicable to such Award, the
Committee shall determine the terms and conditions of any such Other Stock-Based Award. The maximum number of Shares or the value for which Other Stock-Based Awards may be granted to any Participant during any calendar year shall not exceed 300,000
Shares, if the Award is in Shares, or $1,000,000, if the Award is denominated in dollars. 
  
 (h) General. 
  
 (i) Awards May Be Granted Separately or Together. Awards may, in the discretion of the Committee, be granted either alone or in addition to, in tandem with, or in substitution for any other Award granted under the Plan or any award
granted under any other plan of the Company or any Affiliate. Awards granted in addition to or in tandem with other Awards or awards granted under any other plan of the Company or any Affiliate may be granted either at the same time as or at a
different time from the grant of such other Awards or awards. 
  
 (ii) Forms of Payment by Company Under Awards. Subject to the terms of the Plan and of any applicable Award Agreement, payments or transfers to be made by the Company or an Affiliate upon the grant, exercise or
payment of an Award may be made in such form or forms as the Committee shall determine, including, without limitation, cash, Shares, other securities, other Awards or other property, or any combination thereof, and may be made in a single payment or
transfer, in installments, or on a deferred basis, in each case in accordance with rules and procedures established by the Committee. Such rules and procedures may include, without limitation, provisions for the payment or crediting of reasonable
interest on installment or deferred payments. 
  
 (iii) Limits on Transfer of Awards. 
  
 (A) Except as provided in (C) below, each Award, and each right under any Award, shall be exercisable only by the Participant during the Participant’s lifetime, or by the person to whom the Participant’s rights shall pass by will
or the laws of descent and distribution. 
  
 (B)
Except as provided in (C) below, no Award and no right under any such Award may be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by a Participant otherwise than by will or by the laws of descent and 

  

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distribution (or, in the case of Restricted Stock, to the Company) and any such purported assignment, alienation, pledge, attachment, sale, transfer or
encumbrance shall be void and unenforceable against the Company or any Affiliate. 
  
 (C) Notwithstanding anything in the Plan to the contrary, to the extent specifically provided by the Committee with respect to a grant, a
nonqualified stock option may be transferred to immediate family members or related family trusts, or similar entities on such terms and conditions as the Committee may establish. 
  
 (iv) Term of Awards. The term of each Award shall be for such period as may be determined by the
Committee; provided, that in no event shall the term of any Award exceed a period of 10 years from the date of its grant. 
  
 (v) Share Certificates. All certificates for Shares or other securities of the Company or any Affiliate delivered under the Plan
pursuant to any Award or the exercise thereof shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Plan or the rules, regulations, and other requirements of the SEC, any stock exchange
upon which such Shares or other securities are then listed, and any applicable federal or state laws, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions. 

 
 (vi) Consideration for Grants. Awards may be
granted for no cash consideration or for such consideration as the Committee determines including, without limitation, such minimal cash consideration as may be required by applicable law. 
  
 (vii) Delivery of Shares or other Securities and Payment
by Participant of Consideration. No Shares or other securities shall be delivered pursuant to any Award until payment in full of any amount required to be paid pursuant to the Plan or the applicable Award Agreement (including, without
limitation, any exercise price, tax payment or tax withholding) is received by the Company. Such payment may be made by such method or methods and in such form or forms as the Committee shall determine, including, without limitation, cash, Shares,
other securities, other Awards or other property, withholding of Shares, cashless exercise with simultaneous sale, or any combination thereof; provided that the combined value, as determined by the Committee, of all cash and cash equivalents and the
Fair Market Value of any such Shares or other property so tendered to the Company, as of the date of such tender, is at least equal to the full amount required to be paid pursuant to the Plan or the applicable Award Agreement to the Company.

  
 SECTION 7. Amendment and Termination. 
  
 Except to the extent prohibited by applicable law and unless otherwise
expressly provided in an Award Agreement or in the Plan: 
  
 (a)
Amendments to the Plan. Except as required by applicable law or the rules of the principal securities market on which the shares are traded and subject to paragraph (b) below, the Board or the 

  

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Committee may amend, alter, suspend, discontinue, or terminate the Plan without the consent of any stockholder, Participant, other holder or beneficiary of
an Award, or other Person; provided, however, no such amendment may be made without stockholder approval, if such amendment would (i) materially increase the number of Shares authorized under the Plan or (ii) materially increase the Persons eligible
to receive Awards under the Plan. 
  
 (b) Amendments to
Awards. Subject to paragraph (d) below, the Committee may waive any conditions or rights under, amend any terms of, or alter any Award theretofore granted, provided no change, other than pursuant to paragraph (c), in any Award shall reduce the
benefit to Participant without the consent of such Participant. 
  
 (c) Adjustment of Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events. Subject to paragraph (d) below, the Committee is hereby authorized to make adjustments in the terms and conditions of, and the criteria included
in, Awards in recognition of unusual or nonrecurring events (including, without limitation, the events described in Section 4(c) of the Plan) affecting the Company, any Affiliate, or the financial statements of the Company or any Affiliate, or of
changes in applicable laws, regulations, or accounting principles, whenever the Committee determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made
available under the Plan. 
  
 (d) Section 162(m). The
Committee, in its sole discretion and without the consent of the Participant, may amend (i) any stock-based Award to reflect (1) a change in corporate capitalization, such as a stock split or dividend, (2) a corporate transaction, such as a
corporate merger, a corporate consolidation, any corporate separation (including a spinoff or other distribution of stock or property by a corporation), any corporate reorganization (whether or not such reorganization comes within the definition of
such term in Section 368 of the Code), (3) any partial or complete corporate liquidation, or (4) a change in accounting rules required by the Financial Accounting Standards Board and (ii) any Award that is not intended to meet the requirements of
Section 162(m) of the Code, to reflect significant event that the Committee, in its sole discretion, believes to be appropriate to reflect the original intent in the grant of the Award. With respect to an Award that is subject to Section 162(m) of
the Code, the Committee (i) shall not take any action that would disqualify such Award and (ii) must first certify that the Performance Objectives, if applicable, have been achieved before the Award may be paid. 
  

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 SECTION 8. Change in Control. 
  
 (a) Subject to paragraph (b) below, in the event of a Change in Control of the Company all outstanding Awards automatically
shall become fully vested immediately prior to such Change in Control (or such earlier time as set by the Committee), all restrictions, if any, with respect to such Awards shall lapse, all performance criteria, if any, with respect to such Awards
shall be deemed to have been met in full (at the highest level), and unless the Company survives as an independent publicly traded company, all Options outstanding at the time of the event or transaction shall terminate, except to the extent
provision is made in writing in connection with such event or transaction for the continuation of the Plan and/or the assumption of the Options theretofore granted, or for the substitution for such Options of new options covering the stock of a
successor entity, or the parent or subsidiary thereof, with appropriate adjustments as to the number and kinds of shares and exercise prices, in which event the Plan and Options theretofore granted shall continue in the manner and under the terms so
provided. 
  
 (b) Notwithstanding anything to the contrary in this
Plan, if a Participant is a “disqualified individual” (as defined in Section 280G(c) of the Code) and the accelerated vesting of an Award and/or the termination of the Restricted Period occurs with respect to a Change in Control, together
with any other payments which the Participant has the right to receive from any Person, whether or not under this Plan, would constitute a “parachute payment” (as defined in Section 280G(b)(2) of the Code), such accelerated vesting and/or
termination of the Restricted Period provided under the paragraph above shall be reduced to the extent necessary (beginning with Options) so that the present value thereof (as determined for parachute purposes) to the Participant will be $1.00 less
than three times the Participant’s “base amount” (as defined in Section 280G of the Code) but only if such reduction produces a better net after-tax position to the Participant. Such determination shall be made by the Company in good
faith. 
  
 SECTION 9. General Provisions. 
  
 (a) No Rights to Awards. No Director, Employee, Consultant or other
Person shall have any claim to be granted any Award, and there is no obligation for uniformity of treatment of Employees, Consultants, or holders or beneficiaries of Awards. The terms and conditions of Awards need not be the same with respect to
each recipient. 
  
 (b) Withholding. The Company or any
Affiliate is authorized to withhold from any Award, from any payment due or transfer made under any Award or under the Plan or from any compensation or other amount owing to a Participant the amount (in cash, Shares, other securities, Shares that
would otherwise be issued pursuant to such Award, other Awards or other property) of any applicable taxes payable in respect of an Award, its exercise, the lapse of restrictions thereon, or any payment or transfer under an Award or under the Plan
and to take such other action as may be necessary in the opinion of the Company to satisfy all obligations for the payment of such taxes. Notwithstanding the above, a Participant who is subject to Rule 16b-3 may direct the Company to satisfy such
Participant’s tax withholding obligation through the “constructive” tender of already-owned Shares or the withholding of Shares otherwise to be acquired upon the exercise or payment of such Award. 
  

 -12- 

 (c) No Right to Employment. The grant of an Award shall not be construed as giving a Participant
the right to be retained in the employ of the Company or any Affiliate. Further, the Company or an Affiliate may at any time dismiss a Participant from employment, free from any liability or any claim under the Plan, unless otherwise expressly
provided in the Plan or in any Award Agreement. 
  
 (d)
Governing Law. The validity, construction, and effect of the Plan and any rules and regulations relating to the Plan shall be determined in accordance with the laws of the State of Delaware, without regard to conflicts of laws principles, and
applicable federal law. 
  
 (e) Severability. If any
provision of the Plan or any Award is or becomes or is deemed to be invalid, illegal, or unenforceable in any jurisdiction or as to any Person or Award, or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such
provision shall be construed or deemed amended to conform to the applicable laws, or if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or the Award, such provision
shall be stricken as to such jurisdiction, Person or Award and the remainder of the Plan and any such Award shall remain in full force and effect. 
  
 (f) Other Laws. The Committee may refuse to issue or transfer any Shares or other consideration under an Award if, acting in its sole discretion,
it determines that the issuance of transfer or such Shares or such other consideration might violate any applicable law or regulation or entitle the Company to recover the same under Section 16(b) of the Exchange Act, and any payment tendered to the
Company by a Participant, other holder or beneficiary in connection with the exercise of such Award shall be promptly refunded to the relevant Participant, holder or beneficiary. 
  
 (g) No Trust or Fund Created. Neither the Plan nor the Award shall create or be construed to create a trust or
separate fund of any kind or a fiduciary relationship between the Company or any Affiliate and a Participant or any other Person. To the extent that any Person acquires a right to receive payments from the Company or any Affiliate pursuant to an
Award, such right shall be no greater than the right of any general unsecured creditor of the Company or any Affiliate. 
  
 (h) No Fractional Shares. No fractional Shares shall be issued or delivered pursuant to the Plan or any Award, and the Committee shall determine
whether cash, other securities, or other property shall be paid or transferred in lieu of any fractional Shares or whether such fractional Shares or any rights thereto shall be canceled, terminated, or otherwise eliminated. 
  
 (i) Headings. Headings are given to the Sections and subsections of
the Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision thereof. 
  
 SECTION 10. Designation of Beneficiary. 
  
 Each Participant to whom an Award has been made under this Plan may designate
a beneficiary or beneficiaries (which beneficiary may be an entity other than a natural person) to exercise any rights or receive any payment that under the terms of such Award may become exercisable or payable on or after the Participant’s
death. At any time, and from time to time, any such designation may be changed or cancelled 

  

 -13- 

 
by the Participant without the consent of any such beneficiary. Any such designation, change or cancellation must be on a form provided for that purpose by
the Committee and shall not be effective until received by the Committee. If no beneficiary has been named by a deceased Participant, or the designated beneficiaries have predeceased the Participant, the beneficiary shall be the Participant’s
estate. If a Participant designates more than one beneficiary, any such exercise or payment under this Plan shall be made in equal shares unless the Participant has designated otherwise, in which case the exercise or payment shall be made in the
shares designated by the Participant. 
  
 SECTION 11. Effective
Date of the Plan. 
  
 The Plan shall become effective upon its
adoption by the Board; however, no Award may become exercisable or payable unless, and until the Plan is approved by the stockholders of the Company within 12 months of the date it is adopted by the Board. In the event such stockholder approval is
not obtained, all Awards then outstanding on the first anniversary of the date adopted by the Board shall be automatically cancelled without payment. 
  
 SECTION 12. Term of the Plan. 
  
 No Award shall be granted under the Plan after the 10th anniversary of the date the Plan is adopted by the Board. However, unless otherwise expressly
provided in the Plan or in an applicable Award Agreement, any Award granted prior to such termination, and the authority of the Board or the Committee to amend, alter, adjust, suspend, discontinue, or terminate any such Award or to waive any
conditions or rights under such Award, shall extend beyond such termination date. 
  

 -14-2002 Stock Plan, as amended

 EXHIBIT 10.1A 
  
 TERCICA, INC. 
  
 2002 STOCK PLAN 
 (as amended January
2004) 
  
 1.    Purposes of the
Plan.    The purposes of this Plan are to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentive to Employees, Directors and Consultants and to promote the
success of the Company’s business. Options granted under the Plan may be Incentive Stock Options or Nonstatutory Stock Options, as determined by the Administrator at the time of grant. Stock Purchase Rights may also be granted under the Plan.

  
 2.    Definitions.    As used herein, the following definitions shall apply: 
  
 (a)    “Administrator” means the Board or any of its Committees as shall be administering the Plan in
accordance with Section 4 hereof. 
  
 (b)    “Applicable Laws” means the requirements relating to the administration of stock option plans under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange
or quotation system on which the Common Stock is listed or quoted and the applicable laws of any other country or jurisdiction where Options or Stock Purchase Rights are granted under the Plan. 
  
 (c)    “Board” means
the Board of Directors of the Company. 
  
 (d)    “Change in Control” means the occurrence of any of the following events: 
  
 (i)    Any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the
“beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the total voting power represented by the Company’s then outstanding
voting securities; or 
  
 (ii)    The consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets; or 
  
 (iii)    The consummation of a merger or consolidation of the Company with any other corporation, other than a merger
or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its
parent) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger or consolidation. 
  
 (e)    “Code” means the
Internal Revenue Code of 1986, as amended. 

 (f)    “Committee” means a committee of Directors or
of other individuals satisfying Applicable Laws appointed by the Board in accordance with Section 4 hereof. 
  
 (g)    “Common Stock” means the Common Stock of the Company. 
  
 (h)    “Company” means
Tercica, Inc., a Delaware corporation. 
  
 (i)    “Consultant” means any person who is engaged by the Company or any Parent or Subsidiary to render consulting or advisory services to such entity. 
  
 (j)    “Director” means
a member of the Board. 
  
 (k)    “Disability” means total and permanent disability as defined in Section 22(e)(3) of the Code. 
  
 (l)    “Employee” means any person, including officers and Directors, employed by the Company or any
Parent or Subsidiary of the Company. Neither service as a Director nor payment of a director’s fee by the Company shall be sufficient to constitute “employment” by the Company. 
  
 (m)    “Exchange Act”
means the Securities Exchange Act of 1934, as amended. 
  
 (n)    “Fair Market Value” means, as of any date, the value of Common Stock determined as follows: 
  
 (i)    If the Common Stock is listed on any established stock exchange or a national market system, including without
limitation the Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or
system on the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; 
  
 (ii)    If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported,
its Fair Market Value shall be the mean between the high bid and low asked prices for the Common Stock on the day of determination; or 
  
 (iii)    In the absence of an established market for the Common Stock, the Fair Market Value thereof shall be
determined in good faith by the Administrator. 
  
 (o)    “Incentive Stock Option” means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code. 
  
 (p)    “Nonstatutory Stock
Option” means an Option not intended to qualify as an Incentive Stock Option. 
  
 (q)    “Option” means a stock option granted pursuant to the Plan. 
  

 2 

 (r)    “Option Agreement” means a written or
electronic agreement between the Company and an Optionee evidencing the terms and conditions of an individual Option grant. The Option Agreement is subject to the terms and conditions of the Plan. 
  
 (s)    “Optioned Stock”
means the Common Stock subject to an Option or a Stock Purchase Right. 
  
 (t)    “Optionee” means the holder of an outstanding Option or Stock Purchase Right granted under the Plan. 
  
 (u)    “Parent” means a “parent corporation,” whether now or
hereafter existing, as defined in Section 424(e) of the Code. 
  
 (v)    “Plan” means this 2002 Stock Plan. 
  
 (w)    “Restricted Stock” means Shares issued pursuant to a Stock Purchase Right or Shares of
restricted stock issued pursuant to an Option. 
  
 (x)    “Restricted Stock Purchase Agreement” means a written agreement between the Company and the Optionee evidencing the terms and restrictions applying to Shares purchased under a Stock Purchase
Right. The Restricted Stock Purchase Agreement is subject to the terms and conditions of the Plan and the notice of grant. 
  
 (y)    “Securities Act” means the Securities Act of 1933, as amended. 
  
 (z)    “Service
Provider” means an Employee, Director or Consultant. 
  
 (aa)    “Share” means a share of the Common Stock, as adjusted in accordance with Section 12 below. 
  
 (bb)    “Stock Purchase Right” means a right to purchase Common Stock
pursuant to Section 11 below. 
  
 (cc)    “Subsidiary” means a “subsidiary corporation,” whether now or hereafter existing, as defined in Section 424(f) of the Code. 
  
 3.    Stock Subject to the Plan.    Subject to the provisions of Section 13
of the Plan, the maximum aggregate number of Shares that may be subject to option and sold under the Plan is 2,140,000 Shares. The Shares may be authorized but unissued, or reacquired Common Stock. 
  
 If an Option or Stock Purchase Right expires or becomes unexercisable without
having been exercised in full, the unpurchased Shares that were subject thereto shall become available for future grant or sale under the Plan (unless the Plan has terminated). However, Shares that have actually been issued under the Plan, upon
exercise of either an Option or Stock Purchase Right, shall not be returned to the Plan and shall not become available for future distribution under the Plan, except that if Shares of Restricted Stock are repurchased by the Company at their original
purchase price, such Shares shall become available for future grant under the Plan. 
  

 3 

 4.    Administration of the Plan. 
  
 (a)    Administrator.    The Plan shall be administered by the Board or a Committee appointed by the Board, which Committee shall be constituted to comply with Applicable Laws. 
  
 (b)    Powers of the
Administrator.    Subject to the provisions of the Plan and, in the case of a Committee, the specific duties delegated by the Board to such Committee, and subject to the approval of any relevant authorities, the Administrator
shall have the authority in its discretion: 
  
 (i)    to determine the Fair Market Value; 
  
 (ii)    to select the Service Providers to whom Options and Stock Purchase Rights may from time to time be granted hereunder; 
  
 (iii)    to determine the number of Shares to be covered by each such award granted
hereunder; 
  
 (iv)    to
approve forms of agreement for use under the Plan; 
  
 (v)    to determine the terms and conditions of any Option or Stock Purchase Right granted hereunder. Such terms and conditions include, but are not limited to, the exercise price, the time or times when Options or Stock
Purchase Rights may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Option or Stock Purchase Right or the Common Stock relating
thereto, based in each case on such factors as the Administrator, in its sole discretion, shall determine; 
  
 (vi)    to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations
relating to sub-plans established for the purpose of satisfying applicable foreign laws; 
  
 (vii)    to allow Optionees to satisfy withholding tax obligations by electing to have the Company withhold from the
Shares to be issued upon exercise of an Option or Stock Purchase Right that number of Shares having a Fair Market Value equal to the minimum amount required to be withheld. The Fair Market Value of the Shares to be withheld shall be determined on
the date that the amount of tax to be withheld is to be determined. All elections by Optionees to have Shares withheld for this purpose shall be made in such form and under such conditions as the Administrator may deem necessary or advisable; and

  
 (viii)    to construe and
interpret the terms of the Plan and Options granted pursuant to the Plan. 
  
 (c)    Effect of Administrator’s Decision.    All decisions, determinations and interpretations of the Administrator shall be final and binding on all Optionees.

  

 4 

 5.    Eligibility.    Nonstatutory Stock Options and Stock
Purchase Rights may be granted to Service Providers. Incentive Stock Options may be granted only to Employees. 
  
 6.    Limitations. 
  
 (a)    Incentive Stock Option Limit.    Each Option shall be designated in the Option
Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding such designation, to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options are exercisable
for the first time by the Optionee during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such Options shall be treated as Nonstatutory Stock Options. For purposes of this Section 6(a), Incentive
Stock Options shall be taken into account in the order in which they were granted. The Fair Market Value of the Shares shall be determined as of the time the Option with respect to such Shares is granted. 
  
 (b)    At-Will
Employment.    Neither the Plan nor any Option or Stock Purchase Right shall confer upon any Optionee any right with respect to continuing the Optionee’s relationship as a Service Provider with the Company, nor shall it
interfere in any way with his or her right or the Company’s right to terminate such relationship at any time, with or without cause, and with or without notice. 
  
 7.    Term of Plan.    Subject to shareholder approval in accordance with
Section 19, the Plan shall become effective upon its adoption by the Board. Unless sooner terminated under Section 15, it shall continue in effect for a term of ten (10) years from the later of (i) the effective date of the Plan, or (ii) the earlier
of the most recent board or shareholder approval of an increase in the number of Shares reserved for issuance under the Plan. 
  
 8.    Term of Option.    The term of each Option shall be stated in the Option Agreement; provided,
however, that the term shall be no more than ten (10) years from the date of grant thereof. In the case of an Incentive Stock Option granted to an Optionee who, at the time the Option is granted, owns stock representing more than ten percent (10%)
of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Option shall be five (5) years from the date of grant or such shorter term as may be provided in the Option Agreement. 
  
 9.    Option Exercise Price and Consideration.

  
 (a)    Exercise
Price.    The per share exercise price for the Shares to be issued upon exercise of an Option shall be such price as is determined by the Administrator, but shall be subject to the following: 
  
 (i)    In the case of an Incentive Stock
Option 
  
 (A)    granted to
an Employee who, at the time of grant of such Option, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the exercise price shall be no less than 110% of the
Fair Market Value per Share on the date of grant. 
  

 5 

 (B)    granted to any other Employee, the per Share exercise price
shall be no less than 100% of the Fair Market Value per Share on the date of grant. 
  
 (ii)    In the case of a Nonstatutory Stock Option 
  
 (A)    granted to a Service Provider who, at the time of grant of such Option, owns
stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the exercise price shall be no less than 110% of the Fair Market Value per Share on the date of grant. 

 
 (B)    granted to any other Service
Provider, the per Share exercise price shall be no less than 85% of the Fair Market Value per Share on the date of grant. 
  
 (iii)    Notwithstanding the foregoing, Options may be granted with a per Share exercise price other than as required
above pursuant to a merger or other corporate transaction. 
  
 (b)    Forms of Consideration.    The consideration to be paid for the Shares to be issued upon exercise of an Option, including the method of payment, shall be
determined by the Administrator (and, in the case of an Incentive Stock Option, shall be determined at the time of grant). Such consideration may consist of, without limitation, (1) cash, (2) check, (3) promissory note, (4) other Shares, provided
Shares acquired directly from the Company (x) have been owned by the Optionee for more than six months on the date of surrender, and (y) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to
which such Option shall be exercised, (5) consideration received by the Company under a cashless exercise program implemented by the Company in connection with the Plan, or (6) any combination of the foregoing methods of payment. In making its
determination as to the type of consideration to accept, the Administrator shall consider if acceptance of such consideration may be reasonably expected to benefit the Company. 
  
 10.    Exercise of Option. 
  
 (a)    Procedure for Exercise; Rights as a
Shareholder.    Any Option granted hereunder shall be exercisable according to the terms hereof at such times and under such conditions as determined by the Administrator and set forth in the Option Agreement. An Option may
not be exercised for a fraction of a Share. Except in the case of Options granted to officers, Directors and Consultants, Options shall become exercisable at a rate of no less than 20% per year over five (5) years from the date the Options are
granted. 
  
 An Option shall be deemed exercised
when the Company receives (i) written or electronic notice of exercise (in accordance with the Option Agreement) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised.
Full payment may consist of any consideration and method of payment authorized by the Administrator and permitted by the Option Agreement and the Plan. Shares issued upon exercise of an Option shall be issued in the name of the Optionee or, if
requested by the Optionee, in the name of the Optionee and his or her spouse. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or
receive dividends or any other rights as a shareholder shall exist with respect to the Shares, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such 

  

 6 

 
Shares promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the
Shares are issued, except as provided in Section 13 of the Plan. 
  
 Exercise of an Option in any manner shall result in a decrease in the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option
is exercised. 
  
 (b)    Termination of Relationship as a Service Provider.    If an Optionee ceases to be a Service Provider, such Optionee may exercise his or her Option within thirty (30) days of termination,
or such longer period of time as specified in the Option Agreement, to the extent that the Option is vested on the date of termination (but in no event later than the expiration of the term of the Option as set forth in the Option Agreement). If, on
the date of termination, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan. If, after termination, the Optionee does not exercise his or her Option within the
time specified by the Administrator, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan. 
  
 (c)    Disability of Optionee.    If an Optionee ceases to be a Service Provider as a
result of the Optionee’s Disability, the Optionee may exercise his or her Option within six (6) months of termination, or such longer period of time as specified in the Option Agreement, to the extent the Option is vested on the date of
termination (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement). If, on the date of termination, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option shall revert to the Plan. If, after termination, the Optionee does not exercise his or her Option within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

  
 (d)    Death of
Optionee.    If an Optionee dies while a Service Provider, the Option may be exercised within six (6) months following Optionee’s death, or such longer period of time as specified in the Option Agreement, to the extent
that the Option is vested on the date of death (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement) by the Optionee’s designated beneficiary, provided such beneficiary has been designated
prior to Optionee’s death in a form acceptable to the Administrator. If no such beneficiary has been designated by the Optionee, then such Option may be exercised by the personal representative of the Optionee’s estate or by the person(s)
to whom the Option is transferred pursuant to the Optionee’s will or in accordance with the laws of descent and distribution. If, at the time of death, the Optionee is not vested as to his or her entire Option, the Shares covered by the
unvested portion of the Option shall immediately revert to the Plan. If the Option is not so exercised within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan. 
  
 (e)    Leaves of Absence.

  
 (i)    Unless the
Administrator provides otherwise, vesting of Options granted hereunder to officers and Directors shall be suspended during any unpaid leave of absence. 
  

 7 

 (ii)    A Service Provider shall not cease to be an Employee in the
case of (A) any leave of absence approved by the Company or (B) transfers between locations of the Company or between the Company, its Parent, any Subsidiary, or any successor. 
  
 (iii)    For purposes of Incentive Stock Options, no such leave may exceed ninety (90)
days, unless reemployment upon expiration of such leave is guaranteed by statute or contract. If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, then three (3) months following the 91st day of such
leave, any Incentive Stock Option held by the Optionee shall cease to be treated as an Incentive Stock Option and shall be treated for tax purposes as a Nonstatutory Stock Option. 
  
 11.    Stock Purchase Rights. 
  
 (a)    Rights to Purchase.    Stock Purchase Rights may be
issued either alone, in addition to, or in tandem with other awards granted under the Plan and/or cash awards made outside of the Plan. After the Administrator determines that it will offer Stock Purchase Rights under the Plan, it shall advise the
offeree in writing or electronically of the terms, conditions and restrictions related to the offer, including the number of Shares that such person shall be entitled to purchase, the price to be paid, and the time within which such person must
accept such offer. The terms of the offer shall comply in all respects with Section 260.140.42 of Title 10 of the California Code of Regulations. The offer shall be accepted by execution of a Restricted Stock Purchase Agreement in the form
determined by the Administrator. 
  
 (b)    Repurchase Option.    Unless the Administrator determines otherwise, the Restricted Stock Purchase Agreement shall grant the Company a repurchase option exercisable within 90 days of the
voluntary or involuntary termination of the purchaser’s service with the Company for any reason (including death or disability). The purchase price for Shares repurchased pursuant to the Restricted Stock Purchase Agreement shall be the original
price paid by the purchaser and may be paid by cancellation of any indebtedness of the purchaser to the Company. The repurchase option shall lapse at such rate as the Administrator may determine. 
  
 (c)    Other
Provisions.    The Restricted Stock Purchase Agreement shall contain such other terms, provisions and conditions not inconsistent with the Plan as may be determined by the Administrator in its sole discretion. 
  
 (d)    Rights as a
Shareholder.    Once the Stock Purchase Right is exercised, the purchaser shall have rights equivalent to those of a shareholder and shall be a shareholder when his or her purchase is entered upon the records of the duly
authorized transfer agent of the Company. No adjustment shall be made for a dividend or other right for which the record date is prior to the date the Stock Purchase Right is exercised, except as provided in Section 13 of the Plan. 
  
 12.    Limited Transferability of Options and Stock
Purchase Rights.    Unless determined otherwise by the Administrator, Options and Stock Purchase Rights may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or the
laws of descent and distribution, and may be exercised during the lifetime of the Optionee, only by the Optionee. If the Administrator in its sole discretion makes an Option or Stock Purchase Right transferable, such Option or Stock Purchase Right
may only be transferred (i) by will, (ii) by the 

  

 8 

 
laws of descent and distribution, or (iii) to family members (within the meaning of Rule 701 of the Securities Act) through gifts or domestic relations
orders, as permitted by Rule 701 of the Securities Act. 
  
 13.    Adjustments; Dissolution or Liquidation; Merger or Change in Control. 
  
 (a)    Adjustments.    In the event that any dividend or other distribution (whether in the
form of cash, Shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Shares or other securities of the
Company, or other change in the corporate structure of the Company affecting the Shares occurs, the Administrator, in order to prevent diminution or enlargement of the benefits or potential benefits intended to be made available under the Plan, may
(in its sole discretion) adjust the number and class of Shares that may be delivered under the Plan and/or the number, class, and price of Shares covered by each outstanding Option or Stock Purchase Right; provided, however, that the Administrator
shall make such adjustments to the extent required by Section 25102(o) of the California Corporations Code. 
  
 (b)    Dissolution or Liquidation.    In the event of the proposed dissolution or
liquidation of the Company, the Administrator shall notify each Optionee as soon as practicable prior to the effective date of such proposed transaction. To the extent it has not been previously exercised, an Option or Stock Purchase Right will
terminate immediately prior to the consummation of such proposed action. 
  
 (c)    Merger or Change in Control.    In the event of a merger of the Company with or into another corporation, or a Change in Control, each outstanding Option and Stock
Purchase Right shall be assumed or an equivalent option substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. In the event that the successor corporation in a merger or Change in Control refuses to assume
or substitute for the Option or Stock Purchase Right, then the Optionee shall fully vest in and have the right to exercise the Option or Stock Purchase Right as to all of the Optioned Stock, including Shares as to which it would not otherwise be
vested or exercisable. If an Option or Stock Purchase Right becomes fully vested and exercisable in lieu of assumption or substitution in the event of a merger or Change in Control, the Administrator shall notify the Optionee in writing or
electronically that this Option or Stock Purchase Right shall be fully exercisable for a period of fifteen (15) days from the date of such notice, and the Option or Stock Purchase Right shall terminate upon expiration of such period. For the
purposes of this paragraph, the Option or Stock Purchase Right shall be considered assumed if, following the merger or Change in Control, the option or right confers the right to purchase or receive, for each Share of Optioned Stock subject to the
Option or Stock Purchase Right immediately prior to the merger or Change in Control, the consideration (whether stock, cash, or other securities or property) received in the merger or Change in Control by holders of Common Stock for each Share held
on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the
merger or Change in Control is not solely common stock of the successor corporation or its Parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option or
Stock Purchase Right, for each Share of Optioned Stock subject to the Option or Stock Purchase Right, to 

  

 9 

 
be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of common
stock in the merger or Change in Control. 
  
 14.    Time of Granting Options and Stock Purchase Rights.    The date of grant of an Option or Stock Purchase Right shall, for all purposes, be the date on which the Administrator makes the
determination granting such Option or Stock Purchase Right, or such later date as is determined by the Administrator. Notice of the determination shall be given to each Service Provider to whom an Option or Stock Purchase Right is so granted within
a reasonable time after the date of such grant. 
  
 15.    Amendment and Termination of the Plan. 
  
 (a)    Amendment and Termination.    The Board may at any time amend, alter, suspend or
terminate the Plan. 
  
 (b)    Shareholder Approval.    The Board shall obtain shareholder approval of any Plan amendment to the extent necessary and desirable to comply with Applicable Laws. 
  
 (c)    Effect of Amendment or
Termination.    No amendment, alteration, suspension or termination of the Plan shall impair the rights of any Optionee, unless mutually agreed otherwise between the Optionee and the Administrator, which agreement must be in
writing and signed by the Optionee and the Company. Termination of the Plan shall not affect the Administrator’s ability to exercise the powers granted to it hereunder with respect to Options granted under the Plan prior to the date of such
termination. 
  
 16.    Conditions Upon
Issuance of Shares. 
  
 (a)    Legal Compliance.    Shares shall not be issued pursuant to the exercise of an Option unless the exercise of such Option and the issuance and delivery of such Shares shall comply with
Applicable Laws and shall be further subject to the approval of counsel for the Company with respect to such compliance. 
  
 (b)    Investment Representations.    As a condition to the exercise of an Option, the
Administrator may require the person exercising such Option to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in
the opinion of counsel for the Company, such a representation is required. 
  
 17.    Inability to Obtain Authority.    The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the
Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have
been obtained. 
  
 18.    Reservation of
Shares.    The Company, during the term of this Plan, shall at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan. 
  

 10 

 19.    Shareholder Approval.    The Plan shall be subject
to approval by the shareholders of the Company within twelve (12) months after the date the Plan is adopted. Such shareholder approval shall be obtained in the degree and manner required under Applicable Laws. 
  
 20.    Information to
Optionees.    The Company shall provide to each Optionee and to each individual who acquires Shares pursuant to the Plan, not less frequently than annually during the period such Optionee has one or more Options or Stock
Purchase Rights outstanding, and, in the case of an individual who acquires Shares pursuant to the Plan, during the period such individual owns such Shares, copies of annual financial statements. The Company shall not be required to provide such
statements to key employees whose duties in connection with the Company assure their access to equivalent information. 
  

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