Document:

EXHIBIT
10.5

 

AFFYMAX,
INC.

AMENDED AND RESTATED

2006
EQUITY INCENTIVE PLAN

APPROVED
BY THE BOARD:  JULY 7, 2006

APPROVED
BY THE STOCKHOLDERS:  NOVEMBER 22, 2006

AS
AMENDED BY THE BOARD ON OCTOBER 29, 2009

TERMINATION
DATE:  JULY 6, 2016

 

1.             GENERAL.

 

(a)           Successor and Continuation of Prior
Plan.  The Plan is intended as the successor to and
continuation of the Affymax, Inc. 2001 Stock Option/Stock Issuance Plan
(the “Prior Plan”).  On the Effective Date, the shares of Common
stock issuable pursuant to all then outstanding stock awards granted under the
Prior Plan shall be deemed transferred to the share reserve of this Plan, but
such stock awards shall remain subject to the terms of the Prior Plan.  All Stock Awards granted subsequent to the
Effective Date shall be subject to the terms of this Plan.  On and after the Effective Date, no
additional stock awards shall be granted pursuant to the terms of the Prior
Plan, and  any unused shares of Common
Stock remaining available on the Effective Date for the future grant of stock
awards under the Prior Plan  shall not
become available for issuance under this Plan.

 

(b)           Eligible Stock Award Recipients. 
The persons eligible to receive Stock Awards are Employees, Directors
and Consultants.

 

(c)           Available Stock Awards. 
The Plan provides for the grant of the following Stock Awards: (i) Incentive
Stock Options, (ii) Nonstatutory Stock Options, (iii) Restricted
Stock Awards, (iv) Restricted Stock Unit Awards, (v) Stock
Appreciation Rights, (vi) Performance Stock Awards, and (vii) Other
Stock Awards.

 

(d)           Purpose. 
The Company, by means of the Plan, seeks to secure and retain the
services of the group of persons eligible to receive Stock Awards as set forth
in Section 1(b), to provide incentives for such persons to exert maximum
efforts for the success of the Company and any Affiliate, and to provide a
means by which such eligible recipients may be given an opportunity to benefit
from increases in value of the Common Stock through the granting of Stock
Awards.

 

2.             ADMINISTRATION.

 

(a)           Administration by Board. 
The Board shall administer the Plan unless and until the Board delegates
administration of the Plan to a Committee or Committees, as provided in Section 2(d).  However, the Board may not delegate
administration of the Non-Discretionary Grant Program.

 

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(b)           Powers of Board. 
Except with respect to the Non-Discretionary Grant Program, the Board
shall have the power, subject to, and within the limitations of, the express provisions
of the Plan:

 

(i)            To determine from time to time (A) which of the
persons eligible under the Plan shall be granted Stock Awards; (B) when
and how each Stock Award shall be granted; (C) what type or combination of
types of Stock Award shall be granted; (D) the provisions of each Stock
Award granted (which need not be identical), including the time or times when a
person shall be permitted to receive cash or Common Stock pursuant to a Stock
Award; and (E) the number of shares of Common Stock with respect to which
a Stock Award shall be granted to each such person.

 

(ii)           To construe and interpret the Plan and Stock Awards
granted under it, and to establish, amend and revoke rules and regulations
for its administration.  The Board, in
the exercise of this power, may correct any defect, omission or inconsistency
in the Plan or in any Stock Award Agreement, in a manner and to the extent it
shall deem necessary or expedient to make the Plan or Stock Award fully
effective.

 

(iii)         To settle all controversies regarding the Plan and
Stock Awards granted under it.

 

(iv)          To accelerate the time at which a Stock Award may
first be exercised or the time during which a Stock Award or any part thereof
will vest in accordance with the Plan, notwithstanding the provisions in the
Stock Award stating the time at which it may first be exercised or the time
during which it will vest.

 

(v)            To effect, at any time and from time to time, with the
consent of any adversely affected Participant, (1) the reduction of the
exercise price of any outstanding Option or the strike price of any outstanding
Stock Appreciation Right; (2) the cancellation of any outstanding Option
or Stock Appreciation Right and the grant in substitution therefor of (a) a
new Option or Stock Appreciation Right under the Plan or another equity plan of
the Company covering the same or different number of shares of Common Stock, (b) a
Restricted Stock Award, (c) a Restricted Stock Unit Award, (d) an
Other Stock Award, (e) cash, and/or (f) other valuable consideration
as determined by the Board in its sole discretion; or (3) any other action
that is treated as a repricing under generally accepted accounting principles.

 

(vi)          To suspend or terminate the Plan at any
time.  Suspension or termination of the
Plan shall not impair rights and obligations under any Stock Award granted
while the Plan is in effect except with the written consent of the affected
Participant.

 

(vii)         To amend the Plan in any respect the
Board deems necessary or advisable, including, without limitation, relating to
Incentive Stock Options and certain nonqualified deferred compensation under Section 409A
of the Code and/or to bring the Plan or Stock Awards granted under the Plan
into compliance therewith, subject to the limitations, if any, of applicable
law. However, except as provided in Section 10(a) relating to
Capitalization Adjustments, stockholder approval shall be required for
any amendment of the Plan that either (i) materially increases the number
of shares of Common Stock available for issuance under the Plan, (ii) 

 

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materially
expands the class of individuals eligible to receive Stock Awards under the
Plan, (iii) materially increases the benefits accruing to Participants
under the Plan or materially reduces the price at which shares of Common Stock
may be issued or purchased under the Plan, (iv) materially extends the
term of the Plan, or (v) expands the types of Stock Awards available for
issuance under the Plan, but in each of (i) through (v) only to the
extent required by applicable law or listing requirements. Except as provided above, rights under
any Stock Award granted before amendment of the Plan shall not be impaired by
any amendment of the Plan unless (i) the Company requests the consent of
the affected Participant, and (ii) such Participant consents in writing.

 

(viii)        To submit any amendment to the Plan for
stockholder approval, including, but not limited to, amendments to the Plan
intended to satisfy the requirements of (i) Section 162(m) of
the Code and the regulations thereunder regarding the exclusion of
performance-based compensation from the limit on corporate deductibility of
compensation paid to Covered Employees, (ii) Section 422 of the Code
regarding Incentive Stock Options, or (iii) Rule 16b-3.

 

(ix)          To approve forms of Stock Award Agreements for use
under the Plan and to amend the terms of any one or more Stock Awards,
including, but not limited to, amendments to provide terms more favorable than
previously provided in the Stock Award Agreement, subject to any specified
limits in the Plan that are not subject to Board discretion; provided however, that, the rights under any Stock Award
shall not be impaired by any such amendment unless (i) the Company
requests the consent of the affected Participant, and (ii) such
Participant consents in writing. 
Notwithstanding the foregoing, subject to the limitations of applicable
law, if any, the Board may amend the terms of any one or more Stock Awards
without the affected Participant’s consent if necessary to maintain the
qualified status of the Stock Award as an Incentive Stock Option or to bring
the Stock Award into compliance with Section 409A of the Code and the
related guidance thereunder.

 

(x)           Generally, to exercise such powers and to perform such
acts as the Board deems necessary or expedient to promote the best interests of
the Company and that are not in conflict with the provisions of the Plan or
Stock Awards.

 

(xi)          To adopt such procedures and sub-plans as are
necessary or appropriate to permit participation in the Plan by Employees,
Directors or Consultants who are foreign nationals or employed outside the
United States.

 

(c)           Administration of Non-Discretionary
Grant Program.  The Board shall have the power, subject to
and within the limitation of, the express provisions of the Non-Discretionary
Grant Program:

 

(i)            To determine the provisions of each Option to the
extent not specified in the Non-Discretionary Grant Program.

 

(ii)           To construe and interpret the Non-Discretionary Grant
Program and the Options granted under it, and to establish, amend and revoke rules and
regulations for its administration.  The
Board, in the exercise of this power, may correct any defect, omission or
inconsistency in the Non-Discretionary Grant Program or in any Option
Agreement, in a manner 

 

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and to the extent it
shall deem necessary or expedient to make the Non-Discretionary Grant Program
or Option fully effective.

 

(iii)         Generally, to exercise such powers and to perform such
acts as the Board deems necessary or expedient to promote the best interests of
the Company and that are not in conflict with the provisions of the
Non-Discretionary Grant Program.

 

(d)           Delegation to Committee.

 

(i)            General. 
The Board may delegate some or all of the administration of the Plan
(except the Non-Discretionary Grant Program) to a Committee or Committees.  If administration is delegated to a
Committee, the Committee shall have, in connection with the administration of
the Plan, the powers theretofore possessed by the Board that have been
delegated to the Committee, including the power to delegate to a subcommittee
of the Committee any of the administrative powers the Committee is authorized
to exercise (and references in the Plan to the Board shall thereafter be to the
Committee or subcommittee), subject, however, to such resolutions, not
inconsistent with the provisions of the Plan, as may be adopted from time to
time by the Board.  The Board may retain
the authority to concurrently administer the Plan with the Committee and may,
at any time, revest in the Board some or all of the powers previously
delegated.

 

(ii)           Section 162(m) and Rule 16b-3
Compliance.  In the sole discretion of the Board, the
Committee may consist solely of two or more Outside Directors, in accordance
with Section 162(m) of the Code, or solely of two or more
Non-Employee Directors, in accordance with Rule 16b-3.  In addition, the Board or the Committee, in
its sole discretion, may (A) delegate to a Committee who need not be
Outside Directors the authority to grant Stock Awards to eligible persons who
are either (I) not then Covered Employees and are not expected to be
Covered Employees at the time of recognition of income resulting from such Stock
Award, or (II) not persons with respect to whom the Company wishes to
comply with Section 162(m) of the Code, or (B) delegate to a
Committee who need not be Non-Employee Directors the authority to grant Stock
Awards to eligible persons who are not then subject to Section 16 of the
Exchange Act.

 

(e)           Delegation to Officers. 
The Board may delegate to one or more Officers the authority to do one
or both of the following (i) designate Officers and Employees of the
Company or any of its Subsidiaries to be recipients of Options (and, to the
extent permitted by Delaware law, other Stock Awards) and the terms thereof,
and (ii) determine the number of shares of Common Stock to be subject to
such Stock Awards granted to such Officers and Employees; provided, however, that the Board
resolutions regarding such delegation shall specify the total number of shares
of Common Stock that may be subject to the Stock Awards granted by such
Officers and that such Officer may not grant a Stock Award to himself or
herself.  Notwithstanding anything to the
contrary in this Section 2(e), the Board may not delegate to an Officer
authority to determine the Fair Market Value of the Common Stock pursuant to Section 14(x)(iii) below.

 

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(f)            Effect of Board’s Decision. All determinations, interpretations and
constructions made by the Board in good faith shall not be subject to review by
any person and shall be final, binding and conclusive on all persons.

 

3.             SHARES SUBJECT TO THE PLAN.

 

(a)           Share Reserve. Subject to the provisions of Section 10(a) relating
to Capitalization Adjustments, the aggregate number of shares of Common
Stock  that may be issued pursuant to
Stock Awards under the Plan shall not exceed two million eight hundred thirty-seven
thousand two hundred eighty-one (2,837,281) shares, subject to reduction as set
forth below.  Such share reserve consists
of (i) the one million five hundred eighty-seven thousand two hundred
eighty-one (1,587,281) shares reserved for issuance under the Prior Plan, plus (ii) an
additional one million two hundred fifty thousand (1,250,000) shares reserved
for issuance under the Plan, but such aggregate number shall be reduced by any
unused shares of Common Stock remaining available on the Effective Date for the
future grant of stock awards under the Prior Plan.  In addition, the number of shares of Common
Stock available for issuance under the Plan shall automatically increase on January 1st
of each year commencing in 2007 and ending on (and including) January 1,
2016, in an amount equal to the lesser of (i) four and one-half percent
(41⁄2%) of the total number of shares of Common Stock outstanding on December 31st
of the preceding calendar year, or (ii) the number of shares of stock (not
to exceed one million four hundred thousand (1,400,000) shares) determined by
the Board of Directors.  Notwithstanding
the foregoing, the Board may act prior to the first day of any calendar year,
to provide that there shall be no increase in the share reserve for such calendar
year or that the increase in the share reserve for such calendar year shall be
a lesser number of shares of Common Stock than would otherwise occur pursuant
to the preceding sentence.  Shares may be
issued in connection with a merger or acquisition as permitted by NASD Rule 4350(i)(1)(A)(iii) or,
if applicable, NYSE Listed Company Manual Section 303A.08, or AMEX Company
Guide Section 711 and such issuance shall not reduce the number of shares
available for issuance under the Plan.

 

(b)           Reversion of Shares to the Share
Reserve.  If any (i) Stock Award shall for any
reason expire or otherwise terminate, in whole or in part, without having been
exercised in full, (ii) shares of Common Stock issued to a Participant
pursuant to a Stock Award are forfeited back to or repurchased by the Company
because of the failure to meet a contingency or condition required for the
vesting of such shares, (iii) a Stock Award is settled in cash, (iv) if
any shares of Common Stock are cancelled in accordance with the cancellation
and regrant provisions of Section 3(b)(v), then the shares of Common Stock
not issued under such Stock Award, or forfeited to or repurchased by the
Company, shall revert to and again become available for issuance under the
Plan.  If any shares subject to a Stock
Award are not delivered to a Participant because such shares are withheld for
the payment of taxes or the Stock Award is exercised through a reduction of
shares subject to the Stock Award (i.e., “net exercised”) or an appreciation
distribution in respect of a Stock Appreciation right is paid in shares of
Common Stock, the number of shares subject to the Stock Award that are not
delivered to the Participant shall remain available for subsequent issuance
under the Plan.  If the exercise price of
any Stock Award is satisfied by tendering shares of Common Stock held by the
Participant (either by actual delivery or attestation), then the number of
shares so tendered shall remain available for issuance under the Plan.

 

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(c)           Incentive Stock Option Limit.  Notwithstanding anything to the contrary in this Section 3(c),
subject to the provisions of Section 10(a) relating to Capitalization
Adjustments the aggregate maximum number of shares of Common Stock that may be
issued pursuant to the exercise of Incentive Stock Options shall be one million
two hundred fifty thousand (1,250,000) 
(pre-split) shares of Common Stock plus the amount of any increase in
the number of shares that may be available for issuance pursuant to Stock
Awards pursuant to Section 3(a).

 

(d)           Source of Shares. 
The stock issuable under the Plan shall be shares of authorized but
unissued or reacquired Common Stock, including shares repurchased by the
Company on the open market.

 

4.             ELIGIBILITY.

 

(a)           Eligibility for Specific Stock
Awards.  Incentive Stock Options may be granted only
to employees of the Company or a “parent corporation” or “subsidiary
corporation” thereof (as such terms are defined in Sections 424(e) and 424(f) of
the Code).  Stock Awards other than
Incentive Stock Options may be granted to Employees, Directors and
Consultants.  Non-discretionary Options
granted under the Non-Discretionary Grant Program in Section 7 may be
granted only to Eligible Directors.

 

(b)           Ten Percent Stockholders.  A
Ten Percent Stockholder shall not be granted an Incentive Stock Option unless
the exercise price of such Option is at least one hundred ten percent (110%) of
the Fair Market Value of the Common Stock on the date of grant and the Option
is not exercisable after the expiration of five (5) years from the date of
grant.

 

(c)           Section 162(m) Limitation. 
Subject to the provisions of Section 10(a) relating to
Capitalization Adjustments, at such time as the Company may be subject to the
applicable provisions of Section 162(m) of the Code, no Employee
shall be eligible to be granted during any calendar year Stock Awards whose
value is determined by reference to an increase over an exercise or strike
price of at least one hundred percent (100%) of the Fair Market Value of the
Common Stock on the date the Stock Award is granted covering more than six
hundred twenty-five thousand (625,000)  shares of
Common Stock.

 

(d)           Consultants.  A Consultant shall be eligible for the grant of a
Stock Award only if, at the time of grant, a Form S-8 Registration
Statement under the Securities Act (“Form S-8”) is available to register either
the offer or the sale of the Company’s securities to such Consultant.

 

5.             OPTION PROVISIONS.

 

Each Option shall be in such form and shall contain
such terms and conditions as the Board shall deem appropriate.  All Options shall be separately designated
Incentive Stock Options or Nonstatutory Stock Options at the time of grant,
and, if certificates are issued, a separate certificate or certificates shall
be issued for shares of Common Stock purchased on exercise of each type of
Option.  If an Option is not specifically
designated as an Incentive Stock Option, then the Option shall be a
Nonstatutory Stock Option.  The
provisions of separate Options need not be identical; provided, however, that each Option
Agreement shall conform to (through incorporation of provisions hereof by
reference in the Option Agreement or otherwise) the substance of each of the
following provisions:

 

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(a)           Term. 
Subject to the provisions of Section 4(b) regarding Ten
Percent Stockholders, no Option shall be exercisable after the expiration of
ten (10) years from the date of its grant or such shorter period specified
in the Option Agreement.

 

(b)           Exercise Price. 
Subject to the provisions of Section 4(b) regarding Ten
Percent Stockholders, the exercise price of each Option shall be not less than
one hundred percent (100%) of the Fair Market Value of the Common Stock subject
to the Option on the date the Option is granted.  Notwithstanding the foregoing, an Option may
be granted with an exercise price lower than one hundred percent (100%) of the
Fair Market Value of the Common Stock subject to the Option if such Option is
granted pursuant to an assumption or substitution for another option in a
manner consistent with the provisions of Section 424(a) of the Code
(whether or not such options are Incentive Stock Options).

 

(c)           Consideration. 
The purchase price of Common Stock acquired pursuant to the exercise of
an Option shall be paid, to the extent permitted by applicable law and as
determined by the Board in its sole discretion, by any combination of the
methods of payment set forth below.  The
Board shall have the authority to grant Options that do not permit all of the
following methods of payment (or otherwise restrict the ability to use certain
methods) and to grant Options that require the consent of the Company to
utilize a particular method of payment. 
The methods of payment permitted by this Section 5(c) are:

 

(i)            by cash, check, bank draft or money order payable to
the Company;

 

(ii)           pursuant to a program developed under Regulation T as
promulgated by the Federal Reserve Board that, prior to the issuance of the stock
subject to the Option, results in either the receipt of cash (or check) by the
Company or the receipt of irrevocable instructions to pay the aggregate
exercise price to the Company from the sales proceeds;

 

(iii)         by delivery to the Company (either by actual delivery
or attestation) of shares of Common Stock;

 

(iv)          by a “net exercise” arrangement pursuant to which the
Company will reduce the number of shares of Common Stock issuable upon exercise
by the largest whole number of shares with a Fair Market Value that does not
exceed the aggregate exercise price; provided,
however, the Company shall accept a cash or other payment from the
Participant to the extent of any remaining balance of the aggregate exercise
price not satisfied by such reduction in the number of whole shares to be
issued; provided, further, that
shares of Common Stock will no longer be subject to an Option and will not be
exercisable thereafter to the extent that (A) shares issuable upon
exercise are reduced to pay the exercise price pursuant to the “net exercise,” (B) shares
are delivered to the Participant as a result of such exercise, and (C) shares
are withheld to satisfy tax withholding obligations;  or

 

(v)            in any other form of legal consideration that may be
acceptable to the Board in its sole discretion and permissible under applicable
law.

 

(d)           Transferability of Options. 
The Board may, in its sole discretion, impose such limitations on the
transferability of Options as the Board shall determine.  In the absence of such 

 

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a determination by the
Board to the contrary, the following restrictions on the transferability of
Options shall apply:

 

(i)            Restrictions on Transfer. 
An Option shall not be transferable except by will or by the laws of
descent and distribution and shall be exercisable during the lifetime of the
Optionholder only by the Optionholder; provided, however,
that the Board may, in its sole discretion, permit transfer of the Option in a
manner that is not prohibited by applicable tax and securities laws upon the
Optionholder’s request.

 

(ii)           Domestic Relations Orders. 
Notwithstanding the foregoing, an Option may be transferred pursuant to
a domestic relations order, provided, however,
that if an Option is an Incentive Stock Option, such Option may be deemed to be
a Nonstatutory Stock Option as a result of such transfer.

 

(iii)         Beneficiary Designation. 
Notwithstanding the foregoing, the Optionholder may, by delivering
written notice to the Company, in a form provided by or otherwise satisfactory
to the Company and any broker designated by the Company to effect Option
exercises, designate a third party who, in the event of the death of the
Optionholder, shall thereafter be entitled to exercise the Option.  In the absence of such a designation, the
executor or administrator of the Optionholder’s estate shall be entitled to
exercise the Option.

 

(e)           Vesting of Options Generally. 
The total number of shares of Common Stock subject to an Option may vest
and therefore become exercisable in periodic installments that may or may not
be equal.  The Option may be subject to
such other terms and conditions on the time or times when it may or may not be
exercised (which may be based on the satisfaction of Performance Goals or other
criteria) as the Board may deem appropriate. 
The vesting provisions of individual Options may vary.  The provisions of this Section 5(e) are
subject to any Option provisions governing the minimum number of shares of
Common Stock as to which an Option may be exercised.

 

(f)            Termination of Continuous Service. 
In the event that an Optionholder’s Continuous Service terminates (other
than for Cause or upon the Optionholder’s death or Disability), the
Optionholder may exercise his or her Option (to the extent that the
Optionholder was entitled to exercise such Option as of the date of termination
of Continuous Service) but only within such period of time ending on the
earlier of (i) the date three (3) months following the termination of
the Optionholder’s Continuous Service (or such longer or shorter period
specified in the Option Agreement), or (ii) the expiration of the term of
the Option as set forth in the Option Agreement.  If, after termination of Continuous Service,
the Optionholder does not exercise his or her Option within the time specified
herein or in the Option Agreement (as applicable), the Option shall terminate.

 

(g)           Extension of Termination Date. 
An Optionholder’s Option Agreement may provide that if the exercise of
the Option following the termination of the Optionholder’s Continuous Service
(other than for Cause or upon the Optionholder’s death or Disability) would be
prohibited at any time solely because the issuance of shares of Common Stock
would violate the registration requirements under the Securities Act, then the
Option shall terminate on the earlier of (i) the expiration of a period of
three (3) months after the termination of the 

 

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Optionholder’s Continuous
Service during which the exercise of the Option would not be in violation of
such registration requirements, or (ii) the expiration of the term of the
Option as set forth in the Option Agreement.

 

(h)           Disability of Optionholder. 
In the event that an Optionholder’s Continuous Service terminates as a
result of the Optionholder’s Disability, the Optionholder may exercise his or
her Option (to the extent that the Optionholder was entitled to exercise such
Option as of the date of termination of Continuous Service), but only within
such period of time ending on the earlier of (i) the date twelve (12)
months following such termination of Continuous Service (or such longer or
shorter period specified in the Option Agreement), or (ii) the expiration
of the term of the Option as set forth in the Option Agreement.  If, after termination of Continuous Service,
the Optionholder does not exercise his or her Option within the time specified
herein or in the Option Agreement (as applicable), the Option shall terminate.

 

(i)            Death of Optionholder. 
In the event that (i) an Optionholder’s Continuous Service
terminates as a result of the Optionholder’s death, or (ii) the
Optionholder dies within the period (if any) specified in the Option Agreement
after the termination of the Optionholder’s Continuous Service for a reason
other than death, then the Option may be exercised (to the extent the
Optionholder was entitled to exercise such Option as of the date of death) by
the Optionholder’s estate, by a person who acquired the right to exercise the
Option by bequest or inheritance or by a person designated to exercise the
option upon the Optionholder’s death, but only within the period ending on the
earlier of (i) the date eighteen (18) months following the date of death
(or such longer or shorter period specified in the Option Agreement), or (ii) the
expiration of the term of such Option as set forth in the Option
Agreement.  If, after the Optionholder’s
death, the Option is not exercised within the time specified herein or in the
Option Agreement (as applicable), the Option shall terminate.

 

(j)            Termination for Cause. 
In the event that an Optionholder’s Continuous Service is terminated for
Cause, the Option shall terminate immediately and cease to remain outstanding.

 

(k)           Non-Exempt Employees. 
No Option granted to an Employee that is a non-exempt employee for
purposes of the Fair Labor Standards Act shall be first exercisable for any
shares of Common Stock until at least six months following the date of grant of
the Option.  The foregoing provision is
intended to operate so that any income derived by a non-exempt employee in
connection with the exercise or vesting of an Option will be exempt from his or
her regular rate of pay.

 

6.             PROVISIONS OF STOCK AWARDS OTHER
THAN OPTIONS.

 

(a)           Restricted Stock Awards. 
Each Restricted Stock Award Agreement shall be in such form and shall
contain such terms and conditions as the Board shall deem appropriate.  To the extent consistent with the Company’s
Bylaws, at the Board’s election, shares of Common Stock may be (x) held in
book entry form subject to the Company’s instructions until any restrictions
relating to the Restricted Stock Award lapse; or (y) evidenced by a
certificate, which certificate shall be held in such form and manner as
determined by the Board.  The terms and
conditions of Restricted Stock Award Agreements may change from time to time,
and the terms and conditions of separate Restricted Stock Award Agreements need
not be identical, provided, 

 

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however, that each Restricted Stock Award
Agreement shall conform to (through incorporation of the provisions hereof by
reference in the agreement or otherwise) the substance of each of the following
provisions:

 

(i)            Consideration.  A
Restricted Stock Award may be awarded in consideration for (A) cash,
check, bank draft or money order payable to the Company; (B) past or
future services actually or to be rendered to the Company or an Affiliate; or (C) any
other form of legal consideration that may be acceptable to the Board in its
sole discretion and permissible under applicable law.

 

(ii)           Vesting. 
Shares of Common Stock awarded under a Restricted Stock Award Agreement
may be subject to forfeiture to the Company in accordance with a vesting
schedule to be determined by the Board.

 

(iii)         Termination of Participant’s Continuous Service. 
In the event a Participant’s Continuous Service terminates, the Company
may receive via a forfeiture condition or a repurchase right, any or all of the
shares of Common Stock held by the Participant which have not vested as of the
date of termination of Continuous Service under the terms of the Restricted
Stock Award Agreement.

 

(iv)          Transferability.  Rights to acquire shares of
Common Stock under the Restricted Stock Award Agreement shall be transferable
by the Participant only upon such terms and conditions as are set forth in the
Restricted Stock Award Agreement, as the Board shall determine in its sole
discretion, so long as Common Stock awarded under the Restricted Stock Award
Agreement remains subject to the terms of the Restricted Stock Award Agreement.

 

(b)           Restricted Stock Unit Awards.  Each Restricted Stock Unit Award Agreement shall be in
such form and shall contain such terms and conditions as the Board shall deem
appropriate.  The terms and conditions of
Restricted Stock Unit Award Agreements may change from time to time, and the
terms and conditions of separate Restricted Stock Unit Award Agreements need
not be identical, provided, however, that
each Restricted Stock Unit Award Agreement shall conform to (through
incorporation of the provisions hereof by reference in the agreement or
otherwise) the substance of each of the following provisions:

 

(i)            Consideration. 
At the time of grant of a Restricted Stock Unit Award, the Board will determine
the consideration, if any, to be paid by the Participant upon delivery of each
share of Common Stock subject to the Restricted Stock Unit Award. The
consideration to be paid (if any) by the Participant for each share of Common
Stock subject to a Restricted Stock Unit Award may be paid in any form of legal
consideration that may be acceptable to the Board in its sole discretion and
permissible under applicable law.

 

(ii)           Vesting.  At the time of the grant of a Restricted Stock Unit
Award, the Board may impose such restrictions or conditions to the vesting of
the Restricted Stock Unit Award as it, in its sole discretion, deems
appropriate.

 

(iii)         Payment. 
A Restricted Stock Unit Award may be settled by the delivery of shares
of Common Stock, their cash equivalent, any combination thereof or in any other
form

 

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of consideration, as
determined by the Board and contained in the Restricted Stock Unit Award
Agreement.

 

(iv)          Additional Restrictions.  At the time of the grant of a Restricted Stock Unit
Award, the Board, as it deems appropriate, may impose such restrictions or
conditions that delay the delivery of the shares of Common Stock (or their cash
equivalent) subject to a Restricted Stock Unit Award to a time after the
vesting of such Restricted Stock Unit Award.

 

(v)            Dividend Equivalents.  Dividend equivalents may be credited in respect of
shares of Common Stock covered by a Restricted Stock Unit Award, as determined
by the Board and contained in the Restricted Stock Unit Award Agreement.  At the sole discretion of the Board, such
dividend equivalents may be converted into additional shares of Common Stock
covered by the Restricted Stock Unit Award in such manner as determined by the
Board.  Any additional shares covered by
the Restricted Stock Unit Award credited by reason of such dividend equivalents
will be subject to all the terms and conditions of the underlying Restricted
Stock Unit Award Agreement to which they relate.

 

(vi)          Termination of Participant’s
Continuous Service.  Except as otherwise provided in the
applicable Restricted Stock Unit Award Agreement, such portion of the
Restricted Stock Unit Award that has not vested will be forfeited upon the
Participant’s termination of Continuous Service.

 

(vii)         Compliance with Section 409A of
the Code.  Notwithstanding anything to the contrary set
forth herein, any Restricted Stock Unit Award granted under the Plan that is
not exempt from the requirements of Section 409A of the Code shall
incorporate terms and conditions necessary to avoid the consequences of Section 409A(a)(1) of
the Code.  Such restrictions, if any,
shall be determined by the Board and contained in the Restricted Stock Unit
Award Agreement evidencing such Restricted Stock Unit Award.

 

(c)           Stock Appreciation Rights.  Each Stock Appreciation Right Agreement shall be in
such form and shall contain such terms and conditions as the Board shall deem
appropriate.  Stock Appreciation Rights
may be granted as stand-alone Stock Awards or in tandem with other Stock
Awards.  The terms and conditions of
Stock Appreciation Right Agreements may change from time to time, and the terms
and conditions of separate Stock Appreciation Right Agreements need not be
identical; provided, however,
that each Stock Appreciation Right Agreement shall conform to (through
incorporation of the provisions hereof by reference in the agreement or
otherwise) the substance of each of the following provisions:

 

(i)            Term. 
No Stock Appreciation Right shall be exercisable after the expiration of
ten (10) years from the date of its grant or such shorter period specified
in the Stock Appreciation Right Agreement.

 

(ii)           Strike Price. Each Stock Appreciation Right will be
denominated in shares of Common Stock equivalents.  The strike price of each Stock Appreciation
Right shall not be less than one hundred percent (100%) of the Fair Market Value
of the Common Stock equivalents subject to the Stock Appreciation Right on the
date of grant.

 

11

 

(iii)         Calculation of Appreciation. 
The appreciation distribution payable on the exercise of a Stock Appreciation
Right will be not greater than an amount equal to the excess of (A) the
aggregate Fair Market Value (on the date of the exercise of the Stock
Appreciation Right) of a number of shares of Common Stock equal to the number
of share of Common Stock equivalents in which the Participant is vested under
such Stock Appreciation Right, and with respect to which the Participant is
exercising the Stock Appreciation Right on such date, over (B) the strike
price.

 

(iv)          Vesting.  At the time of the grant of a Stock Appreciation
Right, the Board may impose such restrictions or conditions to the vesting of
such Stock Appreciation Right as it, in its sole discretion, deems appropriate.

 

(v)            Exercise. 
To exercise any outstanding Stock Appreciation Right, the Participant
must provide written notice of exercise to the Company in compliance with the
provisions of the Stock Appreciation Right Agreement evidencing such Stock
Appreciation Right.

 

(vi)          Payment. 
The appreciation distribution in respect of a Stock Appreciation Right
may be paid in Common Stock, in cash, in any combination of the two or in any
other form of consideration, as determined by the Board and set forth in the
Stock Appreciation Right Agreement evidencing such Stock Appreciation Right.

 

(vii)         Termination of Continuous Service. 
In the event that a Participant’s Continuous Service terminates (other
than for Cause), the Participant may exercise his or her Stock Appreciation
Right (to the extent that the Participant was entitled to exercise such Stock Appreciation
Right as of the date of termination of Continuous Service) but only within such
period of time ending on the earlier of (A) the date three (3) months
following the termination of the Participant’s Continuous Service (or such
longer or shorter period specified in the Stock Appreciation Right Agreement),
or (B) the expiration of the term of the Stock Appreciation Right as set
forth in the Stock Appreciation Right Agreement.  If, after termination of Continuous Service,
the Participant does not exercise his or her Stock Appreciation Right within
the time specified herein or in the Stock Appreciation Right Agreement (as
applicable), the Stock Appreciation Right shall terminate.

 

(viii)        Termination for Cause. 
Except as explicitly provided otherwise in an Participant’s Stock
Appreciation Right Agreement, in the event that a Participant’s Continuous
Service is terminated for Cause, the Stock Appreciation Right shall terminate
upon the termination date of such Participant’s Continuous Service, and the Participant
shall be prohibited from exercising his or her Stock Appreciation Right from
and after the time of such termination of Continuous Service.

 

(ix)          Compliance with Section 409A of
the Code.  Notwithstanding anything to the contrary
set forth herein, any Stock Appreciation Rights granted under the Plan that are
not exempt from the requirements of Section 409A of the Code shall
incorporate terms and conditions necessary to avoid the consequences described
in Section 409A(a)(1) of the Code. 
Such restrictions, if any, shall be determined by the Board and
contained in the Stock Appreciation Right Agreement evidencing such Stock
Appreciation Right.

 

12

 

(d)           Performance Stock Awards. 
A Performance Stock Award is either a Restricted Stock Award or
Restricted Stock Unit Award that may be granted or may vest based upon the
attainment during a Performance Period of certain Performance Goals.  A Performance Stock Award may, but need not,
require the completion of a specified period of Continuous Service. The length
of any Performance Period, the Performance Goals to be achieved during the
Performance Period, and the measure of whether and to what degree such
Performance Goals have been attained shall be conclusively determined by the
Committee in its sole discretion.  The
maximum benefit to be received by any Participant in a calendar year
attributable to Performance Stock Awards described in this Section 6(d) shall
not exceed the value of six hundred twenty-five thousand (625,000)  shares of Common Stock. 
In addition, to the extent permitted by applicable law and the
applicable Award Agreement, the Board may determine that cash may be used in
payment of Performance Stock Awards.

 

(e)           Other Stock Awards. 
Other forms of Stock Awards valued in whole or in part by reference to,
or otherwise based on, Common Stock may be granted either alone or in addition
to Stock Awards provided for under Section 5 and the preceding provisions
of this Section 6.  Subject to the
provisions of the Plan, the Board shall have sole and complete authority to
determine the persons to whom and the time or times at which such Other Stock
Awards will be granted, the number of shares of Common Stock (or the cash
equivalent thereof) to be granted pursuant to such Other Stock Awards and all
other terms and conditions of such Other Stock Awards.

 

7.             NON-DISCRETIONARY GRANTS TO
ELIGIBLE DIRECTORS

 

(a)           General.  The Non-Discretionary Grant Program in this Section 7
allows Eligible Directors to receive Nonstatutory Stock Options automatically
at designated intervals over their period of Continuous Service on the Board.

 

(b)           Eligibility.  The Stock Awards shall automatically be
granted to all Eligible Directors who meet the specified criteria.

 

(c)           Non-Discretionary Grants.

 

(i)            IPO Awards.   Without any further action of the Board,
each person who is serving as a Non-Employee Director on the IPO Date, except
any such person who was elected or appointed to the Board within nine (9) months
prior to the IPO Date and received an option grant from the Company in
connection with his or her initial election or appointment to the Board, shall
automatically be granted a Nonstatutory Stock Option (the “IPO Award”) to purchase seven
thousand five hundred (7,500) shares of Common Stock on the
terms and conditions set forth in Section 7(d).

 

(ii)           Initial Awards.   Without any further action of the Board,
each person who is elected or appointed for the first time to be a Non-Employee
Director automatically shall, upon the date of his or her initial election or
appointment to be a Non-Employee Director, be granted a Nonstatutory Stock
Option (the “Initial Award”)
to purchase (a) if such initial election or appointment is after the IPO
Date but prior to October 29, 2009, seven thousand five hundred (7,500)
shares of Common Stock on the terms and conditions set forth in Section 7(d),
or (b) if 

 

13

 

such
initial election or appointment is on or after October 29, 2009, twelve
thousand five hundred (12,500) shares of Common Stock on the terms and
conditions set forth in Section 7(d).

 

(iii)         Annual Awards.  Without any further action of the Board, on
the date of each Annual Meeting, commencing with the Annual Meeting in 2007,
each person who is then a Non-Employee Director shall be granted a Nonstatutory
Stock Option (the “Annual Award”) to purchase two thousand five hundred (2,500) shares
of Common Stock on the terms and conditions set forth in Section 7(d); provided however that commencing with
the Annual Meeting in 2010, the number of shares subject to the Annual Award
shall be increased to seven thousand five hundred (7, 500) from two thousand
five hundred (2,500).

 

(d)           Non-Discretionary Option Grant
Provisions.

 

(i)            Term.  No Option granted hereunder shall be
exercisable after the expiration of ten (10) years from the date it was
granted.

 

(ii)           Exercise Price.  The exercise price of each Option shall be
one hundred percent (100%) of the Fair Market Value of the Common Stock subject
to the Option on the date the Option is granted.

 

(iii)         Consideration.  The purchase price of Common Stock acquired
pursuant to the exercise of an Option may be paid by any combination of the
methods of payment set forth below.

 

(1)           by cash, check, bank draft or money order payable to
the Company;

 

(2)           pursuant to a program developed under Regulation T as
promulgated by the Federal Reserve Board that, prior to the issuance of the
stock subject to the Option, results in either the receipt of cash (or check)
by the Company or the receipt of irrevocable instructions to pay the aggregate
exercise price to the Company from the sales proceeds; or

 

(3)           by delivery to the Company (either by actual delivery
or attestation) of shares of Common Stock.

 

(iv)          Termination of Continuous Service.  In the event that an Optionholder’s
Continuous Service terminates (other than upon the Optionholder’s death or
Disability or upon a Change in Control), the Optionholder may exercise his or
her Option (to the extent that the Optionholder was entitled to exercise such
Option as of the date of termination of Continuous Service) but only within
such period of time ending on the earlier of (i) the date three (3) months
following the termination of the Optionholder’s Continuous Service (or such
longer or shorter period specified in the Option Agreement), or (ii) the
expiration of the term of the Option as set forth in the Option Agreement.  If, after termination of Continuous Service,
the Optionholder does not exercise his or her Option within the time specified
herein or in the Option Agreement (as applicable), the Option shall terminate.

 

14

 

(v)            Extension of Termination Date. If the
exercise of the Option following the termination of the Optionholder’s
Continuous Service (other than upon the Optionholder’s death or Disability or
upon a Change in Control) would be prohibited at any time solely because the
issuance of shares of Common Stock would violate the registration requirements
under the Securities Act, then the Option shall terminate on the earlier of (i) the
expiration of a period of three (3) months after the termination of the
Optionholder’s Continuous Service during which the exercise of the Option would
not be in violation of such registration requirements, or (ii) the
expiration of the term of the Option as set forth in the Option Agreement.

 

(vi)          Disability of Optionholder.  In the event that an Optionholder’s
Continuous Service terminates as a result of the Optionholder’s Disability, the
Option shall become fully vested and exercisable and the Optionholder may
exercise his or her Option, but only within such period of time ending on the
earlier of (i) the date twelve (12) months following such termination of
Continuous Service, or (ii) the expiration of the term of the Option as
set forth in the Option Agreement.  If,
after termination, the Optionholder does not exercise his or her Option within
the time specified herein or in the Option Agreement, the Option shall
terminate.

 

(vii)         Death of Optionholder.  In the event that (i) an Optionholder’s
Continuous Service terminates as a result of the Optionholder’s death, or (ii) the
Optionholder dies within the three-month period after the termination of the
Optionholder’s Continuous Service for a reason other than death, then the
Option shall become fully vested and exercisable and may be exercised by the
Optionholder’s estate, by a person who acquired the right to exercise the
Option by bequest or inheritance or by a person designated to exercise the
Option upon the Optionholder’s death, but only within the period ending on the
earlier of (i) the date eighteen (18) months following the date of death,
or (ii) the expiration of the term of such Option as set forth in the
Option Agreement.  If, after the
Optionholder’s death, the Option is not exercised within the time specified
herein, the Option shall terminate.

 

(viii)        Termination Upon Change in Control.  In the event that an Optionholder’s
Continuous Service terminates as of, or within twelve (12) months following a
Change in Control, the Optionholder may exercise his or her Option (to the
extent that the Optionholder was entitled to exercise such Option as of the
date of termination of Continuous Service) within such period of time ending on
the earlier of (i) the date twelve (12) months following the effective
date of the Change in Control (or such longer or shorter period specified in
the Option Agreement), or (ii) the expiration of the term of the Option as
set forth in the Option Agreement.  If,
after termination of Continuous Service, the Optionholder does not exercise his
or her Option within the time specified herein or in the Option Agreement (as
applicable), the Option shall terminate.

 

(ix)          Vesting.  Options granted under the Non-Discretionary
Grant Program shall vest as follows:

 

(1)           IPO Awards. 
Each IPO Award shall vest in a series of thirty-six (36) successive
equal monthly installments during the Eligible Director’s Continuous Service
over the three (3)-year period measured from the date of grant.

 

15

 

(2)           Initial Awards. 
Each Initial Award shall vest in a series of thirty-six (36) successive
equal monthly installments during the Optionholder’s Continuous Service over
the three (3)-year period measured from the date of grant.

 

(3)           Annual Awards. 
Each Annual Award shall vest in a series of twelve (12) successive equal
monthly installments during the Eligible Director’s Continuous Service over the
one (1)-year period measured from the date of grant.

 

(x)           Change in Control.  In the event of a Change in Control, each
Option granted under the Non-Discretionary Grant Program shall become fully
vested and exercisable immediately prior to the effectiveness of such Change in
Control.

 

(xi)          Remaining Terms.  The remaining terms and conditions of each
Option shall be as set forth in an Option Agreement in the form adopted from
time to time by the Board; provided, however, that the terms of such Option
Agreement shall be consistent with the terms of the Plan.

 

8.             COVENANTS OF THE COMPANY.

 

(a)           Availability of Shares. 
During the terms of the Stock Awards, the Company shall keep available
at all times the number of shares of Common Stock required to satisfy such
Stock Awards.

 

(b)           Securities Law Compliance. 
The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
grant Stock Awards and to issue and sell shares of Common Stock upon exercise
of the Stock Awards; provided, however,
that this undertaking shall not require the Company to register under the
Securities Act the Plan, any Stock Award or any Common Stock issued or issuable
pursuant to any such Stock Award.  If,
after reasonable efforts, the Company is unable to obtain from any such
regulatory commission or agency the authority that counsel for the Company
deems necessary for the lawful issuance and sale of Common Stock under the
Plan, the Company shall be relieved from any liability for failure to issue and
sell Common Stock upon exercise of such Stock Awards unless and until such
authority is obtained.

 

(c)           No Obligation to Notify.  The Company shall have no duty or obligation to any
holder of a Stock Award to advise such holder as to the time or manner of
exercising such Stock Award. 
Furthermore, the Company shall have no duty or obligation to warn or
otherwise advise such holder of a pending termination or expiration of a Stock
Award or a possible period in which the Stock Award may not be exercised.  The Company has no duty or obligation to
minimize the tax consequences of a Stock Award to the holder of such Stock
Award.

 

9.             MISCELLANEOUS.

 

(a)           Use of Proceeds.  Proceeds from the sale of shares of Common Stock
pursuant to Stock Awards shall constitute general funds of the Company.

 

(b)           Corporate Action Constituting Grant
of Stock Awards.  Corporate action constituting a grant by the
Company of a Stock Award to any Participant shall be deemed 

 

16

 

completed as of the date
of such corporate action, unless otherwise determined by the Board, regardless
of when the instrument, certificate, or letter evidencing the Stock Award is
communicated to, or actually received or accepted by, the Participant.

 

(c)           Stockholder Rights. 
No Participant shall be deemed to be the holder of, or to have any of
the rights of a holder with respect to, any shares of Common Stock subject to
such Stock Award unless and until (i) such Participant has satisfied all
requirements for exercise of the Stock Award pursuant to its terms, and (ii) the
issuance of the Common Stock pursuant to such exercise has been entered into
the books and records of the Company.

 

(d)           No Employment or Other Service
Rights.  Nothing in the Plan, any Stock Award
Agreement or other instrument executed thereunder or in connection with any
Stock Award granted pursuant to the Plan shall confer upon any Participant any
right to continue to serve the Company or an Affiliate in the capacity in
effect at the time the Stock Award was granted or shall affect the right of the
Company or an Affiliate to terminate (i) the employment of an Employee
with or without notice and with or without cause, (ii) the service of a
Consultant pursuant to the terms of such Consultant’s agreement with the
Company or an Affiliate, or (iii) the service of a Director pursuant to
the Bylaws of the Company or an Affiliate, and any applicable provisions of the
corporate law of the state in which the Company or the Affiliate is
incorporated, as the case may be.

 

(e)           Incentive Stock Option $100,000
Limitation.  To the extent that the aggregate Fair Market
Value (determined at the time of grant) of Common Stock with respect to which
Incentive Stock Options are exercisable for the first time by any Optionholder
during any calendar year (under all plans of the Company and any Affiliates)
exceeds one hundred thousand dollars ($100,000), the Options or portions
thereof that exceed such limit (according to the order in which they were
granted) shall be treated as Nonstatutory Stock Options, notwithstanding any
contrary provision of the applicable Option Agreement(s).

 

(f)            Investment Assurances. 
The Company may require a Participant, as a condition of exercising or
acquiring Common Stock under any Stock Award, (i) to give written
assurances satisfactory to the Company as to the Participant’s knowledge and
experience in financial and business matters and/or to employ a purchaser
representative reasonably satisfactory to the Company who is knowledgeable and
experienced in financial and business matters and that he or she is capable of
evaluating, alone or together with the purchaser representative, the merits and
risks of exercising the Stock Award; and (ii) to give written assurances
satisfactory to the Company stating that the Participant is acquiring Common
Stock subject to the Stock Award for the Participant’s own account and not with
any present intention of selling or otherwise distributing the Common
Stock.  The foregoing requirements, and
any assurances given pursuant to such requirements, shall be inoperative if (x) the
issuance of the shares upon the exercise or acquisition of Common Stock under
the Stock Award has been registered under a then currently effective
registration statement under the Securities Act, or (y) as to any
particular requirement, a determination is made by counsel for the Company that
such requirement need not be met in the circumstances under the then applicable
securities laws.  The Company may, upon
advice of counsel to the Company, place legends on stock certificates issued
under the Plan as such counsel deems necessary or appropriate in order to
comply with applicable securities laws, including, but not limited to, legends
restricting the transfer of the Common Stock.

 

17

 

(g)           Withholding Obligations. 
Unless prohibited by the terms of a Stock Award Agreement, the Company
may, in its sole discretion, satisfy any federal, state or local tax
withholding obligation relating to a Stock Award by any of the following means
(in addition to the Company’s right to withhold from any compensation paid to
the Participant by the Company) or by a combination of such means: (i) causing
the Participant to tender a cash payment; (ii)  withholding shares of
Common Stock from the shares of Common Stock issued or otherwise issuable to
the Participant in connection with the Stock Award; provided,
however, that no shares of Common Stock are withheld with a value
exceeding the minimum amount of tax required to be withheld by law (or such
lower amount as may be necessary to avoid classification of the Stock Award as
a liability for financial accounting purposes); (iii) withholding cash
from a Stock Award settled in cash; (iv) withholding payment from any
amounts otherwise payable to the Participant; or (v) by such other method
as may be set forth in the Stock Award Agreement.

 

(h)           Electronic Delivery. 
Any reference herein to a “written” agreement or document shall include
any agreement or document delivered electronically or posted on the Company’s
intranet.

 

(i)            Deferrals. 
To the extent permitted by applicable law, the Board, in its sole
discretion, may determine that the delivery of Common Stock or the payment of
cash, upon the exercise, vesting or settlement of all or a portion of any Stock
Award may be deferred and may establish programs and procedures for deferral
elections to be made by Participants. 
Deferrals by Participants will be made in accordance with Section 409A
of the Code. Consistent with Section 409A of the Code, the Board may
provide for distributions while a Participant is still an employee.  The Board is authorized to make deferrals of
Stock Awards and determine when, and in what annual percentages, Participants
may receive payments, including lump sum payments, following the Participant’s
termination of employment or retirement, and implement such other terms and
conditions consistent with the provisions of the Plan and in accordance with
applicable law.

 

(j)            Compliance with Section 409A.  To the extent that the Board determines that any Stock
Award granted under the Plan is subject to Section 409A of the Code, the
Stock Award Agreement evidencing such Stock Award shall incorporate the terms
and conditions necessary to avoid the consequences described in Section 409A(a)(1) of
the Code.  To the extent applicable, the Plan and Stock
Award Agreements shall be interpreted in accordance with Section 409A of
the Code and Department of Treasury regulations and other interpretive guidance
issued thereunder, including without limitation any such regulations or other
guidance that may be issued or amended after the Effective Date.  Notwithstanding any provision of the Plan to
the contrary, in the event that following the Effective Date the Board
determines that any Stock Award may be subject to Section 409A of the Code
and related Department of Treasury guidance (including such Department of
Treasury guidance as may be issued after the Effective Date), the Board may
adopt such amendments to the Plan and the applicable Stock Award Agreement or
adopt other policies and procedures (including amendments, policies and
procedures with retroactive effect), or take any other actions, that the Board
determines are necessary or appropriate to (1) exempt the Stock Award from
Section 409A of the Code and/or preserve the intended tax treatment of the
benefits provided with respect to the Stock Award, or (2) comply with the
requirements of Section 409A of the Code and related Department of
Treasury guidance.

 

18

 

10.          ADJUSTMENTS UPON CHANGES IN COMMON STOCK; OTHER CORPORATE EVENTS.

 

(a)           Capitalization Adjustments. 
In the event of a Capitalization Adjustment, the Board shall equitably
adjust: (i) the class(es) and maximum number of securities subject to the
Plan pursuant to Section 3(a); (ii) the class(es) and maximum number
of securities that may be issued pursuant to the exercise of Incentive Stock
Options pursuant to Section 3(c); (iii) the class(es) and maximum
number of securities that may be awarded to any person pursuant to Section 4(c) and
6(d); (iv) the class(es) and number of securities subject to each Option
granted under the Non-Discretionary Grant Program under Section 7; and (v) the
class(es) and number of securities and price per share of stock subject to
outstanding Stock Awards.  The Board
shall make such adjustments, and its determination shall be final, binding and
conclusive.

 

(b)           Dissolution or Liquidation. 
Except as otherwise provided in a Stock Award Agreement, in the event of
a dissolution or liquidation of the Company, all outstanding Stock Awards
(other than Stock Awards consisting of vested and outstanding shares of Common
Stock not subject to a forfeiture condition or the Company’s right of
repurchase) shall terminate immediately prior to the completion of such
dissolution or liquidation, and the shares of Common Stock subject to the
Company’s repurchase rights may be repurchased by the Company notwithstanding
the fact that the holder of such Stock Award is providing Continuous Service, provided, however, that the Board may, in
its sole discretion, cause some or all Stock Awards to become fully vested,
exercisable and/or no longer subject to repurchase or forfeiture (to the extent
such Stock Awards have not previously expired or terminated) before the
dissolution or liquidation is completed but contingent on its completion.

 

(c)           Corporate Transaction. 
The following provisions shall apply to Stock Awards in the event of a
Corporate Transaction unless otherwise provided in a written agreement between
the Company or any Affiliate and the holder of the Stock Award:

 

(i)            Stock Awards May Be Assumed. 
In the event of a Corporate Transaction, any surviving corporation or
acquiring corporation (or the surviving or acquiring corporation’s parent
company) may assume or continue any or all Stock Awards outstanding under the
Plan or may substitute similar stock awards for Stock Awards outstanding under
the Plan (including, but not limited to, awards to acquire the same
consideration paid to the stockholders of the Company pursuant to the Corporate
Transaction), and any reacquisition or repurchase rights held by the Company in
respect of Common Stock issued pursuant to Stock Awards may be assigned by the
Company to the successor of the Company (or the successor’s parent company, if
any), in connection with such Corporate Transaction.  A surviving corporation or acquiring
corporation may choose to assume or continue only a portion of a Stock Award or
substitute a similar stock award for only a portion of a Stock Award.  The terms of any assumption, continuation or
substitution shall be set by the Board in accordance with the provisions of Section 2(b).

 

(ii)           Stock Awards Held by Current
Participants.  In the event of a Corporate Transaction in
which the surviving corporation or acquiring corporation (or its parent
company) does not assume or continue any or all outstanding Stock Awards or
substitute similar stock awards for such outstanding Stock Awards, then with
respect to Stock Awards that have not been assumed, continued or substituted
and that are held by Participants whose Continuous 

 

19

 

Service has not
terminated prior to the effective time of the Corporate Transaction (referred
to as the “Current
Participants”), the vesting of such Stock Awards (and, if
applicable, the time at which such Stock Awards may be exercised) shall
(contingent upon the effectiveness of the Corporate Transaction) be accelerated
in full to a date prior to the effective time of such Corporate Transaction as
the Board shall determine (or, if the Board shall not determine such a date, to
the date that is five (5) days prior to the effective time of the
Corporate Transaction), and such Stock Awards shall terminate if not exercised
(if applicable) at or prior to the effective time of the Corporate Transaction,
and any reacquisition or repurchase rights held by the Company with respect to
such Stock Awards shall lapse (contingent upon the effectiveness of the
Corporate Transaction).

 

(iii)         Stock Awards Held by Former
Participants.  In the event of a Corporate Transaction in
which the surviving corporation or acquiring corporation (or its parent
company) does not assume or continue any or all outstanding Stock Awards or
substitute similar stock awards for such outstanding Stock Awards, then with
respect to Stock Awards that have not been assumed, continued or substituted
and that are held by persons other than Current Participants, the vesting of
such Stock Awards (and, if applicable, the time at which such Stock Award may
be exercised) shall not be accelerated and such Stock Awards (other than a
Stock Award consisting of vested and outstanding shares of Common Stock not
subject to the Company’s right of repurchase) shall terminate if not exercised
(if applicable) prior to the effective time of the Corporate Transaction; provided, however, that any reacquisition
or repurchase rights held by the Company with respect to such Stock Awards
shall not terminate and may continue to be exercised notwithstanding the
Corporate Transaction.

 

(iv)          Payment for Stock Awards in Lieu of
Exercise.  Notwithstanding the foregoing, in the event a
Stock Award will terminate if not exercised prior to the effective time of a
Corporate Transaction, the Board may provide, in its sole discretion, that the
holder of such Stock Award may not exercise such Stock Award but will receive a
payment, in such form as may be determined by the Board, equal in value to the
excess, if any, of (i) the value of the property the holder of the Stock
Award would have received upon the exercise of the Stock Award, over (ii) any
exercise price payable by such holder in connection with such exercise.

 

(d)           Change in Control.  A
Stock Award may be subject to additional acceleration of vesting and
exercisability upon or after a Change in Control as may be provided in the
Stock Award Agreement for such Stock Award or as may be provided in any other
written agreement between the Company or any Affiliate and the Participant.  A Stock Award may vest as to all or any
portion of the shares subject to the Stock Award (i) immediately upon the
occurrence of a Change in Control, whether or not such Stock Award is assumed,
continued, or substituted by a surviving or acquiring entity in the Change in
Control, or (ii) in the event a Participant’s Continuous Service is
terminated, actually or constructively, within a designated period following
the occurrence of a Change in Control. 
In the absence of such provisions, no such acceleration shall occur.

 

11.          TERMINATION OR SUSPENSION OF THE PLAN.

 

(a)           Plan Term. 
The Board may suspend or terminate the Plan at any time.  Unless terminated sooner, the Plan shall
terminate on the day before the tenth (10th) anniversary of the

 

20

 

earlier of (i) the
date the Plan is adopted by the Board, or (ii) the date the Plan is
approved by the stockholders of the Company. 
No Stock Awards may be granted under the Plan while the Plan is
suspended or after it is terminated.

 

(b)           No Impairment of Rights. 
Suspension or termination of the Plan shall not impair rights and
obligations under any Stock Award granted while the Plan is in effect except
with the written consent of the affected Participant.

 

12.          EFFECTIVE DATE OF PLAN.

 

The Plan shall become effective on the IPO Date (the “Effective Date”), but no Stock Award
shall be exercised (or, in the case of a Restricted Stock Award, Restricted
Stock Unit Award, or Other Stock Award shall be granted) unless and until the
Plan has been approved by the Stockholders of the Company, which approval shall
be within twelve (12) months before or after the date the Plan is adopted by
the Board.

 

13.          CHOICE OF LAW.

 

The law of the State of Delaware shall govern all
questions concerning the construction, validity and interpretation of this
Plan, without regard to that state’s conflict of laws rules.

 

14.          DEFINITIONS.

 

As used in the Plan, the following definitions shall
apply to the capitalized terms indicated below:

 

(a)           “Affiliate”
means, at the time of determination, any “parent” or “subsidiary” of the
Company as such terms are defined in Rule 405 of the Securities Act.  The Board shall have the authority to
determine the time or times at which “parent” or “subsidiary” status is
determined within the foregoing definition.

 

(b)           “Annual Award”
means an Option granted to an Eligible Director who meets the specified
criteria pursuant to Section 7(c)(iii).

 

(c)           “Annual Meeting”
means the annual meeting of the stockholders of the Company.

 

(d)           “Board”
means the Board of Directors of the Company.

 

(e)           “Capitalization Adjustment”
means any change that is made in, or other events that occur with respect to,
the Common Stock subject to the Plan or subject to any Stock Award after the
Effective Date without the receipt of consideration by the Company (through
merger, consolidation, reorganization, recapitalization, reincorporation, stock
dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares, change in corporate
structure or other transaction not involving the receipt of consideration by
the Company).  Notwithstanding the
foregoing, the conversion of any convertible securities of the Company shall
not be treated as a transaction “without receipt of consideration” by the
Company.

 

21

 

(f)            “Cause”  means with respect to a Participant, the
occurrence of any of the following events: 
(i) such Participant’s commission of any felony or any crime
involving fraud, dishonesty or moral turpitude under the laws of the United
States or any state thereof; (ii) such Participant’s attempted commission
of, or participation in, a fraud or act of dishonesty against the Company; (iii) such
Participant’s intentional, material violation of any contract or agreement
between the Participant and the Company or of any statutory duty owed to the
Company; (iv)  such Participant’s unauthorized use or disclosure of
the Company’s confidential information or trade secrets; or (v) such
Participant’s gross misconduct. The determination that a termination of the
Participant’s Continuous Service is either for Cause or without Cause shall be
made by the Company in its sole discretion. 
Any determination by the Company that the Continuous Service of a
Participant was terminated with or without Cause for the purposes of
outstanding Stock Awards held by such Participant shall have no effect upon any
determination of the rights or obligations of the Company or such Participant
for any other purpose.

 

(g)           “Change in Control”
means the occurrence, in a single transaction or in a series of related
transactions, of any one or more of the following events:

 

(i)            any Exchange Act Person becomes the Owner, directly or
indirectly, of securities of the Company representing more than fifty percent (50%) of the combined
voting power of the Company’s then outstanding securities other than by virtue
of a merger, consolidation or similar transaction.  Notwithstanding
the foregoing, a Change in Control shall not be deemed to occur (A) on
account of the acquisition of securities of the Company by an investor, any
affiliate thereof or any other Exchange Act Person from the Company in a
transaction or series of related transactions the primary purpose of which is
to obtain financing for the Company through the issuance of equity securities
or (B) solely because the level of Ownership held by any Exchange Act
Person (the “Subject
Person”) exceeds the
designated percentage threshold of the outstanding voting securities as a result
of a repurchase or other acquisition of voting securities by the Company
reducing the number of shares outstanding, provided that if a Change in Control
would occur (but for the operation of this sentence) as a result of the
acquisition of voting securities by the Company, and after such share
acquisition, the Subject Person becomes the Owner of any additional voting
securities that, assuming the repurchase or other acquisition had not occurred,
increases the percentage of the then outstanding voting securities Owned by the
Subject Person over the designated percentage threshold, then a Change in
Control shall be deemed to occur;

 

(ii)           there is consummated a merger, consolidation or
similar transaction involving (directly or indirectly) the Company and,
immediately after the consummation of such merger, consolidation or similar
transaction, the stockholders of the Company immediately prior thereto do not
Own, directly or indirectly, either (A) outstanding voting securities
representing more than fifty percent
(50%) of the combined outstanding voting power of the surviving Entity
in such merger, consolidation or similar transaction or (B) more than fifty percent (50%) of the combined
outstanding voting power of the parent of the surviving Entity in such merger,
consolidation or similar transaction, in each case in substantially the same
proportions as their Ownership of the outstanding voting securities of the
Company immediately prior to such transaction;

 

22

 

(iii)         the stockholders of the Company approve or the Board
approves a plan of complete dissolution or liquidation of the Company, or a
complete dissolution or liquidation of the Company shall otherwise occur,
except for a liquidation into a parent corporation;

 

(iv)          there is consummated a sale, lease, exclusive license
or other disposition of all or substantially all of the consolidated assets of
the Company and its Subsidiaries, other than a sale, lease, license or other
disposition of all or substantially all of the consolidated assets of the
Company and its Subsidiaries to an Entity, more than fifty percent (50%) of the combined voting power of the voting
securities of which are Owned by stockholders of the Company in substantially
the same proportions as their Ownership of the outstanding voting securities of
the Company immediately prior to such sale, lease, license or other
disposition; or

 

(v)            individuals who, on the date the Plan is adopted by
the Board, are members of the Board (the “Incumbent Board”) cease for any reason to
constitute at least a majority of the members of the Board; provided, however, that if the appointment or election (or
nomination for election) of any new Board member was approved or recommended by
a majority vote of the members of the Incumbent Board then still in office,
such new member shall, for purposes of the Plan, be considered as a member of
the Incumbent Board.

 

For avoidance of doubt, the term Change in Control
shall not include a sale of assets, merger or other transaction effected
exclusively for the purpose of changing the domicile of the Company.

 

Notwithstanding the foregoing or any other provision
of the Plan, the definition of Change in Control (or any analogous term) in an
individual written agreement between the Company or any Affiliate and the
Participant shall supersede the foregoing definition with respect to Stock
Awards subject to such agreement; provided,
however, that if no definition of Change in Control or any analogous
term is set forth in such an individual written agreement, the foregoing
definition shall apply.

 

The Board may, in its sole discretion and without a
Participant’s consent, amend the definition of “Change in Control” to conform
to the definition of “Change in Control” under Section 409A of the Code,
and the regulations thereunder.

 

(h)           “Code” means
the Internal Revenue Code of 1986, as amended.

 

(i)            “Committee”
means a committee of one (1) or more Directors to whom authority has been
delegated by the Board in accordance with Section 2(c).

 

(j)            “Common Stock”
means the common stock of the Company.

 

(k)           “Company”
means Affymax, Inc., a Delaware corporation.

 

(l)            “Consultant” means any person, including an advisor,
who is (i) engaged by the Company or an Affiliate to render consulting or
advisory services and is compensated for such services, or (ii) serving as
a member of the board of directors of an Affiliate and is compensated for such
services.  However, service solely as a
Director, or payment of a fee for such service, shall not cause a Director to
be considered a “Consultant” for purposes of the Plan.

 

23

 

(m)          “Continuous Service”
means that the Participant’s service with the Company or an Affiliate, whether
as an Employee, Director or Consultant, is not interrupted or terminated.  A change in the capacity in which the
Participant renders service to the Company or an Affiliate as an Employee,
Consultant or Director or a change in the entity for which the Participant
renders such service, provided that there is no interruption or termination of
the Participant’s service with the Company or an Affiliate, shall not terminate
a Participant’s Continuous Service; provided, however,
if the Entity for which a Participant is rendering services ceases to qualify
as an “Affiliate,” as determined by the Board in its sole discretion, such
Participant’s Continuous Service shall be considered to have terminated on the
date such Entity ceases to qualify as an Affiliate.  To the extent permitted by law, the Board or
the chief executive officer of the Company, in that party’s sole discretion,
may determine whether Continuous Service shall be considered interrupted in the
case of: (i) any leave of absence approved by the Board of the chief
executive officer of the Company, including sick leave, military leave or any
other personal leave; or (ii) transfers between the Company, an Affiliate,
or their successors.  Notwithstanding the
foregoing, a leave of absence shall be treated as Continuous Service for
purposes of vesting in a Stock Award only to such extent as may be provided in
the Company’s leave of absence policy, in the written terms of any leave of
absence agreement or policy applicable to the Participant, or as otherwise
required by law.

 

(n)           “Corporate Transaction”
means the occurrence, in a single transaction or in a series of related
transactions, of any one or more of the following events:

 

(i)            a sale  or other
disposition of all or substantially all, as determined by the Board in its sole
discretion, of the consolidated assets of the Company and its Subsidiaries;

 

(ii)           a sale or other disposition of at least ninety percent (90%) of the
outstanding securities of the Company;

 

(iii)         the consummation of a merger, consolidation or similar
transaction following which the Company is not the surviving corporation; or

 

(iv)          the consummation of a merger, consolidation or similar
transaction following which the Company is the surviving corporation but the
shares of Common Stock outstanding immediately preceding the merger,
consolidation or similar transaction are converted or exchanged by virtue of
the merger, consolidation or similar transaction into other property, whether
in the form of securities, cash or otherwise.

 

(o)           “Covered Employee”
means the chief executive officer and the four (4) other highest
compensated officers of the Company for whom total compensation is required to
be reported to stockholders under the Exchange Act, as determined for purposes
of Section 162(m) of the Code.

 

(p)           “Director”
means a member of the Board.

 

(q)           “Disability”
means, with respect to a Participant, 
the inability of such Participant to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment
which can be expected to result in death or can be expected to last for a 

 

24

 

continuous period of not
less than 12 months, as provided in Section 22(e)(3) and
409A(a)(2)(c)(i) of the Code.

 

(r)           “Effective Date”
means the effective date of the Plan as set forth in Section 12.

 

(s)           “Eligible Director”
means a Director who is not an Employee and is eligible to participate in the
Non-Discretionary Grant Program.

 

(t)            “Employee” means any person employed by the Company
or an Affiliate.  However, service solely
as a Director, or payment of a fee for such services, shall not cause a
Director to be considered an “Employee” for purposes of the Plan.

 

(u)           “Entity”
means a corporation, partnership, limited liability company or other entity.

 

(v)            “Exchange Act”
means the Securities Exchange Act of 1934, as amended.

 

(w)           “Exchange Act Person”  means any natural person, Entity or
“group” (within the meaning of Section 13(d) or 14(d) of the
Exchange Act), except that “Exchange Act Person” shall not include (i) the
Company or any Subsidiary of the Company, (ii) any employee benefit plan
of the Company or any Subsidiary of the Company or any trustee or other
fiduciary holding securities under an employee benefit plan of the Company or
any Subsidiary of the Company, (iii) an underwriter temporarily holding
securities pursuant to an offering of such securities, (iv) an Entity
Owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their Ownership of stock of the Company;
or (v) any natural person, Entity or “group” (within the meaning of Section 13(d) or
14(d) of the Exchange Act) that, as of the Effective Date, is the Owner,
directly or indirectly, of securities of the Company representing more than
fifty percent (50%) of the combined voting power of the Company’s then
outstanding securities.

 

(x)           “Fair Market Value”
means, as of any date, the value of the Common Stock determined as follows:

 

(i)            If the Common Stock is listed on any established stock
exchange or traded on the Nasdaq Global Select Market or the Nasdaq Global
Market (formerly the Nasdaq National Market), the Fair Market Value of a 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 the exchange or
market with the greatest volume of trading in the Common Stock) on the date of
determination, as reported in The Wall Street Journal  or such other source as the Board deems
reliable.

 

(ii)           If the Common Stock is listed or traded on the Nasdaq
Capital Market (formerly the Nasdaq Small Cap Market), the Fair Market Value of
a share of Common Stock shall be the mean between the bid and asked prices for
the Common Stock on the date of determination, as reported in The Wall Street Journal  or
such other source as the Board deems reliable. 
Unless otherwise provided by the Board, if there is no closing sales
price (or closing bid if no sales were reported) for the Common Stock on the
date of determination, then the Fair 

 

25

 

Market Value shall be the
mean between the bid and asked prices for the Common Stock on the last
preceding date for which such quotation exists.

 

(iii)         In the absence of such markets for the Common Stock,
the Fair Market Value shall be determined by the Board in good faith and in a
manner that complies with Section 409A of the Code.

 

(y)           “Incentive Stock Option”
means an Option which qualifies as an “incentive stock option” within the
meaning of Section 422 of the Code and the regulations promulgated
thereunder.

 

(z)           “Initial Award”
means an Option granted to an Eligible Director who meets the specified
criteria pursuant to Section 7(c)(ii).

 

(aa)         “IPO Award”
means an Option granted to an Eligible Director who meets the specified
criteria pursuant to Section 7(c)(i).

 

(bb)         “IPO Date”
means the date of the underwriting agreement between the Company and the
underwriter(s) managing the initial public offering of the Common Stock,
pursuant to which the Common Stock is priced for the initial public offering.

 

(cc)         “Non-Discretionary Grant
Program” means the non-discretionary grant program in effect
under Section 7 of the Plan.

 

(dd)         “Non-Employee Director”  means a Director who either (i) is not a current
employee or officer of the Company or an Affiliate, does not receive
compensation, either directly or indirectly, from the Company or an Affiliate
for services rendered as a consultant or in any capacity other than as a
Director (except for an amount as to which disclosure would not be required
under Item 404(a) of Regulation S-K promulgated pursuant to the Securities
Act (“Regulation S-K”)),
does not possess an interest in any other transaction for which disclosure
would be required under Item 404(a) of Regulation S-K, and is not engaged
in a business relationship for which disclosure would be required pursuant to
Item 404(b) of Regulation S-K; or (ii) is otherwise considered a
“non-employee director” for purposes of Rule 16b-3.

 

(ee)         “Nonstatutory Stock Option”
means an Option that does not qualify as an Incentive Stock Option.

 

(ff)           “Officer”
means a person who is an officer of the Company within the meaning of Section 16
of the Exchange Act and the rules and regulations promulgated thereunder.

 

(gg)         “Option” means
an Incentive Stock Option or a Nonstatutory Stock Option to purchase shares of
Common Stock granted pursuant to the Plan.

 

(hh)         “Option Agreement”
means a written agreement between the Company and an Optionholder evidencing
the terms and conditions of an Option grant. 
Each Option Agreement shall be subject to the terms and conditions of
the Plan.

 

26

 

(ii)           “Optionholder”
means a person to whom an Option is granted pursuant to the Plan or, if
applicable, such other person who holds an outstanding Option.

 

(jj)           “Other Stock Award” means an award based in whole or in part
by reference to the Common Stock which is granted pursuant to the terms and
conditions of Section 6(d).

 

(kk)        “Other Stock Award Agreement”  means a written agreement between the
Company and a holder of an Other Stock Award evidencing the terms and
conditions of an Other Stock Award grant. 
Each Other Stock Award Agreement shall be subject to the terms and
conditions of the Plan.

 

(ll)           “Outside Director”
means a Director who either (i) is not a current employee of the Company
or an “affiliated corporation” (within the meaning of Treasury Regulations
promulgated under Section 162(m) of the Code), is not a former
employee of the Company or an “affiliated corporation” who receives
compensation for prior services (other than benefits under a tax-qualified
retirement plan) during the taxable year, has not been an officer of the
Company or an “affiliated corporation,” and does not receive remuneration from
the Company or an “affiliated corporation,” either directly or indirectly, in
any capacity other than as a Director, or (ii) is otherwise considered an “outside
director” for purposes of Section 162(m) of the Code.

 

(mm)       “Own,” “Owned,” “Owner,”
“Ownership”  A person or Entity shall be deemed
to “Own,” to have “Owned,” to be the “Owner” of, or to have acquired “Ownership”
of securities if such person or Entity, directly or indirectly, through any
contract, arrangement, understanding, relationship or otherwise, has or shares
voting power, which includes the power to vote or to direct the voting, with
respect to such securities.

 

(nn)         “Participant”
means a person to whom a Stock Award is granted pursuant to the Plan or, if
applicable, such other person who holds an outstanding Stock Award.

 

(oo)         “Performance Criteria” means the one or more criteria that the
Board shall select for purposes of establishing the Performance Goals for a
Performance Period.  The Performance
Criteria that shall be used to establish such Performance Goals may be based on
any one of, or combination of, the following: (i) earnings per share; (ii) earnings
before interest, taxes and depreciation; (iii) earnings before interest,
taxes, depreciation and amortization (EBITDA); (iv) total stockholder
return; (v) return on equity; (vi) return on assets, investment, or
capital employed; (vii) operating margin; (viii) gross margin; (ix) operating
income; (x) net income (before or after taxes); (xi) net operating income;
(xii) net operating income after tax; (xiii) pre- and after-tax income; (xiv)
pre-tax profit; (xv) operating cash flow; (xvi) sales or revenue targets;
(xvii) orders and revenue; (xviii) increases in revenue or product revenue;
(xix) expenses and cost reduction goals; (xx) improvement in or attainment of
expense levels; (xxi) improvement in or attainment of working capital levels;
(xxii) economic value added (or an equivalent metric); (xxiii) market share;
(xxiv) cash flow; (xxv) cash flow per share; (xxvi) share price performance;
(xxvii) debt reduction; (xxviii) implementation or completion of projects or
processes; (xxix) customer satisfaction; (xxx) stockholders’ equity; (xxxi)
quality measures; and (xxxii) to the extent that a Stock
Award is not intended to comply with Section 162(m) of the Code, other measures of performance selected by
the Board.  Partial achievement of the
specified criteria may result in the payment or vesting corresponding to the
degree of achievement as specified in 

 

27

 

the Stock Award
Agreement.  The Board shall, in its sole
discretion, define the manner of calculating the Performance Criteria it
selects to use for such Performance Period.

 

(pp)         “Performance Goals” means, for a Performance Period, the one
or more goals established by the Board for the Performance Period based upon
the satisfaction of the Performance Criteria. 
Performance Goals may be based on a Company-wide basis, with respect to
one or more business units, divisions, Affiliates, or business segments, and in
either absolute terms or relative to the performance of one or more comparable
companies or the performance of one or more relevant indices.  At the time of the grant of any Stock Award,
the Board is authorized to determine whether, when calculating the attainment
of Performance Goals for a Performance Period: (i) to exclude
restructuring and/or other nonrecurring charges; (ii) to exclude exchange
rate effects, as applicable, for non-U.S. dollar denominated net sales and
operating earnings; (iii) to exclude the effects of changes to generally
accepted accounting standards required by the Financial Accounting Standards
Board; (iv) to exclude the effects of any statutory adjustments to
corporate tax rates; and (v) to exclude the effects of any “extraordinary
items” as determined under generally accepted accounting principles.  In addition, the Board retains the discretion
to reduce or eliminate the compensation or economic benefit due upon attainment
of Performance Goals.

 

(qq)         “Performance Period” means one or more periods of time, which
may be of varying and overlapping duration, as the Committee may select, over
which the attainment of one or more Performance Goals will be measured for the
purpose of determining a Participant’s right to and the payment of a
Performance Stock Award.

 

(rr)         “Performance Stock Award”
means an award of shares of Common Stock which is granted pursuant to the terms
and conditions of Section 6(d).

 

(ss)         “Plan” means
this Affymax, Inc. 2006 Equity Incentive Plan.

 

(tt)           “Prior Plan”
means the Company’s 2001 Stock Option/Stock Issuance Plan as in effect
immediately prior to the Effective Date.

 

(uu)         “Restricted Stock Award” means an award of shares of Common Stock
which is granted pursuant to the terms and conditions of Section 6(a).

 

(vv)          “Restricted Stock Award Agreement” means a written agreement between the
Company and a holder of a Restricted Stock Award evidencing the terms and
conditions of a Restricted Stock Award grant. 
Each Restricted Stock Award Agreement shall be subject to the terms and
conditions of the Plan.

 

(ww)        “Restricted Stock Unit Award”  means a right to receive shares of Common
Stock which is granted pursuant to the terms and conditions of Section 6(b).

 

(xx)         “Restricted Stock Unit Award Agreement”
means a written
agreement between the Company and a holder of a Restricted Stock Unit Award
evidencing the terms and conditions of a Restricted Stock Unit Award
grant.  Each Restricted Stock Unit Award
Agreement shall be subject to the terms and conditions of the Plan.

 

28

 

(yy)         “Rule 16b-3”
means Rule 16b-3 promulgated under the Exchange Act or any successor to Rule 16b-3,
as in effect from time to time.

 

(zz)         “Securities Act”
means the Securities Act of 1933, as amended.

 

(aaa)       “Stock Appreciation Right” means a right to receive the
appreciation on Common Stock that is granted pursuant to the terms and
conditions of Section 6(c).

 

(bbb)       “Stock Appreciation Right Agreement” means a written agreement between the
Company and a holder of a Stock Appreciation Right evidencing the terms and
conditions of a Stock Appreciation Right grant. 
Each Stock Appreciation Right Agreement shall be subject to the terms
and conditions of the Plan.

 

(ccc)       “Stock Award” means any right to receive Common Stock
granted under the Plan, including an Option, a Restricted Stock Award, a
Restricted Stock Unit Award, a Stock Appreciation Right, a Performance Stock
Award, or any Other Stock Award.

 

(ddd)       “Stock Award Agreement” means a written agreement between the
Company and a Participant evidencing the terms and conditions of a Stock Award
grant.  Each Stock Award Agreement shall
be subject to the terms and conditions of the Plan.

 

(eee)       “Subsidiary”
means, with respect to the Company, (i) any corporation of which more than
fifty percent (50%) of the outstanding capital stock having ordinary voting
power to elect a majority of the board of directors of such corporation
(irrespective of whether, at the time, stock of any other class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time, directly or indirectly, Owned by
the Company, and (ii) any partnership, limited liability company
or other entity in
which the Company has a direct or indirect interest (whether in the form of
voting or participation in profits or capital contribution) of more than fifty
percent (50%) .

 

(fff)         “Ten Percent Stockholder”
means a person who Owns (or is deemed to Own pursuant to Section 424(d) 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 any Affiliate.

 

29EXHIBIT 10.33

 

 

	
   

  	
  UBS Bank
  USA 

  
	
   

  	
  Variable Credit Line
  Account Number: (if applicable) 

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Fixed Credit Line Account
  Number: (if applicable) 

  
	
   

  	
   

  	
   

  	
   

  
	
  Credit Line Account
  Application and Agreement for Organizations and Businesses 

  	
   

  	
  HB

  	
  SS# / TIN

  	
   

  	
   

  
	
   

  	
  Internal Use
  Only

  

 

	
  For Internal Use Only 

  
	
   

  
	
  Variable
  Credit Line Account at UBS Bank USA 

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Fixed
  Credit Line Account at UBS Bank USA 

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

Collateral Account(s) at UBS Financial Services Inc.

 

Insert
the information below for each UBS Financial Services Inc. account to be
pledged to secure the Borrower’s credit line.

 

	
  Full Collateral (Securities)
  Account Title

  	
   

  	
  Branch

  	
   

  	
  Account 

  Number

  	
   

  	
  FA#

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1)        Affymax, Inc.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Credit Line Account

Select the type of credit line account:

 

o   Variable
Credit Line Account

o   Fixed
Credit Line Account

o   Both

 

If you do not indicate your preference you will be
deemed to have selected the “Both” option.

 

Account
Ownership 

Is
this entity / organization a business that provides commercial goods or
services (i.e., an operating entity)?

 

o  Yes       
o  No 

 

Select the Organization/Business Structure: 

 

	
  o 
  Corporation

  	
   

  	
   

  	
   

  	
   

  
	
  o 
  Corp- Subchapter ‘S’

  	
   

  	
  o 
  Fed Charter-Credit Union

  	
   

  	
  o 
  Govt Agency-Local Ent

  
	
  o 
  Limited Liability Company (LLC)

  	
   

  	
  o 
  Foundation-not for profit

  	
   

  	
  o 
  Govt Agency-State

  
	
  o 
  Limited Liability Partnership (LLP)

  	
   

  	
  o 
  Endowment-not for profit

  	
   

  	
   

  
	
  o 
  Limited Liability-Limited

  	
   

  	
  o 
  State Charter-S&L Bank

  	
   

  	
   

  
	
   

  	
   

  	
  o 
  State Charter-Savings Bank

  	
   

  	
   

  
	
        Partnership
  (LLLP)

  	
   

  	
  o 
  State Charter-Comm Bank

  	
   

  	
   

  
	
   

  	
   

  	
  o 
  State Charter-Trust Co.

  	
   

  	
   

  
	
  o 
  Sole Proprietorship

  	
   

  	
  o 
  State Charter-Credit Union

  	
   

  	
   

  
	
  o 
  Partnership-General

  	
   

  	
  o 
  State Charter-Indus Loan

  	
   

  	
   

  
	
  o 
  Partnership-Limited

  	
   

  	
  o 
  Fed Charter-Savings Assoc

  	
   

  	
   

  
	
  o 
  Association

  	
   

  	
  o 
  Fed Charter-Nat’l Bank

  	
   

  	
   

  
	
  o 
  Partnership-Invest Club

  	
   

  	
  o 
  Fed Charter-Trust Co.

  	
   

  	
   

  
	
  o 
  Invest Club Membership

  	
   

  	
  o 
  Govt Agency-Federal

  	
   

  	
   

  

 

Any changes
or corrections to the information on this application must be initialed by
you.  

 

Borrower Information

This section should be completed by the Organization/Business .

 

Borrower

Organization / Business Name Affymax, Inc. 

 

Organization/Business
is (please complete each item that applies):

 

	
  1)     
  o  Incorporated

  	
   

  	
  o  Unincorporated

  
	
  2)     
  o  For
  Profit

  	
   

  	
  o  Not
  For Profit

  

 

Industry
Group (e.g., Construction, Service, etc.):

 

	
  Is
  the Organization/Business publicly listed?

  	
   

  	
  o  No     
  o  Yes;    specify:

  

 

	
   

  	
   

  	
   

  
	
  Exchange
  (NYSE, AMEX, or NASDAQ)

  	
   

  	
  Ticker
  Symbol

  

 

Location of Address

 

	
          o      Business
  - Primary

  	
   

  	
  o      Other
  ( please specify )

  

 

Street
Address ( If a P.O. Box, complete the
Additional Address Information on page 4 .):

 

 

	
  City:

  	
   

  	
  State:

  	
   

  	
  ZIP:

  

 

Business Telephone Number:

 

Place of Formation / Incorporation

 

	
  o  USA (if
  formed/incorporated, specify State):

  	
   

  	
   

  
	
  o  Other (specify)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  TIN: 

  	
   

  	
  Date of Incorporation /
  Establishment: 

  

 

©2009
UBS Bank USA. All rights reserved.

Sign and
date the application on page 5

 

 

 

	
   

  	
  UBS Bank
  USA 

  
	
   

  	
  Variable Credit Line
  Account Number: (if applicable) 

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Fixed Credit Line Account
  Number: (if applicable) 

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SS# / TIN

  	
   

  	
   

  
	
   

  	
  Internal Use
  Only

  

 

Borrower Financial and Ownership Information 

 

	
  Annual
  Income:

  	
   

  	
  Liquid
  Assets:

  
	
   

  	
   

  	
   

  
	
  Net
  Worth

  	
   

  	
  Fiscal
  Year End (indicate month)

  

 

Do
you receive a substantial amount of your revenue/wealth (over 50%)
(trade/export) from a country outside of the United States? 

 

o     
Yes      o     No     If
yes specify: 

 

Country(ies): 

 

Does
the Borrower own 10% or more of the shares of any publicly traded company?

 

o     
Yes      o     No     If
yes, please specify company and%: 

 

	
   

  	
   

  	
   

  	
  %

  

 

Are any of the Borrowers,
business owners or directors/principal officers a control person of UBS AG or
its subsidiaries or affiliates?* 

 

o     
Yes      o     No     If
yes, please specify company and%: 

 

	
   

  	
   

  	
   

  	
  %

  

 

Is
the Borrower an officer or member of the board of directors of UBS AG, its subsidiaries
or affiliates?*

 

o     
Yes      o     No     If
yes, please specify:

 

	
   

  	
   

  	
   

  
	
  Subsidiary
  or Affiliate

  	
   

  	
  Employee
  Name and SS#

  

 

Is the Borrower an immediate family member of
an executive officer or member of the board of directors of UBS AG? Immediate family member means a spouse or any other
relative residing in the Borrower’s household to whom the Borrower lends
financial support. 

 

o     
Yes      o     No     If
yes, please specify: 

 

	
   

  	
   

  	
   

  
	
  Subsidiary
  or Affiliate

  	
   

  	
  Employee
  Name and SS#

  

 

Will
any of the loan proceeds be used to repay any debt or obligation owed to, or
purchase an asset from, UBS AG or its subsidiaries or affiliates?

 

o     
Yes      o     No     If
yes, please specify:

 

	
   

  	
   

  	
   

  
	
  Subsidiary
  or Affiliate

  	
   

  	
   

  

 

*For purposes these questions, “control” means a person or
entity that either (a) owns, controls or has the power to vote 25% or more
of any class of voting securities, (b) has the ability to control the
election of the majority of the directors of a company, or (c) has the
power to exercise a controlling influence over management policies. A person or
entity is presumed to have control of a company if the person or entity owns,
controls or has the power to vote 10% or more of any class of voting securities
of the company and (i) the person is an executive officer or director of
the company or (ii) no other person has a greater percentage of that class
of voting securities.

 

Principal Officer/Beneficial Owner

 

Complete
this section for the Principal Officer(s) of the borrower, or beneficial
owner for an LLC. To include additional principal officers please photocopy
this page and submit it with the application.

 

	
  Principal Officer Name

  	
        SS#

  
	
   

  	
   

  
	
  Country of Citizenship: 

  	
  Date of Birth 

  
	
   

  	
   

  
	
  x     
  USA

  	
  o

  	
  Other (specify) 

  
			

 

Passport/CEDULA
and Green Card#: (If non-U.S. and no SS# specified) 

 

	
  /

  	
   

  	
   

  

Passport/CEDULA Country of Issuance: 

 

Street Address: 

 

 

	
  City:

  	
   

  	
  State:

  	
   

  	
  ZIP:

  

 

Telephone Number: 

 

	
  Principal Officer Name

  	
        SS#

  
	
   

  	
   

  
	
  Country of Citizenship: 

  	
  Date of Birth 

  
	
   

  	
   

  
	
  x     
  USA

  	
  o

  	
  Other (specify) 

  
			

 

Passport/CEDULA
and Green Card#: (If non-U.S. and no SS# specified) 

 

	
  /

  	
   

  	
   

  

Passport/CEDULA Country of Issuance: 

 

Street Address: 

 

 

	
  City:

  	
   

  	
  State:

  	
   

  	
  ZIP:

  

 

Telephone Number: 

 

©2009
UBS Bank USA. All rights reserved.

Sign and
date the application on page 5

 

2

 

 

	
   

  	
  UBS Bank
  USA 

  
	
   

  	
  Variable Credit Line
  Account Number: (if applicable) 

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Fixed Credit Line Account
  Number: (if applicable) 

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SS# / TIN

  	
   

  	
   

  
	
   

  	
  Internal Use
  Only

  

 

Credit Line Account Features 

 

Check Writing 

 

If
you would like to receive Credit Line checks for your credit line account, please
enroll below:

 

o           Check here if you would like
Credit Line checks.

Checks
will be in the name of the Borrower.

Please
print the address that you would like to appear on your checks.

 

 

Alternate Mailing Address for Checks

 

Print
the mailing address for the delivery of checks if different from the address on
the checks:

 

 

Wire Instructions for Loan Payment: (In
US Dollars)

Bank Name:

Wire System Address:

 

For Further Credit to the Account of:

Account Number:

 

For the Benefit of:

Account Number:

 

Alternate Mailing Address for Checks

 

Print the mailing address for the delivery of checks if different from
the address on the checks:

 

 

UBS Credit Corp Wire Instructions are as follows:

UBS AG

ABA # 026007993

 

A/C #

 

A/C Name:

 

Senior Political Affiliation

 

Are you, any authorized signatories, beneficial
owners, trustees, powers of attorney or other individuals with authority to
effect transactions, or any of their immediate family members or close
associates a:

 

	
  I)

  	
  Current
  U.S. political official (as defined in section B below)? 

  	
  o  No     
  o  Yes;    complete:
  

  
	
   

  	
   

  
	
   

  	
    A) Political
  Official’s Name: 

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
    B) Current
  Position: 

  	
  o  President 

  	
  o  Vice President 

  	
  o  US Cabinet Member 

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  o  Speaker of the House of
  Representatives 

  	
  o  Supreme Court Justice 

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  o  Chairman of the Joint Chiefs of
  Staff 

  	
  o  Ambassador 

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
    C) Relationship
  to Client(s): 

  	
  o  Self 

  	
  o  Immediate family member 

  	
  o  Close associate 

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  o  Associated with business or
  trust 

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  II)

  	
  Current
  or former Senior non-U.S. political official, non-U.S. Religious
  Group/Organization, or Senior/Influential representative of a non-U.S.
  Religious Group/Organization? 

  	
   

  	
  o  No   o  Yes;   complete: 

  
	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Political
  Official’s Name: 

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Current
  or Former Position: 

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   
  

  	
   

  
	
   

  	
   

  	
  Relationship
  to Client(s): 

  	
  o  Self 

  	
  o  Immediate family member 

  	
  o  Close associate 

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  o  Associated with business or
  trust 

  	
   

  
												

 

©2009 UBS Bank USA. All rights reserved.

Sign
and date the application on page 5

 

3

 

 

	
   

  	
  UBS Bank
  USA 

  
	
   

  	
  Variable Credit Line
  Account Number: (if applicable) 

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Fixed Credit Line Account
  Number: (if applicable) 

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SS# / TIN

  	
   

  	
   

  
	
   

  	
  Internal Use
  Only

  

 

Duplicate Party Addendum

 

Complete
this section for each Duplicate Party to receive a duplicate credit line
account statement.

 

Name: 

 

Street Address: 

 

 

Internal Location Code (UBS Financial Services
Inc. Use Only) 

 

	
  Country of Citizenship:

  	
   

  
	
  o    USA      
  o    Other
  (specify): 

  	
   
  

  
	
  City:

  	
   

  	
  State:

  	
   

  	
  ZIP:

  
						

 

Additional
Address Information

 

If
the Borrower’s mailing address is a P.O. Box please provide a legal
residence address below.

 

	
  First
  Name: 

  	
   
  

  	
  Last
  Name: 

  	
   
  

  	
   

  
	
   
  

  	
   
  

  	
   
  

  	
   
  

  	
   
  

  
	
  Location
  of Address: 

  
	
  o     Business -
  Primary 

  	
   
  

  
	
  o     Business -
  Secondary 

  	
   
  

  	
   

  	
   

  	
   

  
	
   
  

  	
   
  

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  o     Other
  (Specify): 

  	
   
  

  	
   
  

  	
   
  

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
												

 

Street
Address: 

 

 

	
  City:

  	
   

  	
  State:

  	
   

  	
  ZIP:

  

 

©2009 UBS Bank USA. All rights reserved.

Sign
and date the application on page 5

 

4

 

 

	
   

  	
  UBS Bank
  USA 

  
	
   

  	
  Variable Credit Line
  Account Number: (if applicable) 

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Fixed Credit Line Account
  Number: (if applicable) 

  
	
   

  	
   

  	
   

  	
   

  
	
  Credit Line Agreement 

  	
   

  	
  SS# / TIN

  	
   

  	
   

  
	
   

  	
  Internal Use
  Only

  

 

Borrower Agreement

 

BY SIGNING BELOW, THE BORROWER
UNDERSTANDS, ACKNOWLEDGES AND AGREES THAT:

 

A                 The Borrower has
received and read a copy of this Borrower Agreement, the attached Credit Line
Account Application and Agreement (including the Credit Line Agreement
following this Borrower Agreement) and the Loan Disclosure Statement explaining
the risk factors that the Borrower should consider before obtaining a loan
secured by the Borrower’s securities account. The Borrower agrees to be bound
by the terms and conditions contained in the Credit Line Account Application
and Agreement (including the Credit Line Agreement following this Borrower
Agreement) (which terms and conditions are incorporated by reference).
Capitalized terms used in this Borrower Agreement have the meanings set forth
in the Credit Line Agreement.

 

B                 THE
BORROWER UNDERSTANDS AND AGREES THAT UBS BANK USA MAY DEMAND FULL OR PARTIAL PAYMENT OF THE CREDIT LINE OBLIGATIONS
, AT ITS SOLE OPTION AND WITHOUT CAUSE, AT
ANY TIME, AND THAT NEITHER FIXED RATE ADVANCES NOR VARIABLE RATE ADVANCES ARE
EXTENDED FOR ANY SPECIFIC TERM OR DURATION. THE BORROWER UNDERSTANDS AND AGREES
THAT ALL ADVANCES ARE SUBJECT TO COLLATERAL MAINTENANCE REQUIREMENTS. THE
BORROWER UNDERSTANDS THAT UBS BANK USA MAY, AT ANY TIME, IN ITS DISCRETION,
TERMINATE AND CANCEL THE CREDIT LINE REGARDLESS OF WHETHER OR NOT AN EVENT HAS
OCCURRED.

 

C                 UNLESS
DISCLOSED IN WRITING TO UBS BANK USA AT THE TIME OF THIS AGREEMENT, AND
APPROVED BY UBS BANK USA, THE BORROWER AGREES NOT TO USE THE PROCEEDS OF ANY
ADVANCE EITHER TO PURCHASE, CARRY OR TRADE IN SECURITIES OR TO REPAY ANY DEBT (I) USED
TO PURCHASE, CARRY OR TRADE IN SECURITIES OR (II) TO ANY AFFILIATE OF UBS
BANK USA. THE BORROWER WILL BE DEEMED TO REPEAT THIS AGREEMENT EACH TIME THE
BORROWER REQUESTS AN ADVANCE.

 

D                 THE
BORROWER UNDERSTANDS THAT BORROWING USING SECURITIES AS COLLATERAL ENTAILS
RISKS. SHOULD THE VALUE OF THE SECURITIES IN THE COLLATERAL ACCOUNT DECLINE
BELOW THE REQUIRED COLLATERAL MAINTENANCE REQUIREMENTS, UBS BANK USA MAY REQUIRE
THAT THE BORROWER POST ADDITIONAL COLLATERAL, REPAY PART OR ALL OF THE
BORROWER’S LOAN AND/OR SELL THE BORROWER’S SECURITIES. ANY REQUIRED
LIQUIDATIONS MAY INTERRUPT THE BORROWER’S LONG-TERM INVESTMENT STRATEGIES
AND MAY RESULT IN ADVERSE TAX CONSEQUENCES.

 

E                   Neither
UBS Bank USA nor UBS Financial Services Inc. provides legal or tax advice and
nothing herein shall be construed as providing legal or tax advice.

 

F                   Upon execution
of this Credit Line Account Application and Agreement, the Borrower declares
that all of the information requested in the Application and supplied by the
Borrower is true and accurate and further agrees to promptly notify UBS Bank
USA in writing of any material changes to any or all of the information
contained in the Application including information relating to the Borrower’s
financial situation.

 

G                 Subject to any
applicable financial privacy laws and regulations, data regarding the Borrower
and the Borrower’s securities accounts may be shared with UBS Bank USA
affiliates. Subject to any applicable financial privacy laws and regulations,
the Borrower requests that UBS Bank USA share such personal financial data with
non-affiliates of UBS Bank USA as is necessary or advisable to effect,
administer or enforce, or to service, process or maintain, all transactions and
accounts contemplated by this Agreement.

 

H                 The Borrower
authorizes UBS Bank USA and UBS Financial Services Inc. to obtain a credit
report or other credit references concerning the Borrower (including making
verbal or written inquiries concerning credit history) or to otherwise verify
or update credit information given to UBS Bank USA at any time. The Borrower
authorizes the release of this credit report or other credit information to UBS
Bank USA affiliates as it deems necessary or advisable to effect, administer or
enforce, or to service, process or maintain all transactions and accounts
contemplated by this Agreement, and for the purpose of offering additional
products, from time to time, to the Borrower. The Borrower authorizes UBS Bank
USA to exchange Borrower information with any party it reasonably believes is
conducting a legitimate credit inquiry in accordance with the Fair Credit
Reporting Act. UBS Bank USA may also share credit or other transactional
experience with the Borrower’s designated UBS Financial Services Inc. Financial
Advisor or other parties designated by the Borrower.

 

I                      UBS Bank USA is
subject to examination by various federal, state and self-regulatory
organizations and the books and records maintained by UBS Bank USA are subject
to inspection and subpoena by these regulators and by federal, state, and local
law enforcement officials. The Borrower also acknowledges that such regulators
and officials may, pursuant to treaty or other arrangements, in turn disclose
such information to the officials or regulators of other countries, and that
U.S. courts may be required to compel UBS Bank USA to disclose such information
to the officials or regulators of other countries. The Borrower agrees that UBS
Bank USA may disclose to such regulators and officials information about the
Borrower and transactions in the credit line account or other accounts at UBS
Bank USA without notice to the Borrower. In addition, UBS Bank USA may in the
context of a private dispute be required by subpoena or other judicial process
to disclose information or produce documentation related to the Borrower, the
credit line account or other accounts at UBS Bank USA. The Borrower
acknowledges and agrees that UBS Bank USA reserves the right, in its sole
discretion, to respond to subpoenas and judicial process as it deems
appropriate.

 

J                   To help the
government fight the funding of terrorism and money laundering activities,
Federal law requires all financial institutions to obtain, verify, and record
information that identifies each person who opens an account. When the Borrower
opens an account with UBS Bank USA, UBS Bank USA will ask for the Borrower’s
name, address, and other information that will allow UBS Bank USA to identify
the Borrower. UBS Bank USA may also ask to see other identifying documents. UBS
Financial Services Inc. and UBS Bank USA are firmly committed to compliance
with all applicable laws, rules and regulations, including those related
to combating money laundering. The Borrower understands and agrees that the
Borrower must take all necessary steps to comply with the anti-money laundering
laws, rules and regulations of the Borrower’s country of origin, country
of residence and the situs of the Borrower’s transaction.

 

K                 UBS Bank USA and its
affiliates will act as creditors and, accordingly, their interests may be
inconsistent with, and potentially adverse to, the Borrower’s interests. As a
lender and consistent with normal lending practice, UBS Bank USA may take any
steps necessary to perfect its interest in the Credit Line, issue a call for
additional collateral or force the sale of the Borrower’s securities if the
Borrower’s actions or inactions call the Borrower’s creditworthiness into
question. Neither UBS Bank USA nor UBS Financial Services Inc. will act as
Client’s investment advisor with respect to any liquidation. In fact UBS Bank
USA will act as a creditor and UBS Financial Services Inc. will act as a
securities intermediary.

 

L                  The Borrower
understands that, if the Collateral Account is a managed account with UBS
Financial Services Inc., (i) in addition to any fees payable to UBS
Financial Services Inc. in connection with the Borrower’s managed account,
interest will be payable to the Bank on an amount advanced to the Borrower in
connection with the Credit Line Account, and (ii) the performance of the
managed account might not exceed the managed account fees and the interest
expense payable to the Bank in which case the Borrower’s overall rate of return
will be less than the costs associated with the managed account.

 

M               UBS Bank USA may
provide copies of all credit line account statements to UBS Financial Services
Inc. and to any Guarantor. The Borrower acknowledges and agrees that UBS Bank
USA may share any and all information regarding the Borrower and the Borrower’s
accounts at UBS Bank USA with UBS Financial Services Inc. UBS Financial
Services Inc. may provide copies of all statements and confirmations concerning
each Collateral Account to UBS Bank USA at such times and in such manner as UBS
Bank USA may request and may share with UBS Bank USA any and all information
regarding the Borrower and the Borrower’s accounts with UBS Financial Services
Inc. 

 

IN
WITNESS WHEREOF, the undersigned (“Borrower”) has signed this Agreement, or has
caused this Agreement to be signed in its name by its duly authorized representatives,
as of the date indicated below. 

	
   

  	
   

  	
  DATE:                          

  

 

Name of Borrower : Affymax, Inc.

 

	
  By:

  	
   

  	
   

  	
  Title:

  
	
   

  	
  (Signature
  of Authorized Signatory of Borrower)*

  	
   

  	
  (Title
  of Authorized Signatory of Borrower)

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  Title:

  
	
   

  	
  (Signature
  of Authorized Signatory of Borrower)*

  	
   

  	
  (Title
  of Authorized Signatory of Borrower)

  

 

The authorized signatory of the
Borrower must be one of the Authorized Persons designated on the applicable UBS
Bank USA supplemental form excecuted by the Borrower (e.g., the Supplemental
Corporate Resolution Form (HP Form)).

 

©2009
UBS Bank USA. All rights reserved. 

Sign
and date the application on page 5 

 

5

 

 

	
   

  	
  UBS Bank
  USA 

  
	
   

  	
  Variable Credit Line
  Account Number: (if applicable) 

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Fixed Credit Line Account
  Number: (if applicable) 

  
	
   

  	
   

  	
   

  	
   

  
	
  Credit Line Agreement 

  	
   

  	
  SS# / TIN

  	
   

  	
   

  
	
   

  	
  Internal Use
  Only

  

 

Credit Line Agreement - Demand
Facility

 

THIS CREDIT LINE AGREEMENT (as it may be amended,
supplemented or otherwise modified from time to time, this “Agreement”) is made
by and between the party or parties signing as the Borrower on the Application
to which this Agreement is attached (together and individually, the “Borrower”)
and UBS Bank USA (the “Bank”) and, together with the Application, establishes
the terms and conditions that will govern the uncommitted demand loan facility
made available to the Borrower by the Bank. This Agreement becomes effective
upon the earlier of (i) notice from the Bank (which notice may be oral or
written) to the Borrower that the Credit Line has been approved and (ii) the
Bank making an Advance to the Borrower.

 

1)      Definitions

 

·         “Advance” means
any Fixed Rate Advance or Variable Rate Advance made by the Bank pursuant to
this Agreement.

 

·         “Advance Advice”
means a written or electronic notice by the Bank, sent to the Borrower, the
Borrower’s financial advisor at UBS Financial Services Inc. or any other party
designated by the Borrower to receive the notice, confirming that a requested
Advance will be a Fixed Rate Advance and specifying the amount, fixed rate of
interest and Interest Period for the Fixed Rate Advance.

 

·         “Application”
means the Credit Line Account Application and Agreement that the Borrower has
completed and submitted to the Bank and into which this Agreement is
incorporated by reference.

 

·         “Approved
Amount” means the maximum principal amount of Advances that is permitted to be
outstanding under the Credit Line at any time, as specified in writing by the
Bank.

 

·         “Breakage Costs”
and “Breakage Fee” have the meanings specified in Section 6(b).

 

·         “Business Day”
means a day on which both of the Bank and UBS Financial Services Inc. are open
for business. For notices and determinations of LIBOR, Business Day must also
be a day for trading by and between banks in U.S. dollar deposits in the London
interbank market.

 

·         “Collateral” has
the meaning specified in Section 8(a).

 

·         “Collateral
Account” means, individually and collectively, each account of the Borrower or
Pledgor at UBS Financial Services Inc. or UBS International Inc., as
applicable, that is either identified as a Collateral Account on the
Application to which this Agreement is attached or subsequently identified as a
Collateral Account by the Borrower or Pledgor, either directly or indirectly
through the Borrower’s or Pledgor’s UBS Financial Services Inc. financial
advisor, together with all successors to those identified accounts,
irrespective of whether the successor account bears a different name or account
number.

 

·         “Credit Line”
has the meaning specified in Section 2(a).

 

·         “Credit Line
Account” means each Fixed Rate Account and each Variable Rate Account of the
Borrower that is established by the Bank in connection with this Agreement and
either identified on the Application or subsequently identified as a Credit
Line Account by the Bank by notice to the Borrower, together with all successors
to those identified accounts, irrespective of whether any successor account
bears a different name or account number.

 

·         “Credit Line
Obligations” means, at any time of determination, the aggregate of the
outstanding principal amounts of all Advances, together with all accrued but
unpaid interest on the outstanding principal amounts, any and all fees or other
charges payable in connection with the Advances and any costs of collection
(including reasonable attorneys’ fees) and other amounts payable by the
Borrower under this Agreement, and any and all other present or future
obligations of the Borrower and the other respective Loan Parties under this
Agreement and the related agreements, whether absolute or contingent, whether
or not due or mature.

 

·         “Event” means
any of the events listed in Section 10.

 

·         “Fixed Rate
Advance” means any advance made under the Credit Line that accrues interest at
a fixed rate.

 

·         “Guarantor”
means any party who guaranties the payment and performance of the Credit Line
Obligations.

 

·         “Guaranty
Agreement” means an agreement pursuant to which a Guarantor agrees to guaranty
payment of the Credit Line Obligations.

 

·         “Interest
Period” means, for a Fixed Rate Advance, the number of days, weeks or months
requested by the Borrower and confirmed in the Advance Advice relating to the
Fixed Rate Advance, commencing on the date of (i) the extension of the
Fixed Rate Advance or (ii) any renewal of the Fixed Rate Advance and, in
each case, ending on the last day of the period. If the last day is not a
Business Day, then the Interest Period will end on the immediately succeeding
Business Day. If the last Business Day would fall in the next calendar month,
the Interest Period will end on the immediately preceding Business Day. Each
monthly or longer Interest Period that commences on the last Business Day of a
calendar month (or on any day for which there is no numerically corresponding
day in the appropriate subsequent calendar month) will end on the last Business
Day of the appropriate calendar month.

 

·         “Joint Borrower”
has the meaning specified in Section 7(a).

 

·         “LIBOR” means,
as of any date of determination for Variable Rate Advances, the prevailing
London Interbank Offered Rate for deposits in U.S. dollars having a maturity of
30 days as published in The Wall Street Journal “Money Rates” Table on the date
of the Advance.

 

If the rate ceases to be
regularly published by The Wall Street Journal, LIBOR will be determined by the
Bank in its sole and absolute discretion. For any day that is not a Business
Day, LIBOR will be the applicable LIBOR in effect immediately prior to that
day.

 

·         “Loan Party”
means each Borrower, Guarantor and Pledgor, each in their respective capacities
under this Agreement or any related agreement.

 

·         “Person” means
any natural person, company, corporation, firm, partnership, joint venture,
limited liability company or limited liability partnership, association,
organization or any other legal entity.

 

·         “Pledgor” means
each Person who pledges to the Bank any Collateral to secure the Credit Line
Obligations (or to secure the obligations of any Guarantor with respect to the
guaranty of the Credit Line Obligations). Pledgors will include (i) each
Borrower who pledges Collateral to secure the Credit Line Obligations, (ii) each
Guarantor who has pledged collateral to secure the Credit Line Obligations or
its obligations under a Guaranty Agreement, (iii) any spouse of a Borrower
who executes a spouse’s pledge and consent agreement with respect to a jointly
held collateral account, (iv) any other joint account holder who executes
a joint account holder pledge and consent agreement with respect to a jointly
held

 

©2009
UBS Bank USA. All rights reserved.

Sign
and date the application on page 5

 

6

 

collateral account, and (v) any
other Person who executes a pledge agreement with respect to the Credit Line.

 

·         “Premier Credit
Line” means any Credit Line with an Approved Amount equal to or greater than
$100,000.

 

·         “Prime Credit
Line” means any Credit Line with an Approved Amount less than $100,000.

 

·         “Prime Rate”
means the floating “Prime Rate” as published in The Wall Street Journal “Money
Rates” Table from time to time. The Prime Rate will change as and when the
Prime Rate as published in The Wall Street Journal changes. In the event that
The Wall Street Journal does not publish a Prime Rate, the Prime Rate will be
the rate as determined by the Bank in its sole and absolute discretion.

 

·         “Securities
Intermediary” has the meaning specified in Section 9.

 

·         “UBS Bank USA
Fixed Funding Rate” means, as of any date of determination for Fixed Rate
Advances, an internally computed rate established from time-to-time by the
Bank, in its sole discretion, based upon the LIBOR swap curve for a
corresponding period as well as the Bank’s assessment of other lending rates
charged in the financial markets.

 

·         “UBS Financial
Services Inc.” means UBS Financial Services Inc. and its successors.

 

·         “UBS-I” means
UBS International Inc. and its successors.

 

·         “Variable Rate
Advance” means any advance made under the Credit Line that accrues interest at
a variable rate.”

 

2)      Establishment
of Credit Line; Termination

 

a)       Upon the effectiveness of this
Agreement, the Bank establishes an UNCOMMITTED,
DEMAND revolving line of credit (the “Credit Line”) in an amount up
to the Approved Amount. The Bank may, from time to time upon request of the
Borrower, without obligation and in its sole and absolute discretion, authorize
and make one or more Advances to the Borrower. The Borrower acknowledges that
the Bank has no obligation to make any Advances to the Borrower. The Bank may
carry each Variable Rate Advance in a Variable Rate Account and may carry each
Fixed Rate Advance in a Fixed Rate Account, but all Advances will constitute
extensions of credit pursuant to a single Credit Line. The Approved Amount will
be determined, and may be adjusted from time to time, by the Bank in its sole
and absolute discretion.

 

b)       THE
BORROWER AND EACH OTHER LOAN PARTY UNDERSTAND AND AGREE THAT THE BANK MAY DEMAND
FULL OR PARTIAL PAYMENT OF THE CREDIT LINE OBLIGATIONS, AT ITS SOLE AND
ABSOLUTE DISCRETION AND WITHOUT CAUSE, AT ANY TIME, AND THAT NEITHER FIXED RATE
ADVANCES NOR VARIABLE RATE ADVANCES ARE EXTENDED FOR ANY SPECIFIC TERM OR
DURATION.

 

c)       UNLESS
DISCLOSED IN WRITING TO THE BANK AT THE TIME OF THE APPLICATION, AND APPROVED
BY THE BANK, THE BORROWER AGREES NOT TO USE THE PROCEEDS OF ANY ADVANCE EITHER
TO PURCHASE, CARRY OR TRADE IN SECURITIES OR TO REPAY ANY DEBT (I) USED TO
PURCHASE, CARRY OR TRADE IN SECURITIES OR (II) TO ANY AFFILIATE OF THE
BANK. THE BORROWER WILL BE DEEMED TO REPEAT THE AGREEMENT IN THIS SECTION 2(C) EACH
TIME IT REQUESTS AN ADVANCE. 

 

d)      Prior to the first Advance under
the Credit Line, the Borrower must sign and deliver to the Bank a Federal
Reserve Form U-1 and all other documentation as the Bank may require. The
Borrower acknowledges that neither the Bank nor any of its affiliates has
advised the Borrower in any manner regarding the purposes for which the Credit
Line will be used.

 

e)       The Borrower consents and
agrees that, in connection with establishing the Credit Line Account, approving
any Advances to the Borrower or for any other purpose associated with the
Credit Line, the Bank may obtain a consumer or other credit report from a
credit reporting agency relating to the Borrower’s credit history. Upon request
by the Borrower, the Bank will inform the Borrower: (i) whether or not a
consumer or other credit report was requested; and (ii) if so, the name
and address of the consumer or other credit reporting agency that furnished the
report.

 

f)       The Borrower understands that
the Bank will, directly or indirectly, pay a portion of the interest that it
receives to the Borrower’s financial advisor at UBS Financial Services Inc. or
one of its affiliates. To the extent permitted by applicable law, the Bank may
also charge the Borrower fees for establishing and servicing the Credit Line
Account.

 

g)      Following each month in which
there is activity in the Borrower’s Credit Line Account in amounts greater than
$1, the Borrower will receive an account statement showing the new balance, the
amount of any new Advances, year to date interest charges, payments and other
charges and credits that have been registered or posted to the Credit Line
Account.

 

h)      Each of the Loan Parties
understands and agrees that the Bank may, at any time, in its sole and absolute
discretion, terminate and cancel the Credit Line regardless of whether or not
an Event has occurred. In the event the Bank terminates and cancels the Credit
Line the Credit Line Obligations shall be immediately due and payable in full.
If the Credit Line Obligations are not paid in full, the Bank shall have the
right, at its option, to exercise any or all of its remedies described in Section 10
of this Agreement.

 

3)      Terms
of Advances

 

a)       Advances made under this
Agreement will be available to the Borrower in the form, and pursuant to
procedures, as are established from time to time by the Bank in its sole and
absolute discretion. The Borrower and each Loan Party agree to promptly provide
all documents, financial or other information in connection with any Advance as
the Bank may request. Advances will be made by wire transfer of funds to an
account as specified in writing by the Borrower or by any other method agreed
upon by the Bank and the Borrower. The Borrower acknowledges and agrees that
the Bank will not make any Advance to the Borrower unless the collateral
maintenance requirements that are established by the Bank in its sole and
absolute discretion have been satisfied.

 

b)      Each Advance made under a Premier
Credit Line will be a Variable Rate Advance unless otherwise designated as a
Fixed Rate Advance in an Advance Advice sent by the Bank to the Borrower. The
Bank will not designate any Advance as a Fixed Rate Advance unless it has been
requested to do so by the Borrower (acting directly or indirectly through the
Borrower’s UBS Financial Services Inc. financial advisor or other agent
designated by the Borrower and acceptable to the Bank). Each Advance Advice
will be conclusive and binding upon the Borrower, absent manifest error, unless
the Borrower otherwise notifies the Bank in writing no later than the close of
business, New York time, on the third Business Day after the Advance Advice is
received by the Borrower. 

 

7

 

c)       Each Advance made under a Prime
Credit Line will be a Variable Advance.

 

d)      Unless otherwise agreed by the
Bank: (i) all Fixed Rate Advances must be in an amount of at least
$100,000; and (ii) all Variable Rate Advances taken by wire transfer must be
in an amount of at least $2,500. If the Borrower is a natural person, the
initial Variable Rate Advance under the Credit Line must be in an amount equal
to at least $25,001 (the “Initial Advance Requirement”). If the initial Advance
requested by the Borrower is made in the form of a check drawn on the Credit
Line that does not satisfy the Initial Advance Requirement, then, in addition
to and not in limitation of the Bank’s rights, remedies, powers or privileges
under this Agreement or applicable law, the Bank may, in its sole and absolute
discretion:

 

(i)     
pay the check drawn by the Borrower if, prior to paying that check, the
Bank makes another Advance to the Borrower, which Advance shall be in an amount
not less than $25,001; or

 

(ii)    
pay the check drawn by the Borrower; or

 

(iii)    decline to pay
(bounce) the check.

 

If the Bank elects option
(ii), no interest shall accrue on the amount of the Advance made by paying the
check, and the amount of that Advance shall be due and payable to the Bank immediately
(with or without demand by the Bank).

 

4)      Interest

 

a)       Each Fixed Rate Advance will
bear interest at a fixed rate and for the Interest Period each as specified in
the related Advance Advice. The rate of interest payable on each Fixed Rate
Advance will be determined by adding a percentage rate to the UBS Bank USA
Fixed Funding Rate, as of the date that the fixed rate is determined.

 

b)      Each Variable Rate Advance under
a Premier Credit Line will bear interest at a variable rate equal to LIBOR,
adjusted daily, plus the percentage rate that (unless otherwise specified by
the Bank in writing) is shown on Schedule I below for the Approved Amount of
the Credit Line. For Premier Credit Lines, the rate of interest payable on
Variable Rate Advances is subject to change without notice in accordance with
fluctuations in LIBOR and in the Approved Amount. On each day that LIBOR
changes or the Approved Amount crosses one of the thresholds that is indicated
on Schedule I (or that is otherwise specified by the Bank in writing), the
interest rate on all Variable Rate Advances will change accordingly.

 

c)       Each Variable Rate Advance
under a Prime Credit Line will bear interest at a variable rate equal to the
Prime Rate, adjusted daily, plus the percentage rate that (unless otherwise
specified by the Bank in writing) is shown on the attached Schedule II and that
corresponds to the aggregate principal amount outstanding under the Prime
Credit Line on that day. For Prime Credit Lines, the rate of interest payable
on Variable Rate Advances is subject to change without notice in accordance
with fluctuations in the Prime Rate and in the aggregate amount outstanding
under the Prime Credit Line. On each date that the Prime Rate changes or the
aggregate principal amount outstanding under the Prime Credit Line crosses one
of the thresholds that is indicated on Schedule II (or that is otherwise
specified by the Bank in writing), the interest rate on all Variable Rate
Advances will change accordingly.

 

5)      Payments

 

a)       Each Fixed Rate Advance will be due and payable in full ON DEMAND or, if
not earlier demanded by the Bank, on the last day of the applicable Interest
Period. Any Fixed Rate Advance as to which the Bank has not made a
demand for payment and that is not paid in full or renewed, which renewal is in
the sole and absolute discretion of the Bank, (pursuant to procedures as may be
established by the Bank) as another Fixed Rate Advance on or before the last
day of its Interest Period, will be automatically renewed on that date as a
U.S. dollar denominated, Variable Rate Advance in an amount (based, in the case
of any conversion of a non-U.S. dollar denominated Fixed Rate Advance, upon the
applicable, spot currency exchange rate as of the maturity date, as determined
by the Bank) equal to the unpaid principal balance of the Fixed Rate Advance
plus any accrued but unpaid interest on the Fixed Rate Advance, which Variable
Rate Advance will then accrue additional interest at a variable rate as
provided in this Agreement.

 

b)      Each Variable Rate Advance will be due and payable ON DEMAND.

 

c)       The Borrower promises to pay
the outstanding principal amount of each Advance, together with all accrued but
unpaid interest on each Advance, any and all fees or other charges payable in
connection with each Advance, on the date the principal amount becomes due
(whether by reason of demand, the occurrence of a stated maturity date, by
reason of acceleration or otherwise). The Borrower further promises to pay
interest in respect of the unpaid principal balance of each Advance from the
date the Advance is made until it is paid in full. All interest will be
computed on the basis of the number of days elapsed and a 360-day year.
Interest on each Advance will be payable in arrears as follows:

 

(i)      for Fixed Rate Advances - on the
last day of the Interest Period (or if the Interest Period is longer than three
months, on the last day of each three month period following the date of the
Advance) and on each date that all or any portion of the principal amount of
the Fixed Rate Advance becomes due or is paid; and

 

(ii)     for Variable Rate Advances - on
the twenty-second day of each month other than December, and on the
thirty-first day of December, and on each date that all or any portion of the
principal amount of the Variable Rate Advance becomes due or is paid.

 

To the extent permitted by
law, and without limiting any of the Bank’s other rights and remedies under the
Agreement, interest charges on any Advance that are not paid when due will be
treated as principal and will accrue interest at a variable rate from the date
the payment of interest was due until it is repaid in full.

 

d)      All payments of principal,
interest or other amounts payable under this Agreement will be made in immediately
available funds and in the same currency in which the Advance was made, which
unless otherwise agreed by the Bank, will be U.S. dollars. UBS Financial
Services Inc. or UBS International Inc., as applicable, may act as collecting
and servicing agent for the Bank for the Advances. All payments will be made by
wire transfer of funds to an account specified by the Bank or by another method
agreed upon by the Bank and the Borrower. Upon receipt of all payments, the
Bank will credit the same to the Credit Line Account. The Bank shall apply the
proceeds of any payments in the following order; first to any Breakage Costs,
Breakage Fee, other fees, costs of collection and expenses, second to the
outstanding principal amount of the related Advance and third to accrued
interest.

 

e)       All payments must be made to
the Bank free and clear of any and all present and future taxes (including
withholding taxes), levies, imposts, duties, deductions, fees, liabilities and
similar charges other than those imposed on the overall net income of the Bank.
If so requested by the Bank, the Borrower will deliver to the Bank the original
or a certified copy of each receipt evidencing payment of any taxes or, if no
taxes are payable in respect of any payment

 

8

 

under this Agreement, a
certificate from each appropriate taxing authority, or an opinion of counsel in
form and substance and from counsel acceptable to the Bank in its sole and
absolute discretion, in either case stating that the payment is exempt from or
not subject to taxes. If any taxes or other charges are required to be withheld
or deducted from any amount payable by the Borrower under this Agreement, the
amount payable will be increased to the amount which, after deduction from the
increased amount of all taxes and other charges required to be withheld or
deducted from the amount payable, will yield to the Bank the amount stated to
be payable under this Agreement. If any of the taxes or charges are paid by the
Bank, the Borrower will reimburse the Bank on demand for the payments, together
with all interest and penalties that may be imposed by any governmental agency.
None of the Bank, UBS Financial Services Inc., UBS-I or their respective
employees has provided or will provide legal advice to the Borrower or any Loan
Party regarding compliance with (or the implications of the Credit Line and the
related guaranties and pledges under) the laws (including tax laws) of the
jurisdiction of the Borrower or any Loan Party or any other jurisdiction. The
Borrower and each Loan Party are and shall be solely responsible for, and the
Bank shall have no responsibility for, the compliance by the Loan Parties with
any and all reporting and other requirements arising under any applicable laws.

 

f)       In no event will the total
interest and fees, if any, charged under this Agreement exceed the maximum
interest rate or total fees permitted by law. In the event any excess interest
or fees are collected, the same will be refunded or credited to the Borrower.
If the amount of interest payable by the Borrower for any period is reduced
pursuant to this Section 5(f), the amount of interest payable for each
succeeding period will be increased to the maximum rate permitted by law until
the amount of the reduction has been received by the Bank.

 

6)      Prepayments;
Breakage Charges

 

a)       The Borrower may repay any
Variable Rate Advance at any time, in whole or in part, without penalty.

 

b)      The Borrower may repay any Fixed
Rate Advance, in whole or in part. The Borrower agrees to reimburse the Bank,
immediately upon demand, for any loss or cost (“Breakage Costs”) that the Bank
notifies the Borrower has been incurred by the Bank as a result of (i) any
payment of the principal of a Fixed Rate Advance before the expiration of the
Interest Period for the Fixed Rate Advance (whether voluntarily, as a result of
acceleration, demand or otherwise), or (ii) the Customer’s failure to take
any Fixed Rate Advance on the date agreed upon, including any loss or cost (including
loss of profit or margin) connected with the Bank’s re-employment of the amount
so prepaid or of those funds acquired by the Bank to fund the Advance not taken
on the agreed upon date.

 

Breakage Costs will be
calculated by determining the differential between the stated rate of interest
(as determined in accordance with Section 4(a) of the Agreement) for
the Fixed Rate Advance and prevailing LIBOR and multiplying the differential by
the sum of the outstanding principal amount of the Fixed Rate Advance (or the
principal amount of Fixed Rate Advance not taken by the Borrower) multiplied by
the actual number of days remaining in the Interest Period for the Fixed Rate
Advance (based upon a 360-day year). The Borrower also agrees to promptly pay
to the Bank an administrative fee (“Breakage Fee”) in connection with any
permitted or required prepayment. The Breakage Fee will be calculated by
multiplying the outstanding principal amount of the Fixed Rate Advance (or the
principal amount of Fixed Rate Advance not taken by the Borrower) by two basis
points (0.02%) (with a minimum Breakage Fee of $100.00). Any written notice
from the Bank as to the amount of the loss or cost will be conclusive absent
manifest error. 

 

7)      Joint
Credit Line Account Agreement; Suspension and Cancellation

 

a)       If more than one Person is
signing this Agreement as the “Borrower”, each party (a “Joint Borrower”) will
be jointly and severally liable for the Credit Line Obligations, regardless of
any change in business relations, divorce, legal separation, or other legal
proceedings or in any agreement that may affect liabilities between the
parties. Except as provided below for the reinstatement of a suspended or
cancelled Credit Line, and unless otherwise agreed by the Bank in writing, the
Bank may rely on, and each Joint Borrower will be responsible for, requests for
Advances, directions, instructions and other information provided to the Bank
by any Joint Borrower.

 

b)      Any Joint Borrower may request
the Bank to suspend or cancel the Credit Line by sending the Bank a written
notice of the request addressed to the Bank at the address shown on the
Borrower’s periodic Credit Line Account statements. Any notice will become
effective three Business Days after the date that the Bank receives it, and
each Joint Borrower will continue to be responsible for paying: (i) the
Credit Line Obligations as of the effective date of the notice, and (ii) all
Advances that any Joint Borrower has requested but that have not yet become
part of the Credit Line Obligations as of the effective date of the notice. No
notice will release or in any other way affect the Bank’s interest in the
Collateral. All subsequent requests to reinstate credit privileges must be
signed by all Joint Borrowers comprising the Borrower, including the Joint
Borrower requesting the suspension of credit privileges. Any reinstatement will
be granted or denied in the sole and absolute discretion of the Bank.

 

c)       All Credit Line Obligations
will become immediately due and payable in full as of the effective date of any
suspension or cancellation of the Credit Line. The borrower will be responsible
for the payment of all charges incurred on the Advances after the effective
date. The Bank will not release any Loan Party from any of the obligations
under this Agreement or any related agreement until the Credit Line Obligations
have been paid in full and this Agreement has been terminated.

 

8)   
Collateral; Grant of Security Interest; Set-off

 

a)       To secure payment or
performance of the Credit Line Obligations, the Borrower assigns, transfers and
pledges to the Bank, and grants to the Bank a first priority lien and security
interest in the following assets and rights of the Borrower, wherever located
and whether owned now or acquired or arising in the future: (i) each
Collateral Account; (ii) any and all money, credit balances, certificated
and uncertificated securities, security entitlements, commodity contracts,
certificates of deposit, instruments, documents, partnership interests, general
intangibles, financial assets and other investment property now or in the
future credited to or carried, held or maintained in any Collateral Account; (iii) any
and all over-the- counter options, futures, foreign exchange, swap or similar
contracts between the Borrower and either UBS Financial Services Inc. or any of
its affiliates; (iv) any and all accounts of the Borrower at the Bank or
any of its affiliates; (v) any and all supporting obligations and other
rights ancillary or attributable to, or arising in any way in connection with,
any of the foregoing; and (vi) any and all interest, dividends,
distributions and other proceeds of any of the foregoing, including proceeds of
proceeds (collectively, the “Collateral”).

 

b)      The Borrower and if applicable,
any Pledgor on the Collateral Account, will take all actions reasonably
requested by the Bank to evidence, maintain and perfect the Bank’s first
priority security interest in, and to enable the Bank to obtain control over,
the Collateral and any additional collateral pledged by the Pledgors, including
but not limited to making, executing, recording and delivering to the Bank (and
authorizes the Bank to file, without 

 

9

 

the signature of the Borrower
and any Pledgor where permitted by applicable law) financing statements and
amendments thereto, control agreements, notices, assignments, listings, powers,
consents and other documents regarding the Collateral and the Bank’s security
interest in the Collateral in such jurisdiction and in a form as the Bank
reasonably may require. Each Loan Party irrevocably authorizes and appoints
each of the Bank and UBS Financial Services Inc., as collateral agent, to act
as their agent and attorney-in-fact to file any documents or to execute any
documents in their name, with or without designation of authority. Each Loan
Party acknowledges that it will be obligated in respect of the documentation as
if it had executed the documentation itself.

 

c)       The Borrower (and, if applicable,
any other Pledgor on the Collateral Account) agrees to maintain in a Collateral
Account, at all times, Collateral having an aggregate lending value as
specified by the Bank from time to time.

 

d)      The Bank’s sole duty for the
custody, safe keeping and physical preservation of any Collateral in its
possession will be to deal with the Collateral in the same manner as the Bank
deals with similar property for its own account. The Borrower (and, if
applicable, any other Pledgor on the Collateral Account) agrees that the Bank
will have no responsibility to act on any notice of corporate actions or events
provided to holders of securities or other investment property included in the
Collateral. The Borrower (and, if applicable, any other Pledgor on the Collateral
Account) agrees to (i) notify the Bank promptly upon receipt of any
communication to holders of the investment property disclosing or proposing any
stock split, stock dividend, extraordinary cash dividend, spin-off or other
corporate action or event as a result of which the Borrower or Pledgor would
receive securities, cash (other than ordinary cash dividends) or other assets
in respect of the investment property, and (ii) immediately upon receipt
by the Borrower or Pledgor of any of these assets, cause them to be credited to
a Collateral Account or deliver them to or as directed by the Bank as
additional Collateral.

 

e)       The Borrower (and, if
applicable, any other Pledgor on the Collateral Account) agrees that all
principal, interest, dividends, distributions, premiums or other income and
other payments received by the Bank or credited to the Collateral Account in
respect of any Collateral may be held by the Bank as additional Collateral or
applied by the Bank to the Credit Line Obligations. The Bank may create a
security interest in any of the Collateral and may, at any time and at its
option, transfer any securities or other investment property constituting
Collateral to a securities account maintained in its name or cause any
Collateral Account to be redesignated or renamed in the name of the Bank.

 

f)       The Borrower (and, if
applicable, any other Pledgor on the Collateral Account) agrees that if a
Collateral Account has margin features, the margin features will be removed by
UBS Financial Services Inc. or UBS International Inc., as applicable, so long
as there is no outstanding margin debit in the Collateral Account.

 

g)      If the Collateral Account
permits cash withdrawals in the form of check writing, access card charges,
bill payment and/ or electronic funds transfer services (for example, Resource
Management Account®, Business Services Account BSA®, certain Basic Investment
Accounts and certain accounts enrolled in UBS Financial Services Inc.
Investment Consulting Services programs), the Borrower (and, if applicable, any
other Pledgor on the Collateral Account) agrees that the “Withdrawal Limit” for
the Collateral Account, as described in the documentation governing the account
will be reduced on an ongoing basis so that the aggregate lending value of the
Collateral remaining in the Collateral Account following the withdrawal may not
be less than the amount required pursuant to Section 8(c). 

 

h)      In addition to the Bank’s
security interest, the Borrower (and, if applicable, any other Pledgor on the
Collateral Account) agrees that the Bank will at all times have a right to set
off any or all of the Credit Line Obligations at or after the time at which
they become due, whether upon demand, at a stated maturity date, by
acceleration or otherwise, against all securities, cash, deposits or other
property in the possession of or at any time in any account maintained with the
Bank or any of its affiliates by or for the benefit of the Borrower, whether
carried individually or jointly with others. This right is in addition to, and
not in limitation of, any right the Bank may have at law or otherwise.

 

i)        The Bank reserves the right to
disapprove any Collateral and to require the Borrower at any time to deposit
into the Borrower’s Collateral Account additional Collateral in the amount as
the Bank requests or to substitute new or additional Collateral for any
Collateral that has previously been deposited in the Collateral Account.

 

9)      Control

 

For the purpose of giving the
Bank control over each Collateral Account and in order to perfect the Bank’s
security interests in the Collateral, the Borrower and each Pledgor on the
applicable Collateral Account consents to compliance by UBS Financial Services
Inc., UBS-I or any other securities intermediary (in any case, the “Securities
Intermediary”) maintaining a Collateral Account with entitlement orders and
instructions from the Bank (or from any assignee or successor of the Bank)
regarding the Collateral Account and any financial assets or other property held
therein without the further consent of the Borrower or any other Pledgor on the
applicable Collateral Account. Without limiting the foregoing, the Borrower and
each Pledgor on the Collateral Account acknowledges, consents and agrees that,
pursuant to a control agreement entered into between the Bank and the
Securities Intermediary:

 

a)       The Securities Intermediary
will comply with entitlement orders originated by the Bank regarding any
Collateral Account without further consent from the Borrower or any Pledgor.
The Securities Intermediary will treat all assets credited to a Collateral
Account, including money and credit balances, as financial assets for purposes
of Article 8 of the Uniform Commercial Code.

 

b)     
In order to enable the Borrower and any Pledgor on the applicable
Collateral Account to trade financial assets that are from time to time
credited to a Collateral Account, the Securities Intermediary may comply with
entitlement orders originated by the Borrower or any Pledgor on the applicable Collateral
Account (or if so agreed by the Bank, by an investment adviser designated by
the Borrower or any Pledgor on the applicable Collateral Account and acceptable
to the Bank and the Securities Intermediary) regarding the Collateral Account,
but only until the time that the Bank notifies the Securities Intermediary,
that the Bank is asserting exclusive control over the Collateral Account. After
the Securities Intermediary has received a notice of exclusive control and has
had a reasonable opportunity to comply, it will no longer comply with
entitlement orders originated by the Borrower or any Pledgor (or by any
investment adviser designated by the Borrower or any Pledgor) concerning the
Collateral Account. Notwithstanding the foregoing, however, and irrespective of
whether it has received any notice of exclusive control, the Securities
Intermediary will not comply with any entitlement order originated by the
Borrower or any Pledgor (or by any investment adviser designated by the
Borrower or any Pledgor) to withdraw any financial assets from a Collateral
Account or to pay any money, free credit balance or other amount owing on a
Collateral Account (other than cash withdrawals and payments not exceeding the
“Withdrawal Limit” as contemplated in Section 8 (g)) without the prior
consent of the Bank. 

 

10

 

10)    Remedies

 

a)
     If any of the following
events (each, an “Event”) occurs:

 

(i)     
the Borrower fails to pay any amount due under this Agreement;

 

(ii)    
the Borrower and/or any other relevant Loan Party fails to maintain
sufficient Collateral in a Collateral Account as required by the Bank or any
Guarantor fails to maintain collateral as required by the Bank under its
Guaranty Agreement;

 

(iii)    the Borrower or
any other Loan Party breaches or fails to perform any other covenant,
agreement, term or condition that is applicable to it under this Agreement or
any related agreement, or any representation or other statement of the Borrower
(or any Loan Party) in this Agreement or in any related agreement is incorrect
in any material respect when made or deemed made;

 

(iv)    the Borrower or
any other Loan Party dies or is declared (by appropriate authority) incompetent
or of unsound mind or is indicted or convicted of any crime or, if not an
individual, ceases to exist;

 

(v)  
any voluntary or involuntary proceeding for bankruptcy, reorganization,
dissolution or liquidation or similar action is commenced by or against the
Borrower or any other Loan Party, or a trustee in bankruptcy, receiver,
conservator or rehabilitator is appointed, or an assignment for the benefit of
creditors is made, with respect to the Borrower or any other Loan Party or its
property;

 

(vi)    the Borrower or
any Loan Party is insolvent, unable to pay its debts as they fall due, stops,
suspends or threatens to stop or suspend payment of all or a material part of
its debts, begins negotiations or takes any proceeding or other step with a
view to readjustment, rescheduling or deferral of all or any part of its
indebtedness, which it would or might otherwise be unable to pay when due, or
proposes or makes a general assignment or an arrangement or composition with or
for the benefit of its creditors;

 

(vii)  a
Collateral Account (or any account in which collateral provided by a Loan Party
is maintained) or any portion thereof is terminated, attached or subjected to a
levy;

 

(viii) the
Borrower or any Loan Party fails to provide promptly all financial and other
information as the Bank may request from time to time;

 

(ix)    any indebtedness
of the Borrower or any other Loan Party in respect of borrowed money (including
indebtedness guarantied by the Borrower or any other Loan Party) or in respect
of any swap, forward, cap, floor, collar, option or other derivative
transaction, repurchase or similar transaction or any combination of these
transactions is not paid when due, or any event or condition causes the
indebtedness to become, or permits the holder to declare the indebtedness to
be, due and payable prior to its stated maturity;

 

(x)    
final judgment for the payment of money is rendered against Borrower (or
any Loan Party) and, within thirty days from the entry of judgment, has not
been discharged or stayed pending appeal or has not been discharged within
thirty days from the entry of a final order of affirmance on appeal;

 

(xi)
   any legal proceeding is instituted or any other event
occurs or condition exists that in the Bank’s judgment calls into question (A) the
validity or binding effect of this Agreement or any related agreement or any of
the Borrower’s (or any other Loan Party’s) obligations under this Agreement or
under any related agreement or (B) the ability of the Borrower (or any
Loan Party) to perform its obligations under this Agreement, or under any
related agreement; or

 

(xii)  the
Bank otherwise deems itself or its security interest in the Collateral insecure
or the Bank believes in good faith that the prospect of payment or other
performance by any Loan Party is impaired.

 

then, the Credit Line
Obligations will become immediately due and payable (without demand) and the
Bank may, in its sole and absolute discretion, liquidate, withdraw or sell all
or any part of the Collateral and apply the same, as well as the proceeds of
any liquidation or sale, to any amounts owed to the Bank, including any
applicable Breakage Costs and Breakage Fee. The Bank will not be liable to any
Loan Party in any way for any adverse consequences (for tax effect or
otherwise) resulting from the liquidation of appreciated Collateral. Without
limiting the generality of the foregoing, the sale may be made in the Bank’s
sole and absolute discretion by public sale on any exchange or market where
business is then usually transacted or by private sale, and the Bank may be the
purchaser at any public or private sale. Any Collateral that may decline speedily
in value or that customarily is sold on a recognized exchange or market may be
sold without providing any Loan Party with prior notice of the sale. Each Loan
Party agrees that, for all other Collateral, two calendar days notice to the
Loan Party, sent to its last address shown in the Bank’s account records, will
be deemed reasonable notice of the time and place of any public sale or time
after which any private sale or other disposition of the Collateral may occur.
Any amounts due and not paid on any Advance following an Event will bear
interest from the day following the Event until fully paid at a rate per annum
equal to the interest rate applicable to the Advance immediately prior to the
Event plus 2.00%. In addition to the Bank’s rights under this Agreement, the
Bank will have the right to exercise any one or more of the rights and remedies
of a secured creditor under the Utah Uniform Commercial Code, as then in
effect, or under any other applicable law.

 

b)
     Nothing contained in this Section 10
will limit the right of the Bank to demand full or partial payment of the
Credit Line Obligations, in its sole and absolute discretion and without cause,
at any time, whether or not an Event has occurred and is continuing.

 

c)
      All rights and remedies of
the Bank under this Agreement are cumulative and are in addition to all other
rights and remedies that the Bank may have at law or equity or under any other
contract or other writing for the enforcement of the security interest herein
or the collection of any amount due under this Agreement.

 

d)
     Any non-exercise of rights,
remedies and powers by the Bank under this Agreement and the other documents
delivered in connection with this Agreement shall not be construed as a waiver
of any rights, remedies and powers. The Bank fully reserves its rights to
invoke any of its rights, remedies and powers at any time it may deem
appropriate.

 

11)    Representations,
Warranties and Covenants by the Loan Parties

 

Each Borrower and each other
Loan Party (if applicable) makes the following representations, warranties and
covenants (and each Borrower will be deemed to have repeated each
representation and warranty each time a Borrower requests an Advance) to the
Bank: 

 

11

 

a)       Except for the Bank’s rights
under this Agreement and the rights of the Securities Intermediary under any
account agreement, the Borrower and each relevant Pledgor owns the Collateral,
free of any interest, lien or security interest in favor of any third party and
free of any impediment to transfer;

 

b)      Each Loan Party: (i) if a
natural Person, is of the age of majority; (ii) is authorized to execute
and deliver this Agreement and to perform its obligations under this Agreement
and any related agreement; (iii) is not an employee benefit plan, as that
term is defined by the Employee Retirement Income Security Act of 1974, or an
Individual Retirement Credit Line Account (and none of the Collateral is an
asset of a plan or account); and (iv) unless the Loan Party advises the
Bank to the contrary, in writing, and provides the Bank with a letter of
approval, where required, from its employer, is not an employee or member of
any exchange or of any corporation or firm engaged in the business of dealing,
either as a broker or as principal, in securities, bills of exchange,
acceptances or other forms of commercial paper;

 

c)       Neither the Borrower nor any
Pledgor on the Collateral Account has pledged or will pledge the Collateral or
grant a security interest in the Collateral to any party other than the Bank or
the Securities Intermediary, or has permitted or will permit the Collateral to
become subject to any liens or encumbrances (other than those of the Bank and
the Securities Intermediary), during the term of this Agreement;

 

d)      No Loan Party is in default
under any material contract, judgment, decree or order to which it is a party
or by which it or its properties may be bound;

 

e)       Each Loan Party has duly filed
all tax and information returns required to be filed and has paid all taxes,
fees, assessments and other governmental charges or levies that have become due
and payable, except to the extent such taxes or other charges are being
contested in good faith and are adequately reserved against in accordance with
GAAP.

 

f)       The Borrower and each relevant
Pledgor (i) is and at all times will continue to be the legal and
beneficial owner of all assets held in or credited to any Collateral Account or
otherwise included in the Collateral, and (ii) does not hold any assets
held in or credited to any Collateral Account or otherwise included in the
Collateral in trust or subject to any contractual or other restrictions on use
that would prevent the use of such assets to (a) repay the Bank or (b) be
pledged as Collateral in favor of the Bank.

 

The provisions of this Section 11
will survive the termination of this Agreement or any related agreement and the
repayment of the Credit Line Obligations.

 

12)    Indemnification;
Limitation on Liability of the Bank and the Securities Intermediary

 

Borrower agrees to indemnify
and hold harmless the Bank and the Securities Intermediary, their affiliates
and their respective directors, officers, agents and employees against any and
all claims, causes of action, liabilities, lawsuits, demands and damages, for
example, any and all court costs and reasonable attorneys fees, in any way
relating to or arising out of or in connection with this Agreement, except to
the extent caused by the Bank’s or Securities Intermediary’s breach of its
obligations under this Agreement. Neither the Bank nor the Securities
Intermediary will be liable to any party for any consequential damages arising
out of any act or omission by either of them with respect to this Agreement or
any Advance or Collateral Account. The provisions of this Section 12 will
survive the termination of this Agreement or any related agreement and the
repayment of the Credit Line Obligations.

 

13)    Acceptance
of Application and Agreement; Applicable Law 

 

THIS
APPLICATION AND AGREEMENT WILL BE RECEIVED AND ACCEPTED BY BANK IN THE STATE OF
UTAH, OR IF THIS APPLICATION AND AGREEMENT IS DELIVERED TO BANK’S AGENT, UBS
FINANCIAL SERVICES INC., IT WILL BE RECEIVED AND ACCEPTED WHEN RECEIVED BY UBS
FINANCIAL SERVICES INC.’S UNDERWRITING DEPARTMENT. DELIVERY OF THE APPLICATION
AND AGREEMENT TO THE BORROWER’S FINANCIAL ADVISOR AT UBS FINANCIAL SERVICES
INC. WILL NOT BE CONSIDERED RECEIPT OR ACCEPTANCE BY BANK. ALL DECISIONS MADE
BY BANK REGARDING THE CREDIT LINE WILL BE MADE IN UTAH.

 

THIS
AGREEMENT WILL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF UTAH APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY IN
THE STATE OF UTAH AND, IN CONNECTION WITH THE CHOICE OF LAW GOVERNING INTEREST,
THE FEDERAL LAWS OF THE UNITED STATES, EXCEPT THAT WITH RESPECT TO THE
COLLATERAL ACCOUNT AND THE BANK’S SECURITY INTEREST THEREIN, THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK, INCLUDING, WITHOUT LIMITATION, THE NEW YORK UNIFORM COMMERCIAL CODE,
AND FOR PURPOSES OF THIS AGREEMENT, THE COLLATERAL ACCOUNT AND THE BANK’S
SECURITY INTEREST THEREIN, THE JURISDICTION OF UBS FINANCIAL SERVICES INC. AND
UBS-I SHALL BE DEEMED TO BE THE STATE OF NEW YORK.

 

14)    Assignment

 

This Agreement may not be
assigned by the Borrower without the prior written consent of the Bank. This
Agreement will be binding upon and inure to the benefit of the heirs,
successors and permitted assigns of the Borrower. The Bank may assign this Agreement,
and this Agreement will inure to the benefit of the Bank’s successors and
assigns.

 

15)    Amendment

 

This Agreement may be amended
only by the Bank, including, but not limited to, (i) the addition or
deletion of any provision of this Agreement and (ii) the amendment of the (x) “Spread
Over LIBOR/UBS Bank USA Fixed Funding Rate” in Schedule I or (y) “Spread
Over Prime” in Schedule II to this Agreement, at any time by sending written
notice, signed by an authorized officer of the Bank, of an amendment to the
Borrower. The amendment shall be effective as of the date established by the
Bank. This Agreement may not be amended orally. The Borrower or the Bank may
waive compliance with any provision of this Agreement, but any waiver must be
in writing and will not be deemed to be a waiver of any other provision of this
Agreement. The provisions of this Agreement constitute the entire agreement
between the Bank and the Borrower with respect to the subject matter hereof and
supersede all prior or contemporaneous agreements, proposals, understandings
and representations, written or oral, between the parties with respect to the
subject matter hereof.

 

16)    Severability

 

If any provision of this
Agreement is held to be invalid, illegal, void or unenforceable, by reason of
any law, rule, administrative order or judicial or arbitral decision, the
determination will not affect the validity of the remaining provisions of this
Agreement.

 

17)    Choice
of Forum; Waiver of Jury Trial

 

a)      ANY
SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY JUDGMENT ENTERED BY ANY
COURT REGARDING THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT WILL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE 

 

12

 

THIRD
JUDICIAL DISTRICT COURT FOR THE STATE OF UTAH OR IN THE UNITED STATES DISTRICT
COURT FOR THE STATE OF UTAH. EACH OF THE LOAN PARTIES IRREVOCABLY SUBMITS TO
THE JURISDICTION OF THE COURTS OF THE THIRD JUDICIAL DISTRICT COURT FOR THE
STATE OF UTAH AND OF THE UNITED STATES DISTRICT COURT FOR THE STATE OF UTAH FOR
THE PURPOSE OF ANY SUCH ACTION OR PROCEEDING AS SET FORTH ABOVE AND IRREVOCABLY
AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH
ACTION OR PROCEEDING. EACH OF THE LOAN PARTIES IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE NOW OR IN
THE FUTURE TO THE LAYING OF VENUE OF ANY SUCH ACTION OR PROCEEDING BROUGHT IN
ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH ACTION OR
PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

 

b)       EACH
OF THE LOAN PARTIES (FOR ITSELF, ANYONE CLAIMING THROUGH IT OR IN ITS NAME, AND
ON BEHALF OF ITS EQUITY HOLDERS) IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY REGARDING ANY CLAIM BASED UPON OR ARISING OUT OF THIS
AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.

 

c)       Any
arbitration proceeding between the Borrower (or any other Loan Party) and the
Securities Intermediary, regardless of whether or not based on circumstances
related to any court proceedings between the Bank and the Borrower (or the
other Loan Party), will not provide a basis for any stay of the court
proceedings.

 

d)       Nothing
in this Section 17 will be deemed to alter any agreement to arbitrate any
controversies which may arise between the Borrower (or any other Loan Party)
and UBS Financial Services Inc. or its predecessors, and any claims between the
Borrower or the Loan Party, as applicable, and UBS Financial Services Inc. or
its employees (whether or not they have acted as agents of the Bank) will be
arbitrated as provided in any agreement between the Borrower or the Loan Party,
as applicable, and UBS Financial Services Inc.

 

18)    State
Specific Provisions and Disclosures

 

a)      For
residents of Ohio:

 

The Ohio
laws against discrimination require that all creditors make credit equally
available to all creditworthy customers, and that credit reporting agencies
maintain separate credit histories on each individual upon request. The Ohio
civil rights commission administers compliance with this law.

 

b)     For
residents of Oregon:

 

NOTICE TO
BORROWER: DO NOT SIGN THIS AGREEMENT BEFORE YOU READ IT. THIS AGREEMENT
PROVIDES FOR THE PAYMENT OF A PENALTY IF YOU WISH TO REPAY A FIXED RATE ADVANCE
PRIOR TO THE DATE PROVIDED FOR REPAYMENT IN THE AGREEMENT.

 

c)      For
residents of Vermont:

 

NOTICE TO
BORROWER: THE ADVANCES MADE UNDER THIS AGREEMENT ARE DEMAND LOANS AND SO MAY BE
COLLECTED BY THE LENDER AT ANY TIME. A NEW LOAN MUTUALLY AGREED UPON AND
SUBSEQUENTLY ISSUED MAY CARRY A HIGHER OR LOWER RATE OF INTEREST.

 

NOTICE TO
JOINT BORROWER: YOUR SIGNATURE ON THE AGREEMENT MEANS THAT YOU ARE EQUALLY
LIABLE FOR REPAYMENT OF THIS LOAN. IF THE BORROWER DOES NOT PAY, THE LENDER HAS
A LEGAL RIGHT TO COLLECT FROM YOU.

 

d)     For
residents of California:

 

(i)    Any person, whether married, unmarried,
or separated, may apply for separate credit.

 

(ii)   As required by law, you are notified that a
negative credit report reflecting on your credit record may be submitted to a
credit reporting agency if you fail to fulfill the terms of your credit
obligations.

 

(iii)  The Borrower will notify the Bank, within a
reasonable time, of any change in the Borrower’s name, address, or employment.

 

(iv)  The Borrower will not attempt to obtain any
Advance if the Borrower knows that the Borrower’s credit privileges under the
Credit Line have been terminated or suspended.

 

(v)   The Borrower will notify the Bank by
telephone, telegraph, letter, or any other reasonable means that an
unauthorized use of the Credit Line has occurred or may occur as the result of
the loss or theft of a credit card or other instrument identifying the Credit
Line, within a reasonable time after the Borrower’s discovery of the loss or
theft, and will reasonably assist the Bank in determining the facts and
circumstances relating to any unauthorized use of the Credit Line.

 

19)    Account
Agreement

 

Each Loan
Party acknowledges and agrees that this Agreement supplements their account
agreement(s) with the Securities Intermediary relating to the Collateral
Account and, if applicable, any related account management agreement(s) between
the Loan Party and the Securities Intermediary. In the event of a conflict
between the terms of this Agreement and any other agreement between the Loan
Party and the Securities Intermediary, the terms of this Agreement will
prevail.

 

20)    Notices

 

Unless
otherwise required by law, all notices to a Loan Party may be oral or in
writing, in the Bank’s discretion, and if in writing, delivered or mailed by
the United States mail, or by overnight carrier or by telecopy to the address
of the Loan Party shown on the records of the Bank. Each Loan Party agrees to
send notices to the Bank, in writing, at such address as provided by the Bank
from time to time.

 

13

 

Schedule I to UBS Bank USA Credit
Line Agreement

 

Schedule of Percentage Spreads Over LIBOR or the
UBS Bank USA Fixed

 

Funding Rate, as applicable

 

	
   

  	
   

  	
  Spread
  Over LIBOR/UBS 

  Bank

  	
   

  
	
  Aggregate Approved Amount

  	
   

  	
  USA Fixed Funding Rate

  	
   

  
	
  $100,000 to $249,999

  	
   

  	
  5.00

  	
  %

  
	
  $250,000 to $499,999

  	
   

  	
  3.00

  	
  %

  
	
  $500,000 to $999,999

  	
   

  	
  2.00

  	
  %

  
	
  $1,000,000 to $2,499,999

  	
   

  	
  1.75

  	
  %

  
	
  $2,500,000 to $4,999,999

  	
   

  	
  1.50

  	
  %

  
	
  $5,000,000 and over

  	
   

  	
  1.25

  	
  %

  

 

Schedule II to UBS Bank USA Credit
Line Agreement

 

Schedule of Percentage Spreads Over Prime

 

	
  Outstanding Amount under Credit
  Line

  	
   

  	
  Spread
  Over Prime

  	
   

  
	
  $0 to $49,999

  	
   

  	
  3.50

  	
  %

  
	
  $50,000 to $99,999

  	
   

  	
  3.00

  	
  %

  

 

NOTICE TO CO-SIGNER (Traduccion en
Ingles Se Requiere Por La Ley)

 

You are being asked to guarantee this debt. Think
carefully before you do. If the borrower doesn’t pay the debt, you will have
to. Be sure you can afford to pay if you have to, and that you want to accept
this responsibility.

 

You may have to pay to the full amount of the debt
if the borrower does not pay. You may also have to pay late fees or collection
costs, which increase this amount.

 

The creditor can collect this debt from you without
first trying to collect from the borrower. The creditor can use the same
collection methods against you that can be used against the borrower, such as
suing you, garnishing your wages, etc. If this debt is ever in default, that
fact may become a part of your credit record.

 

This notice is not the contract that makes you
liable for the debt.

 

AVISO PARA EL FIADOR (Spanish
Translation Required By Law)

 

Se le esta pidiendo que garantice esta deuda.
Pienselo con cuidado antes de ponerse de acuerdo. Si la persona que ha pedido
este prestamo no paga la deuda, usted tendra que pagarla. Este seguro de que
usted podra pagar si sea obligado a pagarla y de que usted desea aceptar la
responsabilidad.

 

Si la persona que ha pedido el prestamo no paga la
deuda, es posible que usted tenga que pagar la suma total de la deuda, mas los
cargos por tardarse en el pago o el costo de cobranza, lo cual aumenta el total
de esta suma.

 

El acreedor (financiero) puede cobrarle a usted
sin, primeramente, tratar de cobrarle al deudor. Los mismos metodos de cobranza
que pueden usarse contra el deudor, podran usarse contra usted, tales como
presentar una demanda en corte, quitar parte de su sueldo, etc. Si alguna vez
no se cumpla con la obligacion de pagar esta deuda, se puede incluir esa
informacion en la historia de credito de usted.

 

Este aviso no es el contrato mismo en que se le
echa a usted la responsabilidad de la deuda.

 

14

 

	
  

  	
  UBS
  Bank USA

  

 

	
   

  	
  KU

  

 

ADDENDUM TO
CREDIT LINE ACCOUNT APPLICATION AND 

AGREEMENT

 

	
  Credit Line Account

  	
   

  	
  Account Number

  
	
  Affymax, Inc.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Collateral Account

  	
   

  	
  Account Number

  
	
  Affymax, Inc.

  	
   

  	
   

  

 

This Addendum (this “Addendum”) is attached to,
incorporated by reference into and is fully a part of the Credit Line Account
Application and Agreement between UBS Bank USA (the “Bank”) and the borrower
named in the signature area below (the “Borrower”), dated as of the date hereof
(as amended or otherwise modified from time to time, the “Agreement”). This
Addendum and the Agreement shall not become effective and binding upon the Bank
until this Addendum has been executed by the Borrower and accepted by the Bank
at its home office. Any conflict between the terms of the Agreement and this
Addendum shall be resolved in accordance with the terms of this Addendum.
Defined terms used herein to have the respective meanings set forth in the Agreement
unless otherwise defined in this Addendum.

 

A.     The Bank, UBS Financial Services Inc. and the Borrower
each acknowledge and agree that:

 

Definitions

 

1.      The Agreement is amended by adding the following
definitions in Section 1:

 

“·                      “Additional Payments” has the
meaning specified in Section 5 g).

 

·                            “ARS Collateral”
means any and all Collateral consisting of Auction Rate Securities.

 

·                            “ARS Payments”
has the meaning specified in Section 5 g).

 

·                            “Auction Rate
Securities” means any and all securities determined by the Bank, in its sole
and absolute discretion, as being commonly referred to as “Auction Rate
Securities,” which, for greater certainty, include, without limitation, debt
securities on which the interest rate payable is periodically re-set by an
auction process and/or equity securities on which any dividend payable is
periodically re-set by an auction process.

·                            “Taxable SLARC
Maximum Auction Rate” means the applicable “reset rate,” “maximum auction rate”
or other similar rate as may be specified in the prospectus or other
documentation governing any applicable Taxable Student Loan Auction Rate
Securities as representing the failed auction rate or similar rate payable on
such Auction Rate Securities, in each case expressed as a per-annum rate and as
calculated in the Bank’s sole and absolute discretion.

·                            “Taxable Student
Loan Auction Rate Securities” means any and all Auction Rate Securities
Collateral consisting of securities determined by the Bank, in its sole and
absolute discretion, as being commonly referred to as “Student Loan Auction
Rate Securities” and on which the interest or dividend rate paid or payable to
the Borrower by the issuer of such securities is taxable to the Borrower.”

 

Terms of Advances

 

2.      The Agreement is amended by adding the following as Section 3
e):

 

“The Borrower acknowledges that the Bank will not make an Advance against
the ARS Collateral in amounts equal to the fair market or par value of the ARS
Collateral unless the Borrower arranges for another person or entity to provide
additional collateral or assurances on terms and conditions satisfactory to the
Bank. In requesting an Approved Amount equal to the par value of the ARS
Collateral, the Borrower has arranged for UBS Financial Services Inc. to
provide, directly or through a third party, the pledge of additional collateral
and/or assurances to the Bank so that the Bank will consider making Advances
from time to time in accordance with the terms of this Agreement and in amounts
equal to, in the aggregate, the par value of the ARS Collateral at the date of
an Advance. In addition, the Borrower, the Bank and UBS Financial Services Inc.
acknowledge and agree that if (a) the Bank is repaid all of the Credit
Line Obligations due to the Bank under the Agreement and this Addendum and (b) as
part of such repayment, the Bank realizes on the additional collateral and/or
assurances pledged or otherwise provided by UBS Financial Services and/or any
such third party to the Bank, then the Agreement shall not terminate and the
Bank shall automatically assign to UBS Financial Services Inc. and any such
third party, and UBS Financial Services Inc. and any such third party shall
automatically assume and be subrogated to, all of the Bank’s rights, claims and
interest in and under the Agreement and this Addendum, including without
limitation, the security interest in the Collateral, including without
limitation the ARS Collateral, granted the Bank under the Agreement and this
Addendum (further including, without limitation, interest, dividends,
distributions, premiums, other income and payments received in respect of any
and all such Collateral) to the extent of the amount that the Bank has realized
on all or any part of the additional collateral and/or assurances pledged or
otherwise provided by UBS Financial Services and/or any such third party to the
Bank in order to effect the repayment of the Credit Line Obligations due to the
Bank under the Agreement. Upon such automatic assignment and subrogation, UBS
Financial Services Inc. and any such third party shall be entitled to directly
exercise any and all rights and remedies afforded the Bank under the Agreement,
this Addendum and any and all other documents and agreements entered into in
connection with the Agreement and/or this Addendum.”

 

1

 

Interest

 

3.      The Agreement is amended by adding the following as a new
Section 4 d), Section 4 e) and Section 4 f):

 

“d)                 Notwithstanding anything to
the contrary in this Agreement, and subject to the provisions of Sections 4 e)
and f) of this Agreement, the interest rate charged on any and all outstanding
Variable Rate Advances shall be the lesser of (i) the amount prescribed by
Sections 4 a), b), or c) of this Agreement, as applicable, and (ii) the
then applicable weighted average rate of interest or dividend rate paid to the
Borrower by the issuer of the ARS Collateral.

e)                        The Bank and the
Borrower acknowledge and agree that the Bank shall be entitled to determine or
adjust, at any time and from time to time, the interest rate payable by the
Borrower to the Bank on all or any part of the outstanding Variable Rate
Advances to reflect any changes in the composition of the ARS Collateral, to
address any inability to determine interest rates, or for any other reason
that, in the Bank’s sole and absolute discretion, is necessary to give effect
to the intent of the provisions of this Agreement, including, without
limitation, this Section 4 (it being acknowledged and agreed that the
provisions of this Section 4 are intended to cause the interest payable by
the Borrower under this Agreement to equal the interest or dividend rate
payable to the Borrower by the issuer of any ARS Collateral) and any and all
such adjustments by the Bank hereunder shall be conclusive and binding on the
Bank and the Borrower absent manifest error.

f)                        If
and to the extent that any or all of the ARS Collateral consists of Taxable
Student Loan Auction Rate Securities, then notwithstanding anything to the
contrary in this Agreement, when calculating such weighted average interest
rate, the interest rate paid to the Borrower with respect to such Taxable
Student Loan Auction Rate Securities shall be deemed to be equal to (i) for
the period from the date of this Addendum through and including January 21,
2009, the applicable coupon rate(s) and (ii) from January 22,
2009 and thereafter, the then applicable Taxable SLARC Maximum Auction Rate,
for, and to the extent of, such Taxable Student Loan Auction Rate Securities.
The Borrower will be charged interest on the Loan in months in which the
Borrower does not receive interest on the Taxable Student Loan Auction Rate
Securities.”

 

Payments

 

4.      The Agreement is amended by adding the following as Section 5
g):

 

“The Borrower will make additional payments (“Additional Payments”) as
follows:

 

·         The proceeds of any
liquidation, redemption, sale or other disposition of all or part of the ARS
Collateral will be automatically transferred to the Bank as payments. The
amount of these payments will be determined by the proceeds received in the
Collateral Account, and may be as much as the total Credit Line Obligations.

·         All other interest,
dividends, distributions, premiums, other income and payments that are received
in the Collateral Account in respect of any ARS Collateral will be
automatically transferred to the Bank as payments. These are referred to as
“ARS Payments.” The amount of each ARS Payment will vary, based on the proceeds
received in the Collateral Account. The Bank estimates that the ARS Payments
will range from zero to fifteen ($15.00) dollars per month per $1,000 in par
value of Pledged ARS. The Bank will notify the Borrower at least ten (10) days
in advance of any ARS Payment that falls outside of this range. If the Borrower
would prefer to have advance notice of each payment to be made to Advances, the
Borrower may cancel ARS Payments as described below.

·         The Borrower agrees that any
cash, check or other deposit (other than a deposit of securities) made to the
Collateral Account is an individual authorization to have such amount transferred
to the Bank as a payment. The amount of each payment is the amount of the
deposit.

 

Each Additional Payment will be applied, as of the date received by the
Bank, in the manner set forth in the last sentence of Section 5 d). The
Borrower acknowledges that neither the Bank nor UBS Financial Services Inc.
sets or arranges for any schedule of Additional Payments. Instead, Additional
Payments will be transferred automatically from the Collateral Account whenever
amounts are received in the Collateral Account, generally on the second
Business Day after receipt.

 

The Borrower may elect to stop ARS Payments at any time, and this election
will cancel all ARS Payments that would occur three (3) Business Days or
more after the Bank receives such notice. If the Borrower stops ARS Payments,
the Borrower will continue to be obligated to pay principal, interest, and
other amounts pursuant to the Agreement. If the Borrower elects to cancel ARS
Payments, all other Additional Payments will be cancelled. Cancelling ARS
Payments and Additional Payments may result in higher interest charges by the
Bank because amounts received in the Collateral Account will not be
automatically transferred and credited. Any amounts received in the Collateral
Account will remain in the Collateral Account unless the Bank permits you to
withdraw all or part of such amounts. Your notice to cancel must be sent to:
Attention: Head of Credit Risk Monitoring, UBS Bank USA, 299 South Main Street,
Suite 2275, Salt Lake City, Utah 84111, or call (801) 741-0310.

 

Important Disclosure About Required Payments. If Additional Payments are sufficient to pay all accrued
interest on Advances on or before a due date, then the Borrower need not make
an additional interest payment. Excess Additional Payments will be applied
against principal. However, if Additional Payments are not sufficient to pay
all accrued interest on Advances on or before a due date, then the Bank may, in
its sole discretion (1) capitalize unpaid interest as an additional Advance,
or (2) require the Borrower to make payment of all accrued and unpaid
interest.”

 

2

 

Remedies

 

5.      The
Agreement is amended by adding the following as Section 10 e):

 

“The Borrower agrees that in the event the Bank determines to liquidate or
sell any Collateral, the Bank shall, to the fullest extent permitted by
applicable law, have the right to do so in any manner, including, without
limitation, the sale of Collateral individually or in a block, for cash or for
credit, in a public or private sale, with or without public notice, through the
use of sealed bids or otherwise, with the aid of any advisor or agent who may
be an affiliate of the Bank or in any other manner as the Bank in its sole
discretion shall choose. The Borrower acknowledges that the price the Bank
obtains for Collateral in the Bank’s chosen method of sale may be lower than
might be otherwise obtained in another method of sale, and the Borrower hereby
agrees that any such sale shall not be considered to be not commercially
reasonable solely because of such lower price. The Borrower understands that
there may not be a liquid market for the Collateral and that, as a result, the
price received for the Collateral upon liquidation or sale by the Bank may be
substantially less than the Borrower paid for such Collateral or than the last
market value available for it, if any. The Borrower further agrees that any
sale by the Bank shall not be considered to be not commercially reasonable
solely because there are few (including only one) or no third parties who
submit bids or otherwise offer to buy the Collateral. The Borrower understands
that the Bank’s sale of any of the Collateral may be subject to various state
and federal property and/or securities laws and regulations, and that
compliance with such laws and regulations may result in delays and/or a lower
price being obtained for the Collateral. The Borrower agrees that the Bank
shall have the right to restrict any prospective purchasers to those who, in
the Bank’s sole discretion, the Bank deems to be qualified. The Borrower
acknowledges that the Bank shall have sole authority to determine, without
limitation, the time, place, method of advertisement and manner of sale and
that the Bank may delay or adjourn any such sale in its sole discretion. The
Borrower expressly authorizes the Bank to take any action with respect to the
Collateral as the Bank deems necessary or advisable to facilitate any
liquidation or sale, and the Borrower agrees that the Bank shall not be held
liable for taking or failing to take any such action, regardless if a greater
price may have been obtained for the Collateral if such action was or was not
taken, as applicable. The Borrower hereby waives, to the fullest extent
permitted by law, any legal right of appraisal, notice, valuation, stay,
extension, moratorium or redemption that the Borrower would otherwise have with
respect to a sale of the Collateral.”

 

Representations, Warranties and
Covenants by the Loan Parties

 

6.      The
Agreement is amended by adding the following as Section 11 g):

 

“g)           If at any time
there are Credit Line Obligations outstanding under the Credit Line, then in
connection with any ARS Collateral, if at any time any such ARS Collateral may
be sold, exchanged, redeemed, transferred or otherwise conveyed by the Borrower
for gross proceeds that are, in the aggregate, not less than the par value of
such Auction Rate Securities to any party, including, without limitation, to
UBS Financial Services Inc. and/or any of its affiliates (any such sale,
exchange, redemption, transfer or conveyance referred to herein as an “ARS
Liquidation”), the Borrower agrees (i) to immediately effect such ARS
Liquidation to the extent necessary to satisfy all Credit Line Obligations in
full and (ii) that the proceeds of any such ARS Liquidation so effected
shall be immediately and automatically used to pay down any and all such
outstanding Credit Line Obligations to the extent of such proceeds. The
Borrower hereby acknowledges and agrees with the Bank and directs UBS Financial
Services Inc. that to the extent permitted by applicable law, this Section 11
g) shall constitute an irrevocable instruction, direction and standing sell
order to UBS Financial Services Inc. to effect an ARS Liquidation to the extent
it is possible to do so at any time during the term of this Agreement. The
Borrower further agrees with the Bank and UBS Financial Services Inc. to
execute and deliver to the Bank and/or UBS Financial Services Inc. such further
documents and agreements as may be necessary in the sole and absolute
discretion of the Bank and/or UBS Financial Services Inc. to effect the
foregoing irrevocable instruction, direction and standing sell order.”

 

Waivers

 

7.      The
Agreement is amended by adding the following as Section 21:

 

“The Borrower hereby (i) acknowledges and admits its
indebtedness and obligations to the Bank under the Agreement; and (ii) acknowledges,
admits and agrees that it has no and shall assert no defenses, offsets,
counterclaims or claims in respect of its obligations under the Agreement, in
each case notwithstanding any claim or asserted claim that it may have, or
purport to have, against any affiliate of the Bank.”

 

Schedules I and II

 

	
  8.

  	
  a)

  	
  Schedule
  I of the Agreement is amended in its entirety to read as follows:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  $25,001
  to $499,999 

  	
   

  	
  2.750

  	
  %

  	
   

  
	
   

  	
   

  	
  $500,000
  to $999,999 

  	
   

  	
  1.750

  	
  %

  	
   

  
	
   

  	
   

  	
  $1,000,000
  to $4,999,999 

  	
   

  	
  1.500

  	
  %

  	
   

  
	
   

  	
   

  	
  $5,000,000
  and over 

  	
   

  	
  1.250

  	
  %

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  b)
  

  	
  Schedule
  II of the Agreement is deleted in its entirety and replaced with:
  “[Intentionally Deleted].” 

  

 

3

 

No Fixed Rate Advances/Prime
Credit Lines

 

9.      The Bank
and the Borrower acknowledge and agree that notwithstanding anything to the
contrary in the Agreement: (a) the Borrower shall not request and the Bank
shall not make a Fixed Rate Advance; and (b) there shall be no Prime Credit
Line facilities available under the Agreement.

 

Alternative Financing

 

10.    If at
any time the Bank exercises its right of demand under Section 5 a), Section 5
b) and Section 10 b) of the Loan Agreement for any reason other than (i) the
occurrence of an Event under Sections 10 a) (iv), (v), (vii), (ix) (if and
to the extent any indebtedness specified thereunder is to the Bank or any of
the Bank’s affiliates), or (xi) of the Agreement; or (ii) in connection
with any termination for cause by UBS Financial Services Inc. of the overall
customer relationship between UBS Financial Services Inc. and the Borrower or
its affiliates, then UBS Financial Services Inc. shall, or shall cause one or
more of its affiliates, to provide as soon as reasonably possible, alternative
financing on substantially the same terms and conditions as those under the
Agreement and the Bank agrees that the Agreement shall remain in full force and
effect until such time as such alternative financing has been established.

 

Margin Calls; Interest Payments

 

11.    Notwithstanding
anything to the contrary in the Agreement, the Bank and the Borrower
acknowledge and agree that UBS Financial Services Inc. or any affiliate thereof
may, in its sole and absolute discretion, elect to: (i) provide additional
collateral to the Bank in the form of United States Treasury Securities if and
to the extent that the Borrower does not maintain in a Collateral Account,
Collateral having an aggregate lending value as specified by the Bank from time
to time; and/or (ii) satisfy any and all amounts of accrued and unpaid
interest that are otherwise due and payable by the Borrower to the Bank under
the Agreement, to the extent that the amount of any Additional Payments under
the Agreement are insufficient to satisfy any and all such amounts.

 

Collateral Account Features

 

12.    Section 8
f) of the Agreement is deleted in its entirety and replaced with the following:

 

“If a Collateral Account has margin features, the margin features will be
removed by UBS Financial Services Inc. or UBS International Inc., as
applicable, so long as there is no outstanding margin debit in the Collateral
Account. If a Collateral Account has Resource Management Account® or Business
Services Account BSA® features, such as check writing, cards, bill payment, or
electronic funds transfer services, all such features shall be removed by UBS
Financial Services Inc. or UBS International Inc., as applicable.”

 

No Credit Line Checks

 

13.    The Bank
and the Borrower acknowledge and agree that notwithstanding anything to the
contrary in the Agreement, the Credit Line shall not have Credit Line checks.

 

Headings

 

14.    The
headings of each of Section of this Addendum is for descriptive purposes
only and shall not be deemed to modify or qualify the terms, conditions, rights
or obligations described in such Section.

 

B.      This Addendum may be signed in multiple original
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.

 

[Signature
page(s) follows]

 

4

 

IN WITNESS WHEREOF, each of the parties has signed
this Addendum pursuant to due and proper authority as of the date set forth
below.

 

	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date

  	
   

  	
   

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Print Name and Title

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date

  	
   

  	
  Print Name and Title

  	
   

  	
  Signature

  

 

 

	
   

  	
  UBS BANK USA

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  UBS FINANCIAL SERVICES INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

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