Document:

EX-10.3

 

Exhibit 10.3

BIODEL INC.

2004 STOCK INCENTIVE PLAN

ORIGINALLY APPROVED BY STOCKHOLDERS ON OCTOBER 1, 2004

AMENDED AND RESTATED ON MARCH 20, 2007

APPROVED BY STOCKHOLDERS ON MARCH 20, 2007

EFFECTIVE DATE:                                         2007

1. PURPOSES.

     (A) AMENDMENT AND RESTATEMENT. The Plan amends and restates the Biodel Inc. 2004 Stock
Incentive Plan adopted October 1, 2004 (the “PRIOR PLAN”). All outstanding awards granted under
the Prior Plan shall remain subject to the terms of the Prior Plan. All options granted subsequent
to the effective date of this Plan shall be subject to the terms of this Plan.

     (B) ELIGIBLE STOCK AWARD RECIPIENTS. The persons eligible to receive Stock Awards are
Employees, Directors and Consultants.

     (C) AVAILABLE STOCK AWARDS. The purpose of the Plan is to provide a means by which eligible
recipients of Stock Awards may be given an opportunity to benefit from increases in value of the
Common Stock through the granting of the following Stock Awards: (i) Incentive Stock Options, (ii)
Nonstatutory Stock Options, (iii) Restricted Stock Awards, (iv) Stock Appreciation Rights, (v)
Phantom Stock Awards and (vi) Other Stock Awards.

     (D) GENERAL PURPOSE. The Company, by means of the Plan, seeks to retain the services of the
group of persons eligible to receive Stock Awards, to secure and retain the services of new members
of this group and to provide incentives for such persons to exert maximum efforts for the success
of the Company and its Affiliates.

2. DEFINITIONS.

     (A) “AFFILIATE” means any parent corporation or subsidiary corporation of the Company, whether
now or hereafter existing, as those terms are defined in Sections 424(e) and (f), respectively, of
the Code.

     (B) “BOARD” means the Board of Directors of the Company.

     (C) “CAPITALIZATION ADJUSTMENT” has the meaning ascribed to that term in Section 11(a).

     (D) “CAUSE” means, with respect to a Participant, the occurrence of any of the following: (i)
such Participant’s conviction of any felony or any crime involving fraud or dishonesty which, in
the Board’s sole discretion, materially affects the business of the Company; (ii) such
Participant’s participation (whether by affirmative act or omission) in a fraud, act of

 

 

dishonesty or other act of misconduct against the Company and/or its Affiliates which, in the
Board’s sole discretion, materially affects the business of the Company; (iii) conduct by such
Participant which, based upon a good faith and reasonable factual investigation by the Company (or,
if such Participant is an Officer, by the Board), demonstrates such Participant’s gross unfitness
to serve; (iv) such Participant’s violation of any statutory or fiduciary duty, or duty of loyalty,
owed to the Company and/or its Affiliates; (v) such Participant’s breach of any material term of
any material contract between such Participant and the Company and/or its Affiliates; and (vi) such
Participant’s repeated violation of any material Company policy. Notwithstanding the foregoing,
such Participant’s Disability shall not constitute Cause as set forth herein. The determination
that a termination is for Cause shall be by the Committee in its sole and exclusive judgment and
discretion.

     (E) “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
an Exchange Act Person as described in Section 2(s) (E) transferring in a single act or series of
related acts more than fifty percent (50%) of the combined voting power of the Company’s then
outstanding securities (1) by gift, (2) for estate planning purposes or (3) to any entity
controlled directly or indirectly by such Exchange Act Person, (B) 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 (C) 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;

2

 

          (III) there is consummated a sale, lease, 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

          (IV) individuals who, on the date this 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 this Plan, be considered as a
member of the Incumbent Board. Notwithstanding the foregoing or any other provision of this 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 (it being understood, 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).

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

     (G) “COMMITTEE” means a committee of one or more members of the Board appointed by the Board
in accordance with Section 3(c).

     (H) “COMMON STOCK” means the common stock of the Company.

     (I) “COMPANY” means Biodel Inc., a Delaware corporation.

     (J) “CONSULTANT” means any person, including an advisor, who (i) is engaged by the Company or
an Affiliate to render consulting or advisory services and is compensated for such services or (ii)
is 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 services, shall not
cause a Director to be considered a “Consultant” for purposes of the Plan.

     (K) “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. For
example, a change in status from an Employee of the Company to a Consultant of an Affiliate or to a
Director shall not constitute an interruption of Continuous Service. The Board or

3

 

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 any leave of absence approved by
that party, including sick leave, military leave or any other personal leave. 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 or in
the written terms of the Participant’s leave of absence.

     (L) “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
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) a merger, consolidation or similar transaction following which the Company is not the
surviving corporation; or

          (IV) 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.

     (M) “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.

     (N) “DIRECTOR” means a member of the Board.

     (O) “DISABILITY” means the permanent and total disability of a person within the meaning of
Section 22(e)(3) of the Code.

     (P) “EMPLOYEE” means any person employed by the Company or an Affiliate on the date the option
is granted. 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.

     (Q) “ENTITY” means a corporation, partnership or other entity.

     (R) “EXCHANGE ACT” means the Securities Exchange Act of 1934, as amended.

     (S) “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
(A) the Company or any Subsidiary of the Company, (B) any employee benefit

4

 

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, (C) an
underwriter temporarily holding securities pursuant to an offering of such securities, (D) 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 (E) 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 of the Plan as set forth in Section 14, 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.

     (T) “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
National Market or the Nasdaq SmallCap 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 market (or the exchange or market with the greatest volume of trading in
the Common Stock) on the last market trading day prior to the day of determination, as reported in
The Wall Street Journal or such other source as the Board deems reliable.

          (II) In the absence of such markets for the Common Stock, the Fair Market Value shall be
determined in good faith by the Board.

     (U) “INCENTIVE STOCK OPTION” means an Option intended to qualify as an incentive stock option
within the meaning of Section 422 of the Code and the regulations promulgated thereunder.

     (V) “IPO DATE” means the effective date of the initial public offering of the Common Stock.

     (W) “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.

     (X) “NONSTATUTORY STOCK OPTION” means an Option not intended to qualify as an Incentive Stock
Option.

     (Y) “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.

5

 

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

     (AA) “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.

     (BB) “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.

     (CC) “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 7(d).

     (DD) “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.

     (EE) “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.

     (FF) “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.

     (GG) “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.

     (HH) “PHANTOM STOCK AWARD” means a right to receive shares of Common Stock which is granted
pursuant to the terms and conditions of Section 7(b).

     (II) “PHANTOM STOCK AWARD AGREEMENT” means a written agreement between the Company and a
holder of a Phantom Stock Award evidencing the terms and conditions of a Phantom Stock Award grant.
Each Phantom Stock Award Agreement shall be subject to the terms and conditions of the Plan.

6

 

     (JJ) “PLAN” means this Biodel Inc. 2004 Stock Incentive Plan.

     (KK) “RESTRICTED STOCK AWARD” means an award of shares of Common Stock which is granted
pursuant to the terms and conditions of Section 7(a).

     (LL) “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.

     (MM) “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.

     (NN) “SECURITIES ACT” means the Securities Act of 1933, as amended.

     (OO) “STOCK APPRECIATION RIGHT” means a right to receive the appreciation of Common Stock that
is granted pursuant to the terms and conditions of Section 7(c).

     (PP) “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.

     (QQ) “STOCK AWARD” means any right granted under the Plan, including an Option, a Restricted
Stock Award, a Stock Appreciation Right, a Phantom Stock Award or any Other Stock Award.

     (RR) “STOCK AWARD AGREEMENT” means a written agreement between the Company and a holder of a
Stock Award 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.

     (SS) “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 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%).

     (TT) “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 of any of its Affiliates.

7

 

3. ADMINISTRATION.

     (A) ADMINISTRATION BY BOARD. The Board shall administer the Plan unless and until the Board
delegates administration to a Committee, as provided in Section 3(c).

     (B) POWERS OF BOARD. 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 which of the persons eligible under the Plan shall be
granted Stock Awards; when and how each Stock Award shall be granted; what type or combination of
types of Stock Award shall be granted; 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 Common Stock
pursuant to a Stock Award; and 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
fully effective.

          (III) To effect, at any time and from time to time, with the consent of any adversely affected
Optionholder, (1) the reduction of the exercise price of any outstanding Option under the Plan, (2)
the cancellation of any outstanding Option under the Plan and the grant in substitution therefor of
(A) a new Option under the Plan or another equity plan of the Company covering the same or a
different number of shares of Common Stock, (B) a Restricted Stock Award (including a stock bonus),
(C) a Stock Appreciation Right, (D) a Phantom Stock Award (E) an Other Stock Award, (F) cash and/or
(G) 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.

          (IV) To amend the Plan or a Stock Award as provided in Section 12.

          (V) To terminate or suspend the Plan as provided in Section 13.

          (VI) 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.

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

     (C) DELEGATION TO COMMITTEE.

          (I) GENERAL. The Board may delegate administration of the Plan to a Committee or Committees of
one or more members of the Board, and the term “COMMITTEE”

8

 

shall apply to any person or persons to whom such authority has been delegated. 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, including the power to
delegate to a subcommittee any of the administrative powers the Committee is authorized to exercise
(and references in this 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 abolish the Committee at any time and revest
in the Board the administration of the Plan.

          (II) SECTION 162(M) AND RULE 16B-3 COMPLIANCE. In the discretion of the Board, the Committee
may consist solely of two or more Outside Directors, in accordance with Section 162(m) of the Code,
and/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 (1) delegate to a committee of one or more
members of the Board who need not be Outside Directors the authority to grant Stock Awards to
eligible persons who are either (a) 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 (b) not persons
with respect to whom the Company wishes to comply with Section 162(m) of the Code, and/or (2)
delegate to a committee of one or more members of the Board 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.

     (D) DELEGATION TO AN OFFICER. The Board may delegate to one or more Officers of the Company
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 Stock Awards and (ii) determine the number
of shares of Common Stock to be subject to such Stock Awards granted to such Officers and Employees
of the Company; 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 Officer and that such Officer may not grant a Stock Award to himself or herself.
Notwithstanding anything to the contrary in this Section 3(d), the Board may not delegate to an
Officer authority to determine the Fair Market Value of the Common Stock pursuant to Section
2(t)(ii) above.

     (E) 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.

4. SHARES SUBJECT TO THE PLAN.

     (A) SHARE RESERVE. Subject to the provisions of Section 11(a) relating to Capitalization
Adjustments, the shares of Common Stock that may be issued pursuant to Stock Awards shall not
exceed in the aggregate four million seven hundred thousand (4,700,000) shares of Common Stock.

     (B) REVERSION OF SHARES TO THE SHARE RESERVE. If any Stock Award shall for any reason expire
or otherwise terminate, in whole or in part, without having been exercised in full, or if any
shares of Common Stock issued to a Participant pursuant to a Stock Award are

9

 

forfeited to or repurchased by the Company, including, but not limited to, any repurchase or
forfeiture caused by the failure to meet a contingency or condition required for the vesting of
such shares, 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”), the number of shares that are not delivered to
the Participant shall remain available for 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. Notwithstanding anything to the contrary in this Section 4(b), subject to
the provisions of Section 11(a) relating to Capitalization Adjustments the aggregate maximum number
of shares of Common Stock that may be issued as Incentive Stock Options shall be four million
(4,000,000) shares of Common Stock.

     (C) SOURCE OF SHARES. The shares of Common Stock subject to the Plan may be unissued shares or
reacquired shares, bought on the market or otherwise.

5. ELIGIBILITY.

     (A) ELIGIBILITY FOR SPECIFIC STOCK AWARDS. Incentive Stock Options may be granted only to
Employees. Stock Awards other than Incentive Stock Options may be granted to Employees, Directors
and Consultants.

     (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 ON ANNUAL GRANTS. Subject to the provisions of Section 11(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
Options or Stock Appreciation Rights covering more than FIFTY THOUSAND (50,000) shares of Common
Stock during any calendar year.

     (D) CONSULTANTS. A Consultant shall not be eligible for the grant of a Stock Award if, at the
time of grant, a Form S-8 Registration Statement under the Securities Act (“FORM S-8”) is not
available to register either the offer or the sale of the Company’s securities to such Consultant
because of the nature of the services that the Consultant is providing to the Company, because the
Consultant is not a natural person, or because of any other rule governing the use of Form S-8.

6. 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

10

 

purchased on exercise of each type of Option. The provisions of separate Options need not be
identical, but each Option shall include (through incorporation of provisions hereof by reference
in the Option or otherwise) the substance of each of the following provisions:

     (A) TERM. The Board shall determine the term of an Option; provided however that, subject to
the provisions of Section 5(b) regarding Ten Percent Stockholders, no Incentive Stock Option shall
be exercisable after the expiration of ten (10) years from the date on which it was granted.

     (B) EXERCISE PRICE OF AN INCENTIVE STOCK OPTION. Subject to the provisions of Section 5(b)
regarding Ten Percent Stockholders, the exercise price of each Incentive Stock 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 Incentive Stock Option
may be granted with an exercise price lower than that set forth in the preceding sentence if such
Option is granted pursuant to an assumption or substitution for another option in a manner
satisfying the provisions of Section 424(a) of the Code.

     (C) EXERCISE PRICE OF A NONSTATUTORY STOCK OPTION. The Board, in its discretion, shall
determine the exercise price of each Nonstatutory Stock Option.

     (D) CONSIDERATION. The purchase price of Common Stock acquired pursuant to an Option shall be
paid, to the extent permitted by applicable law, either (i) in cash at the time the Option is
exercised or (ii) at the discretion of the Board at the time of the grant of the Option (or
subsequently in the case of a Nonstatutory Stock Option) (1) by delivery to the Company (either by
actual delivery or attestation) of other Common Stock at the time the Option is exercised, (2)
according to a deferred payment or other similar arrangement with the Optionholder, (3) by a “net
exercise” of the Option (as further described below), (4) pursuant to a program developed under
Regulation T as promulgated by the Federal Reserve Board that, prior to the issuance of Common
Stock, 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 (5) in any other form of legal consideration that may be acceptable to the Board. Unless
otherwise specifically provided in the Option, the purchase price of Common Stock acquired pursuant
to an Option that is paid by delivery to the Company of other Common Stock acquired, directly or
indirectly from the Company, shall be paid only by shares of the Common Stock of the Company that
have been held for more than six (6) months (or such longer or shorter period of time required to
avoid a charge to earnings for financial accounting purposes). At any time that the Company is
incorporated in Delaware, payment of the Common Stock’s “par value,” as defined in the Delaware
General Corporation Law, shall not be made by deferred payment. In the case of any deferred
payment arrangement, interest shall be compounded at least annually and shall be charged at the
minimum rate of interest necessary to avoid (1) the treatment as interest, under any applicable
provisions of the Code, of any amounts other than amounts stated to be interest under the deferred
payment arrangement and (2) the treatment of the Option as a variable award for financial
accounting purposes. In the case of a “net exercise” of an Option, the Company will not require a
payment of the exercise price of the Option from the Participant but will reduce the number of
shares of Common Stock issued upon the exercise

11

 

by the largest number of whole shares that has a Fair Market Value that does not exceed the
aggregate exercise price. With respect to any remaining balance of the aggregate exercise price,
the Company shall accept a cash payment from the Participant. Shares of Common Stock will no longer
be outstanding under an Option (and will therefore not thereafter be exercisable) following the
exercise of such Option to the extent of (i) shares used to pay the exercise price of an Option
under the “net exercise”, (ii) shares actually delivered to the Participant as a result of such
exercise and (iii) shares withheld for purposes of tax withholding.

     (E) TRANSFERABILITY OF AN INCENTIVE STOCK OPTION. An Incentive Stock 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. Notwithstanding the foregoing,
the Optionholder may, by delivering written notice to the Company, in a form provided by or
otherwise satisfactory to the Company, designate a third party who, in the event of the death of
the Optionholder, shall thereafter be entitled to exercise the Option.

     (F) TRANSFERABILITY OF A NONSTATUTORY STOCK OPTION. A Nonstatutory Stock Option shall be
transferable to the extent provided in the Option Agreement. If the Nonstatutory Stock Option does
not provide for transferability, then the Nonstatutory Stock 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. Notwithstanding the foregoing, the
Optionholder may, by delivering written notice to the Company, in a form provided by or otherwise
satisfactory to the Company, designate a third party who, in the event of the death of the
Optionholder, shall thereafter be entitled to exercise the Option.

     (G) VESTING GENERALLY. The total number of shares of Common Stock subject to an Option may,
but need not, vest and therefore become exercisable in periodic installments that may, but need
not, be equal. The Option may be subject to such other terms and conditions on the time or times
when it may be exercised (which may be based on performance or other criteria) as the Board may
deem appropriate. The vesting provisions of individual Options may vary. The provisions of this
Section 6(g) are subject to any Option provisions governing the minimum number of shares of Common
Stock as to which an Option may be exercised.

     (H) TERMINATION OF CONTINUOUS SERVICE. In the event that an Optionholder’s Continuous Service
terminates (for reasons other than 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) 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.

     (I) EXTENSION OF TERMINATION DATE. An Optionholder’s Option Agreement may also provide that if
the exercise of the Option following the termination of the

12

 

Optionholder’s Continuous Service (for reasons other than 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 the term of the Option set forth in the Option
Agreement or (ii) 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.

     (J) 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), but only within such period of time ending on
the earlier of (i) the date twelve (12) months following such termination (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.

     (K) 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 pursuant to Section 6(e) or
6(f), but only within the period ending on the earlier of (1) the date eighteen (18) months
following the date of death (or such longer or shorter period specified in the Option Agreement or
(2) 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.

     (L) RETIREMENT. Notwithstanding the foregoing, if at the time of termination of an
Optionholder’s Continuous Service for any reason other than Cause, the Optionholder is at least
fifty five (55) years old, then the Optionholder (or such person or person(s) as may be entitled to
exercise such Option pursuant to Section 6(k) in the event of the Optionholder’s death) may
exercise his or her Option (to the extent that the Optionholder was entitled to exercise such
Option as of the date of termination) within such period of time ending on the earlier of (i) the
date twenty four (24) months following such termination or (ii) the expiration of the term of the
Option as set forth in the Option Agreement. If, after termination, the Option is not exercised
within the time specified herein, the Option shall terminate.

     (M) TERMINATION FOR CAUSE. In the event an Optionholder’s Continuous Service is terminated for
Cause, the Option shall terminate upon the termination date of such Optionholder’s Continuous
Service and the Optionholder shall be prohibited from exercising his or her Option from and after
the time of such termination of Continuous Service.

13

 

     (N) EARLY EXERCISE. The Option may, but need not, include a provision whereby the Optionholder
may elect at any time before the Optionholder’s Continuous Service terminates to exercise the
Option as to any part or all of the shares of Common Stock subject to the Option prior to the full
vesting of the Option. Any unvested shares of Common Stock so purchased may be subject to a
repurchase option in favor of the Company or to any other restriction the Board determines to be
appropriate. The Company shall not be required to exercise its repurchase option until at least six
(6) months (or such longer or shorter period of time required to avoid a charge to earnings for
financial accounting purposes) have elapsed following exercise of the Option unless the Board
otherwise specifically provides in the Option.

7. 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. At the Board’s
election, shares of Common Stock may be (i) held in book entry form subject to the Company’s
instructions until any restrictions relating to the Restricted Stock Award lapse; or (ii) 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, however, that each Restricted Stock Award Agreement shall include (through incorporation
of the provisions hereof by reference in the agreement or otherwise) the substance of each of the
following provisions:

          (I) PURCHASE PRICE. At the time of the grant of a Restricted Stock Award, the Board will
determine the price to be paid by the Participant for each share subject to the Restricted Stock
Award. To the extent required by applicable law, the price to be paid by the Participant for each
share of the Restricted Stock Award will not be less than the par value of a share of Common Stock.
A Restricted Stock Award may be awarded as a stock bonus (i.e., with no cash purchase price to be
paid) to the extent permissible under applicable law.

          (II) CONSIDERATION. At the time of the grant of a Restricted Stock Award, the Board will
determine the consideration permissible for the payment of the purchase price of the Restricted
Stock Award. The purchase price of Common Stock acquired pursuant to the Restricted Stock Award
shall be paid in one of the following ways: (i) in cash at the time of purchase; (ii) at the
discretion of the Board, according to a deferred payment or other similar arrangement with the
Participant; (iii) by services previously rendered to the Company in the case of a stock bonus; or
(iv) in any other form of legal consideration that may be acceptable to the Board and permissible
under the Delaware Corporation Law; provided, that such payment shall be made within two
and a half months after the later of (i) the last day of the Optionholder’s taxable year during
which the stock award is no longer subject to a substantial risk of forfeiture, or (ii) the last
day of the Company’s taxable year during which the stock award is no longer subject to a
substantial risk of forfeiture. The term “substantial risk of forfeiture” as used herein shall
have the meaning set forth in Section 409A(d)(4) of the Code.

          (III) VESTING. Shares of Common Stock acquired under a Restricted Stock Award may, but need
not, be (i) subject to a share repurchase right or option in favor of the

14

 

Company or (ii) subject to a forfeiture right in favor of the Company, each in accordance with a
vesting schedule to be determined by the Board.

          (IV) TERMINATION OF PARTICIPANT’S CONTINUOUS SERVICE. In the event that a Participant’s
Continuous Service terminates, the Company shall have the right, but not the obligation, to
repurchase, otherwise reacquire or receive by a forfeiture right, any or all of the shares of
Common Stock held by the Participant that have not vested as of the date of termination under the
terms of the Restricted Stock Award Agreement. At the Board’s election, the repurchase right may be
at the least of: (i) the Fair Market Value on the relevant date; (ii) the Participant’s original
cost; or (iii) if the Participant paid the purchase price for the shares of Common Stock with
services rendered, then for no consideration. The Company shall not be required to exercise its
repurchase option until at least six (6) months (or such longer or shorter period of time required
to avoid a charge to earnings for financial accounting purposes) have elapsed following the
purchase of the restricted stock unless otherwise determined by the Board or provided in the
Restricted Stock Award Agreement.

          (V) TRANSFERABILITY. Rights to purchase or receive shares of Common Stock granted under a
Restricted Stock Award 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
discretion, and so long as Common Stock awarded under the Restricted Stock Award remains subject to
the terms of the Restricted Stock Award Agreement.

     (B) PHANTOM STOCK. Each Phantom Stock 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 Phantom
Stock Award Agreements may change from time to time, and the terms and conditions of separate
Phantom Stock Award Agreements need not be identical, provided, however, that each Phantom Stock
Award Agreement shall include (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 Phantom Stock 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 Phantom Stock Award. To the extent required by applicable law, the consideration to
be paid by the Participant for each share of Common Stock subject to a Phantom Stock Award will not
be less than the par value of a share of Common Stock. Such consideration may be paid in any form
permitted under applicable law.

          (II) VESTING. At the time of the grant of a Phantom Stock Award, the Board may impose such
restrictions or conditions to the vesting of the Phantom Stock Award as it, in its absolute
discretion, deems appropriate.

          (III) PAYMENT. A Phantom Stock Award may be settled by the delivery of shares of Common Stock,
their cash equivalent, any combination thereof or in any other form of consideration as determined
by the Board and contained in the Phantom Stock Award Agreement.

15

 

          (IV) ADDITIONAL RESTRICTIONS. At the time of the grant of a Phantom Stock 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 Phantom Stock Award after the
vesting of such Phantom Stock Award.

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

          (VI) TERMINATION OF PARTICIPANT’S CONTINUOUS SERVICE. Except as otherwise provided in the
applicable Phantom Stock Award Agreement, such portion of the Phantom Stock Award that has not
vested will be forfeited upon the Participant’s termination of Continuous Service for any reason.

     (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. 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 include (through incorporation of the
provisions hereof by reference in the agreement or otherwise) the substance of each of the
following provisions:

          (I) STRIKE PRICE AND CALCULATION OF APPRECIATION. Each Stock Appreciation Right will be
denominated in share of Common Stock equivalents. 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) an amount (the strike
price) that will be determined by the Board at the time of grant of the Stock Appreciation Right.

          (II) 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
absolute discretion, deems appropriate.

          (III) 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.

16

 

          (IV) PAYMENT. The appreciation distribution in respect to a Stock Appreciation Right may be
paid in Common Stock, in cash, in any combination thereof or in any other form of consideration as
determined by the Board and contained in the Stock Appreciation Right Agreement evidencing such
Stock Appreciation Right; provided, that such payment shall be made within two and a half
months after the later of (i) the last day of the Optionholder’s taxable year during which the
stock award is no longer subject to a substantial risk of forfeiture, or (ii) the last day of the
Company’s taxable year during which the stock award is no longer subject to a substantial risk of
forfeiture.

          (V) TERMINATION OF CONTINUOUS SERVICE. In the event that a Participant’s Continuous Service
terminates, 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) but only within such period of time ending on the earlier of (i) 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 (ii) the expiration of the term of
the Stock Appreciation Right as set forth in the Stock Appreciation Right Agreement. If, after
termination, 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.

     (D) 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 6 and the preceding provisions of this Section 7. 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.

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 which 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.

17

 

9. USE OF PROCEEDS FROM STOCK. Proceeds from the sale of Common Stock pursuant to Stock Awards
shall constitute general funds of the Company.

10. MISCELLANEOUS.

     (A) ACCELERATION OF EXERCISABILITY AND VESTING. The Board shall have the power 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.

     (B) 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 such Participant has satisfied all requirements for exercise of the Stock Award
pursuant to its terms.

     (C) NO EMPLOYMENT OR OTHER SERVICE RIGHTS. Nothing in the Plan or any instrument executed or
Stock Award granted pursuant thereto 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.

     (D) 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 its 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).

     (E) 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 (1)
the issuance of the shares of Common Stock upon the exercise or acquisition of Common Stock under
the Stock

18

 

Award has been registered under a then currently effective registration statement under the
Securities Act or (2) 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.

     (F) WITHHOLDING OBLIGATIONS. To the extent provided 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; or (iii) by such other method as may be set forth in the Stock
Award Agreement.

11. ADJUSTMENTS UPON CHANGES IN STOCK.

     (A) CAPITALIZATION ADJUSTMENTS. If any change is made in, or other event occurs with respect
to, the Common Stock subject to the Plan or subject to any Stock Award 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 (each a “CAPITALIZATION
ADJUSTMENT”), the Plan will be appropriately adjusted in the class(es) and maximum number of
securities subject to the Plan pursuant to Sections 4(a) and 4(b) and the maximum number of
securities subject to award to any person pursuant to Section 5(c), and the outstanding Stock
Awards will be appropriately adjusted in the class(es) and number of securities and price per share
of Common Stock subject to such outstanding Stock Awards; provided, however, that
any adjustment to the number of securities subject to a Stock Award and the Exercise Price to be
paid therefore, shall be proportionately adjusted to reflect that such transaction and only such
transaction on a pro rata basis such that the aggregate Exercise Price of such Stock Awards, if
any, is not less than the aggregate exercise price before such transaction. The foregoing
adjustment and the manner of application of the foregoing provisions shall be determined by the
Committee in its sole discretion and to the extent permitted by Section 409A of the Code and the
Treasury Regulations thereunder. Any such adjustment may provide for the elimination of any
fractional share of Common Stock which may otherwise become subject to a Stock Award. The Board
shall make such adjustments, and its determination shall be final, binding and conclusive.
(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.)

     (B) DISSOLUTION OR LIQUIDATION. In the event of a dissolution or liquidation of the Company,
then all outstanding Stock Awards shall terminate immediately prior to the completion of such
dissolution or liquidation.

19

 

     (C) CORPORATE TRANSACTION; CHANGE OF CONTROL. Except as expressly provided in any applicable
agreement or instrument evidencing a Stock Award hereunder, in the event of a Corporate
Transaction, or upon a Change of Control, each outstanding Stock Award shall immediately become
exercisable in full, or shall fully vest without condition, as the case may be.

12. AMENDMENT OF THE PLAN AND STOCK AWARDS.

     (A) AMENDMENT OF PLAN. Subject to the limitations, if any, of applicable law, the Board at any
time, and from time to time, may amend the Plan. However, except as provided in Section 11(a)
relating to Capitalization Adjustments, no amendment shall be effective unless approved by the
stockholders of the Company to the extent stockholder approval is necessary to satisfy applicable
law.

     (B) STOCKHOLDER APPROVAL. The Board, in its sole discretion, may submit any other amendment to
the Plan for stockholder approval, including, but not limited to, amendments to the Plan intended
to satisfy the requirements of 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.

     (C) CONTEMPLATED AMENDMENTS. It is expressly contemplated that the Board may amend the Plan in
any respect the Board deems necessary or advisable to provide eligible Employees with the maximum
benefits provided or to be provided under the provisions of the Code and the regulations
promulgated thereunder relating to Incentive Stock Options and/or to bring the Plan and/or
Incentive Stock Options granted under it into compliance therewith.

     (D) NO IMPAIRMENT OF RIGHTS. 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 Participant and (ii) the Participant consents in writing.

     (E) AMENDMENT OF STOCK AWARDS. The Board at any time, and from time to time, may 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 agreement evidencing a Stock Award, 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 Participant and (ii) the Participant consents in writing.

13. TERMINATION OR SUSPENSION OF THE PLAN.

     (A) PLAN TERM. The Board may suspend or terminate the Plan at any time. Unless sooner
terminated, the Plan shall terminate on the day before the tenth (10th) anniversary of the date the
Plan is adopted by the Board or approved by the stockholders of the Company, whichever is earlier.
No Stock Awards may be granted under the Plan while the Plan is suspended or after it is
terminated.

20

 

     (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 Participant.

14. EFFECTIVE DATE OF PLAN. The Plan shall become effective on the IPO Date, but no Stock Award
shall be exercised (or, in the case of a stock bonus, 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.

15. CHOICE OF LAW. The laws of the State of New York shall govern all questions concerning the
construction, validity and interpretation of this Plan, without regard to such state’s conflict of
laws rules.

16. TAX WITHHOLDING. All distributions under the Plan are subject to withholding of all applicable
taxes, and the Committee may condition the delivery of any shares or other benefits under the Plan
on satisfaction of the applicable withholding obligations. The Committee, in its discretion, and
subject to such requirements as the Committee may impose prior to the occurrence of such
withholding, may permit such withholding obligations to be satisfied through the cash payment by
the Optionholder or through the surrender of shares of the Stock Award which the Optionholder is
otherwise entitled under the Plan.

21EX-10.4

 

Exhibit 10.4

BIODEL INC.

2005 EMPLOYEE STOCK PURCHASE PLAN

ADOPTED BY THE BOARD OF DIRECTORS MARCH 20, 2007

APPROVED BY STOCKHOLDERS MARCH 20, 2007

1. PURPOSE.

     (a) The purpose of the Plan is to provide a means by which Employees of the Company and
certain designated Related Corporations may be given an opportunity to purchase shares of the
Common Stock of the Company.

     (b) The Company, by means of the Plan, seeks to retain the services of such Employees, to
secure and retain the services of new Employees and to provide incentives for such persons to exert
maximum efforts for the success of the Company and its Related Corporations.

     (c) The Company intends that the Purchase Rights be considered options issued under an
Employee Stock Purchase Plan.

2. DEFINITIONS.

     As used in the Plan and any Offering, unless otherwise specified, the following terms have the
meanings set forth below:

     (a) “BOARD” means the Board of Directors of the Company.

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

     (c) “COMMITTEE” means a committee appointed by the Board in accordance with Section 3(c) of
the Plan.

     (d) “COMMON STOCK” means the common stock of the Company.

     (e) “COMPANY” means Biodel Inc., a Delaware corporation.

     (f) “CONTRIBUTIONS” means the payroll deductions and other additional payments that a
Participant contributes to fund the exercise of a Purchase Right. A Participant may make payments
not through payroll deductions only if specifically provided for in the Offering, and then only if
the Participant has not already had the maximum permitted amount withheld through payroll
deductions during the Offering.

     (g) “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, lease, license or
other disposition of all or substantially all of the consolidated assets of the Company;

 

 

(ii) a sale or other disposition of at least ninety percent (90%) of the outstanding securities of the
Company; (iii) a merger, consolidation or similar transaction following which the
Company is not the surviving corporation; or (iv) 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.

     (h) “DIRECTOR” means a member of the Board.

     (i) “ELIGIBLE EMPLOYEE” means an Employee who meets the requirements set forth in the Offering
for eligibility to participate in the Offering, provided that such Employee also meets the
requirements for eligibility to participate set forth in the Plan.

     (j) “EMPLOYEE” means any person, including Officers and Directors, who is employed for
purposes of Section 423(b)(4) of the Code by the Company or a Related Corporation. Neither service
as a Director nor payment of a director’s fee shall be sufficient to make an individual an Employee
of the Company or a Related Corporation.

     (k) “EMPLOYEE STOCK PURCHASE PLAN” means a plan that grants Purchase Rights intended to be
options issued under an “employee stock purchase plan,” as that term is defined in Section 423(b)
of the Code.

     (l) “EXCHANGE ACT” means the Securities Exchange Act of 1934, as amended.

     (m) “FAIR MARKET VALUE” means the value of a security, as determined in good faith by the
Board. If the security is listed on any established stock exchange or traded on the Nasdaq National
Market or the Nasdaq SmallCap Market, the Fair Market Value of the security, unless otherwise
determined by the Board, shall be the closing sales price (rounded up where necessary to the
nearest whole cent) for such security (or the closing bid, if no sales were reported) as quoted on
such exchange or market (or the exchange or market with the greatest volume of trading in the
relevant security of the Company) on the Trading Day prior to the relevant determination date, as
reported in The Wall Street Journal or such other source as the Board deems reliable.

     (n) “OFFERING” means the grant of Purchase Rights to purchase shares of Common Stock under the
Plan to Eligible Employees.

     (o) “OFFERING DATE” means a date selected by the Board for an Offering to commence.

     (p) “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.

     (q) “PARTICIPANT” means an Eligible Employee who holds an outstanding Purchase Right granted
pursuant to the Plan.

2

 

     (r) “PLAN” means this Biodel Inc. 2005 Employee Stock Purchase Plan.

     (s) “PURCHASE DATE” means one or more dates during an Offering established by the Board on
which Purchase Rights shall be exercised and as of which purchases of shares of Common Stock shall
be carried out in accordance with such Offering.

     (t) “PURCHASE PERIOD” means a period of time specified within an Offering beginning on the
Offering Date or on the next day following a Purchase Date within an Offering and ending on a
Purchase Date. An Offering may consist of one or more Purchase Periods.

     (u) “PURCHASE RIGHT” means an option to purchase shares of Common Stock granted pursuant to
the Plan.

     (v) “RELATED CORPORATION” means any parent corporation or subsidiary corporation, whether now
or hereafter existing, as those terms are defined in Sections 424(e) and (f), respectively, of the
Code.

     (w) “SECURITIES ACT” means the Securities Act of 1933, as amended.

     (x) “TRADING DAY” means any day on which the exchange(s) or market(s) on which shares of
Common Stock are listed, whether it be an established stock exchange, the Nasdaq National Market,
the Nasdaq SmallCap Market or otherwise, is open for trading.

3. ADMINISTRATION.

     (a) The Board shall administer the Plan unless and until the Board delegates administration to
a Committee, as provided in Section 3(c). Whether or not the Board has delegated administration,
the Board shall have the final power to determine all questions of policy and expediency that may
arise in the administration of the Plan.

     (b) The Board (or the Committee) shall have the power, subject to, and within the limitations
of, the express provisions of the Plan:

          (i) To determine when and how Purchase Rights to purchase shares of Common Stock shall be
granted and the provisions of each Offering of such Purchase Rights (which need not be identical).

          (ii) To designate from time to time which Related Corporations of the Company shall be
eligible to participate in the Plan.

          (iii) To construe and interpret the Plan and Purchase Rights, and to establish, amend and
revoke rules and regulations for the administration of the Plan. The Board, in the
exercise of this power, may correct any defect, omission or inconsistency in the Plan, in a manner
and to the extent it shall deem necessary or expedient to make the Plan fully effective.

3

 

          (iv) To amend the Plan as provided in Section 15.

          (v) Generally, to exercise such powers and to perform such acts as it deems necessary or
expedient to promote the best interests of the Company and its Related Corporations and to carry
out the intent that the Plan be treated as an Employee Stock Purchase Plan.

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

     (c) The Board may delegate administration of the Plan to a Committee of the Board composed of
one (1) or more members of the Board. 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, 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 abolish the Committee at any time
and revest in the Board the administration of the Plan. If administration is delegated to a
Committee, references to the Board in this Plan and in the Offering document shall thereafter be
deemed to be to the Board or the Committee, as the case may be.

4

 

     (d) 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.

4. SHARES OF COMMON STOCK SUBJECT TO THE PLAN.

Subject to the provisions of Section 14(a) relating to adjustments upon changes in Common Stock,
the stock that may be sold pursuant to Purchase Rights granted under the Plan (the “RESERVED
SHARES”), shall not exceed in the aggregate one million three hundred thousand (1,300,000) shares
of the Common Stock. As of each January 1, beginning with January 1, 2008, and continuing through
and including January 1, 2017 (each such January 1, a “CALCULATION DATE”), the number of Reserved
Shares will be increased automatically by the lesser of (i) one percent (1%) of the total number of
shares of Common Stock outstanding on such Calculation Date or (ii) 100,000 shares of Common Stock;
provided, however, that in no event will such annual increase cause the total number of shares of
Common Stock remaining available for issuance under the Plan to exceed ten percent (10%) of the
number of outstanding shares of capital stock of the Company at the end of the prior fiscal year.
Notwithstanding the foregoing, the Board may act, prior to the first day of any fiscal year of the
Company, to increase the share reserve by such number of shares of Common Stock as the Board shall
determine, which number shall be less than each of (i) and (ii).

5. GRANT OF PURCHASE RIGHTS; OFFERING.

     (a) The Board may from time to time grant or provide for the grant of Purchase Rights to
purchase shares of Common Stock under the Plan to Eligible Employees in an Offering (consisting of
one or more Purchase Periods) on an Offering Date or Offering Dates selected by the Board. Each
Offering shall be in such form and shall contain such terms and conditions as the Board shall deem
appropriate, which shall comply with the requirement of Section 423(b)(5) of the Code that all
Employees granted Purchase Rights shall have the same rights and privileges. The terms and
conditions of an Offering shall be incorporated by reference into the Plan and treated as part of
the Plan. The provisions of separate Offerings need not be identical, but each Offering shall
include (through incorporation of the provisions of this Plan by reference in the document
comprising the Offering or otherwise) the period during which the Offering shall be effective,
which period shall not exceed twenty-seven (27) months beginning with the Offering Date, and the
substance of the provisions contained in Sections 6 through 9, inclusive.

     (b) If a Participant has more than one Purchase Right outstanding under the Plan, unless he or
she otherwise indicates in agreements or notices delivered hereunder: (i) each agreement or notice
delivered by that Participant shall be deemed to apply to all of his or her Purchase Rights under
the Plan, and (ii) a Purchase Right with a lower exercise price (or an earlier-granted Purchase
Right, if different Purchase Rights have identical exercise prices) shall be exercised to the
fullest possible extent before a Purchase Right with a higher exercise price (or a later-granted
Purchase Right if different Purchase Rights have identical exercise prices) shall be exercised.

6. ELIGIBILITY.

5

 

     (a) Purchase Rights may be granted only to Employees of the Company or, as the Board may
designate as provided in Section 3(b), to Employees of a Related Corporation. Except as provided in
Section 6(b), an Employee shall not be eligible to be granted Purchase Rights under the Plan
unless, on the Offering Date, such Employee has been in the employ of the Company or the Related
Corporation, as the case may be, for such continuous period preceding such Offering Date as the
Board may require, but in no event shall the required period of continuous employment be greater
than two (2) years. In addition, the Board may provide that no Employee shall be eligible to be
granted Purchase Rights under the Plan unless, on the Offering Date, such Employee’s customary
employment with the Company or the Related Corporation is more than twenty (20) hours per week
and/or more than five (5) months per calendar year.

     (b) The Board may provide that each person who, during the course of an Offering, first
becomes an Eligible Employee shall, on a date or dates specified in the Offering which coincides
with the day on which such person becomes an Eligible Employee or which occurs thereafter, receive
a Purchase Right under that Offering, which Purchase Right shall thereafter be deemed to be a part
of that Offering. Such Purchase Right shall have the same characteristics as any Purchase Rights
originally granted under that Offering, as described herein, except that:

          (i) the date on which such Purchase Right is granted shall be the “Offering Date” of such
Purchase Right for all purposes, including determination of the exercise price of such Purchase
Right;

          (ii) the period of the Offering with respect to such Purchase Right shall begin on its
Offering Date and end coincident with the end of such Offering; and

          (iii) the Board may provide that if such person first becomes an Eligible Employee within a
specified period of time before the end of the Offering, he or she shall not receive any Purchase
Right under that Offering.

     (c) No Employee shall be eligible for the grant of any Purchase Rights under the Plan if,
immediately after any such Purchase Rights are granted, such Employee owns stock possessing five
percent (5%) or more of the total combined voting power or value of all classes of stock of the
Company or of any Related Corporation. For purposes of this Section 6(c), the rules of Section
424(d) of the Code shall apply in determining the stock ownership of any Employee, and stock which
such Employee may purchase under all outstanding Purchase Rights and options shall be treated as
stock owned by such Employee.

     (d) As specified by Section 423(b)(8) of the Code, an Eligible Employee may be granted
Purchase Rights under the Plan only if such Purchase Rights, together with any other rights granted
under all Employee Stock Purchase Plans of the Company and any Related Corporations, do not permit
such Eligible Employee’s rights to purchase stock of the Company or any Related Corporation to
accrue at a rate which exceeds twenty five thousand dollars ($25,000) of Fair Market Value of such
stock (determined at the time such rights are granted, and which, with respect to the Plan, shall
be determined as of their respective Offering Dates) for each calendar year in which such rights
are outstanding at any time.

6

 

     (e) Officers of the Company and any designated Related Corporation, if they are otherwise
Eligible Employees, shall be eligible to participate in Offerings under the Plan. Notwithstanding
the foregoing, the Board may provide in an Offering that Employees who are highly compensated
Employees within the meaning of Section 423(b)(4)(D) of the Code shall not be eligible to
participate.

7. PURCHASE RIGHTS; PURCHASE PRICE.

     (a) On each Offering Date, each Eligible Employee, pursuant to an Offering made under the
Plan, shall be granted a Purchase Right to purchase up to that number of shares of Common Stock
purchasable either with a percentage or with a maximum dollar amount, as designated by the Board,
but in either case not exceeding fifteen percent (15%), of such Employee’s Earnings (as defined by
the Board in each Offering) during the period that begins on the Offering Date (or such later date
as the Board determines for a particular Offering) and ends on the date stated in the Offering,
which date shall be no later than the end of the Offering.

     (b) The Board shall establish one (1) or more Purchase Dates during an Offering as of which
Purchase Rights granted pursuant to that Offering shall be exercised and purchases of shares of
Common Stock shall be carried out in accordance with such Offering.

     (c) In connection with each Offering made under the Plan, the Board may specify a maximum
number of shares of Common Stock that may be purchased by any Participant on any Purchase Date
during such Offering. In connection with each Offering made under the Plan, the Board may specify a
maximum aggregate number of shares of Common Stock that may be purchased by all Participants
pursuant to such Offering. In addition, in connection with each Offering that contains more than
one Purchase Date, the Board may specify a maximum aggregate number of shares of Common Stock that
may be purchased by all Participants on any Purchase Date under the Offering. If the aggregate
purchase of shares of Common Stock issuable upon exercise of Purchase Rights granted under the
Offering would exceed any such maximum aggregate number, then, in the absence of any Board action
otherwise, a pro rata allocation of the shares of Common Stock available shall be made in as nearly
a uniform manner as shall be practicable and equitable.

     (d) The purchase price of shares of Common Stock acquired pursuant to Purchase Rights shall be
not less than the lesser of:

          (i) an amount equal to eighty-five percent (85%) of the Fair Market Value of the shares of
Common Stock on the Offering Date; or

          (ii) an amount equal to eighty-five percent (85%) of the Fair Market Value of the shares of
Common Stock on the applicable Purchase Date.

8. PARTICIPATION; WITHDRAWAL; TERMINATION.

     (a) A Participant may elect to authorize payroll deductions pursuant to an Offering under the
Plan by completing and delivering to the Company, within the time specified in the Offering,

7

 

an enrollment form (in such form as the Company may provide). Each such enrollment form shall
authorize an amount of Contributions expressed as a percentage of the submitting Participant’s
Earnings (as defined in each Offering) during the Offering (not to exceed the maximum percentage
specified by the Board). Each Participant’s Contributions shall remain the property of the
Participant at all times prior to the purchase of Common Stock, but such Contributions may be
commingled with the assets of the Company and used for general corporate purposes except where
applicable law requires that Contributions be deposited with an independent third party. To the
extent provided in the Offering, a Participant may begin making Contributions after the beginning
of the Offering. To the extent provided in the Offering, a Participant may thereafter reduce
(including to zero) or increase his or her Contributions. To the extent specifically provided in
the Offering, in addition to making Contributions by payroll deductions, a Participant may make
Contributions through the payment by cash or check prior to each Purchase Date of the Offering.

     (b) During an Offering, a Participant may cease making Contributions and withdraw from the
Offering by delivering to the Company a notice of withdrawal in such form as the Company may
provide. Such withdrawal may be elected at any time prior to the end of the Offering, except as
provided otherwise in the Offering. Upon such withdrawal from the Offering by a Participant, the
Company shall distribute to such Participant all of his or her accumulated Contributions (reduced
to the extent, if any, such Contributions have been used to acquire shares of Common Stock for the
Participant) under the Offering, and such Participant’s Purchase Right in that Offering shall
thereupon terminate. A Participant’s withdrawal from an Offering shall have no effect upon such
Participant’s eligibility to participate in any other Offerings under the Plan, but such
Participant shall be required to deliver a new enrollment form in order to participate in
subsequent Offerings.

     (c) Purchase Rights granted pursuant to any Offering under the Plan shall terminate
immediately upon a Participant ceasing to be an Employee for any reason or for no reason (subject
to any post-employment participation period required by law) or other lack of eligibility. The
Company shall distribute to such terminated or otherwise ineligible Employee all of his or her
accumulated Contributions (reduced to the extent, if any, such Contributions have been used to
acquire shares of Common Stock for the terminated or otherwise ineligible Employee) under the
Offering.

     (d) Purchase Rights shall not be transferable by a Participant otherwise than by will, the
laws of descent and distribution, or a beneficiary designation as provided in Section 13. During a
Participant’s lifetime, Purchase Rights shall be exercisable only by such Participant.

     (e) Unless otherwise specified in an Offering, the Company shall have no obligation to pay
interest on Contributions.

9. EXERCISE.

     (a) On each Purchase Date during an Offering, each Participant’s accumulated Contributions
shall be applied to the purchase of shares of Common Stock up to the maximum number of shares of
Common Stock permitted pursuant to the terms of the Plan and the

8

 

applicable Offering, at the purchase price specified in the Offering. No fractional shares shall be
issued upon the exercise of Purchase Rights unless specifically provided for in the Offering.

     (b) If any amount of accumulated Contributions remains in a Participant’s account after the
purchase of shares of Common Stock and such remaining amount is less than the amount required to
purchase one share of Common Stock on the final Purchase Date of an Offering, then such remaining
amount shall be held in such Participant’s account for the purchase of shares of Common Stock under
the next Offering under the Plan, unless such Participant withdraws from such next Offering, as
provided in Section 8(b), or is not eligible to participate in such Offering, as provided in
Section 6, in which case such amount shall be distributed to such Participant after the final
Purchase Date, without interest. If the amount of Contributions remaining in a Participant’s
account after the purchase of shares of Common Stock is at least equal to the amount required to
purchase one (1) whole share of Common Stock on the final Purchase Date of the Offering, then such
remaining amount shall be distributed in full to such Participant at the end of the Offering.

     (c) No Purchase Rights may be exercised to any extent unless the shares of Common Stock to be
issued upon such exercise under the Plan are covered by an effective registration statement
pursuant to the Securities Act and the Plan is in material compliance with all laws applicable to
the Plan. If on a Purchase Date during any Offering hereunder the shares of Common Stock are not so
registered or the Plan is not in such compliance, no Purchase Rights or any Offering shall be
exercised on such Purchase Date, and the Purchase Date shall be delayed until the shares of Common
Stock are subject to such an effective registration statement and the Plan is in such compliance,
except that the Purchase Date shall not be delayed more than twelve (12) months and the Purchase
Date shall in no event be more than twenty-seven (27) months from the Offering Date. If, on the
Purchase Date under any Offering hereunder, as delayed to the maximum extent permissible, the
shares of Common Stock are not registered and the Plan is not in such compliance, no Purchase
Rights or any Offering shall be exercised and all Contributions accumulated during the Offering
(reduced to the extent, if any, such Contributions have been used to acquire shares of Common
Stock) shall be distributed to the Participants.

10. COVENANTS OF THE COMPANY.

The Company shall seek to obtain from each federal, state, foreign or other regulatory commission
or agency having jurisdiction over the Plan such authority as may be required to issue and sell
shares of Common Stock upon exercise of the Purchase Rights. If, after commercially 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 shares
of Common Stock under the Plan, the Company shall be relieved from any liability for failure to
issue and sell shares of Common Stock upon exercise of such Purchase Rights unless and until such
authority is obtained.

11. USE OF PROCEEDS FROM SHARES OF COMMON STOCK.

Proceeds from the sale of shares of Common Stock pursuant to Purchase Rights shall constitute
general funds of the Company.

9

 

12. RIGHTS AS A STOCKHOLDER.

A Participant shall not be deemed to be the holder of, or to have any of the rights of a
holder with respect to, shares of Common Stock subject to Purchase Rights unless and until the
Participant’s shares of Common Stock acquired upon exercise of Purchase Rights are recorded in the
books of the Company (or its transfer agent).

13. DESIGNATION OF BENEFICIARY.

     (a) A Participant may file a written designation of a beneficiary who is to receive any shares
of Common Stock and/or cash, if any, from the Participant’s account under the Plan in the event of
such Participant’s death subsequent to the end of an Offering but prior to delivery to the
Participant of such shares of Common Stock or cash. In addition, a Participant may file a written
designation of a beneficiary who is to receive any cash from the Participant’s account under the
Plan in the event of such Participant’s death during an Offering. Any such designation shall be on
a form provided by or otherwise acceptable to the Company.

     (b) The Participant may change such designation of beneficiary at any time by written notice
to the Company. In the event of the death of a Participant and in the absence of a beneficiary
validly designated under the Plan who is living at the time of such Participant’s death, the
Company shall deliver such shares of Common Stock and/or cash to the executor or administrator of
the estate of the Participant, or if no such executor or administrator has been appointed (to the
knowledge of the Company), the Company, in its sole discretion, may deliver such shares of Common
Stock and/or cash to the spouse or to any one or more dependents or relatives of the Participant,
or if no spouse, dependent or relative is known to the Company, then to such other person as the
Company may designate.

14. ADJUSTMENTS UPON CHANGES IN SECURITIES; CORPORATE TRANSACTIONS.

     (a) If any change is made in the shares of Common Stock, subject to the Plan, or subject to
any Purchase Right, 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), the Plan shall be appropriately adjusted in the type(s), class(es)
and maximum number of shares of Common Stock subject to the Plan pursuant to Section 4(a), and the
outstanding Purchase Rights shall be appropriately adjusted in the type(s), class(es), number of
shares and purchase limits of such outstanding Purchase Rights. The Board shall make such
adjustments, and its determination shall be final, binding and conclusive. (Notwithstanding the
foregoing, the conversion of any convertible securities of the Company shall not be treated as a
“transaction not involving the receipt of consideration by the Company.”)

     (b) In the event of a Corporate Transaction, then: (i) any surviving or acquiring corporation
may continue or assume Purchase Rights outstanding under the Plan or may

10

 

substitute similar rights (including a right to acquire the same consideration paid to stockholders
in the Corporate Transaction) for those outstanding under the Plan, or (ii) if any surviving or
acquiring corporation does not continue or assume such Purchase Rights or does not substitute
similar rights for Purchase Rights outstanding under the Plan, then, the Participants’ accumulated
Contributions shall be used to purchase shares of Common Stock within ten (10) business days prior
to the Corporate Transaction under the ongoing Offering, and the Participants’ Purchase Rights
under the ongoing Offering shall terminate immediately after such purchase.

15. AMENDMENT OF THE PLAN.

     (a) The Board at any time, and from time to time, may amend the Plan. However, except as
provided in Section 14 relating to adjustments upon changes in securities and except as to
amendments solely to benefit the administration of the Plan, to take account of a change in
legislation or to obtain or maintain favorable tax, exchange control or regulatory treatment for
Participants or the Company or any Related Corporation, no amendment shall be effective unless
approved by the stockholders of the Company to the extent stockholder approval is necessary for the
Plan to satisfy the requirements of Section 423 of the Code or other applicable laws or
regulations.

     (b) It is expressly contemplated that the Board may amend the Plan in any respect the Board
deems necessary or advisable to provide Employees with the maximum benefits provided or to be
provided under the provisions of the Code and the regulations promulgated thereunder relating to
Employee Stock Purchase Plans or to bring the Plan and/or Purchase Rights into compliance
therewith.

     (c) The rights and obligations under any Purchase Rights granted before amendment of the Plan
shall not be impaired by any amendment of the Plan except: (i) with the consent of the person to
whom such Purchase Rights were granted, or (ii) as necessary to comply with any laws or
governmental regulations (including, without limitation, the provisions of the Code and the
regulations promulgated thereunder relating to Employee Stock Purchase Plans).

16. TERMINATION OR SUSPENSION OF THE PLAN.

     (a) The Board in its discretion may suspend or terminate the Plan at any time. Unless sooner
terminated, the Plan shall terminate at the time that all of the shares of Common Stock reserved
for issuance under the Plan, as increased and/or adjusted from time to time, have been issued under
the terms of the Plan. No Purchase Rights may be granted under the Plan while the Plan is suspended
or after it is terminated.

     (b) Any benefits, privileges, entitlements and obligations under any Purchase Rights while the
Plan is in effect shall not be impaired by suspension or termination of the Plan except (i) as
expressly provided in the Plan or with the consent of the person to whom such Purchase Rights were
granted, (ii) as necessary to comply with any laws, regulations, or listing requirements, or (iii)
as necessary to ensure that the Plan and/or Purchase Rights comply with the requirements of Section
423 of the Code.

11

 

17. EFFECTIVE DATE OF PLAN.

The Plan shall become effective as determined by the Board, but no Purchase Rights shall be
exercised unless and until the Plan has been approved by the stockholders of the Company within
twelve (12) months before or after the date the Plan is adopted by the Board.

18. MISCELLANEOUS PROVISIONS.

     (a) The Plan and Offering do not constitute an employment contract. Nothing in the Plan or in
the Offering shall in any way alter the at will nature of a Participant’s employment or be deemed
to create in any way whatsoever any obligation on the part of any Participant to continue in the
employ of the Company or a Related Corporation, or on the part of the Company or a Related
Corporation to continue the employment of a Participant.

     (b) The provisions of the Plan shall be governed by the laws of the State of New York without
resort to that state’s conflicts of laws rules.

12

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00120-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00120-of-00352.parquet"}]]