Document:

exv10w26

 

Exhibit 10.26

MICROMET, INC.

DIRECTOR COMPENSATION POLICY

     Non-employee members of the board of directors (the “Board”) of Micromet, Inc. (the
“Company”), shall be eligible to receive cash and equity compensation effective upon
consummation of the merger of CancerVax Corporation with Micromet AG, a corporation organized under
the laws of Germany (the “Merger Date”), as set forth in this Director Compensation Policy.
The cash compensation and equity awards described in this Director Compensation Policy shall be
paid or be made, as applicable, automatically and without further action of the Board, to each
non-employee director who may be eligible to receive such cash compensation or equity awards unless
such non-employee director declines the receipt of such cash compensation or equity awards by
notice to the Company. This Director Compensation Policy shall remain in effect until it is
revised or rescinded by further action of the Board.

     1. Cash Compensation.

          (a) General Board Retainer. Each non-employee director shall be eligible to receive
an annual retainer of $16,000 for service on the Board. In addition, the Chairman of the Board
shall be eligible to receive an annual retainer of $85,000 for service on the Board. The
Chairman’s annual retainer for the first year following completion of the merger shall be paid upon
consummation of the merger in common stock in lieu of cash.

          (b) Meeting Stipends. Each non-employee director shall receive a stipend of $1,500
for each Board meeting attended in person and $1,000 for each committee meeting attended in person.
In addition, each non-employee director shall receive such stipends with respect to telephonic
Board meetings and committee meetings if such telephonic meetings last approximately two hours or
longer. The Chairman’s meeting stipends for the first year following completion of the merger
shall be paid in common stock in lieu of cash.

          (c) Expense Reimbursements. The Company shall reimburse non-employee directors for
reasonable expenses incurred to attend meetings of the Board or its committees. Any travel
expenses shall be reimbursed in accordance with the Company’s standard travel policy.

     2. Equity Compensation. The stock options described in this Director Compensation
Policy shall be granted under and shall be subject to the terms and provisions of the Company’s
Amended and Restated 2003 Equity Incentive Award Plan (the “2003 Plan”), as amended from
time to time, and shall be granted subject to the execution and delivery of award agreements,
including attached exhibits, in substantially the same forms approved by the Board, setting forth
the vesting schedule applicable to such awards and such other terms as may be required by the 2003
Plan.

          (a) Initial Awards. On the Merger Date, a person who is a non-employee director,
other than the Chairman of the Board, automatically shall be granted a non-qualified stock option
to purchase 35,000 shares of Company common stock (subject to adjustment as

 

 

provided in the 2003
Plan). On the Merger Date, the Chairman of the Board automatically shall be granted a
non-qualified stock option to purchase 70,000 shares of the Company’s common stock (subject to
adjustment as provided in the 2003 Plan). In addition, a person who is initially elected or
appointed to the Board following the Merger Date, and who is a non-employee director at the time of
such initial election or appointment, automatically shall be granted a non-qualified stock option
to purchase 35,000 shares of Company common stock (subject to adjustment as provided in the 2003
Plan) on the date of such initial election or appointment. Each of the options described in this
Section 2(a) is referred to herein as an “Initial Award.”

          (b) Committee Chair Awards. On the Merger Date, and thereafter on the date of each
annual meeting of the Company’s stockholders, (i) the Chairman of the Audit Committee automatically
shall be granted a non-qualified stock option to purchase 7,500 shares of Company common stock
(subject to adjustment as provided in the 2003 Plan), (ii) the Chairman of the Compensation
Committee automatically shall be granted a non-qualified stock option to purchase 5,000 shares of
Company common stock (subject to adjustment as provided in the 2003 Plan), and (iii) the Chairman
of the Nominating/Corporate Governance Committee automatically shall be granted a non-qualified
stock option to purchase 2,500 shares of common stock (subject to adjustment as provided in the
2003 Plan). The option grants described in this Section 2(b) are referred to herein as
“Committee Chair Awards.”

          (c) Annual Awards. A person who is a non-employee director, other than the Chairman
of the Board, automatically shall be granted a non-qualified stock option to purchase 15,000 shares
of Company common stock (subject to adjustment as provided in the 2003 Plan) on the date of each
annual meeting of the Company’s stockholders after the Merger Date. The Chairman of the Board
automatically shall be granted a non-qualified stock option to purchase 30,000 shares of the
Company’s common stock (subject to adjustment as provided in the 2003 Plan) on the date of each
annual meeting of the Company’s stockholders after the Merger Date. The option grants described in
this Section 2(c) are referred to herein as “Annual Awards.”

          (d) Terms of Option Awards.

               (i) Exercise Price of Options. The per share price of each option granted to a
non-employee director shall equal 100% of the fair market value of a share of common stock on the
date the option is granted (as determined under the 2003 Plan).

               (ii) Vesting of Initial Awards. Options granted as Initial Awards to non-employee
directors shall become vested in equal installments at the end of each calendar month over a period
of three years from the date of grant, such that each stock option shall be 100% vested on the
third anniversary of its date of grant, subject to a director’s continuing service on the Board
through such dates. No portion of an option which is unexercisable at the time of a non-employee
director’s termination of membership on the Board shall thereafter become exercisable.

               (iii) Vesting of Committee Chair Awards and Annual Awards. Options granted as Annual
Awards to non-employee directors shall become vested in equal installments at the end of each
calendar month over a period of one year from the date of grant, such that each stock option shall
be 100% vested on the first anniversary of the date of grant, subject to a director’s continuing
service on the Board through such date. No portion of an option which is unexercisable at the time
of a non-employee director’s termination of membership on the Board shall thereafter become
exercisable.

               (iv) Term. The term of each option granted to a non-employee director shall be ten
years from the date the option is granted.

2exv10w30

 

Exhibit 10.30

MICROMET, INC.

2006 EQUITY INCENTIVE AWARD PLAN

ARTICLE 1

PURPOSE

     1.1 GENERAL. The purpose of the 2006 Equity Incentive Award Plan (the “Plan”) is to promote
the success and enhance the value of Micromet, Inc. (the “Company”) by linking the personal
interests of the members of the Board, employees, officers, and executives of the Company and any
Subsidiary, to those of Company stockholders and by providing such individuals with an incentive
for outstanding performance to generate superior returns to Company stockholders. The Plan is
further intended to provide flexibility to the Company in its ability to motivate, attract, and
retain the services of members of the Board, employees, officers, and executives of the Company
upon whose judgment, interest, and special effort the successful conduct of the Company’s operation
is largely dependent.

ARTICLE 2

DEFINITIONS AND CONSTRUCTION

     2.1 DEFINITIONS. The following words and phrases shall have the following meanings:

          (a) “Award” means an Option, a Restricted Stock award, a Stock Appreciation Right award, a
Performance Share award, a Dividend Equivalents award, a Stock Payment award, a Deferred Stock
award, or a Performance-Based Award granted to a Participant pursuant to the Plan.

          (b) “Award Agreement” means any written agreement, contract, or other instrument or document
evidencing an Award.

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

          (d) “Cause” unless otherwise defined in an employment or services agreement between the
Participant and the Company or a Subsidiary, means any of the following acts or conduct by a
Participant which have materially harmed, or which are reasonably likely to materially harm, the
business, prospective business relationships or reputation of the Company or any of its
affiliates: dishonesty; fraud; misconduct; unauthorized use or disclosure of confidential
information or trade secrets; or conviction or confession of a crime punishable by law (except
minor violations); in each case as determined by the Board, and its determination shall be
conclusive and binding.

          (e) “Change of Control” means and includes each of the following:

                    (1) the acquisition, directly or indirectly, by any “person” or “group” (as those terms are
defined in Sections 3(a)(9), 13(d) and 14(d) of the Exchange Act and the rules thereunder) of
“beneficial ownership” (as determined pursuant to Rule 13d-3 under the Exchange Act) of securities
entitled to vote generally in the election of directors (“voting
securities”) of the Company that represent 40% or more of the combined voting power of the

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Company’s then outstanding voting securities, other than

                         (A) an acquisition by a trustee or other fiduciary holding securities under any employee
benefit plan (or related trust) sponsored or maintained by the Company or any person controlled by
the Company or by any employee benefit plan (or related trust) sponsored or maintained by the
Company or any person controlled by the Company, or

                         (B) an acquisition of voting securities by the Company or a corporation owned, directly or
indirectly by the stockholders of the Company in substantially the same proportions as their
ownership of the stock of the Company, or

                         (C) an acquisition of voting securities pursuant to a transaction described in clause (3)
below that would not be a Change of Control under clause (3);

          Notwithstanding the foregoing, neither of the following events shall constitute an
“acquisition” by any person or group for purposes of this subsection (e): (1) an acquisition of
the Company’s securities by the Company which causes the Company’s voting securities beneficially
owned by a person or group to represent 40% or more of the combined voting power of the Company’s
then outstanding voting securities; provided, however, that if a person or group shall become the
beneficial owner of 40% or more of the combined voting power of the Company’s then outstanding
voting securities by reason of share acquisitions by the Company as described above and shall,
after such share acquisitions by the Company, become the beneficial owner of any additional voting
securities of the Company, then such acquisition shall constitute a Change of Control; or

                    (2) during any period of two consecutive years, individuals who, at the beginning of such
period, constitute the Board together with any new director(s) (other than a director designated by
a person who shall have entered into an agreement with the Company to effect a transaction
described in clauses (1) or (3) of this subsection (e)) whose election by the Board or nomination
for election by the Company’s stockholders was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the beginning of the two year period or
whose election or nomination for election was previously so approved, cease for any reason to
constitute a majority thereof; or

                    (3) the consummation by the Company (whether directly involving the Company or indirectly
involving the Company through one or more intermediaries) of (x) a merger, consolidation or (y) a
sale or other disposition of all or substantially all of the Company’s assets or (z) the
acquisition of assets or stock of another entity, in each case other than a transaction

                         (A) which results in the Company’s voting securities outstanding immediately before the
transaction continuing to represent (either by remaining outstanding or by being converted into
voting securities of the Company or the person that, as a result of the transaction, controls,
directly or indirectly, the Company or owns, directly or indirectly, all or substantially all of
the Company’s assets or otherwise succeeds to the business of the Company (the Company or such
person, the “Successor Entity”)) directly or indirectly, at
least a majority of the combined voting power of the Successor Entity’s outstanding voting

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securities immediately after the transaction, and

                         (B) after which no person or group beneficially owns voting securities representing 40% or
more of the combined voting power of the Successor Entity; provided, however, that no person or
group shall be treated for purposes of this clause (B) as beneficially owning 40% or more of
combined voting power of the Successor Entity solely as a result of the voting power held in the
Company prior to. the consummation of the transaction; or

                    (4) the Company’s stockholders approve a liquidation or dissolution of the Company.

          The Committee shall have full and final authority, which shall be exercised in its discretion,
to determine conclusively whether a Change of Control of the Company has occurred pursuant to the
above definition, and the date of the occurrence of such Change of Control and any incidental
matters relating thereto.

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

          (g) “Committee” means the committee of the Board described in Article 12.

          (h) “Covered Employee” means an Employee who is, or could be, a “covered employee” within the
meaning of Section 162(m) of the Code.

          (i) “Preferred Stock” means a right to receive a specified number of shares of Stock during
specified time periods pursuant to Article 8.

          (j) “Disability” means, for purposes of this Plan, Participant qualifies to. receive
long-term disability payments under the Company’s long-term disability insurance program, as it
may be amended from time to time or, if no such program exists, means the permanent and total
disability of a person within the meaning of Section 22(e)(3) of the Code.

          (k) “Dividend Equivalents” means a right granted to a Participant pursuant to Article 8 to
receive the equivalent value (in cash or Stock) of dividends paid on Stock.

          (l) “Employee” means any officer or other employee (as defined in accordance with Section
3401(c) of the Code) of the Company or any Subsidiary.

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

          (n) “Fair Market Value” shall mean, as of any date, the value of Stack determined as follows:

                    (1) If the Stock is listed on any established stock exchange or a national market system,
including without limitation the Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq
Stock Market, its Fair Market Value shall be the closing sales
price for such stock (or the closing bid, if no sales were reported) as quoted on such
exchange or

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system for the last market trading day prior to the date of determination, as reported
in The Wall Street Journal or such other source as the Committee deems reliable;

                    (2) If the Stock is regularly quoted by a recognized securities dealer but selling prices are
not reported, its Fair Market Value shall be the mean of the closing bid and asked prices for the
Stock on the date prior to the date of determination as reported in The Wall Street Journal or such
other source as the Committee deems reliable; or

                    (3) In the absence of an established market for the Stock, the Fair Market Value thereof shall
be determined in good faith by the Committee.

          (o) “Good Reason” means the occurrence of any of the following events or conditions and the
failure of the successor corporation to cure such event or condition within 30 days after receipt
of written notice from the Participant:

                    (1) a change in the Participant’s status, position or responsibilities (including reporting
responsibilities) that, in the Participant’s reasonable judgment, represents a substantial
reduction in the status, position or responsibilities as in effect immediately prior thereto; the
assignment to the Participant of any duties or responsibilities that, in the Participant’s
reasonable judgment, are materially inconsistent with such status, position or responsibilities; or
any removal of the Participant from or failure to reappoint or reelect the Participant to any of
such positions, except in connection with the termination of the Participant’s employment for
Cause, as a result of his or her Disability or death, or by the Participant other than for Good
Reason;

                    (2) a material reduction in the Participant’s annual base salary, except in connection with a
general reduction in the compensation of the successor corporation’s personnel with similar status
and responsibilities;

                    (3) the successor corporation’s requiring the Participant (without the Participant’s consent)
to be based at any place outside a 50-mile radius of his or her place of employment prior to a
Change of Control, except for reasonably required travel on the successor corporation’s business
that is not materially greater than such travel requirements prior to the Change of Control;

                    (4) the successor corporation’s failure to provide the Participant with compensation and
benefits substantially equivalent (in terms of benefit levels and/or reward opportunities) to those
provided for under each material employee benefit plan, program and practice as in effect
immediately prior to the Change of Control;

                    (5) any material breach by the successor corporation of its obligations to the Participant
under the Plan or any substantially equivalent plan of the successor corporation; or

                    (6) any purported termination of the Participant’s employment or service relationship for
Cause by the successor corporation that is not in accordance with the definition of Cause under the
Plan.

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          (p) “Incentive Stock Option” means an Option that is intended to meet the requirements of
Section 422 of the Code or any successor provision thereto.

          (q) “Non-Employee Director” means a member of the Board who qualifies as a “Non-Employee
Director” as defined in Rule 16b-3(b)(3) of the Exchange Act, or any successor definition adopted
by the Board.

          (r) “Non-Qualified Stock Option” means an Option that is not intended to be an Incentive
Stock Option.

          (s) “Option” means a right granted to a Participant pursuant to Article 5 of the Plan to
purchase a specified number of shares of Stock at a specified price during specified time periods.
An Option may be either an Incentive Stock Option or a Non-Qualified Stock Option.

          (t) “Participant” means a person who, as a member of the Board, consultant to the Company or
Employee, has been granted an Award pursuant to the Plan.

          (u) “Performance-Based Award” means an Award granted to selected Covered Employees pursuant
to Articles 6 and 8, but which is subject to the terms and conditions set forth in Article 9. All
Performance-Based Awards are intended to qualify as Qualified Performance-Based Compensation.

          (v) “Performance Criteria” means the criteria that the Committee selects for purposes of
establishing the Performance Goal or Performance Goals for a Participant for a Performance Period.
The Performance Criteria that will be used to establish Performance Goals are limited to the
following: net earnings (either before or after interest, taxes, depreciation and amortization),
net losses, sales or revenue, operating earnings, operating cash flow, return on net assets,
return on stockholders’ equity, return on assets, return on capital, stockholder returns, gross or
net profit margin, earnings per share, price per share of Stock, and market share, any of which
may be measured either in absolute terms or as compared to any incremental increase or as compared
to results of a peer group. The Committee shall, within the time prescribed by Section 162(m) of
the Code, define in an objective fashion the manner of calculating the Performance Criteria it
selects to use for such Performance Period for such Participant.

          (w) “Performance Goals” means, for a Performance Period, the goals established in writing by
the Committee for the Performance Period based upon the Performance Criteria. Depending on the
Performance Criteria used to establish such Performance Goals, the Performance Goals may be
expressed in terms of overall Company performance or the performance of a division, business unit,
or an individual. The Committee, in its discretion, may, within the time prescribed by Section
l62(m) of the Code, adjust or modify the calculation of Performance Goals for such Performance
Period in order to prevent the dilution or enlargement of the rights of Participants (i) in the
event of, or in anticipation of, any unusual or extraordinary corporate item, transaction, event,
or development, or (ii) in recognition of, or in anticipation of, any other unusual or
nonrecurring events affecting the

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Company, or the financial statements of the Company, or in response to, or in anticipation
of, changes in applicable laws, regulations, accounting principles, or business conditions.

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

          (y) “Performance Share” means a right granted to a Participant pursuant to Article 8, to
receive cash, Stock, or other Awards, the payment of which is contingent upon achieving certain
performance goals established by the Committee.

          (z) “Plan” means this Micromet, Inc. 2006 Equity Incentive Award Plan, as it may be amended
from time to time.

          (aa) “Public Trading Date” means the first date upon which Stock is listed (or approved for
listing) upon notice of issuance on any securities exchange or designated (or approved for
designation) upon notice of issuance as a national market security on an interdealer quotation
system.

          (bb) “Qualified Performance-Based Compensation” means any compensation that is intended to
qualify as “qualified performance-based compensation” as described in Section 162(m)(4)(C) of the
Code.

          (cc) “Restricted Stock” means Stock awarded to a Participant pursuant to Article 6 that is
subject to certain restrictions and to risk of forfeiture.

          (dd) “Stock” means the common stock of the Company and such other securities of the Company
that may be substituted for Stock pursuant to Article 11.

          (ee) “Stock Appreciation Right” or “SAR” means a right granted pursuant to Article 7 to
receive a payment equal to the excess of the Fair Market Value of a specified number of shares of
Stock on the date the SAR is exercised over the Fair Market Value on the date the SAR was granted
as set forth in the applicable Award Agreement.

          (ff) “Stock Payment” means (a) a payment in the form of shares of Stock, or (b) an option or
other right to purchase shares of stock, as part of any bonus, deferred compensation or other
arrangement, made in lieu of all or any portion of the compensation, granted pursuant to Article
8.

          (gg) “Subsidiary” means any corporation or other entity of which a majority of the
outstanding voting stock or voting power is beneficially owned directly or indirectly by the
Company.

6.

 

ARTICLE 3

SHARES SUBJECT TO THE PLAN

     3.1 NUMBER OF SHARES.

          (a) Subject to Article 11, the aggregate number of shares of Stock that may be issued or
transferred pursuant to Awards under the Plan shall be 366,472** shares.

          (b) To the extent that an Award terminates, expires, or lapses for any reason, any shares of
Stock subject to the Award shall again be available for the grant of an Award pursuant to the
Plan. Additionally, any shares of Stock tendered or withheld to satisfy the grant or exercise
price or tax withholding obligation pursuant to any Award shall again be available for the grant
of an Award pursuant to the Plan. To the extent permitted by applicable law or any exchange rule, shares of Stock issued in assumption of, or in substitution for, any outstanding awards of any
entity acquired in any form of combination by the Company or any Subsidiary shall not be counted
against shares of Stock available for grant pursuant to this Plan.

          (c) Notwithstanding the provisions of this Section 3.1, no shares of Stock may again be
optioned, granted or awarded if such action would cause an Incentive Stock Option to fail to
qualify as an Incentive Stock Option under Code Section 422.

     3.2 STOCK DISTRIBUTED. Any Stock distributed pursuant to an Award may consist, in whole or in
part, of authorized and unissued Stock, treasury Stock or Stock purchased on the open market.

     3.3 LIMITATION ON NUMBER OF SHARES SUBJECT TO AWARDS. Notwithstanding any provision in the
Plan to the contrary, and subject to Article 11, the maximum number of shares of Stock with
respect to one or more Awards that may be granted to any one Participant during a rolling
three-year period (measured from the date of any grant) shall be 366,472**.

ARTICLE 4

ELIGIBILITY AND PARTICIPATION

     4.1 ELIGIBILITY.

          (a) GENERAL. Persons eligible to participate in this Plan include Employees, consultants to
the Company and all members of the Board, as determined by the Committee.

          (b) FOREIGN PARTICIPANTS. In order to assure the viability of Awards granted to Participants
employed in foreign countries, the Committee may provide for such

 

			
	**	 	This plan was assumed in the merger with
CancerVax Corporation, and as a result of the exchange ratio in the merger, the
aggregate number of shares of Micromet, Inc. common stock available for
issuance under the plan became 1,922,971 shares.

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special terms as it may consider necessary or appropriate to accommodate differences in local
law, tax policy, or custom. Moreover, the Committee may approve such supplements to, or
amendments, restatements, or alternative versions of, the Plan as it may consider necessary or
appropriate for such purposes without thereby affecting the terms of the Plan as in effect for any
other purpose; provided, however, that no such supplements, amendments, restatements, or
alternative versions shall increase the share limitations contained in Sections 3.1 and 3.3 of the
Plan.

     4.2 ACTUAL PARTICIPATION. Subject to the provisions of the Plan, the Committee may, from time
to time, select from among all eligible individuals, those to whom Awards shall be granted and
shall determine the nature and amount of each Award. No individual shall have any right to be
granted an Award pursuant to this Plan.

ARTICLE 5

STOCK OPTIONS

     5.1 GENERAL. The Committee is authorized to grant Options to Participants on the following
terms and conditions:

          (a) EXERCISE PRICE. The exercise price per share of Stock subject to an Option shall be
determined by the Committee and set forth in the Award Agreement; provided that the exercise price
for any Option shall not be less than par value of a share of Stock on the date of grant.

          (b) TIME AND CONDITIONS OF EXERCISE. The Committee shall determine the time or times at
which an Option may be exercised in whole or in part, provided that the term of any Option granted
under the Plan shall not exceed ten years, and provided further, that in the case of a
Non-Qualified Stock Option, such Option shall be exercisable for one year after the date of the
Participant’s death. The Committee. shall also determine the performance or other conditions, if
any, that must be satisfied before all or part of an Option may be exercised.

          (c) PAYMENT. The Committee shall determine the methods by which the exercise price of an
Option may be paid, the form of payment, including, without limitation, cash, promissory note
bearing interest at no less than such rate as shall then preclude the imputation of interest under
the Code, shares of Stock held for longer than six months having a Fair Market Value on the date
of delivery equal to the aggregate exercise price of the Option or exercised portion thereof, or
other property acceptable to the Committee (including through the delivery of a notice that the
Participant has placed a market sell order with a broker with respect to shares of Stock then
issuable upon exercise of the Option, and that the broker has been directed to pay a sufficient
portion of the net proceeds of the sale to the Company in satisfaction of the Option exercise
price, provided that payment of such proceeds is then made to the Company upon settlement of such
sale), and the methods by which shares of Stock shall be delivered or deemed to be delivered to
Participants. Notwithstanding any other provision of the Plan to the contrary, no Participant who
is a member of the Board or an “executive officer” of the Company within the meaning of Section
13(k) of the Exchange Act shall be permitted to pay the exercise price of an Option in any method
which would violate Section 13(k).

8.

 

          (d) EVIDENCE OF GRANT. All Options shall be evidenced by a written Award Agreement between
the Company and the Participant. The Award Agreement shall include such additional provisions as
may be specified by the Committee.

     5.2 INCENTIVE STOCK OPTIONS. Incentive Stock Options shall be granted only to Employees and
the terms of any Incentive Stock Options granted pursuant to the Plan must comply with the
following additional provisions of this Section 5.2:

          (a) EXERCISE PRICE. The exercise price per share of Stock shall be set by the Committee,
provided that the exercise price for any Incentive Stock Option shall not be less than 100% of the
Fair Market Value on the date of grant.

          (b) EXPIRATION OF OPTION. An Incentive Stock Option may not be exercised to any extent by
anyone after the first to occur of the following events:

                    (1) Ten years from the date it is granted, unless an earlier time is set in the Award
Agreement.

                    (2) One year after the date of the Participant’s termination of employment or service on
account of Disability or death, unless in the case of death a shorter or longer period is
designated in the Award Agreement. Upon the Participant’s Disability or death, any Incentive Stock
Options exercisable at the Participant’s Disability or death may be exercised by the Participant’s
legal representative or representatives, by the person or persons entitled to do so pursuant to the
Participant’s last will and testament, or, if the Participant fails to make testamentary
disposition of such Incentive Stock Option or dies intestate, by the person or persons entitled to
receive the Incentive Stock Option pursuant to the applicable laws of descent and distribution.

          (c) INDIVIDUAL DOLLAR LIMITATION. The aggregate Fair Market Value (determined as of the time
the Option is granted) of all shares of Stock with respect to which Incentive Stock Options are
first exercisable by a Participant in any calendar year may not exceed $100,000.00 or such other
limitation as imposed by Section 422(d) of the Code, or any successor provision. To the extent
that Incentive Stock Options are first exercisable by a Participant in excess of such limitation,
the excess shall be considered Non-Qualified Stock Options.

          (d) TEN PERCENT OWNERS. An Incentive Stock Option shall be granted to any individual who, at
the date of grant, owns stock possessing more than ten percent of the total combined voting power
of all classes of Stock of the Company only if such Option is granted at a price that is not less
than 110% of Fair Market Value on the date of grant and the Option is exercisable for no more than
five years from the date of grant.

          (e) TRANSFER RESTRICTION. The Participant shall give the Company prompt notice of any
disposition of shares of Stock acquired by exercise of an Incentive Stock Option within (1) two
years from the date of grant of such Incentive Stock Option or (2) one year after the transfer of
such shares of Stock to the Participant.

          (f) EXPIRATION OF INCENTIVE STOCK OPTIONS. No Award of an

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Incentive Stock Option may be made pursuant to this Plan after the tenth anniversary of the
Effective Date.

          (g) RIGHT TO EXERCISE. During a Participant’s lifetime, an Incentive Stock Option may be
exercised only by the Participant.

ARTICLE 6

RESTRICTED STOCK AWARDS

     6.1 GRANT OF RESTRICTED STOCK. The Committee is authorized to make Awards of Restricted Stock
to any Participant selected by the Committee in such amounts and subject to such terms and
conditions as determined by the Committee. All Awards of Restricted Stock shall be evidenced by a
written Restricted Stock Award Agreement.

     6.2 ISSUANCE AND RESTRICTIONS. Restricted Stock shall be subject to such restrictions on
transferability and other restrictions as the Committee may impose (including, without limitation,
limitations on the right to vote Restricted Stock or the right to receive dividends on the
Restricted Stock). These restrictions may lapse separately or in combination at such times,
pursuant to such circumstances, in such installments, or otherwise, as the Committee determines at
the time of the grant of the Award or thereafter.

     6.3 FORFEITURE. Except as otherwise determined by the Committee at the time of the grant of
the Award or thereafter, upon termination of employment or service during the applicable
restriction period, Restricted Stock that is at that time subject to restrictions shall be
forfeited; provided, however, that the Committee may provide in any Restricted Stock Award
Agreement that restrictions or forfeiture conditions relating to Restricted Stock will be waived in
whole or in part in the event of terminations resulting from specified causes, and the Committee
may in other cases waive in whole or in part restrictions or forfeiture conditions relating to
Restricted Stock.

     6.4 CERTIFICATES FOR RESTRICTED STOCK. Restricted Stock granted pursuant to the Plan may be
evidenced in such manner as the Committee shall determine. If certificates representing shares of
Restricted Stock are registered in the name of the Participant, certificates must bear an
appropriate legend referring to the terms, conditions, and restrictions applicable to such
Restricted Stock, and the Company may, at its discretion, retain physical possession of the
certificate until such time as all applicable restrictions lapse.

ARTICLE 7

STOCK APPRECIATION RIGHTS

     7.1 GRANT OF STOCK APPRECIATION RIGHTS. A Stock Appreciation Right may be granted to any
Participant selected by the Committee. A Stock Appreciation Right may be granted (a) in connection
and simultaneously with the grant of an Option, (b) with respect to a previously granted Option, or
(c) independent of an Option. A Stock Appreciation Right shall be subject to such terms and
conditions not inconsistent with the Plan as the Committee shall impose and shall be evidenced by
an Award Agreement.

10.

 

     7.2 COUPLED STOCK APPRECIATION RIGHTS.

          (a) A Coupled Stock Appreciation Right (“CSAR”) shall be related to a particular Option and
shall be exercisable only when and to the extent the related Option is exercisable.

          (b) CSAR may be granted to a Participant for no more than the number of shares subject to the
simultaneously or previously granted Option to which it is coupled.

          (c) A CSAR shall entitle the Participant (or other person entitled to exercise the Option
pursuant to the Plan) to surrender to the Company unexercised a portion of the Option to which the
CSAR relates (to the extent then exercisable pursuant to its terms) and to receive from the
Company in exchange therefor an amount determined by multiplying the difference obtained by
subtracting the Option exercise price from the Fair Market Value of a share of Stock on the date
of exercise of the CSAR by the number of shares of Stock with respect to which the CSAR shall have
been exercised, subject to any limitations the Committee may impose.

     7.3 INDEPENDENT STOCK APPRECIATION RIGHTS.

          (a) An Independent Stock Appreciation Right (“ISAR”) shall be unrelated to any Option and
shall have a term set by the Committee. An ISAR shall be exercisable in such installments as the
Committee may determine. An ISAR shall cover such number of shares of Stock as the Committee may
determine. The exercise price per share of Stock subject to each ISAR shall be set by the
Committee; provided, however, that, the Committee in its sole and absolute discretion may provide
that the ISAR may be exercised subsequent to a termination of employment or service, as
applicable, or following a Change in Control of the Company, or because of the Participant’s
retirement, death or disability, or otherwise.

          (b) An ISAR shall entitle the Participant (or other person entitled to exercise the ISAR
pursuant to the Plan) to exercise all or a specified portion of the ISAR (to the extent then
exercisable pursuant to its terms) and to receive from the Company an amount determined by
multiplying the difference obtained by subtracting the exercise price per share of the ISAR from
the Fair Market Value of a share of Stock on the date of exercise of the ISAR by the number of shares of Stock with respect to which the ISAR shall have been exercised, subject to any
limitations the Committee may impose.

     7.4 PAYMENT AND LIMITATIONS ON EXERCISE.

          (a) Payment of the amounts determined under Section 7.2(c) and 7.3(b) above shall be in cash,
in Stock (based on its Fair Market Value as of the date the Stock Appreciation Right is exercised)
or a combination of both, as determined by the Committee.

          (b) To the extent any payment under Section 7.2(c) or 7.3(b) is effected in Stock it shall be
made subject to satisfaction of all provisions of Article 5 above pertaining to Options.

11.

 

ARTICLE 8

OTHER TYPES OF AWARDS

     8.1 PERFORMANCE SHARE AWARDS. Any Participant selected by the Committee may be granted one or
more Performance Share awards which may be denominated in a number of shares of Stock or in a
dollar value of shares of Stock and which may be linked to anyone or more of the Performance
Criteria or other specific performance criteria determined appropriate by the Committee, in each
case on a specified date or dates or over any period or periods determined by the Committee. In
making such determinations, the Committee shall consider (among such other factors as it deems
relevant in light of the specific type of award) the contributions, responsibilities and other
compensation of the particular Participant.

     8.2 DIVIDEND EQUIVALENTS.

          (a) Any Participant selected by the Committee may be granted Dividend Equivalents based on
the dividends declared on the shares of Stock that are subject to any Award, to be credited as of
dividend payment dates, during the period between the date the Award is granted and the date the
Award is exercised, vests or expires, as determined by the Committee. Such Dividend Equivalents
shall be converted to cash or additional shares of Stock by such formula and at such time and
subject to such limitations as may be determined by the Committee.

          (b) Dividend Equivalents granted with respect to Options or SARs that are intended to be
Qualified Performance-Based Compensation shall be payable, with respect to pre-exercise periods,
regardless of whether such Option or SAR is subsequently exercised.

     8.3 STOCK PAYMENTS. Any Participant selected by the Committee may receive Stock Payments in
the manner determined from time to time by the Committee. The number of shares shall be determined
by the Committee and may be based upon the Performance Criteria or other specific performance
criteria determined appropriate by the Committee, determined on the date such Stock Payment is made
or on any date thereafter.

     8.4 DEFERRED STOCK. Any Participant selected by the Committee may be granted an award of
Deferred Stock in the manner determined from time to time by the Committee. The number of shares
of Deferred Stock shall be determined by the Committee and may be linked to the Performance
Criteria or other specific performance criteria determined to be appropriate by the Committee, in
each case on a specified date or dates or over any period or periods determined by the Committee.
Stock underlying a Deferred Stock award will not be issued until the Deferred Stock award has
vested, pursuant to a vesting schedule or performance criteria set by the Committee. Unless
otherwise provided by the Committee, a Participant awarded Deferred Stock shall have no rights as a
Company stockholder with respect to such Deferred Stock until such time as the Deferred Stock Award
has vested and the Stock underlying the Deferred Stock Award has been issued.

     8.5 TERM. The term of any Award of Performance Shares, Dividend Equivalents, Stock Payments
or Deferred Stock shall be set by the Committee in its discretion.

     8.6 EXERCISE OR PURCHASE PRICE. The Committee may establish the exercise or purchase price of
any Award of Performance Shares, Deferred Stock or Stock Payments;

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provided, however, that such price shall not be less than the par value of a share of Stock,
unless otherwise permitted by applicable state law.

     8.7 EXERCISE UPON TERMINATION OF EMPLOYMENT OR SERVICE. An Award of Performance Shares,
Dividend Equivalents, Deferred Stock and Stock Payments shall only be exercisable or payable while
the Participant is an Employee, consultant to the Company or a member of the Board, as applicable;
provided, however, that the Committee in its sole and absolute discretion may provide that an Award
of Performance Shares, Dividend Equivalents, Stock Payments or Deferred Stock may be exercised or
paid subsequent to a termination of employment or service, as applicable, or following a Change of
Control of the Company, or because of the Participant’s retirement, death or disability, or
otherwise; provided, however, that any such provision with respect to Performance Shares shall be
subject to the requirements of Section 162(m) of the Code that apply to Qualified Performance-Based
Compensation.

     8.8 FORM OF PAYMENT. Payments with respect to any Awards granted under this Article 8 shall
be made in cash, in Stock or a combination of both, as determined by the Committee.

     8.9 AWARD AGREEMENT. All Awards under this Article 8 shall be subject to such additional
terms and conditions as determined by the Committee and shall be evidenced by a written Award
Agreement.

ARTICLE 9

PERFORMANCE-BASED AWARDS

     9.1 PURPOSE. The purpose of this Article 9 is to provide the Committee the ability to qualify
Awards other than Options and SARs and that are granted pursuant to Articles 6 and 8 as Qualified
Performance-Based Compensation. If the Committee, in its discretion, decides to grant a
Performance-Based Award to a Covered Employee, the provisions of this Article 9 shall control over
any contrary provision contained in Articles 6 or 8; provided, however, that the Committee may in
its discretion grant Awards to Covered Employees that are based on Performance Criteria or
Performance Goals but that do not satisfy the requirements of this Article 9.

     9.2 APPLICABILITY. This Article 9 shall apply only to those Covered Employees selected by the
Committee to receive Performance-Based Awards. The designation of a Covered Employee as a
Participant for a Performance Period shall not in any manner entitle the Participant to receive an
Award for the period. Moreover, designation of a Covered Employee as a Participant for a
particular Performance Period shall not require designation of such Covered Employee as a
Participant in any subsequent Performance Period and designation of one Covered Employee as a
Participant shall not require designation of any other Covered Employees as a Participant in such
period or in any other period.

     9.3 PROCEDURES WITH RESPECT TO PERFORMANCE-BASED AWARDS. To the extent necessary to comply
with the Qualified Performance-Based Compensation requirements of Section l62(m)(4)(C) of the Code,
with respect to any Award granted under Articles 6 and 8 which may be granted to one or more
Covered Employees, no later than ninety

13.

 

(90) days following the commencement of any fiscal year in question or any other designated
fiscal period or period of service (or such other time as may be required or permitted by Section
l62(m) of the Code), the Committee shall, in writing, (i) designate one or more Covered Employees,
(ii) select the Performance Criteria applicable to the Performance Period, (iii) establish the
Performance Goals, and amounts of such Awards, as applicable, which may be earned for such
Performance Period, and (iv) specify the relationship between Performance Criteria and the
Performance Goals and the amounts of such Awards, as applicable, to be earned by each Covered
Employee for such Performance Period. Following the completion of each Performance Period, the
Committee shall certify in writing whether the applicable Performance Goals have been achieved for
such Performance Period. In determining the amount earned by a Covered Employee, the Committee
shall have the right to reduce or eliminate (but not to increase) the amount payable at a given
level of performance to take into account additional factors that the Committee may deem relevant
to the assessment of individual or corporate performance for the Performance Period.

     9.4 PAYMENT OF PERFORMANCE-BASED AWARDS. Unless otherwise provided in the applicable Award
Agreement, a Participant must be employed by the Company or a Subsidiary on the day a
Performance-Based Award for such Performance Period is paid to the Participant. Furthermore, a
Participant shall be eligible to receive payment pursuant to a Performance-Based Award for a
Performance Period only if the Performance Goals for such period are achieved. In determining the
amount earned under a Performance-Based Award, the Committee may reduce or eliminate the amount of
the Performance-Based Award earned for the Performance Period, if in its sole and absolute
discretion, such reduction or elimination is appropriate.

     9.5 ADDITIONAL LIMITATIONS. Notwithstanding any other provision of the Plan, any Award which
is granted to a Covered Employee and is intended to constitute Qualified Performance-Based
Compensation shall be subject to any additional limitations set forth in Section 162(m) of the Code
(including any amendment to Section 162(m) of the Code) or any regulations or rulings issued
thereunder that are requirements for qualification as qualified performance-based compensation as
described in Section 162(m)(4)(C) of the Code, and the Plan shall be deemed amended to the extent
necessary to conform to such requirements.

ARTICLE 10

PROVISIONS APPLICABLE TO AWARDS

     10.1 STAND-ALONE AND TANDEM AWARDS. Awards granted pursuant to the Plan may, in the
discretion of the Committee, be granted either alone, in addition to, or in tandem with, any other
Award granted pursuant to the Plan. Awards granted in addition to or in tandem with other Awards
may be granted a either at the same time as or at a different time from the grant of such other
Awards.

     10.2 AWARD AGREEMENT. Awards under the Plan shall be evidenced by Award Agreements that set
forth the terms, conditions and limitations for each Award which may include the term of an Award,
the provisions applicable in the event the Participant’s employment or service terminates, and the
Company’s authority to unilaterally or bilaterally amend, modify, suspend, cancel or rescind an
Award.

14.

 

     10.3 LIMITS ON TRANSFER. No right or interest of a Participant in any Award may be pledged,
encumbered, or hypothecated to or in favor of any party other than the Company or a Subsidiary, or
shall be subject to any lien, obligation, or liability of such Participant to any other party other
than the Company or a Subsidiary. Except as otherwise provided by the Committee, no Award shall be
assigned, transferred, or otherwise disposed of by a Participant other than by will or the laws of
descent and distribution. The Committee by express provision in the Award or an amendment thereto
may permit an Award (other than an Incentive Stock Option) to be transferred to, exercised by and
paid to certain persons or entities related to the Participant, including but not limited to
members of the Participant’s family, charitable institutions, or trusts or other entities whose
beneficiaries or beneficial owners are members of the Participant’s family and/or charitable
institutions, or to such other persons or entities as may be expressly approved by the Committee,
pursuant to such conditions and procedures as the Committee may establish. Any permitted transfer
shall be subject to the condition that the Committee receive evidence satisfactory to it that the
transfer is being made for estate and/or tax planning purposes (or to a “blind trust” in connection
with the Participant’s termination of employment or service with the Company or a Subsidiary to
assume a position with a governmental, charitable, educational or similar non-profit institution)
and on a basis consistent with the Company’s lawful issue of securities.

     10.4 BENEFICIARIES. Notwithstanding Section 10.3, a Participant may, in the manner determined
by the Committee, designate a beneficiary to exercise the rights of the Participant and to receive
any distribution with respect to any Award upon the Participant’s death. A beneficiary, legal
guardian, legal representative, or other person claiming any rights pursuant to the Plan is subject
to all terms and conditions of the Plan and any Award Agreement applicable to the Participant,
except to the extent the Plan and Award Agreement otherwise provide, and to any additional
restrictions deemed necessary or appropriate by the Committee. If the Participant is married and
resides in a community property state, a designation of a person other than the Participant’s
spouse as his beneficiary with respect to more than 50% of the Participant’s interest in the Award
shall not be effective without the prior written consent of the Participant’s spouse. If no
beneficiary has been designated or survives the Participant, payment shall be made to the person
entitled thereto pursuant to the Participant’s will or the laws of descent and distribution.
Subject to the foregoing, a beneficiary designation may be changed or revoked by a Participant at
any time provided the change or revocation is filed with the Committee.

     10.5 STOCK CERTIFICATES. Notwithstanding anything herein to the contrary, the Company shall
not be required to issue or deliver any certificates evidencing shares of Stock pursuant to the
exercise of any Award, unless and until the Board has determined, with advice of counsel, that the
issuance and delivery of such certificates is in compliance with all applicable laws, regulations
of governmental authorities and, if applicable, the requirements of any exchange on which the
shares of Stock are listed or traded. All Stock certificates delivered pursuant to the Plan are
subject to any stop-transfer orders and other restrictions as the Committee deems necessary or
advisable to comply with federal, state, or foreign jurisdiction, securities or other laws, rules
and regulations and the rules of any national securities exchange or automated quotation system on
which the Stock is listed, quoted, or traded. The Committee may place legends on any Stock
certificate to reference restrictions applicable to the Stock. In addition to the terms and
conditions provided herein, the Board may require that a Participant

15.

 

make such reasonable covenants, agreements, and representations as the Board, in its
discretion, deems advisable in order to comply with any such laws, regulations, or requirements.
The Committee shall have the right to require any Participant to comply with any timing or other
restrictions with respect to the settlement or exercise of any Award, including a window-period
limitation, as may be imposed in the discretion of the Committee.

ARTICLE 11

CHANGES IN CAPITAL STRUCTURE

     11.1 ADJUSTMENTS. In the event of any stock dividend, stock split, combination or exchange of
shares, merger, consolidation, spin-off, recapitalization or other distribution (other than normal
cash dividends) of Company assets to stockholders, or any other change affecting the shares of
Stock or the share price of the Stock, the Committee shall make such proportionate adjustments, if
any, as the Committee in its discretion may deem appropriate to reflect such change with respect to
(i) the aggregate number and type of shares that may be issued under the Plan (including, but not
limited to, adjustments of the limitations in Sections 3.1 and 3.3); (ii) the terms and conditions
of any outstanding Awards (including, without limitation, any applicable performance targets or
criteria with respect thereto); and (iii) the grant or exercise price per share for any outstanding
Awards under the Plan. Any adjustment affecting an Award intended as Qualified Performance-Based
Compensation shall be made consistent with the requirements of Section l62(m) of the Code.

     11.2 ASSUMPTION, SUBSTITUTION OR CONTINUATION OF OUTSTANDING AWARDS. In the event of a
merger, consolidation, reorganization, spin off, Change of Control or other change in the capital
structure of the Company or any affiliate, the Board of Directors of the Company or affiliate, or
the board of directors of any corporation assuming the obligations of the Company, may provide that
any Awards shall continue in existence with appropriate adjustments and modifications, if
applicable, or may provide that such Awards shall be assumed, or equivalent stock awards shall be
substituted, by an acquiring or succeeding corporation (or an affiliate thereof), in connection
with such transaction. Any Awards that are outstanding at the effective date of the merger set
forth in the Agreement and Plan of Merger and Reorganization, dated as of January 6, 2006, by and
between the Company, CancerVax Corporation and various third parties (“Merger Agreement”), may be
assumed by CancerVax Corporation, or any affiliate, and converted into an option or Award entitling
the participant to purchase shares of the common stock of CancerVax Corporation in accordance with
the terms of the Merger Agreement.

     11.3 ACCELERATION UPON A CHANGE OF CONTROL. If a Change of Control occurs and a Participant’s
Awards are not continued by the Company, if applicable, or are not converted, assumed, or replaced
by an acquiring corporation or successor, such Awards shall become fully exercisable and all
forfeiture restrictions on such Awards shall lapse. Upon, or in anticipation of, a Change of
Control, the Committee may cause any and all Awards outstanding hereunder to terminate at a
specific time in the future and shall give each Participant the right to exercise such Awards
during a period of time as the Committee, in its sole and absolute discretion, shall determine. In
the event that the terms of any agreement between the Company or any Company subsidiary or
affiliate and a Participant contains provisions that conflict with and are more restrictive than
the provisions of this Section 11.3, this Section 11.3 shall prevail

16.

 

and control and the more restrictive terms of such agreement (and only such terms) shall be of
no force or effect. Except as otherwise provided in the Agreement evidencing the Award any such
Awards that are assumed or replaced in a Change of Control and do not otherwise accelerate at that
time shall become fully exercisable and all forfeiture restrictions on such Awards shall lapse in
the event that the Participant’s employment or service relationship with the successor corporation
should terminate (i) in connection with the Change of Control or (ii) subsequently within two years
following such Change of Control, unless such employment or service relationship is terminated by
the successor corporation for Cause or by the Participant voluntarily without Good Reason.

     11.4 OUTSTANDING AWARDS — CERTAIN MERGERS. Subject to any required action by the stockholders
of the Company, in the event that the Company shall be the surviving corporation in any merger or
consolidation (except a merger or consolidation as a result of which the holders of shares of Stock
receive securities of another corporation), each Award outstanding on the date of such merger or
consolidation shall pertain to and apply to the securities that a holder of the number of shares of
Stock subject to such Award would have received in such merger or consolidation.

     11.5 OUTSTANDING AWARDS — OTHER CHANGES. In the event of any other change in the
capitalization of the Company or corporate change other than those specifically referred to in this
Article 11, the Committee may, in its absolute discretion, make such adjustments in the number and
class of shares subject to Awards outstanding on the date on which such change occurs and in the
per share grant or exercise price of each Award as the Committee may consider appropriate to
prevent dilution or enlargement of rights.

     11.6 NO OTHER RIGHTS. Except as expressly provided in the Plan, no Participant shall have any
rights by reason of any subdivision or consolidation of shares of stock of any class, the payment
of any dividend, any increase or decrease in the number of shares of stock of any class or any
dissolution, liquidation, merger, or consolidation of the Company or any other corporation. Except
as expressly provided in the Plan or pursuant to action of the Committee under the Plan, no
issuance by the Company of shares of stock of any class, or securities convertible into shares of
stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect
to, the number of shares of Stock subject to an Award or the grant or exercise price of any Award.

ARTICLE 12

ADMINISTRATION

     12.1 COMMITTEE. Unless and until the Board delegates administration to a Committee as set
forth below, the Plan shall be administered by the Board. 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”
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

17.

 

the provisions of the Plan, as may be adopted from time to time by the Board. Notwithstanding
the foregoing, however, from and after the Public Trading Date, a Committee of the Board shall
administer the Plan and the Committee shall consist solely of two or more members of the Board each
of whom is both an “outside director,” within the meaning of Section 162(m) of the Code, and a
Non-Employee Director. Within the scope of such authority, the Board or the Committee may (i)
delegate to a committee of one or more members of the Board who are not outside directors,” within
the meaning of Section 162(m) of the Code the authority to grant awards under the Plan to eligible
persons who are either (1) not then “covered employees,” within the meaning of Section 162(m) of
the Code and are not expected to be “covered employees” at the time of recognition of income
resulting from such award or (2) not persons with respect to whom the Company wishes to comply with
Section 162(m) of the Code and/or (ii) delegate to a committee of one or more members of the Board
who are not Non-Employee Directors, the authority to grant awards under the Plan to eligible
persons who are not then subject to Section 16 of the Exchange Act. The Board may abolish the
Committee at any time and revest in the Board the administration of the Plan. Appointment of
Committee members shall be effective upon acceptance of appointment. Committee members may resign
at any time by delivering written notice to the Board. Vacancies in the Committee may only be
filled by the Board.

     12.2 ACTION BY THE COMMITTEE. A majority of the Committee shall constitute a quorum. The
acts of a majority of the members present at any meeting at which a quorum is present, and acts
approved in writing by a majority of the Committee in lieu of a meeting, shall be deemed the acts
of the Committee. Each member of the Committee is entitled to, in good faith, rely or act upon any
report or other information furnished to that member by any officer or other employee of the
Company or any Subsidiary, the Company’s independent certified public accountants, or any executive
compensation consultant or other professional retained by the Company to assist in the
administration of the Plan.

     12.3 AUTHORITY OF COMMITTEE. Subject to any specific designation in the Plan, the Committee
has the exclusive power, authority and discretion to:

          (a) Designate Participants to receive Awards;

          (b) Determine the type or types of Awards to be granted to each Participant;

          (c) Determine the number of Awards to be granted and the number of shares of Stock to which
an Award will relate;

          (d) Determine the terms and conditions of any Award granted pursuant to the Plan, including,
but not limited to, the exercise price, grant price, or purchase price, any reload provision, any
restrictions or limitations on the Award, any schedule for lapse of forfeiture restrictions or
restrictions on the exercisability of an Award, and accelerations or waivers thereof, any
provisions related to non-competition and recapture of gain on an Award, based in each case on
such considerations as the Committee in its sole discretion determines; provided, however, that
the Committee shall not have the authority to accelerate the vesting or waive the forfeiture of
any Performance-Based Awards;

          (e) Determine whether, to what extent, and pursuant to what circumstances

18.

 

an Award may be settled in, or the exercise price of an Award may be paid in, cash, Stock,
other Awards, or other property, or an Award may be canceled, forfeited, or surrendered;

          (f) Prescribe the form of each Award Agreement, which need not be identical for each
Participant;

          (g) Decide all other matters that must be determined in connection with an Award;

          (h) Establish, adopt, or revise any rules and regulations as it may deem necessary or
advisable to administer the Plan;

          (i) Interpret the terms of, and any matter arising pursuant to, the Plan or any Award
Agreement; and

          (j) Make all other decisions and determinations that may be required pursuant to the Plan or
as the Committee deems necessary or advisable to administer the Plan.

     12.4 DECISIONS BINDING. The Committee’s interpretation of the Plan, any Awards granted
pursuant to the Plan, any Award Agreement and all decisions and determinations by the Committee
with respect to the Plan are final, binding, and conclusive on all parties.

ARTICLE 13

EFFECTIVE AND EXPIRATION DATE

     13.1 EFFECTIVE DATE. The Plan is effective as of the date the Plan is approved by the
Company’s stockholders (the “Effective Date”). The Plan will be deemed to be approved by the
stockholders if it receives the affirmative vote of the holders of a majority of the shares of
stock of the Company present or represented and entitled to vote at a meeting duly held in
accordance with the applicable provisions of the Company’s Bylaws.

     13.2 EXPIRATION DATE. The Plan will expire on, and no Award may be granted pursuant to the
Plan after, the earlier of the tenth anniversary of (i) the Effective Date or (ii) the date this
Plan is approved by the Board. Any Awards that are outstanding on the tenth anniversary of the
Effective Date shall remain in force according to the terms of the Plan and the applicable Award
Agreement. Each Award Agreement shall provide that it will expire on the tenth anniversary of the
date of grant of the Award to which it relates.

ARTICLE 14

AMENDMENT, MODIFICATION, AND TERMINATION

     14.1 AMENDMENT, MODIFICATION, AND TERMINATION. With the approval of the Board, at any time
and from time to time, the Committee may. terminate, amend or modify the Plan; provided, however,
that (i) to the extent necessary and desirable to comply with any applicable law, regulation, or
stock exchange rule, the Company shall obtain stockholder approval of any Plan amendment in such a
manner and to such a degree as required, and (ii) shareholder approval is required for any
amendment to the Plan that (A) increases the number of shares available under the Plan (other than
any adjustment as provided by Article 11), (B)

19.

 

permits the Committee to. grant Options with an exercise price that is below Fair Market Value
on the date of grant, or (C) permits the Committee to extend the exercise period for an Option
beyond ten years from the date of grant.

     14.2 AWARDS PREVIOUSLY GRANTED. No termination, amendment, or modification of the Plan shall
adversely affect in any material way any Award previously granted pursuant to the Plan without the
prior written consent of the Participant.

ARTICLE 15

GENERAL PROVISIONS

     15.1 NO RIGHTS TO AWARDS. No Participant, employee, or other person shall have any claim to
be granted any Award pursuant to the Plan, and neither the Company nor the Committee is obligated
to treat Participants, employees, and other persons uniformly.

     15.2 NO STOCKHOLDERS RIGHTS. No Award gives the Participant any of the rights of a
stockholder of the Company unless and until shares of Stock are in fact issued to such person in
connection with such Award.

     15.3 WITHHOLDING. The Company or any Subsidiary shall have the authority and the right to
deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to
satisfy federal, state, local and foreign taxes (including the Participant’s FICA obligation)
required by law to be withheld with respect to any taxable event concerning a Participant arising
as a result of this Plan. The Committee may in its discretion and in satisfaction of the foregoing
requirement allow a Participant to elect to have the Company withhold shares of Stock otherwise
issuable under an Award (or allow the return of shares of Stock) having a Fair Market Value equal
to the sums required to be withheld. Notwithstanding any other provision of the Plan, the number
of shares of Stock which may be withheld with respect to the issuance, vesting, exercise or payment
of any Award (or which may be repurchased from the Participant of such Award within six months
after such shares of Stock were acquired by the Participant from the Company) in order to satisfy
the Participant’s federal, state, local and foreign income and payroll tax liabilities with respect
to the issuance, vesting, exercise or payment of the Award shall be limited to the number of shares
which have a Fair Market Value on the date of withholding or repurchase equal to the aggregate
amount of such liabilities based on the minimum statutory withholding rates for federal, state,
local and foreign income tax and payroll tax purposes that are applicable to such supplemental
taxable income.

     15.4 NO RIGHT TO EMPLOYMENT OR SERVICES. Nothing in the Plan or any Award Agreement shall
interfere with or limit in any way the right of the Company or any Subsidiary to terminate any
Participant’s employment or services at any time, nor confer upon any Participant any right to
continue in the employ or service of the Company or any Subsidiary.

     15.5 UNFUNDED STATUS OF AWARDS. The Plan is intended to be an “unfunded” plan for incentive
compensation. With respect to any payments not yet made to a Participant pursuant to an Award,
nothing contained in the Plan or any Award Agreement shall give the Participant any rights that are
greater than those of a general creditor of the Company or any Subsidiary.

20.

 

     15.6 INDEMNIFICATION. To the extent allowable pursuant to applicable law, each member of the
Committee or of the Board shall be indemnified and held harmless by the Company from any loss,
cost, liability, or expense that may be imposed upon or reasonably incurred by such member in
connection with or resulting from any claim, action, suit, or proceeding to which he or she may be
a party or in which he or she may be involved by reason of any action or failure to act pursuant to
the Plan and against and from any and all amounts paid by him or her in satisfaction of judgment in
such action, suit, or proceeding against him or her, provided he or she gives the Company an
opportunity, at its own expense, to handle and defend the same before he or she undertakes to
handle and defend it on his or her own behalf. The foregoing right of indemnification shall not be
exclusive of any other rights of indemnification to which such persons may be entitled pursuant to
the Company’s Certificate of Incorporation or Bylaws, as a matter of law, or otherwise, or any
power that the Company may have to indemnify them or hold them harmless.

     15.7 RELATIONSHIP TO OTHER BENEFITS. No payment pursuant to the Plan shall be taken into
account in determining any benefits pursuant to any pension, retirement, savings, profit sharing,
group insurance, welfare or other benefit plan of the Company or any Subsidiary except to the
extent otherwise expressly provided in writing in such other plan or an agreement thereunder.

     15.8 EXPENSES. The expenses of administering the Plan shall be borne by the Company and its
Subsidiaries.

     15.9 TITLES AND HEADINGS. The titles and headings of the Sections in the Plan are for
convenience of reference only and, in the event of any conflict, the text of the Plan, rather than
such titles or headings, shall control.

     15.10 FRACTIONAL SHARES. No fractional shares of Stock shall be issued and the Committee
shall determine, in its discretion, whether cash shall be given in lieu of fractional shares or
whether such fractional shares shall be eliminated by rounding up or down as appropriate.

     15.11 LIMITATIONS APPLICABLE TO SECTION 16 PERSONS. Notwithstanding any other provision of
the Plan, the Plan, and any Award granted or awarded to any Participant who is then subject to
Section 16 of the Exchange Act, shall be subject to any additional limitations set forth in any
applicable exemptive rule under Section 16 of the Exchange Act (including any amendment to Rule
16b-3 of the Exchange Act) that are requirements for the application of such exemptive rule. To
the extent permitted by applicable law, the Plan and Awards granted or awarded hereunder shall be
deemed amended to the extent necessary to conform to such applicable exemptive rule.

     15.12 GOVERNMENT AND OTHER REGULATIONS. The obligation of the Company to make payment of
awards in Stock or otherwise shall be subject to all applicable laws, rules, and regulations, and
to such approvals by government agencies as may be required. The Company shall be under no
obligation to register pursuant to the Securities Act of 1933, as amended, any of the shares of
Stock paid pursuant to the Plan. If the shares paid pursuant to the Plan may in certain
circumstances be exempt from registration pursuant to the Securities Act of

21.

 

1933, as amended, the Company may restrict the transfer of such shares in such manner as it
deems advisable to ensure the availability of any such exemption.

     15.13 GOVERNING LAW. The Plan and all Award Agreements shall be construed in accordance with
and governed by the laws of the State of Delaware.

     15.14 ACCELERATION UPON DEATH OR DISABILITY. In addition, with respect to Participants who
are Employees or members of the Board of the Company or any Subsidiary, in the event of a
Participant’s termination of employment on account of Disability or death, that number of
Participant’s unvested Awards that would have become fully vested, exercisable and/or payable, as
applicable, over the twelve (12) months following the Participant’s termination under the vesting
schedules applicable to such Awards had the Participant remained continuously employed by or
providing services to the Company during such period shall immediately become so vested,
exercisable and/or payable, as applicable, on the date of termination.

22.

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