Document:

Exhibit 10.5  

AFFYMAX, INC.

2006 EQUITY INCENTIVE PLAN  

Approved by the Board: July 7, 2006

Approved by the Stockholders:    , 2006

Termination Date: July 6, 2016  

 1.     GENERAL.  

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

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

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

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

2.     ADMINISTRATION.  

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

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

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

        (ii)   To construe and interpret the Plan and Stock Awards granted under it, and to establish, amend and revoke rules and
regulations for its administration. The Board, in the exercise of this power, may correct any defect, omission or inconsistency in the Plan or in any Stock Award 

1

 

Agreement,
in a manner and to the extent it shall deem necessary or expedient to make the Plan or Stock Award fully effective. 

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

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

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

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

        (vii) To amend the Plan in any respect the Board deems necessary or advisable, including, without limitation, relating to
Incentive Stock Options and certain nonqualified deferred compensation under Section 409A of the Code and/or to bring the Plan or Stock Awards granted under the Plan into compliance therewith,
subject to the limitations, if any, of applicable law. However, except as provided in Section 10(a) relating to Capitalization Adjustments, stockholder approval shall be required for any
amendment of the Plan that either (i) materially increases the number of shares of Common Stock available for issuance under the Plan, (ii) materially expands the class of individuals
eligible to receive Stock Awards under the Plan, (iii) materially increases the benefits accruing to Participants under the Plan or materially reduces the price at which shares of Common Stock
may be issued or purchased under the Plan, (iv) materially extends the term of the Plan, or (v) expands the types of Stock Awards available for issuance under the Plan, but in each of
(i) through (v) only to the extent required by applicable law or listing requirements. Except as provided above, rights under any Stock Award granted before amendment of the Plan shall
not be impaired by any amendment of the Plan unless (i) the Company requests the consent of the affected Participant, and (ii) such Participant consents in writing. 

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

        (ix)  To approve forms of Stock Award Agreements for use under the Plan and to amend the terms of any one or more Stock
Awards, including, but not limited to, amendments to provide terms more favorable than previously provided in the Stock Award Agreement, subject to any specified limits in the Plan that are not
subject to Board discretion; provided however, that, the rights under any Stock Award shall not be impaired by any such amendment unless (i) the
Company requests the consent of the affected Participant, and (ii) such Participant consents in writing. Notwithstanding the foregoing, subject to the limitations of applicable law, if any, the
Board may amend the terms of any one or more Stock Awards without the affected Participant's 

2

 

consent
if necessary to maintain the qualified status of the Stock Award as an Incentive Stock Option or to bring the Stock Award into compliance with Section 409A of the Code and the related
guidance thereunder. 

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

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

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

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

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

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

        (d)    Delegation to Committee.    

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

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

        (e)    Delegation to Officers.    The Board may delegate to one or
more Officers the authority to do one or both of the following (i) designate Officers and Employees of the Company or any of its Subsidiaries to be recipients of Options (and, to the extent
permitted by Delaware law, other Stock 

3

 

Awards)
and the terms thereof, and (ii) determine the number of shares of Common Stock to be subject to such Stock Awards granted to such Officers and Employees;  provided, however, that the Board
resolutions regarding such delegation shall specify the total number of shares of Common Stock that may be subject to
the Stock Awards granted by such Officers and that such Officer may not grant a Stock Award to himself or herself. Notwithstanding anything to the contrary in this Section 2(e), the Board may
not delegate to an Officer authority to determine the Fair Market Value of the Common Stock pursuant to Section 14(x)(iii) below. 

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

3.     SHARES SUBJECT TO THE PLAN.  

        (a)    Share Reserve.    Subject to the provisions of
Section 10(a) relating to Capitalization Adjustments, the aggregate number of shares of Common Stock that may be issued pursuant to Stock Awards under the Plan shall not exceed ten million two
hundred twenty-six thousand six hundred twenty-three (10,226,623) (pre-split) shares, subject to reduction as set forth below. Such share reserve consists of (i) the
5,226,623 (pre-split) shares reserved for issuance under the Prior Plan, plus (ii) an additional 5,000,000 (pre-split) shares reserved for issuance under the Plan, but
such aggregate number shall be reduced by any unused shares of Common Stock remaining available on the Effective Date for the future grant of stock awards under the Prior Plan. In addition, the number
of shares of Common Stock available for issuance under the Plan shall automatically increase on January 1st of each year commencing in 2007 and ending on (and including) January 1, 2016,
in an amount equal to the lesser of (i) four and one-half percent (41/2%) of the total number of shares of Common Stock outstanding on December 31st of the
preceding calendar year, or (ii) the number of shares of stock (not to exceed five million six hundred thousand (5,600,000) (pre-split) shares) determined by the Board of Directors.
Notwithstanding the foregoing, the Board may act prior to the first day of any calendar year, to provide that there shall be no increase in the share reserve for such calendar year or that the
increase in the share reserve for such calendar year shall be a lesser number of shares of Common Stock than would otherwise occur pursuant to the preceding sentence. Shares may be issued in
connection with a merger or acquisition as permitted by NASD Rule 4350(i)(1)(A)(iii) or, if applicable, NYSE Listed Company Manual Section 303A.08, or AMEX Company Guide
Section 711 and such issuance shall not reduce the number of shares available for issuance under the Plan. 

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

        (c)    Incentive Stock Option Limit.    Notwithstanding anything to
the contrary in this Section 3(c), subject to the provisions of Section 10(a) relating to Capitalization Adjustments the aggregate 

4

 

maximum
number of shares of Common Stock that may be issued pursuant to the exercise of Incentive Stock Options shall be five million (5,000,000) (pre-split) shares of Common Stock plus
the amount of any increase in the number of shares that may be available for issuance pursuant to Stock Awards pursuant to Section 3(a). 

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

4.     ELIGIBILITY.  

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

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

        (c)    Section 162(m) Limitation.    Subject to the provisions
of Section 10(a) relating to Capitalization Adjustments, at such time as the Company may be subject to the applicable provisions of Section 162(m) of the Code, no Employee shall be
eligible to be granted during any calendar year Stock Awards whose value is determined by reference to an increase over an exercise or strike price of at least one hundred percent (100%) of the Fair
Market Value of the Common Stock on the date the Stock Award is granted covering more than two million five hundred thousand (2,500,000) (pre-split) shares of Common Stock. 

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

5.     OPTION PROVISIONS.  

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

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

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

5

 

with
the provisions of Section 424(a) of the Code (whether or not such options are Incentive Stock Options). 

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

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

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

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

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

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

        (d)    Transferability of Options.    The Board may, in its sole
discretion, impose such limitations on the transferability of Options as the Board shall determine. In the absence of such a determination by the Board to the contrary, the following restrictions on
the transferability of Options shall apply: 

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

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

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

6

 

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

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

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

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

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

7

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

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

6.     PROVISIONS OF STOCK AWARDS OTHER THAN OPTIONS.  

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

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

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

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

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

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

        (i)    Consideration.    At the time of grant of a Restricted Stock
Unit Award, the Board will determine the consideration, if any, to be paid by the Participant upon delivery of each share of Common Stock subject to the Restricted Stock Unit Award. The consideration
to be paid (if any) 

8

 

by
the Participant for each share of Common Stock subject to a Restricted Stock Unit Award may be paid in any form of legal consideration that may be acceptable to the Board in its sole discretion and
permissible under applicable law. 

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

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

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

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

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

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

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

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

        (ii)    Strike Price.    Each Stock Appreciation Right will be
denominated in shares of Common Stock equivalents. The strike price of each Stock Appreciation Right shall not be less than one 

9

 

hundred
percent (100%) of the Fair Market Value of the Common Stock equivalents subject to the Stock Appreciation Right on the date of grant. 

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

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

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

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

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

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

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

        (d)    Performance Stock Awards.    A Performance Stock Award is
either a Restricted Stock Award or Restricted Stock Unit Award that may be granted or may vest based upon the attainment during a Performance Period of certain Performance Goals. A Performance Stock
Award may, but need not, require the completion of a specified period of Continuous Service. The length of any Performance Period, the Performance Goals to be achieved during the Performance Period,
and the measure of whether and to what degree such Performance Goals have been attained shall be conclusively determined by the Committee in its sole discretion. The maximum benefit to be received by
any 

10

 

Participant
in a calendar year attributable to Performance Stock Awards described in this Section 6(d) shall not exceed the value of two million (2,500,000) (pre-split) shares of
Common Stock. In addition, to the extent permitted by applicable law and the applicable Award Agreement, the Board may determine that cash may be used in payment of Performance Stock Awards. 

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

7.     NON-DISCRETIONARY GRANTS TO ELIGIBLE DIRECTORS  

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

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

        (c)    Non-Discretionary Grants.    

        (i)    IPO Awards.    Without any further action of the Board, each
person who is serving as a Non-Employee Director on the IPO Date, except any such person who was elected or appointed to the Board within nine (9) months prior to the IPO Date and
received an option grant from the Company in connection with his or her initial election or appointment to the Board, shall automatically be granted a Nonstatutory Stock Option (the
"IPO Award") to purchase thirty thousand (30,000) (pre-split) shares of Common Stock on the terms and conditions set forth in
Section 7(d). 

        (ii)    Initial Awards.    Without any further action of the Board,
each person who after the IPO Date is elected or appointed for the first time to be a Non-Employee Director automatically shall, upon the date of his or her initial election or appointment
to be a Non-Employee Director, be granted a Nonstatutory Stock Option (the "Initial Award") to purchase thirty thousand (30,000)
(pre-split) shares of Common Stock on the terms and conditions set forth in Section 7(d). 

        (iii)    Annual Awards.    Without any further action of the Board, on
the date of each Annual Meeting, commencing with the Annual Meeting in 2007, each person who is then a Non-Employee Director shall be granted a Nonstatutory Stock Option (the
"Annual Award") to purchase ten thousand (10,000) (pre-split) shares of Common Stock on the terms and conditions set forth in
Section 7(d). 

        (d)    Non-Discretionary Option Grant Provisions.    

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

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

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

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

11

 

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

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

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

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

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

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

        (viii)    Termination Upon Change in Control.    In the event that an
Optionholder's Continuous Service terminates as of, or within twelve (12) months following a Change in Control, the Optionholder may exercise his or her Option (to the extent that the
Optionholder was entitled to exercise such Option as of the date of termination of Continuous Service) within such period of time ending on the earlier of (i) the date twelve (12) months
following the effective date of the Change in Control (or such longer or shorter period specified in the Option Agreement), or (ii) the expiration of the term of the Option as set forth in the
Option Agreement. If, after 

12

 

termination
of Continuous Service, the Optionholder does not exercise his or her Option within the time specified herein or in the Option Agreement (as applicable), the Option shall terminate. 

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

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

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

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

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

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

8.     COVENANTS OF THE COMPANY.  

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

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

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

13

   9.     MISCELLANEOUS.  

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

        (b)    Corporate Action Constituting Grant of Stock
Awards.    Corporate action constituting a grant by the Company of a Stock Award to any Participant shall be deemed completed as of the date of such corporate action,
unless otherwise determined by the Board, regardless of when the instrument, certificate, or letter evidencing the Stock Award is communicated to, or actually received or accepted by, the Participant. 

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

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

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

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

14

 

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

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

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

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

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

        (a)    Capitalization Adjustments.    In the event of a Capitalization
Adjustment, the Board shall equitably adjust: (i) the class(es) and maximum number of securities subject to the Plan pursuant to Section 3(a); (ii) the class(es) and maximum
number of securities that may be issued pursuant to the exercise of Incentive Stock Options pursuant to Section 3(c); (iii) the class(es) and maximum number of securities that may be
awarded to any person pursuant to Section 4(c) and 6(d); (iv) the class(es) and number of securities subject to each Option granted under the Non-Discretionary Grant Program 

15

 

under
Section 7; and (v) the class(es) and number of securities and price per share of stock subject to outstanding Stock Awards. The Board shall make such adjustments, and its
determination shall be final, binding and conclusive. 

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

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

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

        (ii)    Stock Awards Held by Current Participants.    In the event of
a Corporate Transaction in which the surviving corporation or acquiring corporation (or its parent company) does not assume or continue any or all outstanding Stock Awards or substitute similar stock
awards for such outstanding Stock Awards, then with respect to Stock Awards that have not been assumed, continued or substituted and that are held by Participants whose Continuous Service has not
terminated prior to the effective time of the Corporate Transaction (referred to as the "Current Participants"), the vesting of such Stock Awards (and,
if applicable, the time at which such Stock Awards may be exercised) shall (contingent upon the effectiveness of the Corporate Transaction) be accelerated in full to a date prior to the effective time
of such Corporate Transaction as the Board shall determine (or, if the Board shall not determine such a date, to the date that is five (5) days prior to the effective time of the Corporate
Transaction), and such Stock Awards shall terminate if not exercised (if applicable) at or prior to the effective time of the Corporate Transaction, and any reacquisition or repurchase rights held by
the Company with respect to such Stock Awards shall lapse (contingent upon the effectiveness of the Corporate Transaction). 

        (iii)    Stock Awards Held by Former Participants.    In the event of
a Corporate Transaction in which the surviving corporation or acquiring corporation (or its parent company) does not assume or continue any or all outstanding Stock Awards or substitute similar stock
awards for such outstanding Stock Awards, then with respect to Stock Awards that have not been assumed, continued or substituted and that are held by persons other than Current Participants, the
vesting of such Stock Awards (and, if applicable, the time at which such Stock Award may be exercised) 

16

 

shall
not be accelerated and such Stock Awards (other than a Stock Award consisting of vested and outstanding shares of Common Stock not subject to the Company's right of repurchase) shall terminate
if not exercised (if applicable) prior to the effective time of the Corporate Transaction; provided, however, that any reacquisition or repurchase
rights held by the Company with respect to such Stock Awards shall not terminate and may continue to be exercised notwithstanding the Corporate Transaction. 

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

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

11.   TERMINATION OR SUSPENSION OF THE PLAN.  

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

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

12.   EFFECTIVE DATE OF PLAN.  

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

13.   CHOICE OF LAW.  

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

17

 

14.   DEFINITIONS.  

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

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

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

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

        (d)   "Board" means the Board of Directors of the Company. 

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

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

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

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

18

 

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; 

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

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

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

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

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

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

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

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

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

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

        (l)    "Consultant" means any person, including an advisor, who is
(i) engaged by the Company or an Affiliate to render consulting or advisory services and is compensated for such services, or (ii) serving as a member of the board of directors of an
Affiliate and is compensated for such services. 

19

 

However,
service solely as a Director, or payment of a fee for such service, shall not cause a Director to be considered a "Consultant" for purposes of the Plan. 

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

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

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

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

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

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

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

        (p)   "Director" means a member of the Board. 

        (q)   "Disability" means, with respect to a Participant, the inability of such
Participant to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for
a continuous period of not less than 12 months, as provided in Section 22(e)(3) and 409A(a)(2)(c)(i) of the Code. 

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

20

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

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

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

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

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

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

        (i)    If the Common Stock is listed on any established stock exchange or traded on the Nasdaq Global Select Market or the
Nasdaq Global Market (formerly the Nasdaq National Market), the Fair Market Value of a share of Common Stock shall be the closing sales price for such stock (or the closing bid, if no sales were
reported) as quoted on such exchange (or the exchange or market with the greatest volume of trading in the Common Stock) on the date of determination, as reported in The Wall
Street Journal or such other source as the Board deems reliable. 

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

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

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

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

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

21

 

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

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

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

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

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

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

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

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

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

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

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

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

22

 

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

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

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

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

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

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

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

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

23

 

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

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

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

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

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

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

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

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

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

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

        (fff)    "Ten Percent Stockholder" means a person who Owns (or is deemed to Own
pursuant to Section 424(d) of the Code) stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any Affiliate. 

24Exhibit 10.6  

AFFYMAX, INC.

2006 EQUITY INCENTIVE PLAN  

OPTION GRANT NOTICE  

        Affymax, Inc. (the "Company"), pursuant to its 2006 Equity Incentive Plan (the
"Plan"), hereby grants to Optionholder an option to purchase the number of shares of the Company's Common Stock set forth below. This option is subject
to all of the terms and conditions as set forth herein and in the Option Agreement, the Plan, and the Notice of Exercise, all of which are attached hereto and incorporated herein in their entirety. 

	Optionholder:	 	

	Date of Grant:	 	

	Vesting Commencement Date:	 	

	Number of Shares Subject to Option:	 	

	Exercise Price (Per Share):	 	

	Total Exercise Price:	 	

	Expiration Date:	 	

	Type of Grant:	 	o    Incentive Stock Option(1)                o    Nonstatutory Stock Option
	

Exercise Schedule:	
 	

[Initial Grant: 1/4th of the shares vest and become exercisable one year after the Vesting Commencement Date; the balance of the shares vest and become exercisable in a series of thirty-six (36) successive equal monthly installments
measured from the first anniversary of the Vesting Commencement Date.]
	

 	
 	

[Refresher Grant: The shares vest and become exercisable in a series of forty-eight (48) successive equal monthly installments over the four (4)-year period measured from the Vesting Commencement Date.]
	

Payment:	
 	

By one or a combination of the following items (described in the Option Agreement):
	

 	
 	

ý By cash or check
	 	 	ý Pursuant to a Regulation T Program if the Shares are publicly traded
	 	 	ý By delivery of already-owned shares if the Shares are publicly traded
	 	 	o By net exercise(2)

        Additional Terms/Acknowledgements:    The undersigned Optionholder acknowledges receipt of, and understands and agrees to, this
Option Grant Notice, the Option Agreement, and the Plan. Optionholder further acknowledges that as of the Date of Grant, this Option Grant Notice, the Option Agreement, and the Plan set forth the
entire understanding between Optionholder and the Company regarding the acquisition of stock in the Company and supersede all prior oral and written agreements 

on
that subject with the exception of (i) options previously granted and delivered to Optionholder under the Plan, and (ii) the following agreements only: 

	OTHER AGREEMENTS:	 	 
	 	 	

	 	 	

	AFFYMAX, INC.	 	OPTIONHOLDER:
	

By:	
 	

 	
 	

 
	 	 	
	 	

	Signature	 	Signature
	Title:	 	 	 	Date:	 	 
	 	 	
	 	 	 	

	Date:	 	 	 	 	 	 
	 	 	
	 	 	 	 

ATTACHMENTS: Option Agreement, 2006 Equity Incentive Plan, and Notice of Exercise 

	(1)
	If
this is an Incentive Stock Option, it (plus other outstanding Incentive Stock Options) cannot be first exercisable for more than
$100,000 in value (measured by exercise price) in any calendar year. Any excess over $100,000 is a Nonstatutory Stock Option.

	(2)
	An
Incentive Stock Option may not be exercised by a net exercise arrangement. 

ATTACHMENT I

OPTION AGREEMENT  

ATTACHMENT II

2006 EQUITY INCENTIVE PLAN  

ATTACHMENT III

NOTICE OF EXERCISE  

   AFFYMAX, INC.

2006 EQUITY INCENTIVE PLAN  

OPTION AGREEMENT

(INCENTIVE STOCK OPTION OR NONSTATUTORY STOCK OPTION)  

        Pursuant to your Option Grant Notice ("Grant Notice") and this Option Agreement, Affymax, Inc. (the
"Company") has granted you an option under its 2006 Equity Incentive Plan (the "Plan") to purchase the
number of shares of the Company's Common Stock indicated in your Grant Notice at the exercise price indicated in your Grant Notice. Defined terms not explicitly defined in this Option Agreement but
defined in the Plan shall have the same definitions as in the Plan. 

        The
details of your option are as follows: 

	1.
	VESTING. Subject to the limitations contained herein, your option will vest as provided in your Grant Notice, provided that vesting will
cease upon the termination of your Continuous Service.

	2.
	NUMBER OF SHARES AND EXERCISE PRICE. The number of shares of Common Stock subject to your option and your exercise price per share
referenced in your Grant Notice may be adjusted from time to time for Capitalization Adjustments.

	3.
	EXERCISE RESTRICTION FOR NON-EXEMPT EMPLOYEES. In the event that you are an Employee eligible for overtime compensation
under the Fair Labor Standards Act of 1938, as amended (i.e., a "Non-Exempt Employee"), you
may not exercise your option until you have completed at least six (6) months of Continuous Service measured from the Date of Grant specified in your Grant Notice, notwithstanding any other
provision of your option.

	4.
	METHOD OF PAYMENT. Payment of the exercise price is due in full upon exercise of all or any part of your option. You may elect to make
payment of the exercise price in cash or by check or in any other manner permitted by your Grant Notice, which may include one or more of the
following: 

 
	(a)
	Provided that at the time of exercise the Common Stock is publicly traded and quoted regularly in The Wall Street
Journal, 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.  

 
	(b)

	Provided that at the time of exercise the Common Stock is publicly traded and quoted regularly in The Wall Street
Journal, by delivery to the Company (either by actual delivery or attestation) of already-owned shares of Common Stock either that you have held for the period required to
avoid classification of your option as a liability for financial accounting purposes (generally six (6) months) or that you did not acquire, directly or indirectly from the Company, that are
owned free and clear of any liens, claims, encumbrances or security interests, and that are valued at Fair Market Value on the date of exercise. "Delivery" for these purposes, in the sole discretion
of the Company at the time you exercise your option, shall include delivery to the Company of your attestation of ownership of such shares of Common Stock in a form approved by the Company.
Notwithstanding the foregoing, you may not exercise your option by tender to the Company of Common Stock to the extent such tender would violate the provisions of any law, regulation or agreement
restricting the redemption of the Company's stock.

 

	5.
	WHOLE SHARES. You may exercise your option only for whole shares of Common Stock.

	6.
	SECURITIES LAW COMPLIANCE. Notwithstanding anything to the contrary contained herein, you may not exercise your option unless the shares
of Common Stock issuable upon such exercise are then 

1

 

registered
under the Securities Act or, if such shares of Common Stock are not then so registered, the Company has determined that such exercise and issuance would be exempt from the registration
requirements of the Securities Act. The exercise of your option also must comply with other applicable laws and regulations governing your option, and you may not exercise your option if the Company
determines that such exercise would not be in material compliance with such laws and regulations. 

	7.
	TERM. You may not exercise your option before the commencement or after the expiration of its term. The term of your option commences on
the Date of Grant and expires upon the earliest of the following: 

 
	(a)
	three (3) months after the termination of your Continuous Service for any reason other than your Disability or death; provided,
however, that (i) if during any part of such three (3) month period your option is not exercisable solely because of the condition set forth in Section 6,
your option shall not expire until the earlier of the Expiration Date or until it shall have been exercisable for an aggregate period of three (3) months after the termination of your
Continuous Service and (ii) if (x) you are a Non-Exempt Employee, (y) you terminate your Continuous Service within six (6) months after the Date of Grant
specified in your Grant Notice, and (z) you have vested in a portion of your option at the time of your termination of Continuous Service, your option shall not expire until the earlier of
(A) the later of the date that is seven (7) months after the Date of Grant specified in your Grant Notice or the date that is three (3) months after the termination of your
Continuous Service, or (B) the Expiration Date;  

 
	(b)
	twelve (12) months after the termination of your Continuous Service due to your
Disability;  

 
	(c)
	eighteen (18) months after your death if you die either during your Continuous Service or within three (3) months after
your Continuous Service
terminates;  

 
	(d)
	the Expiration Date indicated in your Grant Notice; or  

 
	(e)

	the day before the tenth (10th) anniversary of the Date of Grant. 

        If
your option is an Incentive Stock Option, note that to obtain the federal income tax advantages associated with an Incentive Stock Option, the Code requires that at all times
beginning on the date of grant of your option and ending on the day three (3) months before the date of your option's exercise, you must be an employee of the Company or an Affiliate, except in
the event of your death or Disability. The Company has provided for extended exercisability of your option under certain circumstances for your benefit but cannot guarantee that your option will
necessarily be treated as an Incentive Stock Option if you continue to provide services to the Company or an Affiliate as a Consultant or Director after your employment terminates or if you otherwise
exercise your option more than three (3) months after the date your employment with the Company or an Affiliate terminates. 

	8.
	EXERCISE. 

 
	(a)
	You may exercise the vested portion of your option during its term by delivering a Notice of Exercise (in a form designated by the Company) together with the
exercise price to the Secretary of the Company, or to such other person as the Company may designate, during regular business hours, together with such additional documents as the Company may then
require.  

 
	(b)
	By exercising your option you agree that, as a condition to any exercise of your option, the Company may require you to enter into an
arrangement providing for
the payment by you to the Company of any tax withholding obligation of the Company arising by reason of (i) the exercise of your option, or (ii) the disposition of shares of Common Stock
acquired upon such exercise. 

2

 

	(c)
	If your option is an Incentive Stock Option, by exercising your option you agree that you will notify the Company in writing within fifteen (15) days
after the date of any disposition of any of the shares of the Common Stock issued upon exercise of your option that occurs within two (2) years after the date of your option grant or within one
(1) year after such shares of Common Stock are transferred upon exercise of your option.

 

	9.
	TRANSFERABILITY. Your option is not transferable, except by will or by the laws of descent and distribution, and is exercisable during
your life only by you. Notwithstanding the foregoing, by delivering written notice to the Company, in a form satisfactory to the Company, you may designate a third party who, in the event of your
death, shall thereafter be entitled to exercise your option. In addition, you may transfer your option to a trust if you are considered to be the sole beneficial owner (determined under
Section 671 of the Code and applicable state law) while the option is held in the trust, provided that you and the trustee enter into transfer and other agreements required by the Company.

	10.
	OPTION NOT A SERVICE CONTRACT. Your option is not an employment or service contract, and nothing in your option shall be deemed to
create in any way whatsoever any obligation on your part to continue in the employ of the Company or an Affiliate, or of the Company or an Affiliate to continue your employment. In addition, nothing
in your option shall obligate the Company or an Affiliate, their respective stockholders, Boards of Directors, Officers or Employees to continue any relationship that you might have as a Director or
Consultant for the Company or an Affiliate.

	11.
	WITHHOLDING OBLIGATIONS. 

 
	(a)
	At the time you exercise your option, in whole or in part, or at any time thereafter as requested by the Company, you hereby authorize withholding from payroll
and any other amounts payable to you, and otherwise agree to make adequate provision for (including by means of a "cashless exercise" pursuant to a program developed under Regulation T as
promulgated by the Federal Reserve Board to the extent permitted by the Company), any sums required to satisfy the federal, state, local and foreign tax withholding obligations of the Company or an
Affiliate, if any, which arise in connection with the exercise of your option.  

 
	(b)
	Upon your request and subject to approval by the Company, in its
sole discretion, and compliance with any applicable legal conditions or restrictions, the
Company may withhold from fully vested shares of Common Stock otherwise issuable to you upon the exercise of your option a number of whole shares of Common Stock having a Fair Market Value, determined
by the Company as of the date of exercise, not in excess of the minimum amount required to be withheld by law (or such lower amount as may be necessary to avoid classification of your option as a
liability for financial accounting purposes). Any adverse consequences to you arising in connection with such share withholding procedure shall be your sole responsibility.  

 
	(c)

	You may not exercise your option unless the tax withholding obligations of the Company and/or any Affiliate are satisfied. Accordingly, you may not be able to
exercise your option when desired even though your option is vested, and the Company shall have no obligation to issue a certificate for such shares of Common Stock or release such shares of Common
Stock from any escrow provided for herein unless such obligations are satisfied.

 

	12.
	NOTICES. Any notices provided for in your option or the Plan shall be given in writing and shall be deemed effectively given upon
receipt or, in the case of notices delivered by mail by the Company to you, five (5) days after deposit in the United States mail, postage prepaid, addressed to you at the last address you
provided to the Company.

	13.
	GOVERNING PLAN DOCUMENT. Your option is subject to all the provisions of the Plan, the provisions of which are hereby made a part of
your option, and is further subject to all interpretations, amendments, rules and regulations, which may from time to time be promulgated and adopted pursuant to the Plan. In the event of any conflict
between the provisions of your option and those of the Plan, the provisions of the Plan shall control. 

3

   NOTICE OF EXERCISE  

	Affymax, Inc.

4001 Miranda Avenue

Palo Alto, CA 94304	 	Date of Exercise:                        

Ladies and Gentlemen: 

        This
constitutes notice under my stock option that I elect to purchase the number of shares for the price set forth below. 

	Type of option (check one):	 	 	o Incentive	 	o Nonstatutory
	

Stock option dated:	
 	
 	

            	
 	

 
	

Number of shares as to which option is exercised:	
 	
 	

            	
 	

 
	

Certificates to be issued in name of:	
 	
 	

            	
 	

 
	

Total exercise price:	
 	
$	

            	
 	

 
	

Cash payment delivered herewith:	
 	
$	

            	
 	

 
	

Value of            shares of Affymax, Inc. Common Stock delivered herewith(1):	
 	
$	

            	
 	

 

        By
this exercise, I agree (i) to provide such additional documents as you may require pursuant to the terms of the Affymax, Inc. 2006 Equity Incentive Plan, (ii) to
provide for the payment by me to you (in the manner designated by you) of your withholding obligation, if any, relating to the exercise of this option, and (iii) if this exercise relates to an
incentive stock option, to notify you in writing within fifteen (15) days after the date of any disposition of any of the shares of Common Stock issued upon exercise of this option that occurs
within two (2) years after the date of grant of this option or within one (1) year after such shares of Common Stock are issued upon exercise of this option. 

	 	Very truly yours,
	

 	

	(1)
	Shares
must meet the public trading requirements set forth in the option. Shares must be valued in accordance with the terms of the option being exercised, must have been owned for
the minimum period required in the option, and must be owned free and clear of any liens, claims, encumbrances or security interests. Certificates must be endorsed or accompanied by an executed
assignment separate from certificate. 

1

NON-DISCRETIONARY GRANT PROGRAM  

AFFYMAX, INC.

2006 EQUITY INCENTIVE PLAN  

OPTION GRANT NOTICE

([IPO] [INITIAL] [ANNUAL] GRANT)  

        Affymax, Inc. (the "Company"), pursuant to its 2006 Equity Incentive Plan (the
"Plan"), hereby grants to Optionholder an option to purchase the number of shares of the Company's Common Stock set forth below. This option is subject
to all of the terms and conditions as set forth herein and in the Option Agreement, the Plan, and the Notice of Exercise, all of which are attached hereto and incorporated herein in their entirety. 

	Optionholder:	 	

	Date of Grant:	 	

	Number of Shares Subject to Option:	 	

	Exercise Price (Per Share):	 	

	Total Exercise Price:	 	

	Expiration Date:	 	

	Type of Grant:	 	Nonstatutory Stock Option
	

Exercise Schedule:	
 	

[IPO Grant: The shares vest and become exercisable in a series of thirty-six (36) successive equal monthly installments over the three (3)-year period measured from the Date of Grant.]
	

 	
 	

[Initial Grant: The shares vest and become exercisable in a series of thirty-six (36) successive equal monthly installments over the three (3)-year period measured from the Date of Grant.]
	

 	
 	

[Annual Grant: The shares vest and become exercisable in a series of twelve (12) successive equal monthly installments over the one (1)-year period measured from the Date of Grant.]
	

Payment:	
 	

By one or a combination of the following items (described in the Option Agreement):
	

 	
 	

ý By cash or check
	 	 	ý Pursuant to a Regulation T Program if the Shares are publicly traded
	 	 	ý By delivery of already-owned shares if the Shares are publicly traded
	 	 	o By net exercise

        Additional Terms/Acknowledgements:    The undersigned Optionholder acknowledges receipt of, and understands and agrees to, this
Option Grant Notice, the Option Agreement, and the Plan. Optionholder further acknowledges that as of the Date of Grant, this Option Grant Notice, the Option Agreement, and the Plan set forth the
entire understanding between Optionholder and the Company regarding the acquisition of stock in the Company and supersede all prior oral and written agreements 

on
that subject with the exception of (i) options previously granted and delivered to Optionholder under the Plan, and (ii) the following agreements only: 

	OTHER AGREEMENTS:	 	 
	 	 	

	 	 	

	AFFYMAX, INC.	 	OPTIONHOLDER:
	

By:	
 	

 	
 	

 
	 	 	
	 	

	Signature	 	Signature
	Title:	 	 	 	Date:	 	 
	 	 	
	 	 	 	

	Date:	 	 	 	 	 	 
	 	 	
	 	 	 	 

ATTACHMENTS: Option Agreement, 2006 Equity Incentive Plan, and Notice of Exercise 

NON-DISCRETIONARY GRANT PROGRAM  

ATTACHMENT I

OPTION AGREEMENT  

NON-DISCRETIONARY GRANT PROGRAM  

ATTACHMENT II

2006 EQUITY INCENTIVE PLAN  

NON-DISCRETIONARY GRANT PROGRAM  

ATTACHMENT III

NOTICE OF EXERCISE  

   NON-DISCRETIONARY GRANT PROGRAM  

AFFYMAX, INC.

2006 EQUITY INCENTIVE PLAN  

OPTION AGREEMENT

(NONSTATUTORY STOCK OPTION)  

        Pursuant to your Option Grant Notice ("Grant Notice") and this Option Agreement, Affymax, Inc. (the
"Company") has granted you an option pursuant to the Non-Discretionary Grant Program under its 2006 Equity Incentive Plan (the
"Plan") to purchase the number of shares of the Company's Common Stock indicated in your Grant Notice at the exercise price indicated in your Grant
Notice. Defined terms not explicitly defined in this Option Agreement but defined in the Plan shall have the same definitions as in the Plan. 

        The
details of your option are as follows: 

	1.
	VESTING. Subject to the limitations contained herein, your option will vest as provided in your Grant Notice, provided that vesting will
cease upon the termination of your Continuous Service.

	2.
	NUMBER OF SHARES AND EXERCISE PRICE. The number of shares of Common Stock subject to your option and your exercise price per share
referenced in your Grant Notice may be adjusted from time to time for Capitalization Adjustments.

	3.
	METHOD OF PAYMENT. Payment of the exercise price is due in full upon exercise of all or any part of your option. You may elect to make
payment of the exercise price in cash or by check or in any other manner permitted by your Grant Notice, which may include one or more of the
following: 

 
	(a)
	Provided that at the time of exercise the Common Stock is publicly traded and quoted regularly in The Wall Street
Journal, 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.  

 
	(b)

	Provided that at the time of exercise the Common Stock is publicly traded and quoted regularly in The Wall Street
Journal, by delivery to the Company (either by actual delivery or attestation) of already-owned shares of Common Stock either that you have held for the period required to
avoid classification of your option as a liability for financial accounting purposes (generally six (6) months) or that you did not acquire, directly or indirectly from the Company, that are
owned free and clear of any liens, claims, encumbrances or security interests, and that are valued at Fair Market Value on the date of exercise. "Delivery" for these purposes, in the sole discretion
of the Company at the time you exercise your option, shall include delivery to the Company of your attestation of ownership of such shares of Common Stock in a form approved by the Company.
Notwithstanding the foregoing, you may not exercise your option by tender to the Company of Common Stock to the extent such tender would violate the provisions of any law, regulation or agreement
restricting the redemption of the Company's stock.

 

	4.
	WHOLE SHARES. You may exercise your option only for whole shares of Common Stock.

	5.
	SECURITIES LAW COMPLIANCE. Notwithstanding anything to the contrary contained herein, you may not exercise your option unless the shares
of Common Stock issuable upon such exercise are then registered under the Securities Act or, if such shares of Common Stock are not then so registered, the Company has determined that such exercise
and issuance would be exempt from the 

1

 

registration
requirements of the Securities Act. The exercise of your option also must comply with other applicable laws and regulations governing your option, and you may not exercise your option if
the Company determines that such exercise would not be in material compliance with such laws and regulations. 

	6.
	TERM. You may not exercise your option before the commencement or after the expiration of its term. The term of your option commences on
the Date of Grant and expires upon the earliest of the following: 

 
	(a)
	three (3) months after the termination of your Continuous Service for any reason other than your Disability or death or upon a Change in Control,
provided that if during any part of such three (3) month period your option is not exercisable solely because of the condition set forth in Section 5, your option shall not expire until
the earlier of the Expiration Date or until it shall have been exercisable for an aggregate period of three (3) months after the termination of your Continuous Service;  

 
	(b)

	twelve (12) months after the termination of your Continuous Service due to your Disability;  

 

	(c)
	eighteen (18) months after your death if you die either during your Continuous Service or within three (3) months after your Continuous Service
terminates;  

 
	(d)
	twelve (12) months after the effective date of a Change in Control if termination occurs as of, or within twelve (12)
 months following the
effective date of such a Change in Control;  

 
	(e)
	the Expiration Date indicated in your Grant Notice; or  

	(f)
	the day before the tenth (10th) anniversary of the Date of Grant.

 

	7.
	EXERCISE. 

 
	(a)
	You may exercise the vested portion of your option during its term by delivering a Notice of Exercise (in a form designated by the Company) together with the
exercise price to the Secretary of the Company, or to such other person as the Company may designate, during regular business hours, together with such additional documents as the Company may then
require.  

 
	(b)
	By exercising your option you agree that, as a condition to any exercise of your option, the Company may require you to enter into an
arrangement providing for
the payment by you to the Company of any tax withholding obligation of the Company arising by reason of (i) the exercise of your option, or (ii) the disposition of shares of Common Stock
acquired upon such exercise.

 

	8.
	TRANSFERABILITY. Your option is transferable only by will or by the laws of descent and distribution and is exercisable only by you
during your lifetime. However, you may transfer your option for no consideration upon written consent of the Board (i) if, at the time of transfer, a Form S-8 registration
statement under the Securities Act is available for the issuance of shares by the Company upon the exercise of such transferred option, or (ii) the transfer is to your employer at the time of
transfer or an affiliate of your employer at the time of transfer. Any such transfer is subject to such limits as the Board may establish, and subject to the transferee agreeing to remain subject to
all the terms and conditions applicable to your option prior to such transfer. The forgoing right to transfer your option shall apply to the right to consent to amendments to the Option Agreement for
such option. In addition, until you transfers the option, you 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 your death, shall thereafter be entitled to exercise your option. 

2

 
	9.
	CHANGE IN CONTROL. 

 
	(a)
	Your option shall become fully vested and exercisable immediately prior to the effectiveness of a Change in Control.  

 
	(b)

	If any payment or benefit you would receive pursuant to a Change in Control from the Company or otherwise
("Payment") would (i) constitute a "parachute payment" within the meaning of Section 280G of the Code, and (ii) but for this
sentence, be subject to the excise tax imposed by Section 4999 of the Code (the "Excise Tax"), then the Company shall cause to be determined,
before any amounts of the Payment are paid to you, which of the following two alternative forms of payment would maximize your after-tax proceeds: (i) payment in full of the entire
amount of the Payment (a "Full Payment"), or (ii) payment of only a part of the Payment so that you receive the largest payment possible without
the imposition of the Excise Tax (a "Reduced Payment"), whichever amount results in your receipt, on an after-tax basis, of the greater
amount of the Payment notwithstanding that all or some portion of the Payment may be subject to the Excise Tax. For purposes of determining whether to make a Full Payment or a Reduced Payment, the
Company shall cause to be taken into account all applicable federal, state and local income and employment taxes and the Excise Tax (all computed at the highest applicable marginal rate, net of the
maximum reduction in federal income taxes which could be obtained from a deduction of such state and local taxes). If a Reduced Payment is made, (i) the Payment shall be paid only to the extent
permitted under the Reduced Payment alternative, and you shall have no rights to any additional payments and/or benefits constituting the Payment, and (ii) reduction in payments and/or benefits
shall occur in the following order unless you elect in writing a different order (provided, however, that such election shall be subject to Company approval if made on or after the date on which the
event that triggers the Payment occurs): (1) reduction of cash payments; (2) cancellation of accelerated vesting of equity awards other than stock options; (3) cancellation of
accelerated vesting of stock options; and (4) reduction of other benefits paid to you. In the event that acceleration of compensation from your equity awards is to be reduced, such acceleration
of vesting shall be canceled in the reverse order of the date of grant unless you elect in writing a different order for cancellation.  

 
	(c)
	The
accounting firm engaged by the Company for general tax purposes as of the day prior to the effective date of the Change in Control shall perform the
foregoing calculations. If the accounting firm so engaged by the Company is serving as accountant or auditor for the individual, entity or group effecting the Change in Control, the Company shall
appoint a nationally recognized accounting firm to make the determinations required hereunder. The Company shall bear all expenses with respect to the determinations by such accounting firm required
to be made hereunder.  

 
	(d)
	The accounting firm engaged to make the determinations hereunder shall provide its calculations, together with detailed
supporting documentation, to you and
the Company within fifteen (15) calendar days after the date on which your right to a Payment is triggered (if requested at that time by you or the Company) or such other time as requested by
you or the Company. If the accounting firm determines that no Excise Tax is payable with respect to a Payment, either before or after the application of the Reduced Payment, it shall furnish you and
the Company with an opinion reasonably acceptable to you that no Excise Tax will be imposed with respect to such Payment. Any good faith determinations of the accounting firm made hereunder shall be
final, binding and conclusive upon you and the Company.

 

	10.
	OPTION NOT A SERVICE CONTRACT. Your option is not an employment or service contract, and nothing in your option shall be deemed to
create in any way whatsoever any obligation on your part to continue in the employ of the Company or an Affiliate, or of the Company or an Affiliate 

3

 

to
continue your employment. In addition, nothing in your option shall obligate the Company or an Affiliate, their respective stockholders, Boards of Directors, Officers or Employees to continue any
relationship that you might have as a Director or Consultant for the Company or an Affiliate. 

	11.
	WITHHOLDING OBLIGATIONS. 

 
	(a)
	At the time you exercise your option, in whole or in part, or at any time thereafter as requested by the Company, you hereby authorize withholding from payroll
and any other amounts payable to you, and otherwise agree to make adequate provision for (including by means of a "cashless exercise" pursuant to a program developed under Regulation T as
promulgated by the Federal Reserve Board to the extent permitted by the Company), any sums required to satisfy the federal, state, local and foreign tax withholding obligations of the Company or an
Affiliate, if any, which arise in connection with the exercise of your option.  

 
	(b)
	Upon your request and subject to approval by the Company, in its
sole discretion, and compliance with any applicable legal conditions or restrictions, the
Company may withhold from fully vested shares of Common Stock otherwise issuable to you upon the exercise of your option a number of whole shares of Common Stock having a Fair Market Value, determined
by the Company as of the date of exercise, not in excess of the minimum amount of tax required to be withheld by law (or such lower amount as may be necessary to avoid classification of your option as
a liability for financial accounting purposes). Any adverse consequences to you arising in connection with such share withholding procedure shall be your sole responsibility.  

 
	(c)

	You may not exercise your option unless the tax withholding obligations of the Company and/or any Affiliate are satisfied. Accordingly, you may not be able to
exercise your option when desired even though your option is vested, and the Company shall have no obligation to issue a certificate for such shares of Common Stock or release such shares of Common
Stock from any escrow provided for herein unless such obligations are satisfied.

 

	12.
	NOTICES. Any notices provided for in your option or the Plan shall be given in writing and shall be deemed effectively given upon
receipt or, in the case of notices delivered by mail by the Company to you, five (5) days after deposit in the United States mail, postage prepaid, addressed to you at the last address you
provided to the Company.

	13.
	GOVERNING PLAN DOCUMENT. Your option is subject to all the provisions of the Plan, the provisions of which are hereby made a part of
your option, and is further subject to all interpretations, amendments, rules and regulations, which may from time to time be promulgated and adopted pursuant to the Plan. In the event of any conflict
between the provisions of your option and those of the Plan, the provisions of the Plan shall control. 

4

   NOTICE OF EXERCISE  

	Affymax, Inc.

4001 Miranda Avenue

Palo Alto, CA 94304	 	Date of Exercise:                        

Ladies and Gentlemen: 

        This
constitutes notice under my stock option that I elect to purchase the number of shares for the price set forth below. 

	Type of option (check one):	 	 	o Incentive	 	o Nonstatutory
	

Stock option dated:	
 	
 	

            	
 	

 
	

Number of shares as to which option is exercised:	
 	
 	

            	
 	

 
	

Certificates to be issued in name of:	
 	
 	

            	
 	

 
	

Total exercise price:	
 	
$	

            	
 	

 
	

Cash payment delivered herewith:	
 	
$	

            	
 	

 
	

Value of            shares of Affymax, Inc. Common Stock delivered herewith(1):	
 	
$	

            	
 	

 

        By
this exercise, I agree (i) to provide such additional documents as you may require pursuant to the terms of the Affymax, Inc. 2006 Equity Incentive Plan, (ii) to
provide for the payment by me to you (in the manner designated by you) of your withholding obligation, if any, relating to the exercise of this option, and (iii) if this exercise relates to an
incentive stock option, to notify you in writing within fifteen (15) days after the date of any disposition of any of the shares of Common Stock issued upon exercise of this option that occurs
within two (2) years after the date of grant of this option or within one (1) year after such shares of Common Stock are issued upon exercise of this option. 

	 	Very truly yours,
	

 	

	(1)
	Shares
must meet the public trading requirements set forth in the option. Shares must be valued in accordance with the terms of the option being exercised, must have been owned for
the minimum period required in the option, and must be owned free and clear of any liens, claims, encumbrances or security interests. Certificates must be endorsed or accompanied by an executed
assignment separate from certificate. 

1

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00107-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00107-of-00352.parquet"}]]