Document:

exv4w23

 

Exhibit 4.23

THIS WARRANT HAS BEEN, AND THE SHARES OF COMMON STOCK WHICH MAY BE RECEIVED PURSUANT TO THE
EXERCISE OF THIS WARRANT WILL BE, ACQUIRED SOLELY FOR INVESTMENT AND NOT WITH A VIEW TO, OR FOR
RESALE IN CONNECTION WITH, ANY DISTRIBUTION THEREOF. NEITHER THIS WARRANT NOR SUCH SHARES
(TOGETHER, THE “SECURITIES”) HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH DISPOSITION IS EXEMPT FROM
THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF THE ACT AND OF ANY APPLICABLE STATE
SECURITIES LAWS.

No. WC-291           Initial Issue Date: 12/04/03

Reissued 06/15/05 as result of Transfer from WC-274

WARRANT TO PURCHASE COMMON STOCK

 

     THIS CERTIFIES THAT, for good and valuable consideration, S. Neborsky and R Neborsky TTEE
Robert J. Neborsky MD Inc Comb Retirement Trust (the “Holder”) is entitled to subscribe for and
purchase from Adventrx Pharmaceuticals, Inc., a Delaware corporation (the “Company”), Sixty-seven
Thousand, Five Hundred (67,500) fully paid and nonassessable shares of Common Stock, par value
$0.001 per share (“Common Stock”), of the Company (as adjusted pursuant to Section 3 hereof) (the
“Warrant Shares”) at a price per share equal to Fifty Cents ($.50) (as adjusted pursuant to Section
3 hereof) (the “Exercise Price”), subject to the provisions and upon the terms and conditions
hereinafter set forth.

1. Method of Exercise; Payment.

     (a) Exercise Period. The purchase right represented by this Warrant may be exercised
by the Holder during the term of this Warrant (as set forth in Section 9 hereof) at any time
after the Commencement Date, as defined below, by the surrender of this Warrant (with the notice
of exercise form attached hereto as Exhibit A (the “Notice of Exercise”) duly executed)
at the principal office of the Company. This Warrant may only be exercised in whole and not in
part.

     (b) Cash Exercise. Upon exercise of this Warrant, the Holder shall pay the Company an
amount equal to the product of (x) the Exercise Price multiplied by (y) the total number of
Warrant Shares subject to this Warrant, by wire transfer or certified check payable to the order
of the Company. The person or persons in whose name(s) any certificate(s) representing the
Warrant Shares shall be issuable upon exercise of this Warrant shall be deemed to have become
the holder(s) of record of, and shall be treated for all purposes as the record holder(s) of,
the Warrant Shares represented thereby (and such Warrant Shares shall
be deemed to have been issued) immediately prior to the close of business on the date upon
which this Warrant is exercised.

 

 

     (c) Stock Certificates. In the event of the exercise of this Warrant, certificates for
the Warrant Shares so purchased shall be delivered to the Holder within a reasonable time after
exercise.

2. Stock Fully Paid; Reservation of Shares. All of the Warrant Shares issuable upon the exercise
of the rights represented by this Warrant will, upon issuance and receipt of the Exercise Price
therefor, be fully paid and nonassessable, and free from all preemptive rights, rights of first
refusal or first offer, taxes, liens and charges with respect to the issuance thereof. During the
period within which the rights represented by this Warrant may be exercised, the Company shall at
all times have authorized and reserved for issuance a sufficient number of Warrant Shares to
provide for the exercise of the rights represented by this Warrant.

3. Adjustment of Exercise Price and Number of Shares. The number and kind of Warrant Shares
purchasable upon the exercise of this Warrant and the Exercise Price therefor shall be subject to
adjustment from time to time upon the occurrence of certain events, as follows:

     (a) Reclassification, Consolidation or Reorganization. In case of any reclassification
of the Common Stock (other than a change in par value, or as a result of a subdivision or
combination), or in case of any consolidation or merger of the Company with or into another
corporation (other than a Change of Control, as defined below) (any of which is a
“Reorganization Transaction”), the Company, or such successor corporation as the case may be,
shall execute a new warrant, providing that the holder of this Warrant shall have the right to
exercise such new warrant, and procure upon such exercise and payment of the same aggregate
Exercise Price, in lieu of the Warrant Shares theretofore issuable upon exercise of this
Warrant, the kind and amount of shares of stock, other securities, money and property as would
be payable for the Warrant Shares issuable upon exercise of this Warrant as if such Warrant
Shares were outstanding on the consummation of the Reorganization Transaction. For purposes of
this Warrant, the term “Change of Control” shall mean (i) any acquisition of the Company by
means of merger, acquisition, or other form of corporate
reorganization in which outstanding shares of the Company are exchanged for securities or other consideration issued, or caused to
be issued, by the acquiring corporation or its subsidiary or parent (other than a
reincorporation transaction or change of domicile) and pursuant to which the holders of the
outstanding voting securities of the Company immediately prior to such consolidation, merger or
other transaction fail to hold equity securities representing a majority of the voting power of
the Company or surviving entity immediately following such consolidation, merger or other
transaction (excluding voting securities of the acquiring corporation held by such holders prior
to such transaction) or (ii) a sale of all or substantially all of the assets of the Company.

     (b) Stock Splits, Dividends and Combinations. In the event that the Company shall at
any time subdivide the outstanding shares of Common Stock, or shall issue a stock dividend on
its outstanding shares of Common Stock, the number of Warrant Shares issuable upon exercise of
this Warrant immediately prior to such subdivision or to the issuance of such
stock dividend shall be proportionately increased, and the Exercise Price shall be
proportionately decreased, and in the event that the Company shall at any time combine the
outstanding shares of Common Stock, the number of Warrant Shares issuable upon exercise

 

 

of this
Warrant immediately prior to such combination shall be proportionately decreased, and the
Exercise Price shall be proportionately increased, effective at the close of business on the
date of such subdivision, stock dividend or combination, as the case may be.

4. Transfer of Warrant. This Warrant may only be transferred in compliance with federal and state
securities laws and, except as provided below, may not be transferred except with the prior written
consent of the Company, which shall not be unreasonably withheld or delayed, and any purported
transfer without such prior written consent shall be null and void; provided,
however, that the Company may withhold its consent to transfer or assignment of this
Warrant to any person or entity who is deemed to be a competitor or prospective competitor of the
Company, such determination to be made in the reasonable judgment of the Board.

5. Condition to Exercise of Warrant. Each certificate evidencing the Warrant Shares issued upon
exercise of this Warrant shall be stamped or imprinted with a legend substantially in the following
form:

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT
WITH A VIEW TO, OR FOR RESALE IN CONNECTION WITH, ANY DISTRIBUTION THEREOF, AND HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY
STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED
OR HYPOTHECATED IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE ACT OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT.

6. Fractional Shares. No fractional Warrant Shares will be issued in connection with any exercise
hereunder, but in lieu of such fractional shares the Company shall make a cash payment therefor
upon the basis of the Exercise Price then in effect.

7. Representations and Warranties by the Holder. The Holder represents and warrants to the Company
as follows:

     (a) This Warrant is being acquired for the Holder’s own account, for investment and not with a
view to, or for resale in connection with, any distribution or public offering thereof within
the meaning of the Securities Act of 1933, as amended (the “Securities Act”). Upon exercise of
this Warrant, the Holder shall, if so requested by the Company, confirm in writing, in a form
reasonably satisfactory to the Company, that the Warrant Shares issuable upon exercise of this
Warrant are being acquired for investment and not with a view toward distribution or resale.
The Holder is an “accredited investor” within the meaning of the Securities Act.

     (b) The Holder understands that this Warrant and the Warrant Shares have not been registered
under the Securities Act by reason of their issuance in a transaction exempt from
the registration and prospectus delivery requirements of the Securities Act pursuant to
Section 4(2) thereof and that the Company’s reliance upon such exemption is predicated, in

 

 

part,
upon the Holder’s representations and warranties set forth in this Agreement. The Holder
understands that this Warrant and the Warrant Shares must be held by the Holder indefinitely,
and that the Holder must therefore bear the economic risk of such investment indefinitely,
unless a subsequent disposition thereof is registered under the Securities Act or is exempted
from such registration. The Holder further understands that this Warrant and the Warrant Shares
have not been registered under the securities laws of any state.

     (c) The Holder acknowledges that it is acquiring this Warrant without being offered or
furnished any offering literature or prospectus. The Holder understands that neither the United
States Securities and Exchange Commission, nor any governmental agency charged with the
administration of the securities laws of any state nor any other governmental agency has passed
upon or reviewed the merits or qualifications of, or recommended or approved the issuance of
this Warrant or the Warrant Shares.

     (d) The Holder understands that, except as provided in Section 10 of this Warrant, the Company
is under no obligation to register this Warrant or the Warrant Shares.

     (e) The Holder is a bona fide resident and domiciliary (not a temporary or transient resident)
of the state indicated in the signature page hereto and the Holder has no present intention of
becoming a resident of any other state or jurisdiction.

     (f) The Holder has such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of the purchase of this Warrant and the Warrant
Shares purchasable pursuant to the terms of this Warrant and of protecting its interests in
connection therewith. The Holder is able to bear the economic risk of the purchase of the
Warrant Shares pursuant to the terms of this Warrant.

     (g) The Holder does not currently have and will not undertake during the term of this Warrant
any short position with respect to shares of Common Stock of the Company.

8. Rights of Stockholders. No holder of this Warrant shall be entitled, as a Warrant holder, to
vote or receive dividends or be deemed the holder of Warrant Shares or any other securities of the
Company which may at any time be issuable on the exercise hereof for any purpose, nor shall
anything contained herein be construed to confer upon the Holder any of the rights of a stockholder
of the Company or any right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any corporate action
(whether upon any recapitalization, issuance of stock, reclassification of stock, change of par
value, consolidation, merger, conveyance, or otherwise) or to receive notice of meetings, or to
receive dividends or subscription rights or otherwise with respect to the Warrant Shares until this
Warrant shall have been exercised and the Warrant Shares purchasable upon the exercise hereof shall
have become deliverable, as provided herein.

 

 

9. Term of Warrant.

     (a) This Warrant shall become exercisable on the date of issuance set forth below (the
“Commencement Date”) and shall no longer be exercisable as of the earlier of (i) 5:00 p.m., San
Diego, California local time, on December 4, 2006 (ii) immediately prior to a Change of Control
and (iii) 5:00 p.m., San Diego, California local time, on the Call Termination Date (as defined
below).

     (b) Notwithstanding anything herein to the contrary, at any time after the Commencement Date,
if the closing price of one share of Common Stock quoted in the over-the-counter market summary,
the Bulletin Board Exchange, the Nasdaq National Market or the closing price quoted on a
national securities exchange, whichever is applicable, is greater than or equal to 200% of the
Exercise Price for a period of 20 consecutive trading days, then thereafter the Company shall
have the right (the “Company Termination Right”), exercisable at the Company’s sole discretion,
to terminate this Warrant with at least 10-days’ prior written notice (the “Termination Notice”)
which Termination Notice shall state the date this Warrant shall terminate (the “Call
Termination Date”); provided, however, that the Company may not exercise the
Company Termination Right unless a registration statement registering the Warrant Stock has been
declared effective and is effective from the date of delivery of the Termination Notice until
the Call Termination Date, provided, further, that if this Warrant is terminated
pursuant to this Section 9(b), then the Company shall use commercially reasonable efforts to
maintain the effectiveness of a registration statement registering the Warrant Stock until the
date that is 15 days after the Call Termination Date or, if earlier, the date the Holder shall
have sold all its Warrant Shares covered by such registration statement.

10. Registration Rights.

     (a) Piggy-back Rights. If (but without any obligation to do so) the Company proposes
to register any shares of Common Stock solely for cash pursuant to a registration statement
under the Securities Act, other than a registration solely in connection with a transaction
under Rule 145 promulgated under the Securities Act (a “Public Offering”), the Company shall
promptly give the Holder written notice of such Public Offering, at least 10 business days prior
to the filing of the registration statement under the Securities Act regarding such Public
Offering. Upon the written request of the Holder given within 5 business days after delivery of
such written notice by the Company, the Company shall, subject to the provisions of Section
10(b) below, use its best efforts to cause to be registered under the Securities Act all of the
Warrant Shares that the Holder has requested to be registered.

     (b) Underwriting. If the registration statement under which the Company gives notice
under this Section 10 is for an underwritten Public Offering, the Company shall so advise the
Holder. The right of the Holder to registration pursuant to Section 10(a) above shall be
conditioned upon the Holder’s participation in such underwriting and the inclusion of the
Warrant Shares in the underwriting to the extent provided herein. The Holder shall (together
with the Company and any other holders of Company securities distributing their securities
through such underwriting) enter into an underwriting agreement in customary

 

 

form with the
underwriter or underwriters selected for underwriting by the Company. Notwithstanding any
other provision of this Section 10, if the underwriter determines that marketing factors
require a limitation of the number of shares to be underwritten, the underwriter may exclude
some or all of the Warrant Shares from such registration and underwriting.

     (c) Furnish Information. It shall be a condition to the Company’s obligations to take
any action under this Section 10 that the Holder shall furnish to the Company such information
regarding itself, the Warrant Shares, and the intended method of disposition of such Warrant
Shares as shall be required to effect the registration of any Warrant Shares. In that
connection, the Holder shall be required to represent to the Company that all such information
which is given is both complete and accurate in all material respects when made.

     (d) Delay of Registration. The Holder shall have no right to obtain or seek an
injunction restraining or otherwise delaying any such registration as the result of any
controversy that might arise with respect to the interpretation or implementation of this
Section 10.

     (e) Termination of Registration Rights. The Company shall have no obligation to
register Warrant Shares pursuant to this Section 10 with respect to any request or requests made
by any Holder on or after that date which is one year after the date such Warrant Shares were
deemed to be acquired for purposes of determining the holding period of such Warrant Shares
under Rule 144 of the Act.

11. Miscellaneous.

     (a) This Warrant is being delivered in the state of California and shall be construed and
enforced in accordance with and governed by the laws of the state of California, without giving
effect to principles of conflicts of laws.

     (b) The headings in this Warrant are for purposes of reference only, and shall not limit or
otherwise affect any of the terms hereof.

     (c) The terms of this Warrant shall be binding upon and shall inure to the benefit of any
successors or assigns of the Company and of the Holder and of the Warrant Shares issued or
issuable upon the exercise hereof.

     (d) Any notice provided for or permitted under this Warrant shall be treated as having been
given (a) upon receipt, when delivered personally, (b) upon receipt, when sent by confirmed
facsimile or telecopy, (c) one day after sending, when sent by commercial overnight courier with
written verification of receipt, or (d) three business days after deposit with the United States
Postal Service, when mailed postage prepaid by certified or registered mail, return receipt
requested, addressed (a) if to the Company, at 9948 Hibert Street, Suite 100, San Diego, CA
92131, facsimile: (858) 271-9678, Attention: Nicholas J. Virca, or (b) if to the Holder, at such
address or facsimile number as the Holder shall have furnished to the Company in writing, or at
such other place of which the other party has been notified in accordance with the provisions of
this Section 11(d).

 

 

     (e) This Warrant constitutes the full and entire understanding and agreement between the
parties with regard to the subjects hereof.

     (f) Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant and, in the case of any such loss, theft or
destruction, upon delivery of an indemnity agreement reasonably satisfactory in form and amount
to the Company or, in the case of any such mutilation, upon surrender and cancellation of such
Warrant, the Company at the Holder’s expense will execute and deliver to the holder of record,
in lieu thereof, a new Warrant of like date and tenor.

     (g) This Warrant and any provision hereof may be amended, waived or terminated only by an
instrument in writing signed by the Company and the Holder.

     (h) Receipt of this Warrant by the Holder shall constitute acceptance of and agreement to the
foregoing terms and conditions.

[Signature page follows.]

 

 

     IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its duly authorized
officer.

	 	 	 	 	 	 	 
	 	 	Adventrx Pharmaceuticals, Inc.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Carrie Carlander	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:
	 	Carrie Carlander	 	 
	 

	 	Title:
	 	Chief Financial Officer     6/15/05
	 	 
	 
	 	 	 	 	 	 
	 	 	S. Neborsky and R. Neborsky TTEE

Robert J. Neborsky MD Inc Comb Retirement Trust	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Sandra Neborsky	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Robert Neborsky	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Address:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Facsimile:	 	 	 	 
	 

	 	 	 	 	 	 

 

 

Exhibit A

Notice of Exercise

	 	 	 
	TO:

	 	Adventrx Pharmaceuticals, Inc.
	 

	 	9948 Hibert Street, Suite 100
	 

	 	San Diego, CA 92131

RE: WC-291

     The undersigned hereby elects to purchase 67,500 shares of Common Stock, par value $0.001 per
share, of the Company (“Common Stock”) pursuant to the terms of Section 1(b) of the Warrant to
Purchase Common Stock dated December 4, 2003 (the “Warrant”), and tenders herewith payment of the
purchase price of such shares in full.

     Please issue a certificate or certificates representing said 67,500 shares of Common Stock in
the name of the undersigned or in such other name as is specified below:

	 	 	 	 	 	 	 
	 

	 	Name:
	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Address:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 

     The undersigned hereby represents and warrants that the aforesaid shares of Common Stock are
being acquired for the account of the undersigned for investment and not with a view to, or for
resale, in connection with the distribution thereof, and that the undersigned has no present
intention of distributing or reselling such shares, and that all representations and warranties of
the undersigned set forth in Section 7 of the Warrant are true and correct as of the date hereof.

	 	 	 	 	 	 	 
	 	 	S. Neborsky and Robert J. Neborsky TTEE

Robert J. Neborsky MD Inc Comb Retirement Trust	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Date:exv10w1

 

Exhibit 10.1

ADVENTRX PHARMACEUTICALS, INC.

2005 EQUITY INCENTIVE PLAN

1. Purpose. The 2005 Equity Incentive Plan (the “Plan”) of ADVENTRX Pharmaceuticals, Inc., a
Delaware corporation (the “Company”), is intended to encourage ownership of Stock by employees,
consultants and directors of the Company and Affiliates and to provide additional incentive for
them to promote the success of the Company’s business through the grant of Awards. The Plan is
intended to be an incentive stock option plan within the meaning of Section 422 of the Code, but
not all Awards are required to be Incentive Options.

2. Definitions. As used in the Plan, the terms set forth below shall have the meanings set forth
below:

     2.1 Accelerate, Accelerated, and Acceleration means: (a) when used with respect to an Option
or Stock Appreciation Right, that as of the time of reference the Option or Stock Appreciation
Right will become exercisable with respect to some or all of the Stock or Stock Appreciation Right
for which it was not then otherwise exercisable by its terms; (b) when used with respect to
Restricted Stock or Restricted Stock Units, that the Risk of Forfeiture otherwise applicable to
such Stock or Restricted Stock Units shall expire with respect to some or all of the Restricted
Stock or Units then still otherwise subject to the Risk of Forfeiture; and (c) when used with
respect to Performance Units, that the applicable Performance Goals shall be deemed to have been
met as to some or all of the Units.

     2.2 Acquisition means a merger or consolidation of the Company with or into another person or
the sale, transfer, or other disposition of all or substantially all of the Company’s assets to one
or more other persons in a single transaction or series of related transactions.

     2.3 Affiliate means any corporation, partnership, limited liability company, business trust,
or other entity controlling, controlled by or under common control with the Company.

     2.4 Award means any grant or sale pursuant to the Plan of Options, Stock Appreciation Rights,
Performance Units, Restricted Stock, Restricted Stock Units or Stock Grants.

     2.5 Award Agreement means an agreement between the Company and a Participant, setting forth
the terms and conditions of an Award.

     2.6 Board means the Board of Directors of the Company.

     2.7 Change of Control means the occurrence of any of the following after the date of the
approval of the Plan by the Board:

          (a) an Acquisition, unless in connection with any merger or consolidation securities
possessing more than 50% of the total combined voting power of the survivor’s or acquiror’s
outstanding securities (or the securities of any parent thereof) are held by a person or persons
who held securities possessing more than 50% of the total combined voting power of the Company’s
outstanding securities immediately prior to that transaction;

          (b) any person or group of persons (within the meaning of Section 13(d)(3) of the Exchange
Act) directly or indirectly acquires beneficial ownership (determined pursuant to Rule 13d-3
promulgated under the Exchange Act) of securities possessing more than 50% of the total combined
voting power of the Company’s outstanding securities pursuant to a tender or exchange offer made
directly to the Company’s stockholders that the Board does not recommend such stockholders accept,
other than (i) the Company or an Affiliate, (ii) an employee benefit plan of the Company or any
Affiliates, (iii) a trustee or other fiduciary holding securities under an employee benefit plan of
the Company or any Affiliates, or (iv) an underwriter temporarily holding securities pursuant to an
offering of such securities;

          (c) over a period of 36 consecutive months or less, there is a change in the composition of
the Board such that a majority of the Board members (rounded up to the next whole number, if a
fraction) ceases, by reason of one or more proxy contests for the election of Board members, to be
composed of individuals who either

1

 

(i) have been Board members continuously since the beginning of
that period, or (ii) have been elected or nominated for election as Board members during such
period by at least a majority of the Board members described in the preceding clause (i) who were
still in office at the time that election or nomination was approved by the Board; or

          (d) a majority of the Board votes in favor of a decision that a Change of Control has
occurred.

     2.8 Code means the Internal Revenue Code of 1986, as amended, or any successor statutes
thereto, and any regulations issued from time to time thereunder.

     2.9 Committee means the Compensation Committee of the Board, which in general is responsible
for the administration of the Plan, as provided in Section 5. For any period during which no such
committee is in existence, “Committee” means the Board, and all authority and responsibility
assigned to the Committee under the Plan shall be exercised, if at all, by the Board.

     2.10 Continuous Service means the absence of any interruption or termination of service as an
employee, director or consultant of the Company or any Subsidiary. Continuous Service shall not be
considered interrupted during any period of (i) any leave of absence approved by the Company or
(ii) transfers between locations of the Company or between the Company and any Parent, Subsidiary
or successor of the Company.

     2.11 Covered Employee means an employee who is a “covered employee” within the meaning of
Section 162(m) of the Code.

     2.12 Effective Date means May 24, 2005, the date the requisite number of stockholders of the
Company approved the Plan.

     2.13 Exchange Act means the Securities Exchange Act of 1934, as amended.

     2.14 Grant Date means the date as of which an Award is granted, as determined under Section
7.1(a).

     2.15 Incentive Option means an Option which by its terms is to be treated as an “incentive
stock option” within the meaning of Section 422 of the Code.

     2.16 Market Value means the value of a share of Stock on a particular date determined by such
methods or procedures as may be established by the Committee. Unless otherwise determined by the
Committee, the Market Value of a share of Stock as of any date is the closing price for a Stock as
reported on the American Stock Exchange LLC (or on any national securities exchange or other
established market on which the Stock is then listed) for that date or, if no closing price is
reported for that date, the closing price on the next preceding date for which a closing price was
reported.

     2.17 Nonstatutory Option means any Option that is not an Incentive Option.

     2.18 Option means an option to purchase Stock.

     2.19 Optionee means a Participant to whom an Option shall have been granted under the Plan.

     2.20 Parent means a parent corporation of the Company, whether now or hereafter existing, as
defined by Section 424(e) of the Code.

     2.21 Participant means any holder of an outstanding Award under the Plan.

     2.22 Performance Criteria means the criteria that the Committee selects for purposes of
establishing the Performance Goal or Performance Goals for a Participant for a Performance Period.
The Performance Criteria
used to establish Performance Goals are limited to: pre- or after-tax net earnings, sales
growth, operating earnings, operating cash flow, return on net assets, return on stockholders’
equity, return on assets, return on capital, Stock price growth, stockholder returns, gross or net
profit margin, earnings per share, price per share of Stock, and market

2

 

share, any of which may be
measured either in absolute terms or as compared to any incremental increase or as compared to
results of a peer group, results of clinical trial or FDA approvals. The Committee will, in the
manner and within the time prescribed by Section 162(m) of the Code in the case of Qualified
Performance-Based Awards, objectively define the manner of calculating the Performance Criteria it
selects to use for such Performance Period for such Participant.

     2.23 Performance Goals means, for a Performance Period, the written goals established by the
Committee for the Performance Period based upon the Performance Criteria. Depending on the
Performance Criteria used to establish such Performance Goals, the Performance Goals may be
expressed in terms of overall Company performance or the performance of a division, business unit,
Subsidiary, or an individual.

     2.24 Performance Period means the one or more periods, which may be of varying and overlapping
durations, selected by the Committee, over which the attainment of one or more Performance Goals
will be measured for purposes of determining a Participant’s right to, and the payment of, a
Performance Unit.

     2.25 Performance Unit means a right granted to a Participant under Section 7.5 to receive
cash, Stock or other Awards, the payment of which is contingent on achieving Performance Goals
established by the Committee.

     2.26 person means an individual, a corporation, a partnership, a limited liability company, an
association, a trust or other entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.

     2.27 Qualified Performance-Based Awards means Awards intended to qualify as “performance-based
compensation” under Section 162(m) of the Code.

     2.28 Restricted Stock means a grant or sale of Stock to a Participant subject to a Risk of
Forfeiture.

     2.29 Restricted Stock Units means rights to receive Stock at the close of a Restriction
Period, subject to a Risk of Forfeiture.

     2.30 Restriction Period means the period of time, established by the Committee in connection
with an Award of Restricted Stock or Restricted Stock Units, during which the Restricted Stock or
Restricted Stock Units are subject to a Risk of Forfeiture described in the applicable Award
Agreement.

     2.31 Risk of Forfeiture means a limitation on the right of the Participant to retain
Restricted Stock or Restricted Stock Units, including a right in the Company to reacquire
Restricted Stock at less than the then Market Value of such Restricted Stock, arising because of
the occurrence or non-occurrence of specified events or conditions.

     2.32 Securities Act means the Securities Act of 1933, as amended.

     2.33 SEC means the Securities and Exchange Commission.

     2.34 Stock means common stock, par value $0.001 per share, of the Company, and such other
securities as may be substituted for Stock pursuant to Section 8.

     2.35 Stock Appreciation Right means a right to receive any excess in the Market Value of a
share of Stock (except as otherwise provided in Section 7.2(c)) over a specified exercise price.

     2.36 Stock Grant means the grant of Stock not subject to restrictions or other forfeiture
conditions.

     2.37 Subsidiary means a subsidiary corporation of the Company, whether now or hereafter
existing, as defined in Section 424(f) of the Code.

3

 

     2.38 Ten Percent Owner means a person who owns, or is deemed within the meaning of Section
422(b)(6) of the Code to own, stock possessing more than 10% of the total combined voting power of
all classes of stock of the Company (or any Parent or Subsidiary of the Company). Whether a person
is a Ten Percent Owner shall be determined with respect to an Option based on the facts existing
immediately prior to the Grant Date of the Option.

     2.39 Vesting Commencement Date means, with respect to an Option or Stock Appreciation Right,
the date, determined by the Committee, on which the vesting of the Option or Stock Appreciation
Right shall commence, which may be the Grant Date or a date prior to or after the Grant Date.

3. Term of the Plan. Unless the Plan shall have been earlier terminated by the Board, Awards may be
granted under the Plan at any time in the period commencing on the Effective Date and ending
immediately prior to the tenth anniversary of the Effective Date. Awards granted pursuant to the
Plan within that period shall not expire solely by reason of the termination of the Plan.

4. Stock Subject to the Plan. Subject to Section 8, the maximum aggregate number of shares of
Stock which may be issued pursuant to or subject to outstanding Awards granted under the Plan is
6,000,000, plus an annual increase to be automatically added on the first day of the Company’s
fiscal year beginning in 2006 equal to the lesser of (i) one percent of the number of outstanding
shares of Stock on such day, (ii) 750,000 and (iii) such other amount as the Board may specify
prior to the date such annual increase is to take effect. The maximum aggregate number of shares
of Stock which may be issued pursuant to or subject to outstanding Incentive Options granted under
the Plan is 5,000,000. For purposes of applying the foregoing limitations, if any Option or Stock
Appreciation Right expires, terminates, or is cancelled for any reason without having been
exercised in full, or if any other Award is forfeited by the recipient, the shares of Stock not
purchased by the Optionee or which are forfeited by the recipient shall again be available for
Awards to be granted under the Plan. In addition, exercise or settlement of any Award shall not
count against the foregoing limitations except to the extent settled in the form of Stock. Stock
issued pursuant to Awards granted under the Plan and later repurchased by the Company pursuant to
any repurchase right (other than the repurchase of shares that have not vested and are subject to
forfeiture prior to vesting) that the Company may have shall not be available for future grant of
Awards under the Plan.

5. Administration. The Plan shall be administered by the Committee; provided, however, that at any
time and on any one or more occasions the Board may itself exercise any of the powers and
responsibilities assigned the Committee under the Plan and when so acting shall have the benefit of
all of the provisions of the Plan pertaining to the Committee’s exercise of its authorities
hereunder. Subject to the provisions of the Plan, the Committee shall have complete authority, in
its discretion, to make or to select the manner of making all determinations with respect to each
Award to be granted by the Company under the Plan, including the employee, consultant or director
to receive the Award and the form of Award. In making such determinations, the Committee may take
into account the nature of the services rendered by the respective employees, consultants, and
directors, their present and potential contributions to the success of the Company and Affiliates,
and such other factors as the Committee in its discretion shall deem relevant. Subject to the
provisions of the Plan, the Committee shall also have complete authority to interpret the Plan, to
prescribe, amend and rescind rules and regulations relating to it, to determine the terms and
provisions of the respective Award Agreements (which need not be identical), and to make all other
determinations necessary or advisable for the administration of the Plan. The Committee’s
determinations made in good faith on matters referred to in the Plan shall be final, binding and
conclusive on all persons having or claiming any interest under the Plan or an Award made pursuant
to hereto.

6. Authorization of Grants.

     6.1 Eligibility. The Committee may grant from time to time and at any time prior to the
termination or expiration of the Plan one or more Awards, either alone or in combination with any
other Awards, to any employee of or consultant to one or more of the Company and Affiliates or to
any non-employee member of the Board or of any board of directors (or similar governing authority)
of any Affiliate. However, only employees of the Company, and of any Parent or Subsidiary of the
Company, shall be eligible for the grant of an Incentive Option.
Further, in no event shall the number of shares of Stock covered by Options or other Awards
granted to any one person in any one calendar year exceed 1,500,000 shares of Stock subject to the
Plan.

4

 

     6.2 General Terms of Awards. Each grant of an Award shall be subject to all
applicable terms and conditions of the Plan (including but not limited to any specific terms and
conditions applicable to that type of Award set out in the following Section), and such other terms
and conditions, not inconsistent with the terms of the Plan, as the Committee may prescribe. No
prospective Participant shall have any rights with respect to an Award, unless and until such
Participant has (a) (i) executed an Award Agreement with respect to such Award and delivered a
fully executed copy of such Award Agreement to the Company, or (ii) otherwise affirmatively
assented to the terms and conditions of an Award Agreement with respect to such Award, including by
“click through” agreement, pursuant to procedures and guidelines approved by the Committee, and (b)
otherwise complied with the applicable terms and conditions of such Award.

     6.3 Effect of Termination of Employment, Disability or Death.

          (a) Termination of Employment, Etc. Unless the Committee shall provide otherwise with
respect to any Award, if the Participant’s employment or other association with the Company and
Affiliates ends for any reason other than by total disability or death, including because of the
Participant’s employer ceasing to be an Affiliate, (i) any outstanding Option or Stock Appreciation
Right of the Participant shall cease to be exercisable in any respect not later than 90 days
following that event and, for the period it remains exercisable following that event, shall be
exercisable only to the extent exercisable at the date of that event, subject to the condition that
no Option or Stock Appreciation Right shall be exercised after its expiration in accordance with
its terms, and (ii) any other outstanding Award of the Participant shall be forfeited or otherwise
subject to return to or repurchase by the Company on the terms specified in the applicable Award
Agreement. Military or sick leave or other public (such as jury duty) or personal leave approved
by an authorized representative of the Company shall not be deemed a termination of employment or
other association, provided that it does not exceed the longer of 90 days or the period during
which the absent Participant’s reemployment rights, if any, are guaranteed by statute or by
contract.

          (b) Disability of Participant. If a Participant’s employment or other association
with the Company and Affiliates ends due to disability (as defined in Section 22(e)(3) of the
Code), and such Participant was in Continuous Service from the Grant Date until the date of
termination of service, (i) any outstanding Option or Stock Appreciation Right may be exercised at
any time within six months following the date of termination of service, but only to the extent of
the accrued right to exercise at the time of termination of service, subject to the condition that
no Option or Stock Appreciation Right shall be exercised after its expiration in accordance with
its terms and (ii) any other outstanding Award or the Participant shall be forfeited or otherwise
subject to return or repurchase by the Company on the terms specified in the applicable Award
Agreement.

          (c) Death of Participant. In the event of the death of a Participant who is at the
time of such Participant’s death an employee, director or consultant and who was in Continuous
Service as from the Grant Date until the date of death, (i) any outstanding Option or Stock
Appreciation Right of such Participant shall cease to be exercisable in any respect not later than
12 months following the date of death and, for the period it remains exercisable following the date
of death, shall be exercisable by such Participant’s estate or by a person who acquired the right
to exercise such Award by bequest, inheritance or otherwise as a result of the Participant’s death,
but only to the extent exercisable at the date of death, subject to the condition that no Option or
Stock Appreciation Right shall be exercised after its expiration in accordance with its terms, and
(ii) any other outstanding Award of such Participant shall be forfeited or otherwise subject to
return to or repurchase by the Company on the terms specified in the applicable Award Agreement.

     6.4 Transferability of Awards. Except as otherwise provided in this Section 6.4,
Awards shall not be transferable, and no Award or interest therein may be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of
descent and distribution. All of a Participant’s rights in any Award may be exercised during the
life of the Participant only by the Participant or the Participant’s legal representative.
However, the Committee may, at or after the grant of an Award of a Nonstatutory Option, or
Restricted Stock, provide that such Award may be transferred by the recipient through a gift or
domestic relations order in settlement of marital property rights to any of the following donees or
transferees and may be reacquired by the Participant from any of such donors or transferees:

          (a) any “family member,” which includes any child, stepchild, grandchild, parent, stepparent,
spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-

5

 

law, or sister-in-law, including adoptive relationships and any
individual sharing the Participant’s household (other than a tenant or employee);

          (b) a trust in which family members have more than 50% of the beneficial interests;

          (c) a foundation in which “family members” (or the Participant) control the management of
assets; and

          (d) any other entity in which “family members” (or the Participant) own more than 50% of the
voting interests.

provided, that (x) any such transfer is without payment of any consideration whatsoever and that no
transfer shall be valid unless first approved by the Committee, acting in its sole discretion; (y)
the Award Agreement pursuant to which such Awards are granted, and any amendments thereto, must be
approved by the Committee and must expressly provide for transferability in a manner consistent
with this Section 6.4; and (z) subsequent transfers of transferred Awards shall be prohibited
except in accordance with this Section 6.4. Following transfer, any such Awards shall continue to
be subject to the same terms and conditions as were applicable immediately prior to transfer,
provided that the term of the Plan or in the Award Agreement shall continue to be applied with
respect to the original Participant, following which any Options or Stock Appreciation Rights shall
be exercisable by the transferee only to the extent, and for the periods specified in the Award
Agreement or Section 6.3, as applicable.

7. Specific Terms of Awards.

     7.1 Options.

          (a) Date of Grant. The granting of an Option shall take place at the time specified
in the Award Agreement. Only if expressly so provided in the applicable Award Agreement shall the
Grant Date be a date other than the date on which the Award Agreement shall have been duly executed
and delivered by the Company and the Optionee.

          (b) Exercise Price. The per share price at which Stock may be acquired under each
Incentive Option shall be not less than 100% of the Market Value of a share of Stock on the Grant
Date, or not less than 110% of the Market Value of a share of Stock on the Grant Date if the
Optionee is a Ten Percent Owner. The price at which shares may be acquired under each Nonstatutory
Option shall not be so limited solely by reason of this Section.

          (c) Option Period. No Incentive Option may be exercised on or after the tenth
anniversary of the Grant Date, or on or after the fifth anniversary of the Grant Date if the
Optionee is a Ten Percent Owner. The Option period under each Nonstatutory Option shall not be so
limited solely by reason of this Section.

          (d) Exercisability. An Option may be immediately exercisable or become exercisable in such
installments, cumulative or non-cumulative, as the Committee may determine. Unless the Committee
specifically determines otherwise at the time of the grant of the Option, each Option shall vest
and become exercisable, cumulatively, as to one-fourth of the Stock originally subject to the
Option at the first anniversary of the Vesting Commencement Date and as to one forty-eighth of the
Stock originally subject to the Option at the end of each successive month thereafter until all of
the Stock subject to the Option have vested, subject to Section 6.3. In the case of an Option not
otherwise immediately exercisable in full, the Committee may Accelerate such Option in whole or in
part at any time; provided, however, that in the case of an Incentive Option, any such Acceleration
of the Option would not cause the Option to fail to comply with the provisions of Section 422 of
the Code or the Optionee consents to the Acceleration.

          (e) Method of Exercise. An Option may be exercised by the Optionee giving written
notice, in the manner provided in Section 15, specifying the number of shares of Stock with respect
to which the Option is
then being exercised. The notice shall be accompanied by payment in the form of cash or check
payable to the order of the Company in an amount equal to the exercise price of the Stock to be
purchased or, if the Committee had so

6

 

authorized on the grant of an Incentive Option or on or after
grant of a Nonstatutory Option (and subject to such conditions, if any, as the Committee may deem
necessary to avoid adverse accounting effects to the Company) by delivery to the Company of

                    (i) Stock having a Market Value equal to the exercise price of the Stock to be purchased upon
exercise of such Option, or

                    (ii) unless or to the extent not prohibited by applicable law, the Optionee’s executed
promissory note in the principal amount equal to the exercise price of the shares to be purchased
and otherwise in such form as the Committee shall have approved.

If the Stock is traded on an established market, payment of any exercise price may also be made
through and under the terms and conditions of any formal cashless exercise program authorized by
the Company entailing the sale of the Stock subject to an Option in a brokered transaction (other
than to the Company). Receipt by the Company of such notice and payment in any authorized or
combination of authorized means shall constitute the exercise of the Option. Within 30 days
thereafter but subject to the remaining provisions of the Plan, the Company shall deliver or cause
to be delivered to the Optionee or his agent a certificate or certificates for the number of shares
of Stock then being purchased. Such shares of Stock shall be fully paid and nonassessable.

          (f) Limit on Incentive Option Characterization. An Incentive Option shall be
considered to be an Incentive Option only to the extent that the number of shares of Stock for
which the Option first becomes exercisable in a calendar year do not have an aggregate Market Value
(as of the date of the grant of the Option) in excess of the “current limit.” The current limit
for any Optionee for any calendar year shall be $100,000 minus the aggregate Market Value at the
date of grant of the number of shares of Stock available for purchase for the first time in the
same year under each other Incentive Option previously granted to the Optionee under the Plan, and
under each other incentive stock option previously granted to the Optionee under any other
incentive stock option plan of the Company and Affiliates. Any Stock which would cause the
foregoing limit to be violated shall be deemed to have been granted under a separate Nonstatutory
Option, otherwise identical in its terms to those of the Incentive Option.

          (g) Notification of Disposition. Each person exercising any Incentive Option granted
under the Plan shall be deemed to have covenanted with the Company to report to the Company any
disposition of such shares prior to the expiration of the holding periods specified by Section
422(a)(1) of the Code and, if and to the extent that the realization of income in such a
disposition imposes upon the Company federal, state, local or other withholding tax requirements,
or any such withholding is required to secure for the Company an otherwise available tax deduction,
to remit to the Company an amount in cash sufficient to satisfy those requirements.

          (h) Automatic Option Grants. The provisions set forth in this Section 7.1(h) shall
not be amended more than once every six months other than to comport with changes in the Code, the
Employee Retirement Income Security Act of 1974, as amended, or the rules promulgated thereunder.
All grants of Options to non-employee directors under the Plan shall be automatic and
nondiscretionary and shall be made strictly in accordance with the following provisions:

                    (i) No person shall have any discretion to select which non-employee directors shall be
granted Options.

                    (ii) Each non-employee director shall be automatically granted a Nonstatutory Option (an
“Automatic Director Option”) to purchase 50,000 shares of Stock at the first meeting of the Board
following the annual meeting of stockholders in each year, commencing with the 2005 annual meeting
of stockholders, provided that such director is not an employee and if, as of such date, such
non-employee director shall have served on the Board for at least the preceding six months.

                    (iii) The terms of an Automatic Director Option granted hereunder shall be as follows:

7

 

     (A) the term of the Automatic Director Option shall be 10
years;

     (B) the exercise price per share shall be 105% of the Market
Value per share on the date of grant of the Automatic Director
Option. In the event that the date of grant of the Automatic
Director Option is not a trading day, the exercise price per share
shall be 105% of the Market Value on the next trading day
immediately following the date of grant of the Automatic Director
Option;

     (C) subject to Section 9, the Automatic Director Option shall
become exercisable as to 1/12th of the shares subject to
the Automatic Director Option at the end of each calendar month
after its date of grant, provided that the Optionee was in
Continuous Service on such dates;

     (D) except as the terms of this Section 7.1(h) otherwise
provide, the terms and conditions of the Plan shall apply to
Automatic Director Options.

                    (iv) In the event that any Automatic Director Option granted under the Plan would cause the
number of shares subject to outstanding Options plus the number of shares previously purchased
under Options to exceed the total number of authorized shares then available under the Plan, the
remaining shares available for Option grant shall be granted under Options to the non-employee
directors on a pro rata basis. No further grants shall be made until such time, if any, as
additional shares become available for grant under the Plan through action of the Board or the
stockholders to increase the number of shares which may be issued under the Plan or through
cancellation or expiration of Awards previously granted hereunder.

     7.2 Stock Appreciation Rights.

          (a) Tandem or Stand-Alone. Stock Appreciation Rights may be granted in tandem with an
Option (at or, in the case of a Nonstatutory Option, after, the award of the Option), or alone and
unrelated to an Option. Stock Appreciation Rights in tandem with an Option shall terminate to the
extent that the related Option is exercised, and the related Option shall terminate to the extent
that the tandem Stock Appreciation Rights are exercised.

          (b) Exercise Price. Stock Appreciation Rights shall have such exercise price as the
Committee may determine, except that in the case of Stock Appreciation Rights in tandem with
Options, the exercise price of the Stock Appreciation Rights shall equal the exercise price of the
related Option.

          (c) Other Terms. Except as the Committee may deem inadvisable or inapplicable in the
circumstances, Stock Appreciation Rights shall be subject to terms and conditions substantially
similar to those applicable to a Nonstatutory Option. In addition, a Stock Appreciation Right
related to an Option which can only be exercised during limited periods following a Change of
Control may entitle the Participant to receive an amount based upon the highest price paid or
offered for Stock in any transaction relating to the Change of Control or paid during the 30-day
period immediately preceding the occurrence of the Change of Control in any transaction reported in
the stock market in which the Stock is normally traded.

     7.3 Restricted Stock.

          (a) Purchase Price. Shares of Restricted Stock shall be issued under the Plan for
such consideration, in cash, other property or services, or any combination thereof, as is
determined by the Committee.

          (b) Issuance of Certificates. Each Participant receiving a Restricted Stock Award,
subject to Section 7.3(c), shall be issued a stock certificate in respect of such Restricted Stock.
Such certificate shall be
registered in the name of such Participant, and, if applicable, shall bear an appropriate
legend referring to the terms, conditions, and restrictions applicable to such Award substantially
in the following form:

8

 

THE TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO THE TERMS AND CONDITIONS OF THE 2005 EQUITY INCENTIVE
PLAN OF THE ISSUER AND AN AWARD AGREEMENT ENTERED INTO BY THE REGISTERED OWNER AND
THE ISSUER. COPIES OF SUCH PLAN AND AGREEMENT ARE ON FILE IN THE OFFICES OF THE
ISSUER.

          (c) Escrow of Shares. The Committee may require that the stock certificates
evidencing Restricted Stock be held in custody by a designated escrow agent (which may but need not
be the Company) until the restrictions thereon shall have lapsed, and that the Participant deliver
a stock power, endorsed in blank, relating to the Stock covered by such Award.

          (d) Restrictions and Restriction Period. During the Restriction Period applicable to
Restricted Stock, such shares shall be subject to limitations on transferability and a Risk of
Forfeiture arising on the basis of such conditions related to the performance of services, Company
or Affiliate performance or otherwise as the Committee may determine and provide for in the
applicable Award Agreement. Any such Risk of Forfeiture may be waived or terminated, or the
Restriction Period shortened, at any time by the Committee on such basis as it deems appropriate.

          (e) Rights Pending Lapse of Risk of Forfeiture or Forfeiture of Award. Except as
otherwise provided in the Plan or the applicable Award Agreement, at all times prior to lapse of
any Risk of Forfeiture applicable to, or forfeiture of, an Award of Restricted Stock, the
Participant shall have all of the rights of a stockholder of the Company, including the right to
vote, and the right to receive any dividends with respect to, the Restricted Stock. The Committee,
as determined at the time of Award, may permit or require the payment of cash dividends to be
deferred and, if the Committee so determines, reinvested in additional Restricted Stock to the
extent shares are available under Section 4.

          (f) Lapse of Restrictions. If and when the Restriction Period expires without a prior
forfeiture of the Restricted Stock, the certificates for such shares shall be delivered to the
Participant promptly if not theretofore so delivered.

     7.4 Restricted Stock Units.

          (a) Character. Each Restricted Stock Unit shall entitle the recipient to a share of Stock at
a close of such Restriction Period as the Committee may establish and subject to a Risk of
Forfeiture arising on the basis of such conditions relating to the performance of services, Company
or Affiliate performance or otherwise as the Committee may determine and provide for in the
applicable Award Agreement. Any such Risk of Forfeiture may be waived or terminated, or the
Restriction Period shortened, at any time by the Committee on such basis as it deems appropriate.

          (b) Form and Timing of Payment. Payment of earned Restricted Stock Units shall be
made in a single lump sum following the close of the applicable Restriction Period. At the
discretion of the Committee, Participants may be entitled to receive payments equivalent to any
dividends declared with respect to Stock referenced in grants of Restricted Stock Units but only
following the close of the applicable Restriction Period and then only if the underlying Stock
shall have been earned. Unless the Committee shall provide otherwise, any such dividend
equivalents shall be paid, if at all, without interest or other earnings.

     7.5 Performance Units.

          (a) Character. Each Performance Unit shall entitle the recipient to the value of a specified
number of shares of Stock, over the initial value for such number of shares, if any, established by
the Committee at the time of grant, at the close of a specified Performance Period to the extent
specified Performance Goals shall have been achieved.

          (b) Earning of Performance Units. The Committee shall set Performance Goals in its
discretion which, depending on the extent to which they are met within the applicable Performance
Period, will determine the

9

 

number and value of Performance Units that will be paid out to the
Participant. After the applicable Performance Period has ended, the holder of Performance Units
shall be entitled to receive payout on the number and value of Performance Units earned by the
Participant over the Performance Period, to be determined as a function of the extent to which the
corresponding Performance Goals have been achieved.

          (c) Form and Timing of Payment. Payment of earned Performance Units shall be made in
a single lump sum following the close of the applicable Performance Period. At the discretion of
the Committee, Participants may be entitled to receive any dividends declared with respect to Stock
which have been earned in connection with grants of Performance Units which have been earned, but
not yet distributed to Participants. The Committee may permit or, if it so provides at grant
require, a Participant to defer such Participant’s receipt of the payment of cash or the delivery
of Stock that would otherwise be due to such Participant by virtue of the satisfaction of any
requirements or goals with respect to Performance Units. If any such deferral election is required
or permitted, the Committee shall establish rules and procedures for such payment deferrals.

     7.6 Stock Grants. Stock Grants shall be awarded solely in recognition of significant
contributions to the success of the Company or Affiliates, in lieu of compensation otherwise
already due and in such other limited circumstances as the Committee deems appropriate. Stock
Grants shall be made without forfeiture conditions of any kind.

     7.7 Qualified Performance-Based Awards.

          (a) Purpose. The purpose of this Section 7.7 is to provide the Committee the ability
to qualify Awards as “performance-based compensation” under Section 162(m) of the Code. If the
Committee, in its discretion, decides to grant an Award as a Qualified Performance-Based Award, the
provisions of this Section 7.7 will control over any contrary provision contained in the Plan. In
the course of granting any Award, the Committee may specifically designate the Award as intended to
qualify as a Qualified Performance-Based Award. However, no Award shall be considered to have
failed to qualify as a Qualified Performance-Based Award solely because the Award is not expressly
designated as a Qualified Performance-Based Award, if the Award otherwise satisfies the provisions
of this Section 7.7 and the requirements of Section 162(m) of the Code and the regulations
promulgated thereunder applicable to “performance-based compensation.”

          (b) Authority. All grants of Awards intended to qualify as Qualified Performance-Based Awards
and determination of terms applicable thereto shall be made by the Committee or, if not all of the
members thereof qualify as “Outside Directors” within the meaning of applicable IRS regulations
under Section 162 of the Code, a subcommittee of the Committee consisting of such of the members of
the Committee as do so qualify. Any action by such a subcommittee shall be considered the action
of the Committee for purposes of the Plan.

          (c) Applicability. This Section 7.7 will apply only to those Covered Employees, or to
those persons who the Committee determines are reasonably likely to become Covered Employees in the
period covered by an Award, selected by the Committee to receive Qualified Performance-Based
Awards. The Committee may, in its discretion, grant Awards to Covered Employees that do not
satisfy the requirements of this Section 7.7.

          (d) Discretion of Committee with Respect to Qualified Performance-Based Awards.
Options may be granted as Qualified Performance-Based Awards in accordance with Section 7.1, except
that the exercise price of any Option intended to qualify as a Qualified Performance-Based Award
shall in no event be less that the Market Value of the Stock on the date of grant. With regard to
other Awards intended to qualify as Qualified Performance-Based Awards, such as Restricted Stock,
Restricted Stock Units, or Performance Units, the Committee will have full discretion to select the
length of any applicable Restriction Period or Performance Period, the kind or level of the
applicable Performance Goal, and whether the Performance Goal is to apply to the Company, a
Subsidiary or any division or business unit or to the individual. Any Performance Goal or Goals
applicable to Qualified Performance-Based Awards shall be objective, shall be established not later
than 90 days after the beginning of any applicable Performance Period (or at such other date as may
be required or permitted for “performance-based compensation” under Section 162(m) of the Code) and
shall otherwise meet the requirements of
Section 162(m) of the Code, including the requirement that the outcome of the Performance Goal
or Goals be substantially uncertain (as defined in the regulations under Section 162(m) of the
Code) at the time established.

10

 

          (e) Payment of Qualified Performance-Based Awards. A Participant will be eligible to
receive payment under a Qualified Performance-Based Award which is subject to achievement of a
Performance Goal or Goals only if the applicable Performance Goal or Goals period are achieved
within the applicable Performance Period, as determined by the Committee. In determining the
actual size of an individual Qualified Performance-Based Award, the Committee may reduce or
eliminate the amount of the Qualified Performance-Based Award earned for the Performance Period, if
in its sole and absolute discretion, such reduction or elimination is appropriate.

          (f) Maximum Award Payable. The maximum Qualified Performance-Based Award payment to
any one Participant under the Plan for a Performance Period is the number of shares of Stock set
forth in Section 4, or if the Qualified Performance-Based Award is paid in cash, that number of
shares multiplied by the Market Value of the Stock as of the date the Qualified Performance-Based
Award is granted.

          (g) Limitation on Adjustments for Certain Events. No adjustment of any Qualified
Performance-Based Award pursuant to Section 8 shall be made except on such basis, if any, as will
not cause such Award to provide other than “performance-based compensation” within the meaning of
Section 162(m) of the Code.

     7.8 Awards to Participants Outside the United States. The Committee may modify the
terms of any Award under the Plan, granted to a Participant who is, at the time of grant or during
the term of the Award, resident or primarily employed outside of the United States in any manner
deemed by the Committee to be necessary or appropriate in order that the Award shall conform to
laws, regulations, and customs of the country in which the Participant is then resident or
primarily employed, or so that the value and other benefits of the Award to the Participant, as
affected by foreign tax laws and other restrictions applicable as a result of the Participant’s
residence or employment abroad, shall be comparable to the value of such an Award to a Participant
who is resident or primarily employed in the United States. The Committee may establish
supplements to, or amendments, restatements, or alternative versions of, the Plan for the purpose
of granting and administrating any such modified Award. No such modification, supplement,
amendment, restatement or alternative version may increase the share limit of Section 4.

     7.9 Notwithstanding any other provisions of the Plan, it is not intended that any grant of an
Award shall result in the deferral of compensation within the meaning of Section 409A of the Code;
provided, however, that to the extent the grant of an Award would result in the deferral of
compensation under Section 409A of the Code, such Award shall comply with the requirements of
Section 409A of the Code. .

8. Adjustment Provisions.

     8.1 Adjustment for Corporate Actions. All of the share numbers set forth in the Plan
reflect the capital structure of the Company as of the Effective Date. Subject to Section 8.2, if
subsequent to that date the outstanding number of shares of Stock (or any other securities covered
by the Plan by reason of the prior application of this Section) are increased, decreased, or
exchanged for a different number or kind of shares or other securities, or if additional shares or
new or different shares or other securities are distributed with respect to such outstanding Stock,
through merger, consolidation, sale of all or substantially all the property of the Company,
reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock
split, or other similar distribution with respect to such Stock, an appropriate and proportionate
adjustment will be made in (i) the maximum numbers and kinds of shares provided in Section 4, (ii)
the numbers and kinds of shares or other securities subject to the then outstanding Awards, (iii)
the exercise price for each share or other unit of any other securities subject to then outstanding
Options and Stock Appreciation Rights (without change in the aggregate purchase price as to which
such Options or Rights remain exercisable), and (iv) the repurchase price of each share of
Restricted Stock then subject to a Risk of Forfeiture in the form of a Company repurchase right.

     8.2 Treatment in Certain Acquisitions.

          (a) Subject to any provisions of then outstanding Awards granting different rights to the
holders thereof, in the event of an Acquisition constituting a Change of Control in which
outstanding Awards are not Accelerated in full, any then outstanding Awards shall nevertheless
Accelerate in full if not assumed or replaced by comparable Awards referencing shares of the
capital stock of the successor or acquiring entity or the entity in control of such successor or
acquiring entity, and thereafter (or after a reasonable period following such Acquisition,

11

 

as determined by the Committee) terminate. As to any one or more outstanding Awards which are not
otherwise Accelerated in full by reason of such Acquisition, the Committee may also, either in
advance of such Acquisition or at the time thereof and upon such terms as it may deem appropriate,
provide for the Acceleration of such outstanding Awards in the event that the employment of the
Participants should subsequently terminate following such Acquisition. Each outstanding Award that
is assumed in connection with such Acquisition, or is otherwise to continue in effect subsequent to
such Acquisition, will be appropriately adjusted, immediately after such Acquisition, as to the
number and class of securities and other relevant terms in accordance with Section 8.1.

          (b) For the purposes of this Section 8.2, an Award shall be considered assumed or replaced by
a comparable Award if, following the Acquisition constituting a Change of Control, the Award
confers the right to purchase, for each share of Stock subject to the Award immediately prior to
such Acquisition, the consideration (whether stock, cash or other securities or property) received
in such Acquisition by holders of Stock on the effective date of such Acquisition (and if holders
were offered a choice of consideration, the type of consideration chosen by the holders of a
majority of the outstanding Stock); provided, however, that if such consideration received in such
Acquisition was not solely common stock of the successor corporation or its Parent or Subsidiary,
the Committee may, with the consent of the successor corporation, provide for the consideration to
be received upon the exercise of the Award for each share of Stock subject to the Award to be
solely common stock of the successor corporation or its Parent or Subsidiary equal in fair market
value to the per share consideration received by holders of Stock in such Acquisition.

     8.3 Dissolution or Liquidation. Upon dissolution or liquidation of the Company, other
than as part of an Acquisition or similar transaction, (a) each outstanding Option and Stock
Appreciation Right shall terminate, but the Optionee or Stock Appreciation Right holder shall have
the right, immediately prior to such dissolution or liquidation, to exercise the Option or Stock
Appreciation Right to the extent exercisable on the date of dissolution or liquidation; (b) each
share of Restricted Stock that is subject to a Risk of Forfeiture immediately prior to such
dissolution or liquidation may, at the election of the Company, be forfeited by the Company prior
to such dissolution or liquidation pursuant to the terms of the applicable Award Agreement; and (c)
subject to subparts (a) and (b) of this Section 8.3, each other outstanding Award shall be
forfeited.

     8.4 Adjustment of Awards Upon the Occurrence of Certain Unusual or Nonrecurring
Events. In the event of any corporate action not specifically covered by the preceding
sections, including but not limited to an extraordinary cash distribution on Stock, a corporate
separation or other reorganization or liquidation, the Committee may make such adjustment of
outstanding Awards and their terms, if any, as it, in its sole discretion, may deem equitable and
appropriate in the circumstances. The Committee may make adjustments in the terms and conditions
of, and the criteria included in, Awards in recognition of unusual or nonrecurring events
(including, without limitation, the events described in this Section 8.4) affecting the Company or
the financial statements of the Company or of changes in applicable laws, regulations, or
accounting principles, whenever the Committee determines that such adjustments are appropriate in
order to prevent dilution or enlargement of the benefits or potential benefits intended to be made
available under the Plan.

     8.5 Related Matters. Any adjustment in Awards made pursuant to this Section 8 shall
be determined and made, if at all, by the Committee and shall include any correlative modification
of terms, including of Option exercise prices, rates of vesting or exercisability, Risks of
Forfeiture, applicable repurchase prices for Restricted Stock, and Performance Goals and other
financial objectives which the Committee may deem necessary or appropriate so as to ensure the
rights of the Participants in their respective Awards are not substantially diminished nor enlarged
as a result of the adjustment and corporate action other than as expressly contemplated in this
Section 8. No fraction of a share shall be purchasable or deliverable upon exercise, but in the
event any adjustment hereunder of the number of shares covered by an Award shall cause such number
to include a fraction of a share, such number of shares shall be adjusted to the nearest smaller
whole number of shares. No adjustment of an Option exercise price per share pursuant to this
Section 8 shall result in an exercise price which is less than the par value of the Stock.

9. Settlement of Awards

     9.1 In General. Options and Restricted Stock shall be settled in accordance with
their terms. All other Awards may be settled in cash, Stock, or other Awards, or a combination
thereof, as determined by the Committee at

12

 

or after grant and subject to any contrary Award
Agreement. The Committee may not require settlement of any Award in Stock pursuant to the
immediately preceding sentence to the extent issuance of such Stock would be prohibited or
unreasonably delayed by reason of any other provision of the Plan.

     9.2 Violation of Law. Notwithstanding any other provision of the Plan or the relevant
Award Agreement, if, at any time, in the reasonable opinion of the Company, the issuance of Stock
covered by an Award may constitute a violation of law, then the Company may delay such issuance and
the delivery of a certificate for such shares until (i) approval shall have been obtained from such
governmental agencies, other than the SEC, as may be required under any applicable law, rule, or
regulation and (ii) in the case where such issuance would constitute a violation of a law
administered by or a regulation of the SEC, one of the following conditions shall have been
satisfied:

          (a) the shares are at the time of the issue of such shares effectively registered under the
Securities Act; or

          (b) the Company shall have determined, on such basis as it deems appropriate (including an
opinion of counsel in form and substance satisfactory to the Company) that the sale, transfer,
assignment, pledge, encumbrance or other disposition of such shares or such beneficial interest, as
the case may be, does not require registration under the Securities Act or any applicable State
securities laws.

The Company shall make all reasonable efforts to bring about the occurrence of said events.

     9.3 Corporate Restrictions on Rights in Stock. Any Stock to be issued pursuant to
Awards granted under the Plan shall be subject to all restrictions upon the transfer thereof which
may be now or hereafter imposed by the charter, certificate or articles, or bylaws, of the Company.

     9.4 Investment Representations. The Company shall be under no obligation to issue any
shares covered by any Award unless the shares to be issued pursuant to Awards granted under the
Plan have been effectively registered under the Securities Act, or the Participant shall have made
such written representations to the Company (upon which the Company believes it may reasonably
rely) as the Company may deem necessary or appropriate for purposes of confirming that the issuance
of such shares will be exempt from the registration requirements of the Securities Act and any
applicable state securities laws and otherwise in compliance with all applicable laws, rules and
regulations, including but not limited to that the Participant is acquiring the shares for such
Participant’s own account for the purpose of investment and not with a view to, or for sale in
connection with, the distribution of any such shares.

     9.5
Registration. If the Company shall deem it necessary or desirable to register under the
Securities Act or other applicable statutes any Stock issued or to be issued pursuant to Awards
granted under the Plan, or to qualify any such Stock for exemption from the Securities Act or other
applicable statutes, then the Company shall take such action at its own expense. The Company may
require from each recipient of an Award, or each holder of Stock acquired pursuant to the Plan,
such information in writing for use in any registration statement, prospectus, preliminary
prospectus or offering circular as is reasonably necessary for that purpose and may require
reasonable indemnity to the Company and its officers and directors from that holder against all
losses, claims, damage and liabilities arising from use of the information so furnished and caused
by any untrue statement of any material fact therein or caused by the omission to state a material
fact required to be stated therein or necessary to make the statements therein not misleading in
the light of the circumstances under which they were made. In addition, the Company may require of
any such person that such person agree that, without the prior written consent of the Company or
the managing underwriter in any public offering of Stock, such person will not sell, make any short
sale of, loan, grant any option for the purchase of, pledge or otherwise encumber, or otherwise
dispose of, any Stock during the 180-day period commencing on the effective date of the
registration statement relating to the underwritten public offering of securities. Without limiting
the generality of the foregoing provisions of this Section 9.5, if in connection with any
underwritten public offering of securities of the Company the managing underwriter of
such offering requires that the Company’s directors and officers enter into a lock-up
agreement containing provisions that are more restrictive than the provisions set forth in the
preceding sentence, then (a) each holder of Stock acquired pursuant to the Plan (regardless of
whether such person has complied or complies with the provisions of clause (b) below) shall be
bound by, and shall be deemed to have agreed to, the same lock-up terms as those to

13

 

which the Company’s directors and officers are required to adhere; and (b) at the request of the Company or
such managing underwriter, each such person shall execute and deliver a lock-up agreement in form
and substance equivalent to that which is required to be executed by the Company’s directors and
officers.

     9.6 Placement of Legends; Stop Orders; etc. Each share of Stock to be issued pursuant
to Awards granted under the Plan may bear a reference to the investment representation made in
accordance with Section 9.4 in addition to any other applicable restriction under the Plan, the
terms of the Award and, if applicable, to the fact that no registration statement has been filed
with the SEC in respect to such Stock. All certificates for Stock or other securities delivered
under the Plan shall be subject to such stock transfer orders and other restrictions as the
Committee may deem advisable under the rules, regulations, and other requirements of any stock
exchange upon which the Stock is then listed, and any applicable federal or state securities law,
and the Committee may cause a legend or legends to be put on any such certificates to make
appropriate reference to such restrictions.

     9.7 Tax Withholding. Whenever Stock are issued or to be issued pursuant to Awards
granted under the Plan, the Company shall have the right to require the recipient to remit to the
Company an amount sufficient to satisfy federal, state, local or other withholding tax requirements
if, when, and to the extent required by law (whether so required to secure for the Company an
otherwise available tax deduction or otherwise) prior to the delivery of any certificate or
certificates for such shares. The obligations of the Company under the Plan shall be conditional
on satisfaction of all such withholding obligations and the Company shall, to the extent permitted
by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the
recipient of an Award. However, in such cases Participants may elect, subject to the approval of
the Committee, to satisfy an applicable withholding requirement, in whole or in part, by having the
Company withhold shares to satisfy their tax obligations. Participants may only elect to have
shares withheld having a Market Value on the date the tax is to be determined equal to the minimum
statutory total tax which could be imposed on the transaction. All elections shall be irrevocable,
made in writing, signed by the Participant, and shall be subject to any restrictions or limitations
that the Committee deems appropriate.

10. Reservation of Stock. The Company shall at all times during the term of the Plan and any
outstanding Awards granted hereunder reserve or otherwise keep available such number of shares of
Stock as will be sufficient to satisfy the requirements of the Plan (if then in effect) and the
Awards and shall pay all fees and expenses necessarily incurred by the Company in connection
therewith.

11. Limitation of Rights in Stock; No Special Service Rights. Subject to Section 7.3(e), a
Participant shall not be deemed for any purpose to be a stockholder of the Company with respect to
any of the Stock subject to an Award, unless and until a certificate shall have been issued
therefor and delivered to the Participant or his/her agent. Any Stock to be issued pursuant to
Awards granted under the Plan shall be subject to all restrictions upon the transfer thereof which
may be now or hereafter imposed by the certificate of incorporation and the bylaws of the Company.
Nothing contained in the Plan or in any Award Agreement shall confer upon any recipient of an Award
any right with respect to the continuation of such recipient’s employment or other association with
the Company (or any Affiliate), or interfere in any way with the right of the Company (or any
Affiliate), subject to the terms of any separate employment or consulting agreement or provision of
law or certificate of incorporation or bylaws to the contrary, at any time to terminate such
employment or consulting agreement or to increase or decrease, or otherwise adjust, the other terms
and conditions of the recipient’s employment or other association with the Company and Affiliates.

12. Unfunded Status of the Plan. The Plan is intended to constitute an “unfunded” plan for
incentive compensation, and the Plan is not intended to constitute a plan subject to the provisions
of the Employee Retirement Income Security Act of 1974, as amended. With respect to any payments
not yet made to a Participant by the Company, nothing contained in this Plan shall give any such
Participant any rights that are greater than those of a general creditor of the Company. In its
sole discretion, the Committee may authorize the creation of trusts or other arrangements to meet
the obligations created under the Plan to deliver Stock or payments with respect to Options,
Stock Appreciation Rights and other Awards hereunder, provided, however, that the existence of such
trusts or other arrangements is consistent with the unfunded status of the Plan.

13. Nonexclusivity of the Plan. Neither the adoption of the Plan by the Board nor the submission of
the Plan to the stockholders of the Company shall be construed as creating any limitations on the
power of the Board to adopt

14

 

such other incentive arrangements as it may deem desirable, including
without limitation, the granting of stock options and restricted stock other than under the Plan,
and such arrangements may be either applicable generally or only in specific cases.

14. Termination and Amendment of the Plan.

     14.1 The Board may at any time terminate the Plan or make such modifications of the Plan as it
shall deem advisable. Unless the Board otherwise expressly provides, no amendment of the Plan
shall affect the terms of any Award outstanding on the date of such amendment unless such amendment
is necessary to comply with Section 409A of the Code. In any case, no termination or amendment of
the Plan may, without the consent of any recipient of an Award granted hereunder, adversely affect
the rights of the recipient under such Award.

     14.2 The Committee may amend the terms of any Award theretofore granted, prospectively or
retroactively, provided that the Award as amended is consistent with the terms of the Plan, but no
such amendment shall impair the rights of the recipient of such Award without such recipient’s
consent unless the impairment of such rights is necessary to comply with Section 409A of the Code.

15. Notices and Other Communications. Any notice, demand, request or other communication hereunder
to any party shall be deemed to be sufficient if contained in a written instrument delivered in
person or duly sent by first class registered, certified or overnight mail, postage prepaid, or
telecopied with a confirmation copy by regular, certified or overnight mail, addressed or
telecopied, as the case may be, (i) if to the recipient of an Award, at such recipient’s residence
address last filed with the Company and (ii) if to the Company, at its principal place of business,
addressed to the attention of its Chief Financial Officer, or to such other address or telecopier
number or electronic mail address, as the case may be, as the addressee may have designated by
notice to the addressor. All such notices, requests, demands and other communications shall be
deemed to have been received: (i) in the case of personal delivery, on the date of such delivery;
(ii) in the case of mailing, when received by the addressee; (iii) in the case of facsimile
transmission, when confirmed by facsimile machine report; and (iv) in the case of electronic mail,
when directed to an electronic mail address at which the receiving party has consented to receive
notice, provided, that such consent is deemed revoked if the sender is unable to deliver by
electronic transmission two consecutive notices and such inability becomes known to the secretary
or assistant secretary of the Company or to the transfer agent, or other person responsible for
giving notice.

16. Governing Law. The Plan and all Award Agreements and actions taken thereunder shall be
governed, interpreted and enforced in accordance with the laws of the State of California, without
regard to the conflict of laws principles thereof.

15

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00119-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00119-of-00352.parquet"}]]