Document:

exv10w1

 

Exhibit 10.1

Execution Copy

8 August 2007

Peplin Limited

Peplin, Inc.

Restructure

Implementation

Agreement

 

 

	 	 	 	 	 
	Contents	 	 	 	 
	1 Interpretation
	 	 	1	 
	 
	 	 	 	 
	1.1 Definitions
	 	 	1	 
	1.2 Construction
	 	 	6	 
	1.3 Headings
	 	 	7	 
	 
	 	 	 	 
	2 Implementation of the Restructure
	 	 	7	 
	 
	 	 	 	 
	3 Conditions precedent
	 	 	7	 
	 
	 	 	 	 
	3.1 Conditions precedent
	 	 	7	 
	3.2 Benefit and waiver of Conditions Precedent
	 	 	9	 
	3.3 Parties must cooperate
	 	 	9	 
	3.4 Notification of certain events
	 	 	9	 
	3.5 Certificate
	 	 	10	 
	 
	 	 	 	 
	4 Restructure steps
	 	 	10	 
	 
	 	 	 	 
	4.1 Preliminary steps
	 	 	10	 
	4.2 Share Scheme steps
	 	 	10	 
	4.3 Option Scheme steps
	 	 	11	 
	4.4 Election
	 	 	11	 
	4.5 Fractional entitlements
	 	 	12	 
	4.6 Ineligible Foreign Shareholders
	 	 	12	 
	4.7 Ineligible Foreign Optionholders
	 	 	12	 
	4.8 Unlisted Options
	 	 	13	 
	4.9 General provisions
	 	 	13	 
	 
	 	 	 	 
	5 Implementation of the Restructure
	 	 	14	 
	 
	 	 	 	 
	5.1 Mutual obligations
	 	 	14	 
	5.2 Obligations of the Company
	 	 	14	 
	5.3 Obligations of Peplin
	 	 	15	 
	 
	 	 	 	 
	6 Public announcements
	 	 	16	 
	 
	 	 	 	 
	7 Termination
	 	 	16	 
	 
	 	 	 	 
	7.1 Termination prior to Second Court Date
	 	 	16	 
	7.2 Other termination rights
	 	 	17	 
	7.3 Method of termination
	 	 	17	 
	7.4 Automatic termination
	 	 	17	 
	7.5 Effect of termination
	 	 	17	 
	 
	 	 	 	 
	8 Notices
	 	 	18	 
	 
	 	 	 	 
	8.1 General
	 	 	18	 
	8.2 How to give a communication
	 	 	18	 
	8.3 Particulars for delivery of notices
	 	 	18	 
	8.4 Communications by post
	 	 	18	 
	8.5 Communications by fax
	 	 	18	 
	8.6 After hours communications
	 	 	19	 
	8.7 Process service
	 	 	19	 

	 	 	 	 	 

			
	 
	 	page i

 

 

	 	 	 	 	 
	Contents	 	 	 	 
	9 GST
	 	 	19	 
	 
	 	 	 	 
	10 General
	 	 	20	 
	 
	 	 	 	 
	10.1 Duty
	 	 	20	 
	10.2 Legal costs
	 	 	20	 
	10.3 Amendment
	 	 	20	 
	10.4 Waiver and exercise of rights
	 	 	20	 
	10.5 Rights cumulative
	 	 	20	 
	10.6 Consents
	 	 	21	 
	10.7 Further steps
	 	 	21	 
	10.8 Governing law and jurisdiction
	 	 	21	 
	10.9 Assignment
	 	 	21	 
	10.10 Liability
	 	 	21	 
	10.11 Counterparts
	 	 	21	 
	10.12 Entire understanding
	 	 	21	 
	10.13 No Merger
	 	 	21	 
	 
	 	 	 	 
	Annexure 1 – Share Scheme
	 	 	24	 
	 
	 	 	 	 
	Annexure 2 – Option Scheme
	 	 	25	 
	 
	 	 	 	 
	Annexure 3 – Form of Share Scheme Deed Poll
	 	 	26	 
	 
	 	 	 	 
	Annexure 4 – Form of Option Scheme Deed Poll
	 	 	27	 
	 
	 	 	 	 
	Annexure 5 – Peplin Stock Option Plan
	 	 	28	 

	 	 	 

			
	 
	 	page ii

 

 

	 	 	 	Date
	 
	 	 	 	Parties
	 
	 	 	 	Peplin Limited ABN 55 090 819 275 of Level 2, 1 Breakfast Creek Road, Newstead,
Queensland 4006 (Company)
	 
	 	 	 	Peplin, Inc a company incorporated in Delaware, United States of America of 6475 Christie
Avenue, Emeryville, CA 94608, United States of America (Peplin)
	 
	 	 	 	Background

	A	 	The Company is listed on the official list of the ASX and has
184,591,662 Shares and 17,119,260 Options on issue.

	B	 	Peplin is a company incorporated under the laws of Delaware,
United States and has one share, being the Peplin Redeemable
Share, on issue. Other than the Peplin Redeemable Share, Peplin has not issued any other shares and has not granted any options
or other convertible securities.

	C	 	The parties have agreed on the terms set out in this document
that the Company will propose to implement a reorganisation by
means of:

	 	(a)	 	a scheme of arrangement under Part 5.1 of the Corporations Act between
the Company and its members; and
	 
	 	(b)	 	a scheme of arrangement under Part 5.1 of the Corporations Act between
the Company and its listed optionholders.

	D	 	Simultaneously with the Schemes, the Company and Peplin will seek
to replace the Company’s unlisted options with stock options in
Peplin.
	 
	E	 	Each of the parties agrees to do the things within their power to
implement the Schemes on and subject to the terms of this
document.

	 	 	Agreed terms

	 
	1 Interpretation
	 
	1.1 Definitions
	 
	 	 	In this document:
	 
	 	 	ASIC means the Australian Securities and Investments Commission.
	 
	 	 	 

			
	 
	 	page 1

 

 

	 	 	ASIC Relief means the modifications or exemptions which the Company and Peplin may agree
are necessary or desirable in connection with the Restructure.
	 
	 	 	associate has the meaning given in section 12 of the Corporations Act.
	 
	 	 	ASTC means the Australian Settlement and Transfer Corporation Limited.
	 
	 	 	ASTC Settlement Rules means the Settlement Rules of ASTC.
	 
	 	 	ASX means ASX Limited (ACN 008 624 691).
	 
	 	 	ASX Listing Rules means the official listing rules of ASX.
	 
	 	 	ASX Waivers means the waivers to or exemptions from the ASX Listing Rules which the
Company and Peplin may agree are necessary or desirable in connection with the
Restructure.
	 
	 	 	Business Day means a day on which trading banks are open for business in Brisbane and
Sydney, Australia, but does not include a Saturday, Sunday or any public holiday in
Brisbane and Sydney.
	 
	 	 	Capital Raising Resolution means the ordinary resolution to be put to Shareholders on or
about the date of the Scheme Meetings pursuant to ASX Listing Rule 7.1 for the issue of
greater than 15% of the issued capital of Peplin or the Company (as applicable).
	 
	 	 	CDI Register has the meaning given to that term in the ASTC Settlement Rules.
	 
	 	 	CHESS Depositary Interest has the meaning given to that term in the ASTC Settlement
Rules.
	 
	 	 	Conditions Precedent means the conditions precedent in clause 3.1.
	 
	 	 	Corporations Act means the Corporations Act 2001 (Cth).
	 
	 	 	Corporations Regulations means the Corporations Regulations 2001 (Cth).
	 
	 	 	Court means the Federal Court of Australia.
	 
	 	 	Deed Polls mean the deed polls in the form of Annexures 3 and 4 (or in such other forms
as is agreed between the parties to this document).
	 
	 	 	Depositary has the meaning given to the term “Depositary” in the ASTC Settlement Rules.
	 
	 	 	Effective means, when used in relation to the Schemes, the coming into effect, pursuant
to section 411(10) of the Corporations Act, of the Implementation Orders.
	 
	 	 	Eligible Option Scheme Participant means an Option Scheme Participant who is registered
in the Option Register as at the Record Date with an address within Australia, New
Zealand, the United States or such other country agreed by the Company and Peplin.
	 
	 	 	Eligible Share Scheme Participant means a Share Scheme Participant who is registered in
the Share Register as at the Record Date with an address

			

			
	 
	 	page 2

 

 

	 	 	within Australia, New Zealand, the United States or such other country agreed by the
Company and Peplin.
	 
	 	 	End Date means 31 October 2007, or such later date as the parties may agree in writing.
	 
	 	 	ESOP means the Employee Share Option Plan of the Company approved by shareholders on 30
June 2000.
	 
	 	 	Exercise Price means, in relation to an option, all amounts paid or payable with respect
to that option, including any amount paid or payable on grant of the option and/or on
exercise of the option.
	 
	 	 	Governmental Agency means any government or governmental, semi-governmental,
administrative, fiscal, regulatory or judicial entity or authority. It also includes a
self-regulatory organisation established under a statute or stock exchange.
	 
	 	 	Implementation Date means the Business Day immediately following the Record Date.
	 
	 	 	Implementation Orders means the orders pursuant to Section 411(4)(b) of the Corporations
Act in relation to the Schemes.
	 
	 	 	Independent Expert’s Report means a report by an independent expert appointed in
accordance with the guidelines established by ASIC in its Practice Notes 42 and 43 and
Policy Statement 75, stating whether or not in his or her opinion, the Restructure is in
the best interests of the Scheme Participants and setting out his or her reasons for that
opinion.
	 
	 	 	Information Memorandum means the information memorandum prepared by the Company in
respect of the Schemes to be approved by the Court and dispatched to Shareholders and
Optionholders.
	 
	 	 	Ineligible Foreign Optionholder means each Option Scheme Participant who is not an
Eligible Option Scheme Participant.
	 
	 	 	Ineligible Foreign Shareholder means each Share Scheme Participant who is not an Eligible
Share Scheme Participant.
	 
	 	 	Intellectual Property means any and all intellectual property rights throughout the
world, whether or not registered or registrable, including all present and future rights
in any:

	 	(a)	 	patent, invention, discovery, copyright (including future copyright),
trade mark, design, software, circuit layout, or trade, business, domain or company
name;
	 
	 	(b)	 	entitlement to registration or application for registration of such a
right; and
	 
	 	(c)	 	trade secrets, know how, concept, idea, data, formula and confidential or
other information,

	 	 	granted by law or equity from time to time under the law of any jurisdiction.
	 
	 	 	 

			
	 
	 	page 3

 

 

	 	 	Nominee means the nominee selected by the Company prior to the Implementation Date for
the purposes of clauses 4.6 and 4.7.
	 
	 	 	Option means an option to be issued a Share, which is listed for quotation on ASX, and
for the avoidance of doubt, does not include an Unlisted Option.
	 
	 	 	Optionholders means each person who is registered in the register of optionholders of the
Company as the holder of Options, from time to time.
	 
	 	 	Option CDI means the CHESS Depositary Interest to be issued in connection with the Option
Scheme representing an interest in one-twentieth of a Peplin Stock Option.
	 
	 	 	Option Register means the register of Options maintained in accordance with the
Corporations Act.
	 
	 	 	Option Scheme means the proposed scheme of arrangement under Part 5.1 of the Corporations
Act between the Company and the Optionholders in the form of Annexure 2, subject to any
alterations or conditions made or required by the Court under section 411(6) of the
Corporations Act and approved in writing by each party.
	 
	 	 	Option Scheme Participant means each person who is a Optionholder as at the Record Date.
	 
	 	 	Peplin Common Stock means shares of fully paid Common Stock in the capital of Peplin to
come into existence on adoption by Peplin of its Certificate of Incorporation.
	 
	 	 	Peplin Employee Stock Option means an option to be issued by Peplin to acquire one share
of Peplin Common Stock under the Peplin Stock Option Plan.
	 
	 	 	Peplin Redeemable Share means the one redeemable share in the capital of Peplin held by
the Company, which will be immediately redeemed on the Implementation Date.
	 
	 	 	Peplin Stock Option means an option to be issued by Peplin to acquire one share of Peplin
Common Stock under the Peplin Stock Option Plan.
	 
	 	 	Peplin Stock Option Plan means the Stock Option Plan in the form of Annexure 5 (or in
such other forms as is agreed between the parties to this document), to be adopted by
Peplin in accordance with clause 4.1.
	 
	 	 	Record Date means the fifth Business Day following the date on which the Schemes become
Effective, or such earlier date as the parties may agree in writing.
	 
	 	 	Relevant Instrument means, with respect to any person:

	 	(a)	 	the certificate of incorporation, the constitution, the by laws or
charter documents of that person;
	 
	 	(b)	 	any agreement, note, bond, security interest, indenture, deed of trust,
contract, undertaking, lease, or other instrument or obligation to which that person
is a party or its assets are bound or affected;
	 
	 	 	 	 

			
	 
	 	page 4

 

 

	 	(c)	 	any authorisation, licence, permit or authority, granted to or entered
into by that person and that is material in the context that it is granted or
entered into; or
	 
	 	(d)	 	any writ, order, decree, injunction, judgment, law, statute, rule or
regulation applicable to that person or its assets or by which it or they are bound
or affected.

	 	 	Required Consents means the consent, approval, permission or waiver of any third party
(including any Governmental Agency) which, whether pursuant to a Relevant Instrument or
otherwise, is required in connection with, or as a result of, the proposal or
implementation of the Restructure in order to avoid:

	 	(a)	 	a material breach, material violation or material default occurring under
a Relevant Instrument applicable to any party or any of its associates;
	 
	 	(b)	 	any other person becoming entitled to terminate, withdraw, accelerate or
call for a material default under a Relevant Instrument applicable to any party or
any of its associates;
	 
	 	(c)	 	any other person becoming entitled to amend the terms of a Relevant
Instrument in a way which would materially adversely affect any party or any of its
associates or which enables that other person to acquire any other right which would
materially adversely affect any party or any of its associates; or
	 
	 	(d)	 	the creation of any security interest upon any of the assets or
properties of any party or any of its associates.

	 	 	Restructure means the reorganisation which is to be effected on the Implementation Date,
under which:

	 	(a)	 	Peplin will acquire all of the Shares under the Share Scheme;
	 
	 	(b)	 	the Company will cancel all of the Options under the Option Scheme;
	 
	 	(c)	 	the Company will cancel all of the Unlisted Options; and
	 
	 	(d)	 	the existing securityholders of the Company will receive shares of common
stock and options to acquire common stock in Peplin.

	 	 	Scheme Meetings means the meetings of shareholders and option holders to be convened by
the Court in relation to the Schemes pursuant to section 411(1) of the Corporations Act.
	 
	 	 	Second Court Date means the day on which the Court makes orders pursuant to section
411(4)(b) of the Corporations Act approving the Share Scheme.
	 
	 	 	Share CDI means the CHESS Depositary Interest to be issued in connection with the Share
Scheme representing an interest in one-twentieth of a share of Peplin Common Stock.
	 
	 	 	Share Register means the register of members of the Company maintained in accordance with
the Corporations Act.
	 
	 	 	Share Scheme means the proposed scheme of arrangement under Part 5.1 of the Corporations
Act between the Company and the Shareholders in the form
	 
	 	 	 

			
	 
	 	page 5

 

 

	 	 	of Annexure 1, subject to any alterations or conditions made or required by the Court
under section 411(6) of the Corporations Act and approved in writing by each party.
	 
	 	 	Share Scheme Participant means each person who is a Shareholder as at the Record Date.
	 
	 	 	Shareholder means each person who is registered in the Share Register as the holder of
Shares.
	 
	 	 	Shares means fully paid ordinary shares in the capital of the Company.
	 
	 	 	Scheme Participants means a Share Scheme Participant or a Option Scheme Participant.
	 
	 	 	Schemes means the Share Scheme and the Option Scheme.
	 
	 	 	Unlisted Option means an option to be issued a Share issued:

	 	(a)	 	under the ESOP;
	 
	 	(b)	 	under the directors and officers plan adopted by the Company; or
	 
	 	(c)	 	to directors and officers of the Company,
and which, for the avoidance of doubt, is not an Option.

	 	 	Unlisted Optionholders means each person who is registered in the register of
optionholders of the Company as the holder of Unlisted Options, from time to time.
	 
	1.2	 	Construction
	 
	 	 	Unless expressed to the contrary, in this document:

	 	(a)	 	words in the singular include the plural and vice versa;
	 
	 	(b)	 	any gender includes the other genders;
	 
	 	(c)	 	if a word or phrase is defined its other grammatical forms have
corresponding meanings;
	 
	 	(d)	 	“includes” means includes without limitation;
	 
	 	(e)	 	no rule of construction will apply to a clause to the disadvantage of a
party merely because that party put forward the clause or would otherwise benefit
from it;
	 
	 	(f)	 	a reference to:

	 	(i)	 	a person includes a partnership, joint venture,
unincorporated association, corporation and a government or statutory body or
authority;
	 
	 	(ii)	 	a person includes the person’s legal personal
representatives, successors, permitted assigns and persons substituted by
permitted novation;
	 
	 	 	 	 

			
	 
	 	page 6

 

 

	 	(iii)	 	any legislation includes subordinate legislation under it
and includes that legislation and subordinate legislation as modified or
replaced;
	 
	 	(iv)	 	an obligation includes a warranty or representation and a
reference to a failure to comply with an obligation includes a breach of
warranty or representation;
	 
	 	(v)	 	a right includes a benefit, remedy, discretion or power;
	 
	 	(vi)	 	time is to local time in Sydney;
	 
	 	(vii)	 	“$” or “dollars” is a reference to Australian currency;
	 
	 	(viii)	 	this or any other document includes the document as novated, varied or
replaced by agreement between the parties and despite any change in the
identity of the parties;
	 
	 	(ix)	 	writing includes any mode of representing or reproducing
words in tangible and permanently visible form, and includes fax
transmissions;
	 
	 	(x)	 	this document includes all schedules and annexures to it;
and
	 
	 	(xi)	 	a clause, schedule or annexure is a reference to a clause,
schedule or annexure, as the case may be, of this document;

	 	(g)	 	if the date on or by which any act must be done under this document is
not a Business Day, the act must be done on or by the next Business Day;
	 
	 	(h)	 	where time is to be calculated by reference to a day or event, that day
or the day of that event is excluded; and
	 
	 	(i)	 	a reference to any statement, including a warranty made by a party on the
basis of its knowledge, belief or awareness, is made on the basis of the actual
knowledge, belief or awareness of the officers of the party (and no other persons)
as at the date of this document.

	1.3	 	Headings
	 
	 	 	Headings do not affect the interpretation of this document.
	 
	2	 	Implementation of the Restructure
	 
	 	 	The Company agrees to propose the Schemes, and the parties agree to implement the
Restructure on and subject to this document.
	 
	3	 	Conditions precedent
	 
	3.1	 	Conditions precedent
	 
	 	 	The obligations of the parties under clause 2 and clauses 4.2 to 4.9 to implement
the Restructure, are subject to the following conditions precedent
	 
	 	 	 

			
	 
	 	page 7

 

 

	 	 	having been satisfied or deemed to be satisfied or waived in accordance with clause 3.2:

	 	(a)	 	(ASX listing): before 8.00 am on the Second Court Date, ASX approves:

	 	(i)	 	Peplin for admission to the ASX official list;
	 
	 	(ii)	 	the Share CDIs for official quotation by ASX; and
	 
	 	(iii)	 	the Option CDIs for official quotation by ASX,

	 	 	 	in each case conditional only on the Schemes becoming Effective and Peplin
providing to the ASX the information required by the ASX approval or the ASX
Listing Rules and satisfying any other conditions of the ASX approval related to
deferred trading of CHESS Depositary Interests;
	 
	 	(b)	 	(ASIC Relief): before 8.00 am on the Second Court Date, ASIC grants to
the Company the ASIC Relief on terms that are unconditional or subject to conditions
that are acceptable to the Company;
	 
	 	(c)	 	(ASX Waivers): before 8.00 am on the Second Court Date, ASX grants to the
Company the ASX Waivers on terms that are unconditional or subject to conditions
that are acceptable to the Company;
	 
	 	(d)	 	(Capital Raising): before 8.00am on the Second Court Date, the
Shareholders have passed the Capital Raising Resolution;
	 
	 	(e)	 	(Required Consents): before 8.00 am on the Second Court Date, all
Required Consents which the Company and Peplin agree are necessary to implement the
Restructure are obtained or received, without the imposition of any term or
condition unsatisfactory to the parties acting reasonably;
	 
	 	(f)	 	(No restraints): before 8.00 am on the Second Court Date, no temporary
restraining order, preliminary or permanent injunction or other order is issued by
any court of competent jurisdiction or other legal restraint or prohibition
preventing the Restructure being implemented;
	 
	 	(g)	 	(Depositary): before 8.00 am on the Second Court Date, Peplin has
appointed a Depositary and the Depositary has agreed to the allotment to it of
Peplin Common Stock and Peplin Stock Options under the Schemes;
	 
	 	(h)	 	(Nominee): before 8.00 am on the Second Court Date, Peplin has appointed
a Nominee and the Nominee has agreed to sell the Share CDIs and the Option CDIs as
contemplated by clauses 4.6 and 4.7 respectively; and
	 
	 	(i)	 	(Ability to issue CDIs): before 8.00 am on the Second Court Date, Peplin
has done everything necessary under the ASTC Settlement Rules to enable it to issue
Share CDls and Option CDIs other than the allotment to a Depositary of,
respectively:

	 	(i)	 	Peplin Common Stock under the Share Scheme, and
	 
	 	 	 	 

			
	 
	 	page 8

 

 

	 	(ii)	 	Peplin Stock Options under the Option Scheme.

	3.2	 	Benefit and waiver of Conditions Precedent

	 	(a)	 	The Company and Peplin together have the benefit of the Conditions Precedent
in clause 3.1 and any breach or non-fulfilment of those Conditions Precedent can
only be waived with the consent of both parties.
	 
	 	(b)	 	A party entitled to waive a Condition Precedent under this clause 3.2 may
do so in its absolute discretion.
	 
	 	(c)	 	If a waiver by a party of a Condition Precedent is itself conditional and
the other party accepts the condition, the terms of that condition apply
accordingly. If the other party does not accept a conditional waiver of the
Condition Precedent, the Condition Precedent has not been waived.
	 
	 	(d)	 	Unless specified in the waiver, a waiver of the breach or non-fulfilment
of any Condition Precedent will not constitute:

	 	(i)	 	a waiver of breach or non-fulfilment of any other Condition
Precedent resulting from events or circumstances giving rise to the breach or
non-fulfilment of the first Condition Precedent; or
	 
	 	(ii)	 	a waiver of breach or non-fulfilment of that Condition
Precedent resulting from any other event or circumstance.

	3.3	 	Parties must cooperate

	 	(a)	 	Each party must co-operate with the other and do all things reasonably
necessary to procure that the Conditions Precedent are fulfilled in a timely manner
and prior to the End Date.
	 
	 	(b)	 	Each party must use its best endeavours to procure that:

	 	(i)	 	each of the Conditions Precedent for which it is
responsible is satisfied as soon as practicable after the date of this
document, or continues to be satisfied at all times until the last time it is
to be satisfied (as the case may require), with a view to the Schemes
becoming Effective on or before the End Date; and
	 
	 	(ii)	 	there is no event or circumstance within the reasonable
control or influence of the Company or Peplin respectively that would prevent
the Conditions Precedent being satisfied.

	 	(c)	 	For the purposes of this clause 3.3, the Company and Peplin will be
jointly responsible for the Conditions Precedent.

	3.4	 	Notification of certain events
	 
	 	 	Each party must:

	 	(a)	 	keep the other promptly and reasonably informed of the steps it has taken
and of its progress towards satisfaction of the Conditions Precedent;
	 
	 	 	 	 

			
	 
	 	page 9

 

 

	 	(b)	 	promptly notify the other if it becomes aware that any Condition
Precedent has been satisfied;
	 
	 	(c)	 	promptly notify the other if it becomes aware that any Condition
Precedent has failed to be satisfied or has become incapable of being satisfied or
is not reasonably capable of being satisfied or of any circumstances which may
reasonably be expected to lead to such a state of affairs; and
	 
	 	(d)	 	after having given or received a notice in accordance with clause 3.4(c)
in relation to a Condition Precedent that it is entitled under clause 3.2 to waive,
give notice to the other party as soon as possible (and in any event no later than
five Business Days or such shorter time to ensure that notice is given before 5.00
pm on the day before the Second Court Date) as to whether or not it waives the
breach or non-fulfilment of the relevant Condition Precedent, specifying that
Condition Precedent.

	3.5	 	Certificate
	 
	 	 	Each of the parties must provide to the Court on the Second Court Date a
certificate confirming whether or not all the conditions precedent in this document have
been satisfied or waived.

	4	 	Restructure steps
	 
	4.1	 	Preliminary steps
	 
	 	 	On or before 8.00 am on the Second Court Date:

	 	(a)	 	the Company will make an offer to each Unlisted Optionholder to cancel
the Unlisted Options held by that person in accordance with clause 4.8(a);
	 
	 	(b)	 	the Company will seek a ruling from the Australian Taxation Office that
Australian resident Scheme Participants will receive capital gains tax rollover
relief in relation to the transfer of their Shares to Peplin and the cancellation of
their Options under the Schemes;
	 
	 	(c)	 	Peplin will adopt the Peplin Stock Option Plan; and
	 
	 	(d)	 	Peplin will file with the Secretary of State of the U.S. State of
Delaware the Amended and Restated Certificate of Incorporation, and adopt the
Amended and Restated By-laws.

	4.2	 	Share Scheme steps
	 
	 	 	On the Implementation Date, the following steps will occur under the Share Scheme
in the order set out below:

	 	(a)	 	all of the Shares held by the Share Scheme Participants will be
transferred to Peplin and, in consideration for and subject to this transfer, Peplin
will:

	 	(i)	 	in respect of Shares held by Eligible Share Scheme
Participants on the Record Date:
	 
	 	 	 	 

			
	 
	 	page 10

 

 

	 	(A)	 	issue to those Eligible Share Scheme
Participants who have not made an election in accordance with clause
4.4, one Share CDI for every one Share held by them as at the Record
Date;
	 
	 	(B)	 	issue to those Eligible Share Scheme
Participants who have made an election in accordance with clause 4.4,
one share of Peplin Common Stock for every 20 Shares held by them as
at the Record Date;

	 	(ii)	 	in respect of Shares held by Ineligible Foreign
Shareholders on the Record Date, issue to the Nominee for sale on behalf of
the Ineligible Foreign Shareholders under clause 4.6 one Share CDI for every
one Share held by them as at the Record Date.

	 	(b)	 	The Company will then register the transfers of the Shares to Peplin in
the Share Register.

	4.3	 	Option Scheme steps
	 
	 	 	On the Implementation Date, the following steps will occur under the Option Scheme
in the order set out below:

	 	(a)	 	in consideration for and subject to the Company cancelling the Options
and issuing the new options referred to in paragraph (b) below, Peplin will:

	 	(i)	 	in respect of the Options held by Eligible Option Scheme
Participants on the Record Date issue to those Eligible Option Scheme
Participants one Option CDI for every one Option held by them as at the
Record Date; and
	 
	 	(ii)	 	in respect of Options held by Ineligible Foreign
Optionholders on the Record Date, issue to the Nominee for sale on behalf of
the Ineligible Optionholders under clause 4.7 one Option CDI for every one
Option held by them as at the Record Date.

	 	(b)	 	The Company will then cancel all of the Options outstanding as at the
Record Date without the need for any further act by any Option Scheme Participant.

	4.4	 	Election

	 	(a)	 	The Information Memorandum must be accompanied by a form under which each
Eligible Share Scheme Participant may make an election to receive shares of Peplin
Common Stock rather than Share CDIs under the Share Scheme, by completing, signing
and returning the form by 5.00 pm on the Record Date (or such other date as agreed
by the parties in writing) to the Company’s share registry.
	 
	 	(b)	 	An election under paragraph (a) may only be made in respect of all and
not part of the Shares held by an Eligible Share Scheme Participant.
	 
	 	 	 	 

			
	 
	 	page 11

 

 

	 	(c)	 	If an Eligible Share Scheme Participant does not make an election in
accordance with paragraph (a), an Eligible Share Scheme Participant will receive
Share CDIs under the Share Scheme.

	4.5	 	Fractional entitlements
	 
	 	 	Fractional entitlements to the consideration offered under clause 4.2(a)(i)(B)
will be rounded up to the nearest whole number of shares of Peplin Common Stock after
aggregating all holdings of a Share Scheme Participant and, in each case, in a manner
which avoids manipulation of holdings, take advantage of the rounding up entitlement.
	 
	4.6	 	Ineligible Foreign Shareholders
	 
	 	 	If clause 4.2(a)(ii) applies, Peplin will procure that the Nominee:

	 	(a)	 	as soon as reasonably practicable sells, in a manner reasonably
determined by the Nominee, for the benefit of the Ineligible Foreign Shareholders
all the Share CDIs issued to the Nominee under clause 4.2(a)(ii);
	 
	 	(b)	 	accounts to each Ineligible Foreign Shareholder for the net proceeds of
sale of the Share CDIs issued to the Nominee in respect of that Ineligible Foreign
Shareholder’s entitlement under clause 4.2(a)(ii) (but calculated on an averaged
basis so that all Ineligible Foreign Shareholders receive the same price per Share
CDI (as the case may be), subject to rounding to the nearest whole cent) after
deduction of any applicable brokerage, taxes and charges, at the Ineligible Foreign
Shareholder’s risk in full satisfaction of the Ineligible Foreign Shareholder’s
rights under the Share Scheme; and
	 
	 	(c)	 	remits to the Ineligible Foreign Shareholder the net proceeds of sale in
respect of the Ineligible Foreign Shareholder’s entitlement under this clause 4.6,
such proceeds to be dispatched by mail to the Ineligible Foreign Shareholder’s
address as shown in the Share Register by cheque in Australian currency.

	4.7	 	Ineligible Foreign Optionholders
	 
	 	 	If clause 4.3(a)(ii) applies, Peplin will procure that the Nominee:

	 	(a)	 	as soon as reasonably practicable sells, in a manner reasonably
determined by the Nominee, for the benefit of the Ineligible Foreign Optionholders
all the Option CDIs issued to the Nominee under clause 4.3(a)(ii);
	 
	 	(b)	 	accounts to each Ineligible Foreign Optionholder for the net proceeds of
sale of the Option CDIs issued to the Nominee in respect of that Ineligible Foreign
Optionholder’s entitlement under clause 4.3(a)(ii) above (but calculated on an
averaged basis so that all Ineligible Foreign Optionholders receive the same price
per Option CDI (as the case may be), subject to rounding to the nearest whole cent)
after deduction of any applicable brokerage, taxes and charges, at the Ineligible
Foreign
	 
	 	 	 	 

			
	 
	 	page 12

 

 

	 	 	 	Optionholder’s risk in full satisfaction of the Ineligible Foreign Optionholder’s
rights under the Option Scheme; and
	 
	 	(c)	 	remits to the Ineligible Foreign Optionholder the net proceeds of sale in
respect of the Ineligible Foreign Optionholder’s entitlement under this clause 4.7,
such proceeds to be dispatched by mail to the Ineligible Foreign Optionholder’s
address as shown in the Option Register by cheque in Australian currency.

	4.8	 	Unlisted Options

	 	(a)	 	On or before 8.00 am on the Second Court Date, the Company will make an offer
to each Unlisted Optionholder to cancel the Unlisted Options held by that person.
In consideration for and subject to that cancellation, Peplin will grant to each
Unlisted Optionholder one Peplin Employee Stock Option under the Peplin Stock Option
Plan for every 20 Unlisted Options held by them as at the Implementation Date
(rounded up to the nearest whole number of Peplin Employee Stock Options if
necessary) on the terms set out in paragraph (c) below.
	 
	 	(b)	 	The offers made under clause 4.8(a) must be conditional on:

	 	(i)	 	the Share Scheme becoming Effective; and
	 
	 	(ii)	 	ASX granting a waiver of any requirements under ASX Listing
Rule 6.23 to obtain the approval of Shareholders to the cancellation of the
Unlisted Options on or before the Implementation Date.

	 	(c)	 	Each Peplin Employee Stock Option will:

	 	(i)	 	have an Exercise Price (per option) equal to 20 times the
Exercise Price (per option) of the Unlisted Options it replaces;
	 
	 	(ii)	 	have an exercise period equal to the unexpired exercise
period of the Unlisted Options it replaces;
	 
	 	(iii)	 	be vested to the same extent and have the same terms
including the vesting schedules as the Unlisted Options it replaces; and
	 
	 	(iv)	 	otherwise be issued on the terms of the Peplin Stock Option
Plan.

	4.9	 	General provisions

	 	(a)	 	The obligations of Peplin to issue Peplin Common Stock, Peplin Stock Options
and Peplin Employee Stock Options under this document will be satisfied by Peplin on
the Implementation Date, procuring the entry in the registers maintained by Peplin
of holders of Peplin Common Stock, Peplin Stock Options and Peplin Employee Stock
Options of each person who is to receive Peplin Common Stock, Peplin Stock Options
and/or Peplin Employee Stock Options.
	 
	 	(b)	 	After the satisfaction of the obligations of Peplin in clause 4.9(a), and
within five Business Days after the Implementation Date, Peplin will:
	 
	 	 	 	 

			
	 
	 	page 13

 

 

	 	(i)	 	issue holding statements, certificates or transmittal
letters (as the case may be) for such Peplin Common Stock, Peplin Stock
Options and/or Peplin Employee Stock Options in the name of such persons; and
	 
	 	(ii)	 	procure the dispatch of such holding statements,
certificates or transmittal letters to the address as shown in the registers
for such persons.

	 	(c)	 	The obligations of Peplin to issue Share CDIs and Option CDIs under
clause 4.2(a) and clause 4.3(a) respectively, of this document will be satisfied by
Peplin:

	 	(i)	 	on the Implementation Date, procuring the entry in the
register maintained by Peplin of holders of Peplin Common Stock of the
Depositary as depositary to hold the Peplin Common Stock underlying those
Share CDIs; and
	 
	 	(ii)	 	on the Implementation Date, procuring the entry in the
register maintained by Peplin of holders of Peplin Stock Options of the
Depositary as depositary to hold the Peplin Stock Options underlying those
Option CDls.

	 	(d)	 	After the satisfaction of the obligations of Peplin in clause 4.9(c), and
within five Business Days after the Implementation Date, Peplin will:

	 	(i)	 	issue holding statements or transmittal letters (as the
case may be) for such Peplin Common Stock and/or Peplin Stock Options in the
name of the Depositary, and procure the dispatch of such holding statements
or transmittal letters to the Depositary;
	 
	 	(ii)	 	record in the CDI Register each person who is to receive
Share CDls and/or Option CDIs under clause 4.2(a) and clause 4.3(a); and
	 
	 	(iii)	 	dispatch to each person who is to receive Share CDIs
and/or Option CDIs under clause 4.2(a) and clause 4.3(a) a holding statement
in the name of that person representing the number of Share CDIs and/or
Option CDIs to be issued to that person.

	5	 	Implementation of the Restructure
	 
	5.1	 	Mutual obligations
	 
	 	 	The parties must cooperate with each other, and provide all assistance as
reasonably requested, including the provision and collection of information, and
attending any meetings, which a party reasonably requires in connection with the
preparation of all documents, and the seeking of all Required Consents and other
approvals, required in connection with the Restructure.
	 
	5.2	 	Obligations of the Company
	 
	 	 	To the extent it has not already done so prior to execution of this document, the
Company must take all necessary steps to propose and implement the
	 
	 	 	 

			
	 
	 	page 14

 

 

	 	 	Schemes as soon as is reasonably practicable, including without limitation taking each of
the following steps:

	 	(a)	 	(Court direction): apply to the Court for orders under section 411(1) of
the Corporations Act directing the Company to convene the Scheme Meetings;
	 
	 	(b)	 	(Section 411(17)(b) statement): apply to ASIC for the production of a
statement pursuant to section 411(17)(b) of the Corporations Act stating that ASIC
has no objection to the Schemes;
	 
	 	(c)	 	(Information Memorandum): promptly prepare and dispatch the Information
Memorandum to Shareholders, Optionholders and Unlisted Optionholders, incorporating
the Independent Expert’s Report (and, in this regard, the Company must act in good
faith to attempt to ensure that the Information Memorandum complies with the
requirements of the Corporations Act, the Corporations Regulations and ASIC
Regulatory Guides No. 60 and 142);
	 
	 	(d)	 	(Scheme Meetings): promptly convene the Scheme Meetings in accordance
with the Court order referred to in clause 5.1(a), provided that if this document is
terminated under clause 7, it will take all steps reasonably required to ensure the
Scheme Meetings are not held;
	 
	 	(e)	 	(Court approval): as soon as practicable after Shareholders and
Optionholders have approved the Schemes at the Scheme Meetings, apply to the Court
for the Implementation Orders;
	 
	 	(f)	 	(Lodge copy of Court orders): lodge with ASIC an office copy of the
Implementation Orders;
	 
	 	(g)	 	(Transfer of Shares): register and process the transfer of Shares
referred to in clauses 4.2(a) on the Implementation Date; and
	 
	 	(h)	 	(Cancellation of Options and Unlisted Options): register and process the
cancellation of the Options and Unlisted Options on the Implementation Date.

	5.3	 	Obligations of Peplin
	 
	 	 	To the extent it has not already done so prior to execution of this document,
Peplin must take all necessary steps to assist the Company to propose and implement the
Schemes as soon as is reasonably practicable including, without limitation, taking each
of the following steps:

	 	(a)	 	(Peplin Information): promptly provide to the Company for inclusion in
the Information Memorandum such information regarding Peplin as the Company
reasonably requires to prepare and issue the Information Memorandum (including
consent to the form and context in which that information appears in the Information
Memorandum);
	 
	 	(b)	 	(Independent Expert Information): provide any assistance or information
reasonably requested by the Company or by the independent expert in connection with
the preparation of the
	 
	 	 	 	 

			
	 
	 	page 15

 

 

	 	 	 	Independent Expert’s Report to be sent together with the Information Memorandum;
	 
	 	(c)	 	(Supplementary Information): promptly provide to the Company such
information as may arise after the Information Memorandum has been prepared which
may be necessary to ensure that the Information Memorandum, in relation to the
information contained in it provided by Peplin, does not contain any material
statement which is false or misleading or contain any material omission;
	 
	 	(d)	 	(Deed Polls): prior to the dispatch of the Information Memorandum, enter
into the Deed Polls to which it is a party;
	 
	 	(e)	 	(Issue of CDIs): do all things necessary under the ASTC Settlement Rules
to enable the Share CDls and Option CDIs to be issued; and
	 
	 	(f)	 	(Issue of Peplin securities): do all things necessary to enable the
Peplin Common Stock, the Peplin Stock Options and Peplin Employee Stock Options to
be issued.

	6	 	Public announcements
	 
	 	 	Each party will, subject to law and applicable ASX Listing Rules, use its
reasonable endeavours to consult and agree the form of any other public announcement by
it or any of its related bodies corporate in connection with the Restructure.
	 
	7	 	Termination
	 
	7.1	 	Termination prior to Second Court Date
	 
	 	 	Without limiting any other provision of this document, this document may be
terminated at any time prior to the Second Court Date:

	 	(a)	 	(Peplin Breach): by the Company, if Peplin is in material breach of this
document, taken in the context of the Restructure as a whole, provided that the
Company has given notice to Peplin setting out the relevant circumstances and
stating an intention to terminate and the relevant circumstances have continued to
exist for five Business Days (or any shorter period ending prior to the commencement
of the hearing of the application to the Court to approve the Schemes on the Second
Court Date) from the time such notice is given;
	 
	 	(b)	 	(Company Breach): by Peplin, if the Company is in material breach of
this document, taken in the context of the Restructure as a whole, provided that
Peplin (as the case may be) has given notice to the Company setting out the relevant
circumstances and stating an intention to terminate and the relevant circumstances
have continued to exist for five Business Days (or any shorter period ending prior
to the commencement of the hearing of the application to the Court to approve
	 
	 	 	 	 

			
	 
	 	page 16

 

 

	 	 	 	the Schemes on the Second Court Date) from the time such notice is given;
	 
	 	(c)	 	(Directors’ Recommendation): by any party if the Board of the Company
withdraws its recommendation in favour of the Restructure;
	 
	 	(d)	 	(Failure of Condition Precedent): by any party if any Condition
Precedent is not satisfied or waived in accordance with clause 3.2;
	 
	 	(e)	 	(Order): by any party if a Court or other Governmental Agency has issued
a final and non-appealable order, decree or ruling or taken other action which
permanently restrains or prohibits the Restructure; and
	 
	 	(f)	 	(Court Decision): by any party if the Court refuses to make any order
convening the Scheme Meetings and the parties are advised by its legal advisors that
an appeal against that decision would have either no reasonable prospect of success
or a low probability of success.

	7.2	 	Other termination rights
	 
	 	 	Without limiting any other provision of this document, this document may be
terminated at any time by any party if:

	 	(a)	 	the End Date has passed without the Schemes becoming Effective; or
	 
	 	(b)	 	the Court refuses to make the Implementation Orders and that party is
advised by its legal advisors that an appeal against that decision would have no
reasonable prospect of success.

	7.3	 	Method of termination
	 
	 	 	Where a party has the right to terminate this document under clause 7.1 or 7.2,
that right for all purposes will be validly exercised if that party gives a notice in
writing to the other parties stating to the other parties that it terminates this
document.
	 
	7.4	 	Automatic termination
	 
	 	 	Without limiting any other provision of this document, this document will
terminate automatically, without the action of any party, if the resolution put to the
Share Scheme Meeting to approve the Share Scheme is not approved by the requisite
majorities of Shareholders under the Corporations Act.
	 
	7.5	 	Effect of termination
	 
	 	 	If this document is terminated, whether pursuant to clauses 7.1, 7.2 or 7.4, it
will become void and have no effect, other than in respect of any liability for an
antecedent breach of this document and provided that this clause and clauses 1 and 10
survive termination.
	 
	 	 	 

			
	 
	 	page 17

 

 

	8	 	Notices
	 
	8.1	 	General
	 
	 	 	A notice, demand, certification, process or other communication relating to this
document must be in writing in English and may be given by an agent of the sender.
	 
	8.2	 	How to give a communication
	 
	 	 	In addition to any other lawful means, a communication may be given by being:

	 	(a)	 	personally delivered;
	 
	 	(b)	 	left at the party’s current address for notices;
	 
	 	(c)	 	sent to the party’s current address for notices by pre-paid ordinary mail
or, if the address is outside Australia, by pre-paid airmail; or
	 
	 	(d)	 	sent by fax to the party’s current fax number for notices.

	8.3	 	Particulars for delivery of notices

	 	(a)	 	The particulars for delivery of notices are initially:

	 	 	 	 	 	 	 
	 

	 	Company	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Address:
	 	 	 	Level 2, 1 Breakfast Creek Road, Newstead,
	 

	 	 	 	 	 	Qld 4006
	 
	 	 	 	 	 	 
	 

	 	Fax:
	 	 	 	+61 7 3237 2152
	 
	 	 	 	 	 	 
	 

	 	Attention:
	 	 	 	Company Secretary
	 
	 	 	 	 	 	 
	 

	 	Peplin	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Address:
	 	 	 	c/o- Peplin Limited
	 

	 	 	 	 	 	6475 Christie Avenue
	 

	 	 	 	 	 	Emeryville, CA 94608
	 

	 	 	 	 	 	United States
	 
	 	 	 	 	 	 
	 

	 	Fax:
	 	 	 	+1 510 653 9704
	 
	 	 	 	 	 	 
	 

	 	Attention:
	 	 	 	David Smith

	 	(b)	 	Each party may change its particulars for delivery of notices by notice
to each other party.

	8.4	 	Communications by post
	 
	 	 	Subject to clause 8.6, a communication is given if posted:

	 	(a)	 	within Australia to an Australian address, three Business Days after
posting; or
	 
	 	(b)	 	in any other case, ten Business Days after posting.

	8.5	 	Communications by fax
	 
	 	 	Subject to clause 8.6, a communication is given if sent by fax, when the sender’s
fax machine produces a report that the fax was sent in full to the
	 
	 	 	 

			
	 
	 	page 18

 

 

	addressee.	 	That report is conclusive evidence that the addressee received the fax in
full at the time indicated on that report.

	8.6	 	After hours communications
	 
	 	 	If a communication is given:

	 	(a)	 	after 5.00 pm in the place of receipt; or
	 
	 	(b)	 	on a day which is a Saturday, Sunday or bank or public holiday in the
place of receipt,

	 	 	it is taken as having been given at 9.00 am on the next day which is not a Saturday,
Sunday or bank or public holiday in that place.
	 
	8.7	 	Process service
	 
	 	 	Any process or other document relating to litigation, administrative or arbitral
proceedings relating to this document may be served by any method contemplated by this
clause 8 or in accordance with any applicable law.
	 
	9	 	GST

	 	(a)	 	In this clause 9:

	 	(i)	 	words and expressions which are not defined in this
contract but which have a defined meaning in GST Law have the same meaning as
in the GST Law; and
	 
	 	(ii)	 	GST Law has the meaning given to that expression in the A
New Tax System (Goods and Services Tax) Act 1999.

	 	(b)	 	Unless otherwise expressly stated, all prices or other sums payable or
consideration to be provided under this contract are exclusive of GST.
	 
	 	(c)	 	If GST is payable by a supplier or by the representative member for a GST
group of which the supplier is a member, on any supply made under or in relation to
this contract, the recipient will pay to the supplier an amount equal to the GST
payable on the supply.
	 
	 	(d)	 	The recipient will pay the amount referred to in paragraph (c) in
addition to and at the same time that the consideration for the supply is to be
provided under this contract.
	 
	 	(e)	 	The supplier must deliver a tax invoice or an adjustment note to the
recipient before the supplier is entitled to payment of an amount under paragraph
(c). The recipient can withhold payment of the amount until the supplier provides a
tax invoice or an adjustment note, as appropriate.
	 
	 	(f)	 	If an adjustment event arises in respect of a taxable supply made by a
supplier under this contract, the amount payable by the recipient under paragraph
(c) will be recalculated to reflect the adjustment event and a payment will be made
by the recipient to the supplier or by the supplier to the recipient as the case
requires.
	 
	 	 	 	 

			
	 
	 	page 19

 

 

	 	(g)	 	Where a party is required under this contract to pay or reimburse an
expense or outgoing of another party, the amount to be paid or reimbursed by the
first party will be the sum of:

	 	(i)	 	the amount of the expense or outgoing less any input tax
credits in respect of the expense or outgoing to which the other party, or to
which the representative member for a GST group of which the other party is a
member, is entitled; and
	 
	 	(ii)	 	if the payment or reimbursement is subject to GST, an
amount equal to that GST.

	10	 	General
	 
	10.1	 	Duty

	 	(a)	 	Peplin as between the parties is liable for and must pay all duty (including
any fine or penalty except where it arises from default by the other party) on or
relating to this document, any document executed under it or any dutiable
transaction evidenced or effected by it.
	 
	 	(b)	 	If a party other than Peplin pays any duty (including any fine or
penalty) on or relating to this document, any document executed under it or any
dutiable transaction evidenced or effected by it, Peplin must pay that amount to the
paying party on demand.

	10.2	 	Legal costs
	 
	 	 	Except as expressly stated otherwise in this document, the Company will pay the
legal and other costs and expenses of negotiating, preparing, executing and performing
the parties’ respective obligations under this document.
	 
	10.3	 	Amendment
	 
	 	 	This document may only be varied or replaced by a document executed by the
parties.
	 
	10.4	 	Waiver and exercise of rights

	 	(a)	 	A single or partial exercise or waiver by a party of a right relating to this
document does not prevent any other exercise of that right or the exercise of any
other right.
	 
	 	(b)	 	A party is not liable for any loss, cost or expense of any other party
caused or contributed to by the waiver, exercise, attempted exercise, failure to
exercise or delay in the exercise of a right.

	10.5	 	Rights cumulative
	 
	 	 	Except as expressly stated otherwise in this document, the rights of a party under
this document are cumulative and are in addition to any other rights of that party.
	 
	 	 	 

			
	 
	 	page 20

 

 

	10.6	 	Consents
	 
	 	 	Any consent referred to in, or required under, this document from any party may
not be unreasonably withheld, unless this document expressly provides for that consent to
be given in that party’s absolute discretion.
	 
	10.7	 	Further steps
	 
	 	 	Each party must promptly do whatever any other party reasonably requires of it to
give effect to this document and to perform its obligations under it.
	 
	10.8	 	Governing law and jurisdiction

	 	(a)	 	This document is governed by and is to be construed in accordance with the
laws applicable in New South Wales.
	 
	 	(b)	 	Each party irrevocably and unconditionally submits to the non-exclusive
jurisdiction of the courts of New South Wales and any courts which have jurisdiction
to hear appeals from any of those courts and waives any right to object to any
proceedings being brought in those courts.

	10.9	 	Assignment

	 	(a)	 	A party must not assign or deal with any right under this document without the
prior written consent of the other parties.
	 
	 	(b)	 	Any purported dealing in breach of this clause is of no effect.

	10.10	 	Liability
	 
	 	 	An obligation of two or more persons binds them separately and together.
	 
	10.11	 	Counterparts
	 
	 	 	This document may consist of a number of counterparts and, if so, the counterparts
taken together constitute one document.
	 
	10.12	 	Entire understanding

	 	(a)	 	This document contains the entire understanding between the parties as to the
subject matter of this document.
	 
	 	(b)	 	All previous negotiations, understandings, representations, warranties,
memoranda or commitments concerning the subject matter of this document are merged
in and superseded by this document and are of no effect. No party is liable to any
other party in respect of those matters.
	 
	 	(c)	 	No oral explanation or information provided by any party to another:

	 	(i)	 	affects the meaning or interpretation of this document; or
	 
	 	(ii)	 	constitutes any collateral agreement, warranty or
understanding between any of the parties.

	10.13	 	No Merger
	 
	 	 	The rights and obligations of the parties under this document will not merge on
completion of any transaction under this document. They will survive the
	 
	 	 	 

			
	 
	 	page 21

 

 

	 	 	execution and delivery of any assignment or other document entered into for the purpose
of implementing any transaction.
	 
	 	 	 

			
	 
	 	page 22

 

 

	 	 	 	 	 	 	 	 	 
	Executed as an agreement.
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Executed by Peplin Limited

	 	 	)	 	 	 	 	 
	/s/
David Smith
	 	 	 	 	 	/s/ Cherrell Hirst	 	 
	 

Company Secretary/Director

	 	 	 	 	 	 

Director
	 	 
	David
Smith
	 	 	 	 	 	Cherrell Hirst	 	 
	 

Name of Company Secretary/Director (print)

	 	 	 	 	 	 

Name of Director (print)
	 	 
	 
	 	 	 	 	 	 	 	 
	Executed on behalf of Peplin, Inc. by an authorised
officer or attorney in the presence of:

	 	 	)

)

)	 	 	 	 	 
	/s/ James Rozsa
	 	 	 	 	 	/s/ Michael Aldridge	 	 
	 

Witness

	 	 	 	 	 	 

Officer/Attorney
	 	 
	James
Rozsa
	 	 	 	 	 	Michael Aldridge	 	 
	 

Name of Witness (print)

	 	 	 	 	 	 

Name of Officer/Attorney (print)
	 	 

			
	 
	 
	 	page 23

 

 

Annexure 1

Share Scheme

			
	 
	 
	 	page 24

 

 

Peplin Limited

Each Share Scheme Participant

Share Scheme

pursuant to section 411 of the Corporations Act

 

 

	 	 	 	Date
	 
	 	 	 	Parties
	 
	 	 	 	Peplin Limited ABN 55 090 819 275 of Level 2, 1 Breakfast Creek Road, Newstead, Qld 4006
(Company)
	 
	 	 	 	Each Share Scheme Participant
	 
	 	 	 	Background
	 
	 	A	 	The Company is a public company registered in Queensland and is a company limited by shares.
	 
	 	B	 	As at the date of the Information Memorandum, 184,591,662 Shares were on issue.
	 
	 	C	 	Peplin is a company incorporated under the laws of Delaware, United States.
	 
	 	D	 	The Company and Peplin have entered into the Implementation Agreement which sets out the terms on which the parties have
agreed to implement this Share Scheme.
	 
	 	E	 	Peplin has entered into the Deed Poll for the purpose of covenanting in favour of Share Scheme Participants to perform
their obligations under this Share Scheme and the Implementation Agreement.
	 
	 	 	 	Agreed terms
	 
	 	1	 	Interpretation
	 
	 	1.1	 	Definitions
	 
	 	 	 	In this document:
	 
	 	 	 	CHESS means the clearing house electronic sub-register system of share transfers operated
by ASX Settlement and Transfer Corporation Pty Limited.
	 
	 	 	 	Effective Date means the date on which this Share Scheme becomes Effective.
	 
	 	 	 	Implementation Agreement means the Restructure Implementation Agreement dated 8 August
2007 between the Company and Peplin relating to the implementation of the Schemes and
related transactions.

 

 

	 	 	 	Marketable Parcel has the meaning given to that term in the ASX Market Rules.
	 
	 	 	 	Peplin means Peplin, Inc, a company incorporated in Delaware, United States.
	 
	 	 	 	Restated Certificate of Incorporation and By-Laws means the constituent documents of
Peplin.
	 
	 	 	 	Tax File Number means the tax file number issued to a person by the Australian Taxation
Office or, in the case of non-Australian residents, a number or identification issued for
taxation purposes by the equivalent governmental agency of that resident’s country.
	 
	 	1.2	 	Further definitions and construction
	 
	 	 	 	Unless the context requires otherwise, clauses 1.1 and 1.2 of the Implementation
Agreement apply as if set out in full.
	 
	 	2	 	Conditions
	 
	 	2.1	 	Conditions precedent
	 
	 	 	 	This Share Scheme is conditional on each of the following conditions precedent:

	 	(a)	 	all of the conditions set out in clause 3.1 of the Implementation
Agreement, have been satisfied or waived in accordance with the terms of the
Implementation Agreement before 8.00 am on the Second Court Date;
	 
	 	(b)	 	as at the Second Court Date, neither the Implementation Agreement nor the
Deed Poll have been terminated;
	 
	 	(c)	 	the Share Scheme has been approved in accordance with section 411 of the
Corporations Act at the Scheme Meetings; and
	 
	 	(d)	 	the Share Scheme has been approved by the Court pursuant to
section 411(4)(b) of the Corporations Act by the End Date.

	 	2.2	 	Satisfaction of Conditions
	 
	 	 	 	The Company and Share Scheme Participants will not have any rights or obligations under
clause 4 of this document unless and until the conditions precedent in clause 2.1 are
satisfied.
	 
	 	3	 	Lodgement
	 
	 	 	 	On or before the fourth Business Day following approval of the Share Scheme by the Court
in accordance with section 411(4)(b) of the Corporations Act, the Company will lodge with
ASIC an office copy of the Court order under section 411(10) of the Corporations Act
approving this Share Scheme. The Court order is taken to have effect on and from the
time and date specified in that order.

 page 2

 

	 	4	 	Implementation
	 
	 	4.1	 	Share Scheme steps
	 
	 	 	 	Subject to the conditions precedent in clause 2.1 being satisfied, on the Implementation
Date, the Company will:

	 	(a)	 	procure Peplin to:

	 	(i)	 	in respect of Shares held by Eligible Share Scheme
Participants on the Record Date:

	 	(A)	 	issue to those Eligible Share Scheme
Participants who have not made an election in accordance with
clause 4.2, one Share CDI for every one Share held by them as at the
Record Date; and
	 
	 	(B)	 	issue to those Eligible Share Scheme
Participants who have made an election in accordance with clause 4.2,
one share of Peplin Common Stock for every 20 Shares held by them as
at the Record Date;

	 	(ii)	 	in respect of Shares held by Ineligible Foreign
Shareholders on the Record Date, issue to the Nominee for sale on behalf of
the Ineligible Foreign Shareholders under clause 4.4 one Share CDI for every
one Share held by them as at the Record Date;
	 
	 	(iii)	 	undertake to each Share Scheme Participant that any
fractional entitlements resulting from paragraph (a)(i)(B) will be dealt with
in accordance with clause 4.3 below,

	 	 	 	and each Share Scheme Participant agrees in favour of the Company that they will
accept such shares and CHESS Depositary Interests;
	 
	 	(b)	 	either effect a valid transfer or transfers of the Shares held by the
Scheme Participants to Peplin under section 1074D of the Corporations Act or deliver
to Peplin duly completed and executed share transfer forms (or a master transfer
form) in accordance with section 1071B of the Corporations Act and Peplin will
execute and deliver those share transfer form(s) to the Company; and
	 
	 	(c)	 	enforce the provisions of the Implementation Agreement for the benefit of
Share Scheme Participants, including the obligations of Peplin to issue Peplin
Common Stock or procure the issue of CHESS Depositary Interests representing an
interest in Peplin Common Stock.

	 	4.2	 	Election

	 	(a)	 	Each Eligible Share Scheme Participant may make an election to receive
shares of Peplin Common Stock rather than Share CDIs under the Share Scheme by
completing, signing and returning the relevant form contained in the Information
Memorandum by 5.00pm on the Record Date (or such other date as agreed by the parties
in writing) to the Company’s share registry.

 page 3

 

	 	(b)	 	An election under paragraph (a) may only be made in respect of all and
not part of the Shares held by an Eligible Share Scheme Participant.
	 
	 	(c)	 	If an Eligible Share Scheme Participant does not make an election in
accordance with paragraph (a), an Eligible Share Scheme Participant will receive
Share CDIs under the Share Scheme.

	 	4.3	 	Fractional entitlements
	 
	 	 	 	Fractional entitlements to the consideration offered under clause 4.1(a)(i)(B) will be
rounded up to nearest whole number of shares of Peplin Common Stock, after aggregating
all holdings of a Share Scheme Participant.
	 
	 	4.4	 	Ineligible Foreign Shareholders
	 
	 	 	 	If clause 4.1(a)(ii) applies, Peplin will procure that the Nominee:

	 	(a)	 	as soon as reasonably practicable sells, in a manner reasonably
determined by the Nominee, for the benefit of the Ineligible Foreign Shareholders
all the Share CDIs issued to the Nominee under clause 4.1(a)(ii);
	 
	 	(b)	 	accounts to each Ineligible Foreign Shareholder for the net proceeds of
sale of the Share CDIs issued to the Nominee in respect of that Ineligible Foreign
Shareholder’s entitlement under clause 4.1(a)(ii) (but calculated on an averaged
basis so that all Ineligible Foreign Shareholders receive the same price per Share
CDI (as the case may be), subject to rounding to the nearest whole cent) after
deduction of any applicable brokerage, taxes and charges, at the Ineligible Foreign
Shareholder’s risk in full satisfaction of the Ineligible Foreign Shareholder’s
rights under the Share Scheme; and
	 
	 	(c)	 	remits to the Ineligible Foreign Shareholder the net proceeds of sale in
respect of the Ineligible Foreign Shareholder’s entitlement under this clause 4.4,
such proceeds to be dispatched by mail to the Ineligible Foreign Shareholder’s
address as shown in the Share Register by cheque in Australian currency.

	 	4.5	 	Joint holders
	 
	 	 	 	In the case of Shares held by Share Scheme Participants on the Record Date in joint
names:

	 	(a)	 	any cheque required to be paid in respect of the relevant shares will be
payable to the joint holders and will be forwarded to the holder whose name appears
first in the Share Register on the Record Date; and
	 
	 	(b)	 	any holding statements or transmittal letters for Peplin Common Stock, or
CHESS Depositary Interests, which are to be issued in respect of the relevant Shares
will be issued in the names of the joint holders and forwarded to the holder whose
name appears first in the Share Register on the Record Date.

 page 4

 

	 	5	 	Dealings in Shares

	 	(a)	 	For the purpose of establishing who are Share Scheme Participants,
dealings in Shares will only be recognised if:

	 	(i)	 	in the case of dealings of the type to be affected using
CHESS, the transferee is registered in the Share Register as the holder of
the relevant the Shares (as the case may be) by 10.00 pm on the Record Date;
and
	 
	 	(ii)	 	in all other cases, if registrable transmission
applications or transfers in respect of those dealings are received on or
before 10.00 pm on the Record Date at the place where the Share Register is
kept.

	 	(b)	 	The Company must register registrable transmission applications or
transfers of the type referred to in paragraph (a)(ii), provided that nothing in
this paragraph requires the Company to register a transfer that would result in a
Shareholder holding a parcel of Shares that is less than a Marketable Parcel.
	 
	 	(c)	 	The Company will not accept for registration or recognise for any purpose
any transmission application or transfer in respect of Shares received after 10.00
pm on the Record Date.
	 
	 	(d)	 	For the purpose of determining entitlements to the consideration to be
provided under this Share Scheme, the Company will, until that consideration has
been provided, maintain the Share Register in accordance with the foregoing
provisions of this clause 5 and the Share Register in this form will solely
determine entitlements to that consideration.
	 
	 	(e)	 	The Company must procure that on the Record Date, details of the names,
registered addresses and holdings of Shares of every Share Scheme Participant as
shown in the Share Register at the Record Date are available to Peplin in such form
as Peplin may reasonably require.
	 
	 	(f)	 	Subject to implementation occurring under this Share Scheme, as from
10.00 pm on the Record Date, all share certificates and holding statements for the
Shares held at 10.00 pm on the Record Date will cease to have effect as documents of
title, and each entry currently on the Share Register at that time in respect of
Shares will cease to have any effect other than as evidence of entitlement to the
consideration required to be provided under this Share Scheme.

	 	6	 	General provisions
	 
	 	6.1	 	Alterations and conditions
	 
	 	 	 	If the Court proposes to approve this Share Scheme subject to any alterations or
conditions, the Company may by its legal counsel consent on behalf of all persons
concerned to those alterations or conditions to which Peplin has consented.

 page 5

 

	 	6.2	 	Warranties by Share Scheme Participants
	 
	 	 	 	Each Share Scheme Participant is deemed to have warranted to Peplin that:

	 	(a)	 	all their Shares (including any rights and entitlements attaching to
those shares) transferred to Peplin under the Scheme will, on the Implementation
Date, be fully paid and free from all mortgages, charges, liens, encumbrances,
pledges, security interests and other interests of third parties of any kind,
whether legal or otherwise, and restrictions on transfer of any kind, whether legal
or otherwise; and
	 
	 	(b)	 	they have full power and capacity to sell and to transfer their shares
(including any rights and entitlements attaching to those shares) to Peplin under
the Share Scheme.

	 	6.3	 	Covenants by Share Scheme Participants

	 	(a)	 	Each Share Scheme Participants:

	 	(i)	 	consents to the Company doing all things necessary or
incidental to the implementation of this Share Scheme; and
	 
	 	(ii)	 	agrees to be bound by the terms of the Restated Certificate
of Incorporation and By-Laws in respect of Peplin Common Stock and/or Share
CDIs issued to them pursuant to this Share Scheme.

	 	(b)	 	Each Share Scheme Participant, without the need for any further act,
irrevocably appoints the Company and all of its directors and officers (jointly and
severally) as its attorney and agent for the purpose of executing any document
necessary to give effect to the Share Scheme.

	 	6.4	 	Registration of Common Stock and Share CDIs

	 	(a)	 	The obligations of the Company to procure Peplin to issue Peplin Common
Stock under clause 4 of this document will be satisfied by Peplin, on the
Implementation Date, procuring the entry in the registers maintained by Peplin of
holders of Peplin Common Stock each person who is to receive Peplin Common Stock
under those provisions.
	 
	 	(b)	 	After the satisfaction of the obligations of the Company in paragraph (a)
above, and within 5 Business Days after the Implementation Date, the Company will
procure Peplin to also issue holding statements or transmittal letters (as the case
may be) for such Peplin Common Stock in the name of such persons, and procure the
dispatch of such holding statements or transmittal letters to the address as shown
in the Share Register for such persons.
	 
	 	(c)	 	The obligations of the Company to procure Peplin to issue Share CDIs
under clause 4 of this Share Scheme will be satisfied by Peplin on the
Implementation Date, procuring the entry in the register maintained by Peplin of
holders of Peplin Common Stock of the Depositary as depositary to hold the Peplin
Common Stock underlying those Share CDIs.

 page 6

 

	 	(d)	 	After the satisfaction of the obligations of the Company in paragraph (c)
above, within 5 Business Day after the Implementation Date, the Company will procure
Peplin to:

	 	(i)	 	issue holding statements or transmittal letters (as the
case may be) for such Peplin Common Stock in the name of the Depositary, and
procure the dispatch of such holding statements or transmittal letters to the
Depositary;
	 
	 	(ii)	 	record in the CDI Register each person who is to receive
Share CDls under clause 4; and
	 
	 	(iii)	 	dispatch to each person who is to receive Share CDIs under
clause 4 a holding statement in the name of that person representing the
number of Share CDIs to be issued to that person.

	 	6.5	 	Communications

	 	(a)	 	Where a notice, transfer, transmission application, direction or other
communication referred to in this document is sent by post to the Company, it will
not be deemed to be received in the ordinary course of post or on a date other than
the date (if any) on which it is actually received at the Company’s registered
office or at its Share Registry.
	 
	 	(b)	 	The Company may, acting in good faith but otherwise in its sole
discretion, treat as valid or invalid any form and/or method of execution of notice
from a Share Scheme Participant who is registered in the Share Register as at the
Record Date with an address in Australia, New Zealand or the United States of
America requesting Peplin Common Stock under the Share Scheme rather than CHESS
Depositary Interests (or any notice of revocation of such request).
	 
	 	(c)	 	Except for a Share Scheme Participant’s Tax File Number, any instruction
or notification between a Share Scheme Participant and the Company relating to
Shares at the Record Date (including, any instruction relating to payment of
dividends or to communications from the Company) will from the Implementation Date
be deemed to be a similar instruction or notification to Peplin (except where the
performance of such instruction or notification by Peplin would not be permitted
under applicable law) in respect of Peplin Common Stock (or, in the case of Eligible
Share Scheme Participants who have not made an election under clause 4.2, Share
CDls) issued to the Share Scheme Participant until that instruction or notification
is revoked or amended in writing and addressed to Peplin.

	 	6.6	 	Further assurances
	 
	 	 	 	The Company will execute all documents and do all acts and things necessary for the
implementation and performance of its obligations under the Share Scheme.

 page 7

 

	 	6.7	 	Governing law
	 
	 	 	 	The proper law of this document is the law of the State of New South Wales.

 page 8

 

Annexure 2

Option Scheme

	 		
	 
	 	page 25

 

 

Peplin Limited

Each Option Scheme Participant

Option Scheme

pursuant to section 411 of the Corporations Act

 

 

	 	 	Date
	 
	 	 	Parties
	 
	 	 	Peplin Limited ABN 55 090 819 275 of Level 2, 1 Breakfast Creek Road, Newstead, Qld 4006
(Company)
	 
	 	 	Each Option Scheme Participant
	 
	 	 	Background
	 
	A	 	The Company is a public company registered in Queensland and is a company limited by shares.
	 
	B	 	As at the date of the Information Memorandum, 17,118,960 Options were on issue.
	 
	C	 	Peplin is a company incorporated under the laws of Delaware, United States.
	 
	D	 	The Company and Peplin have entered into the Implementation Agreement which sets out the terms on which the parties have
agreed to implement this Option Scheme.
	 
	E	 	Peplin has entered into the Deed Poll for the purpose of covenanting in favour of Option Scheme Participants to perform
their obligations under this Option Scheme and the Implementation Agreement.
	 
	 	 	Agreed terms
	 
	1	 	Interpretation
	 
	1.1	 	Definitions
	 
	 	 	In this document:
	 
	 	 	CHESS means the clearing house electronic sub-register system of share transfers operated
by ASX Settlement and Transfer Corporation Pty Limited.
	 
	 	 	Effective Date means the date on which this Share Scheme becomes Effective.
	 
	 	 	Implementation Agreement means the Restructure Implementation Agreement dated 8 August
2007 between the Company and Peplin relating to the implementation of the Schemes and
related transactions.

 

 

	 	 	Marketable Parcel has the meaning given to that term in the ASX Market Rules.
	 
	 	 	Peplin means Peplin, Inc, a company incorporated in Delaware, United States.
	 
	 	 	Restated Certificate of Incorporation and By-Laws means the constituent documents of
Peplin.
	 
	 	 	Tax File Number means the tax file number issued to a person by the Australian Taxation
Office or, in the case of non-Australian residents, a number or identification issued for
taxation purposes by the equivalent governmental agency of that resident’s country.
	 
	1.2	 	Further definitions and construction
	 
	 	 	Unless the context requires otherwise, clauses 1.1 and 1.2 of the Implementation
Agreement apply as if set out in full.
	 
	2	 	Conditions
	 
	2.1	 	Conditions precedent
	 
	 	 	This Option Scheme is conditional on each of the following conditions precedent:

	 	(a)	 	all of the conditions set out in clause 3.1 of the Implementation
Agreement have been satisfied or waived in accordance with the terms of the
Implementation Agreement before 8.00 am on the Second Court Date;
	 
	 	(b)	 	as at the Second Court Date, neither the Implementation Agreement nor the
Deed Poll have been terminated;
	 
	 	(c)	 	the Schemes have been approved in accordance with section 411 of the
Corporations Act at the Scheme Meetings; and
	 
	 	(d)	 	the Schemes have been approved by the Court pursuant to section 411(4)(b)
of the Corporations Act by the End Date.

	2.2	 	Satisfaction of Conditions
	 
	 	 	The Company and Option Scheme Participants will not have any rights or obligations under
clause 4 of this document unless and until the conditions precedent in clause 2.1 are
satisfied.
	 
	3	 	Lodgement
	 
	 	 	On or before the fourth Business Day following approval of the Option Scheme by the Court
in accordance with Section 411(4)(b) of the Corporations Act, the Company will lodge with
ASIC an office copy of the Court order under Section 411(10) of the Corporations Act
approving the Option Scheme. The Court order is taken to have effect on and from the
time and date specified in that order.

Page 2

 

	4	 	Implementation
	 
	4.1	 	Option Scheme steps
	 
	 	 	Subject to the conditions precedent in clause 2.1 being satisfied, on the Implementation
Date, the Company will:

	 	(a)	 	procure Peplin to:

	 	(i)	 	in respect of the Options held by Eligible Option Scheme
Participants on the Record Date, issue to those Eligible Option Scheme
Participants, one Option CDI for every one Option held by them as at the
Record Date; and
	 
	 	(ii)	 	in respect of Options held by Ineligible Foreign
Optionholders on the Record Date, issue to the Nominee for sale on behalf of
the Ineligible Optionholders under clause 4.2 one Option CDI for every one
Option held by them as at the Record Date;

	 	(b)	 	without limiting paragraph (a) above, record in the Options Register the
cancellation of all Options outstanding as at the Record Date; and
	 
	 	(c)	 	enforce the provisions of the Implementation Agreement for the benefit of
Option Scheme Participants, including the obligations of Peplin to issue Peplin
Stock Options to the Depositary and procure the issue of CHESS Depositary Interests
representing an interest in a Peplin Stock Option.

	4.2	 	Ineligible Foreign Optionholders
	 
	 	 	If clause 4.1(a)(ii) applies, Peplin will procure that the Nominee:

	 	(a)	 	as soon as reasonably practicable sells, in a manner reasonably
determined by the Nominee, for the benefit of the Ineligible Foreign Optionholders
all the Option CDIs issued to the Nominee under clause 4.1(a)(ii);
	 
	 	(b)	 	accounts to each Ineligible Foreign Optionholder for the net proceeds of
sale of the Option CDIs issued to the Nominee in respect of that Ineligible Foreign
Optionholder’s entitlement under clause 4.1(a)(ii) above (but calculated on an
averaged basis so that all Ineligible Foreign Optionholders receive the same price
per Option CDI (as the case may be), subject to rounding to the nearest whole cent)
after deduction of any applicable brokerage, taxes and charges, at the Ineligible
Foreign Optionholder’s risk in full satisfaction of the Ineligible Foreign
Optionholder’s rights under the Option Scheme; and
	 
	 	(c)	 	remits to the Ineligible Foreign Optionholder the net proceeds of sale in
respect of the Ineligible Foreign Optionholder’s entitlement under this clause 4.2,
such proceeds to be dispatched by mail to the Ineligible Foreign Optionholder’s
address as shown in the Option Register by cheque in Australian currency.

	4.3	 	Joint holders
	 
	 	 	In the case of Options held by Option Scheme Participants on the Record Date in joint
names:

Page 3

 

	 	(a)	 	any cheque required to be paid in respect of the relevant options will be
payable to the joint holders and will be forwarded to the holder whose name appears
first in the Option Register on the Record Date; and
	 
	 	(b)	 	any holding statements or transmittal letters for CHESS Depositary
Interests, which are to be issued in respect of the relevant Peplin Stock Options
will be issued in the names of the joint holders and forwarded to the holder whose
name appears first in the Option Register on the Record Date.

	4.4	 	Interdependence with Share Scheme
	 
	 	 	The steps referred to in clause 4.1 will be interdependent with the implementation steps
required under clause 4.1 of the Share Scheme, such that implementation under this Option
Scheme will not be taken to have occurred until the implementation steps required under
clause 4.1 of the Share Scheme have also occurred.

	5	 	Dealings in Options

	 	(a)	 	For the purpose of establishing who are Option Scheme Participants,
dealings in Options will only be recognised if:

	 	(i)	 	in the case of dealings of the type to be affected using
CHESS, the transferee is registered in the Option Register as the holder of
the relevant the Options by 10.00 pm on the Record Date; and
	 
	 	(ii)	 	in all other cases, if registrable transmission
applications, option exercise forms or transfers in respect of those dealings
are received on or before 10.00 pm on the Record Date at the place where the
Option Register is kept.

	 	(b)	 	The Company must register registrable transmission applications, option
exercise forms or transfers of the type referred to in paragraph (a)(ii), which are
received on or before 10 pm on the Record Date at the place where the Option
Register is kept.
	 
	 	(c)	 	The Company will not accept or recognise for any purpose any exercise of
an Option received after 10.00 pm on the Record Date.
	 
	 	(d)	 	For the purpose of determining entitlements to the consideration to be
provided under this Option Scheme, the Company must, until that consideration has
been provided, maintain the Option Register in accordance with the foregoing
provisions of this clause 5 and the Option Register in this form will solely
determine entitlements to that consideration.
	 
	 	(e)	 	The Company must procure that on the Record Date, details of the names,
registered addresses and holdings of Options of every Option Scheme Participant as
shown in the Option Register at the Record Date are available to Peplin in such form
as Peplin may reasonably require.

Page 4

 

	 	(f)	 	Subject to implementation occurring under this Option Scheme, as from
10.00 pm on the Record Date, all option certificates and holding statements for the
Options held at 10.00 pm on the Record Date will cease to have effect as documents
of title, and each entry currently on the Option Register at that time will cease to
have any effect other than as evidence of entitlement to the consideration to be
provided under this Option Scheme.

	6	 	General provisions
	 
	6.1	 	Alterations and conditions
	 
	 	 	If the Court propose to approve the Option Scheme subject to any alterations or
conditions, the Company may by its legal counsel consent on behalf of all persons
concerned to those alterations or conditions to which Peplin has consented.
	 
	6.2	 	Registration of Option CDIs

	 	(a)	 	The obligations of the Company to procure Peplin to issue Option CDIs
under clause 4 of this Option Scheme will be satisfied by Peplin on the
Implementation Date, procuring the entry in the register maintained by Peplin of
holders of Peplin Stock Options of the Depositary as depositary to hold the Peplin
Stock Options underlying those Option CDIs.
	 
	 	(b)	 	After the satisfaction of the obligations of the Company in paragraph (a)
above, within 5 Business Day after the Implementation Date, the Company will procure
Peplin to:

	 	(i)	 	record in the CDI Register each person who is to receive
Option CDls under clause 4; and
	 
	 	(ii)	 	dispatch to each person who is to receive Option CDIs under
clause 4 a holding statement in the name of that person representing the
number of Option CDIs to be issued to that person.

	6.3	 	Communications
	 
	 	 	Where a notice, transfer, transmission application, direction or other communication
referred to in the Option Scheme is sent by post to the Company, it will not be deemed to
be received in the ordinary course of post or on a date other than the date (if any) on
which it is actually received at the Company’s registered office or at its Option
Registry.
	 
	6.4	 	Covenants by Option Scheme Participants

	 	(a)	 	Each Option Scheme Participant consents to the Company doing all things
necessary or incidental to the implementation of the Option Scheme.
	 
	 	(b)	 	Each Option Scheme Participant, without the need for any further act,
irrevocably appoints the Company and all of its directors and officers

Page 5

 

	 	 	 	(jointly and severally) as its attorney and agent for the purpose of executing any
document necessary to give effect to the Option Scheme.

	6.5	 	Further assurances
	 
	 	 	The Company will execute all documents and do all acts and things necessary for the
implementation and performance of its obligations under the Option Scheme.
	 
	6.6	 	Governing law
	 
	 	 	The proper law of the Option Scheme is the law of the State of New South Wales.

Page 6

 

Annexure 3

Form of Share Scheme Deed Poll

	 		
	 
	 	page 26

 

 

Execution copy

8 August 2007

Peplin, Inc.

Share Scheme

Deed Poll

Execution
Copy

 

 

	 	 	Date
	 
	 	 	Parties
	 
	 	 	Peplin, Inc. a company incorporated in Delaware, United States of America of c/-6475
Christie Avenue, Emeryville CA 94608 United States of America (Peplin)
	 
	 	 	Each Share Scheme Participant
	 
	 	 	Background
	 
	A	 	The directors of the Company have resolved that the Company propose
the Share Scheme.
	 
	B	 	The effect of the Share Scheme will be that in exchange for their
Shares in the Company, the Shareholders will be issued with
replacement shares of Peplin Common Stock.
	 
	C	 	On 8 August 2007 the Company and Peplin entered into a Restructure
Implementation Agreement (Implementation Agreement), in which Peplin
agreed to do the things within its power to implement the Schemes,
including entering into this document and enabling the Peplin Common
Stock to be issued.
	 
	D	 	Peplin is entering into this document for the purpose of covenanting
in favour of the Shareholders to perform certain of its obligations
under the Implementation Agreement.
	 
	 	 	Agreed Terms
	 
	1	 	Interpretations
	 
	1.1	 	Definitions and construction
	 
	 	 	In this document, unless the context requires otherwise, clauses 1.1 and 1.2 of the
Implementation Agreement apply as if set out in full.
	 
	1.2	 	Nature of deed poll
	 
	 	 	Peplin acknowledges that this document is a deed poll and may be relied on and enforced
by any Share Scheme Participant in accordance with its terms, notwithstanding that the
Share Scheme Participants are not party to this document.

Page 1

 

	2	 	Conditions precedent and termination
	 
	2.1	 	Conditions
	 
	 	 	Each of Peplin’s obligations under clause 3 are subject to the Share Scheme becoming
Effective and the satisfaction or waiver of the conditions precedent contained in clause
3.1 of the Share Scheme.
	 
	2.2	 	Termination
	 
	 	 	If the Share Scheme does not become Effective, or the conditions precedent contained in
clause 3.1 of the Share Scheme are not satisfied or waived before the End Date, the
obligations of Peplin under this document will terminate when the Implementation
Agreement terminates.
	 
	2.3	 	Consequences of termination
	 
	 	 	If this document is terminated under clause 2.2 then in addition and without prejudice to
any other rights, powers or remedies available to it:

	 	(a)	 	Peplin is released from its obligations to further perform its
obligations under this document, except those obligations contained in clause 5 and
any other obligations which by their nature survive termination; and
	 
	 	(b)	 	the Share Scheme Participants retain the rights they have against Peplin
in respect of any breach of this document which occurred before this document is
terminated.

	3	 	Provision of consideration
	 
	 	 	Subject to clause 2, on the Implementation Date, Peplin will cause to be provided or
remitted to each Share Scheme Participant the consideration due to such Share Scheme
Participant under the Share Scheme in accordance with clause 4.2(a) of the Implementation
Agreement.
	 
	4	 	Representations and warranties
	 
	 	 	Peplin represents and warrants that:

	 	(a)	 	it is a corporation validly existing under the laws of its place of
incorporation;
	 
	 	(b)	 	it has the corporate power to enter into and perform its obligations
under this document and to carry out the transactions contemplated by this document;
	 
	 	(c)	 	it has taken all necessary corporate action to authorise the entry into
this document and has taken or will take all necessary corporate action to authorise
the performance of this document and to carry out the transactions contemplated by
this document; and
	 
	 	(d)	 	this document is valid and binding upon it.

Page 2

 

	5	 	Continuing obligations
	 
	 	 	This document is irrevocable and subject to clause 2, remains in full force and effect
until Peplin has completely performed its obligations under this document or the earlier
termination of this document under clause 2.
	 
	6	 	Stamp duty
	 
	 	 	Peplin must pay all stamp duty (if any) imposed on this document and on any instrument or
other document executed to give effect to this document.
	 
	7	 	General
	 
	7.1	 	Waiver and variation

	 	(a)	 	A provision or right under this document may not be waived except in
writing signed by the person granting the waiver.
	 
	 	(b)	 	A provision of this document may not be varied unless the variation is
agreed to by the Company and the Court indicates that the variation would not in
itself preclude approval of the Scheme in which event Peplin will enter into a
further deed poll in favour of the Share Scheme Participants giving effect to such
variation.

	7.2	 	Rights cumulative
	 
	 	 	Except as expressly stated otherwise in this document, the rights of Peplin and the Share
Scheme Participants under this document are cumulative and are in addition to any other
rights of that party.
	 
	7.3	 	Governing law and jurisdiction

	 	(a)	 	This document is governed by the laws of New South Wales.
	 
	 	(b)	 	Peplin irrevocably submit to the non-exclusive jurisdiction of the courts
of New South Wales and any courts which have jurisdiction to hear appeals from any
of those courts and waives any right to object to any proceedings being brought in
those courts.

	7.4	 	Assignment
	 
	 	 	The rights and obligations of a person under this document are personal. They cannot be
assigned, charged or otherwise dealt with, and no person must attempt or purport to do
so.

Page 3

 

	 	 	Executed as a deed poll.

	 	 	 	 	 	 	 
	Executed on behalf of Peplin, Inc. by

	 	 	)	 	 	 
	an authorised officer or attorney in the
	 	 	 	 	 	 
	presence of:
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	Witness

	 	 	 	 	 	Officer/Attorney
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	Name of Witness (print)

	 	 	 	 	 	Name of Officer/Attorney (print)

Page 4

 

Annexure 4

Form of Option Scheme Deed Poll

	 		
	 
	 	page 27

 

 

Execution copy

8 August 2007

Peplin, Inc.

Option Scheme

Deed Poll

 

 

	 	 	Date
	 
	 	 	Parties
	 
	 	 	Peplin, Inc a company incorporated in Delaware, United States of America of 6475 Christie
Avenue, Emeryville, CA 94608, United States of America (Peplin)
	 
	 	 	Each Option Scheme Participant
	 
	 	 	Background
	 
	A	 	The directors of the Company have resolved that the Company propose
the Option Scheme.
	 
	B	 	The effect of the Option Scheme will be that all Options will be
cancelled, such that the Company ceases to have any Options on issue,
and Option Scheme Participants will be granted Peplin Stock Options by
Peplin, in return for the cancellation of their Options.
	 
	C	 	On 8 August 2007 the Company and Peplin entered into a Restructure
Implementation Agreement (Implementation Agreement), in which Peplin
agreed to do the things within its power to implement the Schemes
including entering into this document and enabling the Peplin Stock
Options to be issued.
	 
	D	 	Peplin is entering into this document for the purpose of covenanting
in favour of the Optionholders to perform certain of its obligations
under the Implementation Agreement.
	 
	 	 	Agreed terms
	 
	1	 	Interpretations
	 
	1.1	 	Definitions and construction
	 
	 	 	In this document, unless the context requires otherwise, clauses 1.1 and 1.2 of the
Implementation Agreement apply as if set out in full.
	 
	1.2	 	Nature of deed poll
	 
	 	 	Peplin acknowledges that this document is a deed poll and may be relied on and enforced
by any Option Scheme Participant in accordance with its terms, notwithstanding that the
Option Scheme Participants are not party to this document.

 

 

	2	 	Conditions precedent and termination
	 
	2.1	 	Conditions
	 
	 	 	Each of Peplin’s obligations under clause 3 are subject to the Option Scheme becoming
Effective and the satisfaction or waiver of the conditions precedent contained in clause
3.1 of the Option Scheme.
	 
	2.2	 	Termination
	 
	 	 	If the Option Scheme does not become Effective, or the conditions precedent contained in
clause 3.1 of the Option Scheme are not satisfied or waived before the End Date, the
obligations of Peplin under this document will terminate when the Implementation
Agreement terminates.
	 
	2.3	 	Consequences of termination
	 
	 	 	If this document is terminated under clause 2.2 then in addition and without prejudice to
any other rights, powers or remedies available to it:

	 	(a)	 	Peplin is released from its obligations to further perform its
obligations under this document, except those obligations contained
in clause 5 and
any other obligations which by their nature survive termination; and
	 
	 	(b)	 	the Option Scheme Participants retain the rights they have against Peplin
in respect of any breach of this document which occurred before this document is
terminated.

	3	 	Provision of consideration
	 
	 	 	Subject to clause 2, on the Implementation Date, Peplin, in consideration for the
cancellation referred to in clause 4.3(b) of the Implementation Agreement, will cause to
be provided or remitted to each Option Scheme Participant the consideration due to such
Option Scheme Participant under the Option Scheme in accordance with clause 4.3(a) of the
Implementation Agreement.
	 
	4	 	Representations and warranties
	 
	 	 	Peplin represents and warrants that:

	 	(a)	 	it is a corporation validly existing under the laws of its place of
incorporation;
	 
	 	(b)	 	it has the corporate power to enter into and perform its obligations
under this document and to carry out the transactions contemplated by this document;
	 
	 	(c)	 	it has taken all necessary corporate action to authorise the entry into
this document and has taken or will take all necessary corporate action to authorise
the performance of this document and to carry out the transactions contemplated by
this document; and
	 
	 	(d)	 	this document is valid and binding upon it.

page 2

 

	5	 	Continuing obligations
	 
	 	 	This document is irrevocable and subject to clause 2, remains in full force and effect
until Peplin has completely performed its obligations under this document or the earlier
termination of this document under clause 2.
	 
	6	 	Stamp duty
	 
	 	 	Peplin must pay all stamp duty (if any) imposed on this document and on any instrument or
other document executed to give effect to this document.
	 
	7	 	General
	 
	7.1	 	Waiver and variation

	 	(a)	 	A provision or right under this document may not be waived except in
writing signed by the person granting the waiver.
	 
	 	(b)	 	A provision of this document may not be varied unless the variation is
agreed to by the Company and the Court indicates that the variation would not in
itself preclude approval of the Scheme in which event Peplin will enter into a
further deed poll in favour of the Option Scheme Participants giving effect to such
variation.

	7.2	 	Rights cumulative
	 
	 	 	Except as expressly stated otherwise in this document, the rights of Peplin and the
Option Scheme Participants under this document are cumulative and are in addition to any
other rights of that party.
	 
	7.3	 	Governing law and jurisdiction

	 	(a)	 	This document is governed by the laws of New South Wales.
	 
	 	(b)	 	Peplin irrevocably submit to the non-exclusive jurisdiction of the courts
of New South Wales and any courts which have jurisdiction to hear appeals from any
of those courts and waives any right to object to any proceedings being brought in
those courts.

	7.4	 	Assignment
	 
	 	 	The rights and obligations of a person under this document are personal. They cannot be
assigned, charged or otherwise dealt with, and no person must attempt or purport to do
so.

page 3

 

Executed as a deed poll.

Executed
on behalf of Peplin, Inc. by
                   )
 an authorised
officer or attorney in the presence of:

	 	 	 
	 
	 	 
	Witness
	 	Officer/Attorney
	 	 	 
	 
	 	 
	Name of Witness (print)
	 	Name of Officer/Attorney (print)

page 4

 

Annexure 5

Peplin Stock Option Plan

	 		
	 
	 	page 28exv10w2

 

Exhibit 10.2

PEPLIN, INC. 2007 INCENTIVE AWARD PLAN

     Peplin, Inc., a Delaware corporation (the “Company”), by resolution of its Board of
Directors, hereby adopts the Peplin, Inc. 2007 Incentive Award Plan (the “Plan”).

     The purpose of the Plan is to promote the success and enhance the value of the Company by
linking the personal interests of the members of the Board, Employees, and Consultants to those of
the Company’s stockholders and by providing such individuals with an incentive for outstanding
performance to generate superior returns to the Company’s stockholders. The Plan is further
intended to provide flexibility to the Company in its ability to motivate, attract, and retain the
services of members of the Board, Employees, and Consultants upon whose judgment, interest, and
special effort the successful conduct of the Company’s operation is largely dependent.

ARTICLE I.

DEFINITIONS

          Wherever the following terms are used in the Plan they shall have the meanings specified
below, unless the context clearly indicates otherwise. The singular pronoun shall include the
plural where the context so indicates.

          1.1. “Administrator” shall mean the entity that conducts the general administration of
the Plan as provided in Article X. With reference to the administration of the Plan with respect
to Awards granted to Non-Employee Directors, the term “Administrator” shall refer to the Board.
With reference to the administration of the Plan with respect to any other Award, the term
“Administrator” shall refer to the Committee unless the Board has assumed the authority for
administration of the Plan generally as provided in Section 10.2. With reference to the duties of
the Committee under the Plan which have been delegated to one or more persons pursuant to Section
10.5, the term “Administrator” shall refer to such person(s) unless the Committee or the Board has
revoked such delegation.

          1.2. “ASX Listing Rules” shall mean the listing rules of the Australian Securities
Exchange, as amended from time to time.

          1.3. “Award” shall mean an Option, a Restricted Stock Award, a Restricted Stock Unit
Award, a Performance Award, a Dividend Equivalents Award, a Deferred Stock Award, a Stock Payment
Award or a Stock Appreciation Right, which may be awarded or granted under the Plan (collectively,
“Awards”).

          1.4. “Award Agreement” shall mean a written agreement executed by an authorized
officer of the Company and the Holder which shall contain such terms and conditions with respect to
an Award as the Administrator shall determine; provided, that such terms and conditions shall not
be inconsistent with the terms and conditions of the Plan.

          1.5. “Award Limit” shall mean three hundred thousand (300,000) shares of Common Stock,
as adjusted pursuant to Section 11.3. Solely with respect to cash-based Performance Awards granted
pursuant to Section 8.2(b), “Award Limit” shall mean $500,000.

 

 

          1.6. “Board” shall mean the Board of Directors of the Company.

          1.7. “Change in Control” shall mean the occurrence of any of the following
transactions or events occurring on or after the Effective Date:

               (a) the acquisition, directly or indirectly, by any “person” or “group” (as those terms are
defined in Sections 3(a)(9), 13(d), and 14(d) of the Exchange Act and the rules thereunder) of
“beneficial ownership” (as determined pursuant to Rule 13d-3 under the Exchange Act) of securities
entitled to vote generally in the election of directors (“voting securities”) of the
Company that represent 50% or more of the combined voting power of the Company’s then outstanding
voting securities, other than

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

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

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

          Notwithstanding the foregoing, an acquisition of the Company’s securities by the Company
which, either alone or in combination only with the other event, causes the Company’s voting
securities beneficially owned by a person or group to represent 50% or more of the combined voting
power of the Company’s then outstanding voting securities shall not constitute an “acquisition” by
any person or group for purposes of this clause (a); provided, however, that if a person or group
shall become the beneficial owner of 50% or more of the combined voting power of the Company’s then
outstanding voting securities by reason of share acquisitions by the Company as described above and
shall, after such share acquisitions by the Company, become the beneficial owner of any additional
voting securities of the Company, then such acquisition shall constitute a Change in Control;

               (b) individuals who, as of the date hereof, constitute the Board (the “Incumbent
Board”) cease for any reason to constitute at least a majority of the Board; provided, however,
that any individual becoming a director subsequent to the date hereof whose election, or nomination
for election by the Company’s stockholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened election contest with respect to
the election or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a person other than the Board;

2

 

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

               (i) which results in the Company’s voting securities outstanding immediately
before the transaction continuing to represent (either by remaining outstanding or
by being converted into voting securities of the Company or the person that, as a
result of the transaction, controls, directly or indirectly, the Company or owns,
directly or indirectly, all or substantially all of the Company’s assets or
otherwise succeeds to the business of the Company (the Company or such person, the
“Successor Entity”)) directly or indirectly, at least 50% of the combined
voting power of the Successor Entity’s outstanding voting securities immediately
after the transaction, and

               (ii) after which more than 50% of the members of the board of directors of the
Successor Entity were members of the Incumbent Board at the time of the Board’s
approval of the agreement providing for the transaction or other action of the Board
approving the transaction, and

               (iii) after which no person or group beneficially owns voting securities
representing 50% or more of the combined voting power of the Successor Entity;
provided, however, that no person or group shall be treated for purposes of this
clause (C) as beneficially owning 50% or more of combined voting power of the
Successor Entity solely as a result of the voting power held in the Company prior to
the consummation of the transaction; or

               (d) stockholder approval of a liquidation or dissolution of the Company.

          For purposes of clause (a) above, the calculation of voting power shall be made as if the date
of the acquisition were a record date for a vote of the Company’s stockholders, and for purposes of
clause (c) above, the calculation of voting power shall be made as if the date of the consummation
of the transaction were a record date for a vote of the Company’s stockholders.

          1.8. “Code” shall mean the Internal Revenue Code of 1986, as amended from time to
time.

          1.9. “Committee” shall mean the Compensation Committee of the Board, or another
committee or subcommittee of the Board, appointed as provided in Article X.

          1.10. “Common Stock” shall mean the common stock of the Company, par value $0.001 per
share.

          1.11. “Company” shall mean Peplin, Inc., a Delaware corporation.

3

 

          1.12. “Consultant” shall mean any consultant or adviser if: (a) the consultant or
adviser is a natural person, (b) the consultant or adviser renders bona fide services to the
Company or any Subsidiary; and (c) the services rendered by the consultant or adviser are not in
connection with the offer or sale of securities in a capital-raising transaction and do not
directly or indirectly promote or maintain a market for the Company’s securities.

          1.13. “Covered Employee” shall mean any Employee who is, or could be, a “covered
employee” within the meaning of Section 162(m) of the Code.

          1.14. “Deferred Stock” shall mean a right to receive Common Stock awarded under
Section 8.5 of the Plan.

          1.15. “Director” shall mean a member of the Board.

          1.16. “Dividend Equivalent” shall mean a right to receive the equivalent value (in
cash or Common Stock) of dividends paid on Common Stock, awarded under Section 8.3 of the Plan.

          1.17. “DRO” shall mean a domestic relations order as defined by the Code or Title I of
the Employee Retirement Income Security Act of 1974, as amended from time to time, or the rules
thereunder.

          1.18. “Effective Date” shall mean the date the Plan is adopted by the Board.

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

          1.20. “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from
time to time.

          1.21. “Fair Market Value” means, as of any date, the value of a share of Common Stock
determined as follows:

               (a) If the Common Stock is listed on any established stock exchange (such as the New York
Stock Exchange, the NASDAQ Global Market and the NASDAQ Global Select Market) or any national
market system, including without limitation any market system of The NASDAQ Stock Market, the value
of a share of Common Stock shall be the closing sales price for a share of Common Stock as quoted
on such exchange or system for such date, or if there is no closing sales price for a share of
Common Stock on the date in question, the closing sales price for a share of Common Stock on the
last preceding date for which such quotation exists, as reported in The Wall Street Journal or such
other source as the Administrator deems reliable;

               (b) If the Common Stock is regularly quoted by a recognized securities dealer but closing
sales prices are not reported, the value of a share of Common Stock shall be the mean of the high
bid and low asked prices for such date or, if there are no high bid and low asked prices for a
share of Common Stock on the date in question, the high bid and low asked prices for a share of
Common Stock on the last preceding date for which such information exists,

4

 

as reported in The Wall Street Journal or such other source as the Administrator deems
reliable; or

               (c) If the Common Stock is neither listed on an established stock exchange or a national
market system nor regularly quoted by a recognized securities dealer, the value of a share of
Common Stock shall be established by the Administrator in good faith.

          1.22. “Fiscal Year” means the fiscal year of the Company.

          1.23. “Holder” shall mean a person who has been granted an Award.

          1.24. “Incentive Stock Option” shall mean an option which conforms to the applicable
provisions of Section 422 of the Code and which is designated as an Incentive Stock Option by the
Administrator.

          1.25. “Non-Employee Director” shall mean a Director who is not an Employee.

          1.26. “Non-Qualified Stock Option” shall mean an Option which is not designated as an
Incentive Stock Option by the Administrator.

          1.27. “Option” shall mean a stock option granted under Article IV of the Plan. An
Option granted under the Plan shall be either a Non-Qualified Stock Option or an Incentive Stock
Option, as determined by the Administrator; provided, however, that Options granted to Non-Employee
Directors and Consultants shall be Non-Qualified Stock Options.

          1.28. “Peplin Limited” shall mean Peplin Limited ACN 090 819 275.

          1.29. “Peplin Restructuring” shall mean the reorganization of Peplin Limited and its
subsidiaries pursuant to a restructure implementation agreement.

          1.30. “Performance Award” shall mean a cash bonus, stock bonus or other performance or
incentive award that is paid in cash, Common Stock or a combination of both, awarded under Section
8.2 of the Plan.

          1.31. “Performance Criteria” means the criteria (and adjustments) that the Committee
selects for an Award for purposes of establishing the Performance Goal or Performance Goals for a
Performance Period, determined as follows:

          (a) The Performance Criteria that shall be used to establish Performance Goals are limited to
the following: (i) net earnings (either before or after (A) interest, (B) taxes, (C) depreciation
and (D) amortization), (ii) gross or net sales or revenue, (iii) net income (either before or after
taxes), (iv) operating profit, (v) cash flow (including, but not limited to, operating cash flow
and free cash flow), (vi) return on assets, (vii) return on capital, (viii) return on stockholders’
equity, (ix) return on sales, (x) gross or net profit or operating margin, (xi) costs, (xii) funds
from operations, (xiii) expenses, (xiv) working capital, (xv) earnings per share, and (xvi) price
per share of Common Stock, and (xvii) market share, any of which may be measured either in absolute
terms or as compared to any incremental increase or decrease or as compared to results of a peer
group.

5

 

          (b) The Committee may, in its discretion, at the time of grant, specify in the Award that one
or more objectively determinable adjustments shall be made to one or more of the Performance Goals.
Such adjustments may include one or more of the following: (i) items related to a change in
accounting principle; (ii) items relating to financing activities; (iii) expenses for restructuring
or productivity initiatives; (iv) other non-operating items; (v) items related to acquisitions,
including product acquisitions; (vi) items attributable to the business operations of any entity
acquired by the Company during the Performance Period; (vii) items related to the disposal of a
business or segment of a business; or (viii) items related to discontinued operations that do not
qualify as a segment of a business under United States generally accepted accounting principles
(“GAAP”).

          1.32. “Performance Goals” means, for a Performance Period, one or more goals
established in writing by the Committee for the Performance Period based upon one or more
Performance Criteria. Depending on the Performance Criteria used to establish such Performance
Goals, the Performance Goals may be expressed in terms of overall Company performance or the
performance of a division, business unit, or individual. The achievement of each Performance Goal
shall be determined in accordance with GAAP to the extent applicable.

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

          1.34. “Plan” shall mean this Peplin, Inc. 2007 Incentive Award Plan, as amended from
time to time.

          1.35. “Prior Award” shall mean an option to acquire ordinary shares in the capital of
Peplin Limited that is granted by Peplin Limited on or before the consummation of the initial
Peplin Restructuring.

          1.36. “Restricted Stock” shall mean Common Stock awarded under Article VII of the Plan
that is subject to repurchase or forfeiture.

          1.37. “Restricted Stock Units” shall mean rights to receive Common Stock awarded under
Section 8.6.

          1.38. “Rule 16b-3” shall mean Rule 16b-3 promulgated under the Exchange Act, as such
Rule may be amended from time to time.

          1.39. “Securities Act” shall mean the Securities Act of 1933, as amended from time to
time.

          1.40. “Stock Appreciation Right” shall mean a stock appreciation right granted under
Article IX of the Plan.

          1.41. “Stock Payment” shall mean: (a) a payment in the form of shares of Common
Stock, or (b) an option or other right to purchase shares of Common Stock, as part of a deferred
compensation arrangement or otherwise, made in lieu of all or any portion of the

6

 

compensation, including without limitation, salary, bonuses, commissions and directors’ fees,
that would otherwise be payable to an Employee, Consultant or Non-Employee Director in cash,
awarded under Section 8.4 of the Plan.

          1.42. “Subsidiary” means any entity (other than the Company), whether domestic or
foreign, in an unbroken chain of entities beginning with the Company if each of the entities other
than the last entity in the unbroken chain beneficially owns, at the time of the determination,
securities or interests representing more than fifty percent (50%) of the total combined voting
power of all classes of securities or interests in one of the other entities in such chain.

          1.43. “Subsidiary Corporation” shall mean any corporation in an unbroken chain of
corporations beginning with the Company if each of the corporations other than the last corporation
in the unbroken chain then owns stock possessing fifty percent (50%) or more of the total combined
voting power of all classes of stock in one of the other corporations in such chain.

          1.44. “Substitute Award” shall mean an Option granted under this Plan upon the
assumption of, or in substitution for or replacement of, outstanding equity awards previously
granted by a company or other entity (including, without limitation, Peplin Limited) in connection
with a corporate transaction, such as a merger, combination, consolidation, reorganization or
acquisition of property or stock; provided, however, that in no event shall the term “Substitute
Award” be construed to refer to an award made in connection with the cancellation and repricing of
an Option.

          1.45. “Termination of Consultancy” shall mean the time when the engagement of a Holder
as a Consultant to the Company or a Subsidiary is terminated for any reason, with or without cause,
including, without limitation, by resignation, discharge, death or retirement, but excluding
terminations where there is a simultaneous commencement of employment or service with the Company
or any Subsidiary. The Administrator, in its discretion, shall determine the effect of all matters
and questions relating to Termination of Consultancy, including, without limitation, the question
of whether a Termination of Consultancy resulted from a discharge for cause. Notwithstanding any
other provision of the Plan, the Company or any Subsidiary has an absolute and unrestricted right
to terminate a Consultant’s service at any time for any reason whatsoever, with or without cause,
except to the extent expressly provided otherwise in writing. For purposes of the Plan, the
engagement of a Holder as a Consultant to a Subsidiary shall be deemed to be terminated in the
event that the Subsidiary engaging such Holder ceases to remain a Subsidiary following any merger,
sale of stock or other corporate transaction or event (including, without limitation, a spin-off).

          1.46. “Termination of Directorship” shall mean the time when a Holder who is a
Non-Employee Director ceases to be a Director for any reason, including, without limitation, a
termination by resignation, failure to be elected, death or retirement. The Board, in its
discretion, shall determine the effect of all matters and questions relating to Termination of
Directorship with respect to Non-Employee Directors.

          1.47. “Termination of Employment” shall mean the time when the employee-employer
relationship between a Holder and the Company or any Subsidiary is terminated for

7

 

any reason, with or without cause, including, without limitation, a termination by
resignation, discharge, death, disability or retirement, but excluding: (a) terminations where
there is a simultaneous reemployment or continuing employment of a Holder by the Company or any
Subsidiary, and (b) terminations which are followed by the simultaneous establishment of a
consulting relationship by the Company or a Subsidiary with the former employee. The
Administrator, in its discretion, shall determine the effect of all matters and questions relating
to Termination of Employment, including, without limitation, the question of whether a Termination
of Employment resulted from a discharge for cause; provided, however, that, with respect to
Incentive Stock Options, unless the Administrator otherwise provides in the terms of the Award
Agreement or otherwise, a leave of absence, change in status from an employee to an independent
contractor or other change in the employee-employer relationship shall constitute a Termination of
Employment if, and to the extent that, such leave of absence, change in status or other change
interrupts employment for the purposes of Section 422(a)(2) of the Code and the then applicable
regulations and revenue rulings under said Section. For purposes of the Plan, a Holder’s
employee-employer relationship shall be deemed to be terminated in the event that the Subsidiary
employing such Holder ceases to remain a Subsidiary following any merger, sale of stock or other
corporate transaction or event (including, without limitation, a spin-off).

ARTICLE II.

SHARES SUBJECT TO PLAN

          2.1. Shares Subject to Plan.

               (a) Subject to Section 11.3 and Section 2.1(b), the aggregate number of shares of Common Stock
that may be issued or transferred pursuant to Awards under the Plan initially shall be equal to
1,000,000 shares (the “Initial Authorized Shares”). In addition, in the event of any
cancellation, termination, expiration or forfeiture of any Prior Award during the term of the Plan
(including, without limitation, any cancellation of any Prior Award in connection with the Peplin
Restructuring), the number of shares of Common Stock that may be issued or transferred pursuant to
Awards under the Plan shall be automatically increased by one share for every twenty shares subject
to such Prior Award that is so cancelled, terminated, expired, forfeited or repurchased
(collectively, the “Cancelled Prior Award Shares”). In no event, however, shall the
aggregate number of Initial Authorized Shares and Cancelled Prior Award Shares made available for
issuance under the Plan exceed 1,500,000.

               (b) To the extent that an Award terminates, expires, lapses or is forfeited for any reason,
any shares of Common Stock then subject to such Award shall again be available for the grant of an
Award pursuant to the Plan. To the extent permitted by applicable law or any exchange rule, shares
of Common Stock issued in assumption of, or in substitution for, any outstanding awards of any
entity acquired in any form of combination by the Company or any Subsidiary shall not be counted
against shares of Common Stock available for grant pursuant to this Plan. If any shares of
Restricted Stock are surrendered by the Holder or repurchased by the Company pursuant to Section
7.4 or 7.5 hereof, such shares may again be granted or awarded hereunder, subject to the
limitations of Section 2.1(a). To the extent exercised, the full number of shares subject to an
Option or Stock Appreciation Right shall be counted for purposes of calculating the aggregate
number of shares of Common Stock available

8

 

for issuance under the Plan as set forth in Section 2.1(a) and for purposes of calculating the
share limitation set forth in Section 2.3, regardless of the actual number of shares issued or
transferred upon any net exercise of an Option (in which Common Stock is withheld to satisfy the
exercise price or taxes) or upon exercise of any Stock Appreciation Right for Common Stock or cash.
The payment of Dividend Equivalents in cash in conjunction with any outstanding Awards shall not
be counted against the shares available for issuance under the Plan. Notwithstanding the
provisions of this Section 2.1(b), no shares of Common Stock may again be optioned, granted or
awarded if such action would cause an Incentive Stock Option to fail to qualify as an incentive
stock option under Section 422 of the Code.

          2.2. Stock Distributed. Any Common Stock distributed pursuant to an Award shall
consist, in whole or in part, of authorized and unissued Common Stock, shares of Common Stock held
in treasury or shares of Common Stock purchased on the open market.

          2.3. Limitation on Number of Shares Subject to Awards. Notwithstanding any provision
in the Plan to the contrary, and subject to Article XI, the maximum number of shares of Common
Stock with respect to one or more Awards that may be granted to any one Employee, Consultant or
Non-Employee Director during any Fiscal Year shall not exceed the Award Limit. To the extent
required by Section 162(m) of the Code, shares subject to Awards which are canceled shall continue
to be counted against the Award Limit.

ARTICLE III.

GRANTING OF AWARDS

          3.1. Award Agreement. Each Award shall be evidenced by an Award Agreement. Award
Agreements evidencing Awards intended to qualify as performance-based compensation (as described in
Section 162(m)(4)(C) of the Code) shall contain such terms and conditions as may be necessary to
meet the applicable provisions of Section 162(m) of the Code. Award Agreements evidencing
Incentive Stock Options shall contain such terms and conditions as may be necessary to meet the
applicable provisions of Section 422 of the Code.

          3.2. Provisions Applicable to Covered Employees.

               (a) The Committee, in its discretion, may determine whether an Award is to qualify as
performance-based compensation (as described in Section 162(m)(4)(C) of the Code).

               (b) Notwithstanding anything in the Plan to the contrary, the Committee may grant any Award to
a Covered Employee, including Restricted Stock the restrictions with respect to which lapse upon
the attainment of specified Performance Goals and any performance or incentive award described in
Article VIII that vests or becomes exercisable or payable upon the attainment of one or more
specified Performance Goals.

               (c) To the extent necessary to comply with the performance-based compensation requirements of
Section 162(m)(4)(C) of the Code, with respect to any Award granted under Articles VII and VIII
which may be granted to one or more Covered Employees, no later than ninety (90) days following the
commencement of any Fiscal Year in question or any

9

 

other designated fiscal period or period of service (or such earlier time as may be required
under Section 162(m) of the Code), the Committee shall, in writing, (i) designate one or more
Covered Employees, (ii) select the Performance Criteria applicable to the Fiscal Year or other
designated fiscal period or period of service (including any applicable adjustments), (iii)
establish the various performance targets, in terms of an objective formula or standard, and
amounts of such Awards, as applicable, which may be earned for such Fiscal Year or other designated
fiscal period or period of service, and (iv) specify the relationship between Performance Criteria
and the performance targets and the amounts of such Awards, as applicable, to be earned by each
Covered Employee for such Fiscal Year or other designated fiscal period or period of service.
Following the completion of each Fiscal Year or other designated fiscal period or period of
service, the Committee shall certify in writing whether the applicable performance targets have
been achieved for such Fiscal Year or other designated fiscal period or period of service. In
determining the amount earned by a Covered Employee, the Committee shall have the right to reduce
(but not increase) the amount payable at a given level of performance to take into account
additional factors that the Committee may deem relevant to the assessment of individual or
corporate performance for the Fiscal Year or other designated fiscal period or period of service.

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

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

          3.4. At-Will Employment. Nothing in the Plan or in any Award Agreement hereunder
shall confer upon any Holder any right to continue in the employ of, or as a Consultant for, the
Company or any Subsidiary, or as a Director of the Company, or shall interfere with or restrict in
any way the rights of the Company and any Subsidiary, which rights are hereby expressly reserved,
to discharge any Holder at any time for any reason whatsoever, with or without cause, except to the
extent expressly provided otherwise in a written employment agreement between the Holder and the
Company and any Subsidiary.

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ARTICLE IV.

GRANTING OF OPTIONS TO EMPLOYEES,

CONSULTANTS AND NON-EMPLOYEE DIRECTORS

          4.1. Eligibility. Any Employee or Consultant selected by the Administrator pursuant
to Section 4.4(a)(i) shall be eligible to be granted an Option. Each Non-Employee Director of the
Company shall be eligible to be granted Options at the times and in the manner set forth in Section
4.5.

          4.2. 10% Stockholders. No person may be granted an Incentive Stock Option under the
Plan if such person, at the time the Incentive Stock Option is granted, owns stock possessing more
than 10% of the total combined voting power of all classes of stock of the Company or any then
existing Subsidiary Corporation or parent corporation (as defined in Section 424(e) of the Code)
unless such Incentive Stock Option conforms to the applicable provisions of Section 422 of the
Code.

          4.3. Disqualification for Incentive Stock Options. No Incentive Stock Option shall be
granted to any person who is not an Employee of the Company or a Subsidiary Corporation.

          4.4. Granting of Options to Employees and Consultants.

               (a) The Administrator shall from time to time, in its discretion, and, subject to applicable
limitations of the Plan:

               (i) Select from among the Employees or Consultants (including Employees or
Consultants who have previously received Awards under the Plan) such of them as in
its opinion should be granted Options;

               (ii) Subject to the Award Limit, determine the number of shares to be subject
to such Options granted to the selected Employees or Consultants;

               (iii) Subject to Section 4.2 and Section 4.3, determine whether such Options
are to be Incentive Stock Options or Non-Qualified Stock Options and whether such
Options are to qualify as performance-based compensation (as described in Section
162(m)(4)(C) of the Code); and

               (iv) Subject to the provisions of Article V, determine the terms and conditions
of such Options; provided, however, that such terms and conditions shall not be
inconsistent with the terms of the Plan; and provided further, that the terms and
conditions of Options intended to qualify as performance-based compensation (as
described in Section 162(m)(4)(C) of the Code) shall include, but not be limited to,
such terms and conditions as may be necessary to meet the applicable provisions of
Section 162(m) of the Code.

11

 

               (b) Upon the selection of an Employee or Consultant to be granted an Option, the Administrator
shall instruct the Secretary of the Company to issue the Option and may impose such conditions on
the grant of the Option as it deems appropriate.

               (c) Any Incentive Stock Option granted under the Plan may be modified by the Administrator,
with the consent of the Holder, to disqualify such Option from treatment as an “incentive stock
option” under Section 422 of the Code.

          4.5. Granting of Options to Non-Employee Directors. The Board shall from time to
time, in its discretion, and subject to applicable limitations of the Plan:

               (a) Select from among the Non-Employee Directors (including Non-Employee Directors who have
previously received Awards under the Plan) such of them as in its opinion should be granted
Options;

               (b) Subject to the Award Limit, determine the number of shares to be subject to such Options
granted to the selected Non-Employee Directors; and

               (c) Subject to the provisions of Article V, determine the terms and conditions of such
Options; provided, however, that such terms and conditions shall not be inconsistent with the terms
of the Plan.

ARTICLE V.

TERMS OF OPTIONS

          5.1. Option Price. The price per share of Common Stock subject to each Option granted
to an Employee, Non-Employee Director or Consultant shall be set by the Administrator; provided,
however, that:

               (a) In the case of Incentive Stock Options, such price shall not be less than 100% of the Fair
Market Value of a share of Common Stock on the date the Option is granted (or the date the Option
is modified, extended or renewed for purposes of Section 424(h) of the Code);

               (b) In the case of Incentive Stock Options granted to an individual then owning (within the
meaning of Section 424(d) of the Code) more than 10% of the total combined voting power of all
classes of stock of the Company or any Subsidiary Corporation or parent corporation thereof (as
defined in Section 424(e) of the Code), such price shall not be less than 110% of the Fair Market
Value of a share of Common Stock on the date the Option is granted (or the date the Option is
modified, extended or renewed for purposes of Section 424(h) of the Code); and

               (c) In the case of Non-Qualified Stock Options, such price shall not be less than 100% of the
Fair Market Value of a share of Common Stock on the date the Option is granted.

12

 

          5.2. Option Term. The term of an Option granted to an Employee, Consultant or
Non-Employee Director shall be set by the Administrator in its discretion; provided, however, that
the term shall not be more than ten (10) years from the date the Option is granted, or five (5)
years from the date the Option is granted if the Option is an Incentive Stock Option granted to an
individual then owning (within the meaning of Section 424(d) of the Code) more than 10% of the
total combined voting power of all classes of stock of the Company or any Subsidiary Corporation or
parent corporation thereof (as defined in Section 424(e) of the Code). Except as limited by the
requirements of Section 409A or Section 422 of the Code and regulations and rulings thereunder, the
Administrator may extend the term during which any outstanding Option may be exercised following
any Termination of Employment, Termination of Directorship or Termination of Consultancy of the
Holder, or amend any other term or condition of such Option relating to such a Termination of
Employment, Termination of Directorship or Termination of Consultancy.

          5.3. Option Vesting.

               (a) The period during which the right to exercise, in whole or in part, an Option vests in the
Holder shall be set by the Administrator and the Administrator may determine that an Option may not
be exercised in whole or in part for a specified period after it is granted; provided, however,
that, unless the Administrator otherwise provides in the terms of the Award Agreement or otherwise,
no Option granted to a person subject to Section 16 of the Exchange Act shall be exercisable until
at least six months have elapsed following the date on which the Option was granted. At any time
after grant of an Option, the Administrator may, in its discretion and subject to whatever terms
and conditions it selects, accelerate the period during which an Option vests.

               (b) No portion of an Option granted to an Employee, Consultant or Non-Employee Director which
is unexercisable at Termination of Employment, Termination of Directorship or Termination of
Consultancy, as applicable, shall thereafter become exercisable, except as otherwise provided by
the Administrator either in the Award Agreement or by action of the Administrator following the
grant of the Option.

               (c) To the extent that the aggregate fair market value of stock with respect to which
“incentive stock options” (within the meaning of Section 422 of the Code, but without regard to
Section 422(d) of the Code) are exercisable for the first time by a Holder during any calendar year
under the Plan, and all other plans of the Company and any Subsidiary Corporation or parent
corporation thereof (as defined in Section 424(e) of the Code), exceeds $100,000, the Options shall
be treated as Non-Qualified Stock Options to the extent required by Section 422 of the Code. The
rule set forth in the preceding sentence shall be applied by taking Options and other “incentive
stock options” into account in the order in which they were granted. For purposes of this Section
5.3(c), the fair market value of stock shall be determined as of the time the Option or other
“incentive stock options” with respect to such stock is granted.

          5.4. Substitute Awards. Notwithstanding the foregoing provisions of this Article V to
the contrary, in the case of an Option that is a Substitute Award, the price per share of Common
Stock subject to such Option may be less than the Fair Market Value per share on the date of grant;
provided, that the excess of: (a) the aggregate Fair Market Value (as of the

13

 

date such Substitute Award is granted) of the shares subject to the Substitute Award, over (b)
the aggregate exercise price of such shares does not exceed the excess of: (x) the aggregate fair
market value (as of the time immediately preceding the transaction giving rise to the Substitute
Award, such fair market value to be determined by the Administrator) of the shares of the
predecessor entity that were subject to the grant assumed, replaced or substituted for by the
Company, over (y) the aggregate exercise price of such shares.

ARTICLE VI.

EXERCISE OF OPTIONS

          6.1. Partial Exercise. An exercisable Option may be exercised in whole or in part.
However, an Option shall not be exercisable with respect to fractional shares and the Administrator
may require that, by the terms of the Option, a partial exercise be with respect to a minimum
number of shares.

          6.2. Manner of Exercise. All or a portion of an exercisable Option shall be deemed
exercised upon delivery of all of the following to the Secretary of the Company, or such other
person or entity designated by the Administrator, or his, her or its office, as applicable:

          (a) A written notice complying with the applicable rules established by the
Administrator stating that the Option, or a portion thereof, is exercised. Such rules may
provide that for administrative convenience an Option may not be exercised during such
period (not exceeding 10 days) as is specified in advance by the Administrator. The notice
shall be signed by the Holder or other person then entitled to exercise the Option or such
portion of the Option;

          (b) Such representations and documents as the Administrator, in its discretion, deems
necessary or advisable to effect compliance with all applicable provisions of the Securities
Act and any other federal, state or foreign securities laws or regulations. The
Administrator may, in its discretion, also take whatever additional actions it deems
appropriate to effect such compliance including, without limitation, placing legends on
share certificates and issuing stop-transfer notices to agents and registrars;

          (c) In the event that the Option shall be exercised pursuant to Section 11.1 by any
person or persons other than the Holder, appropriate proof of the right of such person or
persons to exercise the Option; and

          (d) Full cash payment to the Secretary of the Company for the shares with respect to
which the Option, or portion thereof, is exercised. However, the Administrator may, in its
discretion, (i) allow payment, in whole or in part, through the delivery of shares of
Common Stock which have been owned by the Holder for at least six months, duly endorsed for
transfer to the Company with a Fair Market Value on the date of delivery equal to the
aggregate exercise price of the Option or exercised portion thereof; (ii) allow payment, in
whole or in part, through the surrender of shares of Common Stock then issuable upon
exercise of the Option having a Fair Market Value on the date of Option exercise equal to
the aggregate exercise price of the Option or

14

 

exercised portion thereof; (iii) allow payment, in whole or in part, through the
delivery of property of any kind which constitutes good and valuable consideration; (iv)
allow payment, in whole or in part, through the delivery of a notice that the Holder has
placed a market sell order with a broker with respect to shares of Common Stock then
issuable upon exercise of the Option, and the broker timely pays a sufficient portion of the
net proceeds of the sale to the Company in satisfaction of the Option exercise price; or (v)
allow payment through any combination of the consideration provided in the foregoing
subparagraphs (i), (ii), (iii) and (iv); provided, however, that the payment in the manner
prescribed in the preceding paragraphs shall not be permitted to the extent that the
Administrator determines that payment in such manner shall result in an extension or
maintenance of credit, an arrangement for the extension of credit, or a renewal or an
extension of credit in the form of a personal loan to or for any Director or executive
officer of the Company that is prohibited by Section 13(k) of the Exchange Act or other
applicable law.

          6.3. Conditions to Issuance of Stock Certificates. The Company shall not be required
to issue or deliver any certificate or certificates for shares of stock purchased upon the exercise
of any Option or portion thereof prior to fulfillment of all of the following conditions:

          (a) The admission of such shares to listing on all stock exchanges on which such class
of stock is then listed;

          (b) The completion of any registration or other qualification of such shares under any
federal, state or foreign law, or under the rulings or regulations of the Securities and
Exchange Commission or any other governmental regulatory body which the Administrator shall,
in its discretion, deem necessary or advisable;

          (c) The obtaining of any approval or other clearance from any federal, state or foreign
governmental agency which the Administrator shall, in its discretion, determine to be
necessary or advisable;

          (d) The lapse of such reasonable period of time following the exercise of the Option as
the Administrator may establish from time to time for reasons of administrative convenience;
and

          (e) The receipt by the Company of full payment for such shares, including payment of
any applicable withholding tax, which in the discretion of the Administrator may be in the
form of consideration used by the Holder to pay for such shares under Section 6.2(d).

          6.4. Rights as Stockholders. Holders shall not be, nor have any of the rights or
privileges of, stockholders of the Company in respect of any shares purchasable upon the exercise
of any part of an Option unless and until such shares have been issued by the Company to such
Holders.

          6.5. Ownership and Transfer Restrictions. The Administrator, in its discretion, may
impose such restrictions on the ownership and transferability of the shares purchasable upon the
exercise of an Option as it deems appropriate. Any such restriction shall be set forth in the

15

 

respective Award Agreement and may be referred to on the certificates evidencing such shares.
The Holder shall give the Company prompt notice of any disposition of shares of Common Stock
acquired by exercise of an Incentive Stock Option within (a) two years from the date of granting
(including the date the Option is modified, extended or renewed for purposes of Section 424(h) of
the Code) such Option to such Holder, or (b) one year after the transfer of such shares to such
Holder.

          6.6. Additional Limitations on Exercise of Options. Holders may be required to comply
with any timing or other restrictions with respect to the settlement or exercise of an Option,
including a window-period limitation, as may be imposed in the discretion of the Administrator.

ARTICLE VII.

AWARD OF RESTRICTED STOCK

          7.1. Eligibility. Subject to the Award Limit, Restricted Stock may be awarded to any
Employee, Consultant or Non-Employee Director who the Administrator determines should receive such
an Award.

          7.2. Award of Restricted Stock.

               (a) The Administrator may from time to time, in its discretion:

               (i) Select from among the Employees, Non-Employee Directors or Consultants
(including Employees, Non-Employee Directors or Consultants who have previously
received Awards under the Plan) such of them as in its opinion should be awarded
Restricted Stock; and

               (ii) Determine the purchase price, if any, and other terms and conditions
applicable to such Restricted Stock; provided, however, that such terms and
conditions shall not be inconsistent with the terms of the Plan.

               (b) The Administrator shall establish the purchase price, if any, and form of payment for
Restricted Stock; provided, however, that such purchase price shall be no less than the par value
of the Common Stock to be purchased, unless otherwise permitted by applicable state law. In all
cases, legal consideration shall be required for each issuance of Restricted Stock.

               (c) Upon the selection of an Employee, Consultant or Non-Employee Director to be awarded
Restricted Stock, the Administrator shall instruct the Secretary of the Company to issue such
Restricted Stock and may impose such conditions on the issuance of such Restricted Stock as it
deems appropriate.

          7.3. Rights as Stockholders. Subject to Section 7.4, upon delivery of the shares of
Restricted Stock to the escrow holder pursuant to Section 7.6, the Holder shall have, unless
otherwise provided by the Administrator, all the rights of a stockholder with respect to said
shares, including the right to receive all dividends and other distributions paid or made with

16

 

respect to the shares, subject to the restrictions in his or her Award Agreement; provided,
however, that, in the discretion of the Administrator, any extraordinary distributions with respect
to the Common Stock shall be subject to the restrictions set forth in Section 7.4.

          7.4. Restriction. All shares of Restricted Stock issued under the Plan (including any
shares received by Holders thereof with respect to shares of Restricted Stock as a result of stock
dividends, stock splits or any other form of recapitalization) shall, in the terms of each
individual Award Agreement, be subject to such restrictions as the Administrator shall provide,
which restrictions may include, without limitation, restrictions concerning voting rights and
transferability and restrictions based on duration of employment, directorship or consultancy with
the Company, Company performance and individual performance; provided, however, by action taken
after the Restricted Stock is issued, the Administrator may, on such terms and conditions as it may
determine to be appropriate, remove any or all of the restrictions imposed by the terms of the
Award Agreement. Restricted Stock may not be sold or encumbered until all restrictions are
terminated or expire. If no consideration was paid by the Holder upon issuance, a Holder’s rights
in unvested Restricted Stock shall lapse, and such Restricted Stock shall be surrendered to the
Company without consideration, upon Termination of Employment, Termination of Directorship, or
Termination of Consultancy, as applicable; provided, however, that the Administrator in its
discretion may provide that such rights shall not lapse in the event of a Termination of
Employment, Termination of Directorship or Termination of Consultancy, as applicable, following a
Change in Control or because of the Holder’s retirement, death or disability or termination without
cause, or otherwise.

          7.5. Repurchase of Restricted Stock. The Administrator shall provide in the terms of
each individual Award Agreement that the Company shall have the right to repurchase from the Holder
the Restricted Stock then subject to restrictions under the Award Agreement immediately upon a
Termination of Employment, Termination of Directorship, or Termination of Consultancy, as
applicable, at a cash price per share equal to the price paid by the Holder for such Restricted
Stock; provided, however, that the Administrator in its discretion may provide that such rights
shall not lapse in the event of a Termination of Employment, Termination of Directorship or
Termination of Consultancy, as applicable, following a Change in Control or because of the Holder’s
retirement, death or disability or termination without cause, or otherwise.

          7.6. Escrow. The Secretary of the Company or such other escrow holder as the
Administrator may appoint shall retain physical custody of each certificate representing Restricted
Stock until all of the restrictions imposed under the Award Agreement with respect to the shares
evidenced by such certificate expire or shall have been removed.

          7.7. Legend. In order to enforce the restrictions imposed upon shares of Restricted
Stock hereunder, the Administrator shall cause a legend or legends to be placed on certificates
representing all shares of Restricted Stock that are still subject to restrictions under Award
Agreements, which legend or legends shall make appropriate reference to the conditions imposed
thereby.

          7.8. Section 83(b) Election. If a Holder makes an election under Section 83(b) of the
Code, or any successor section thereto, to be taxed with respect to the Restricted Stock as of the
date of transfer of the Restricted Stock rather than as of the date or dates upon which the

17

 

Holder would otherwise be taxable under Section 83(a) of the Code, the Holder shall deliver a
copy of such election to the Company immediately after filing such election with the Internal
Revenue Service.

ARTICLE VIII.

PERFORMANCE AWARDS, DIVIDEND EQUIVALENTS, DEFERRED STOCK, STOCK PAYMENTS, RESTRICTED STOCK UNITS

          8.1. Eligibility. Subject to the Award Limit, one or more Performance Awards,
Dividend Equivalent Awards, Stock Payment Awards, Deferred Stock Awards and/or Restricted Stock
Unit Awards may be granted to any Employee, Consultant or Non-Employee Director whom the
Administrator determines should receive such an Award.

          8.2. Performance Awards.

               (a) Any Employee, Consultant or Non-Employee Director selected by the Administrator may be
granted one or more Performance Awards. The value of such Performance Awards may be linked to any
one or more of the Performance Criteria or other specific performance criteria determined
appropriate by the Administrator, in each case on a specified date or dates or over any period or
periods determined by the Administrator. In making such determinations, the Administrator shall
consider (among such other factors as it deems relevant in light of the specific type of award) the
contributions, responsibilities and other compensation of the particular Employee, Consultant or
Non-Employee Director.

               (b) Without limiting Section 8.2(a), the Administrator may grant Performance Awards to any
Covered Employee in the form of a cash bonus payable upon the attainment of objective Performance
Goals which are established by the Administrator, in each case on a specified date or dates or over
any period or periods determined by the Administrator. Any such bonuses paid to Covered Employees
shall be based upon objectively determinable bonus formulas established in accordance with the
provisions of Section 3.2. The maximum aggregate amount of all cash-based Performance Awards
granted to a Covered Employee under this Section 8.2(b) during any calendar year shall not exceed
the Award Limit. Unless otherwise specified by the Administrator at the time of grant, the
Performance Criteria with respect to a Performance Award payable to a Covered Employee shall be
determined on the basis of GAAP.

          8.3. Dividend Equivalents. Any Employee, Consultant or Non-Employee Director selected
by the Administrator may be granted Dividend Equivalents based on the dividends declared on Common
Stock, to be credited as of dividend payment dates, during the period between the date an Award is
granted and the date such Award vests, is exercised, is distributed or expires, as determined by
the Administrator. Such Dividend Equivalents shall be converted to cash or additional shares of
Common Stock by such formula and at such time and subject to such limitations as may be determined
by the Administrator.

          8.4. Stock Payments. Any Employee, Consultant or Non-Employee Director selected by
the Administrator may receive Stock Payments in the manner determined from time to time by the
Administrator. The number of shares shall be determined by the Administrator and may be based upon
the Performance Criteria or other specific performance criteria

18

 

determined appropriate by the Administrator, determined on the date such Stock Payment is made
or on any date thereafter.

          8.5. Deferred Stock. Any Employee, Consultant or Non-Employee Director selected by
the Administrator may be granted an award of Deferred Stock in the manner determined from time to
time by the Administrator. The number of shares of Deferred Stock shall be determined by the
Administrator and may be linked to the satisfaction of one or more Performance Goals or other
specific performance goals as the Administrator determines to be appropriate at the time of grant,
in each case on a specified date or dates or over any period or periods determined by the
Administrator. Common Stock underlying a Deferred Stock Award will not be issued until the
Deferred Stock Award has vested, pursuant to a vesting schedule or performance criteria set by the
Administrator. Unless otherwise provided by the Administrator, a Holder of Deferred Stock shall
have no rights as a Company stockholder with respect to such Deferred Stock until such time as the
Award has vested and the Common Stock underlying the Award has been issued.

          8.6. Restricted Stock Units. Any Employee, Consultant or Non-Employee Director
selected by the Administrator may be granted an award of Restricted Stock Units in the manner
determined from time to time by the Administrator. The Administrator is authorized to make awards
of Restricted Stock Units in such amounts and subject to such terms and conditions as determined by
the Administrator. The Administrator shall specify the date or dates on which the Restricted Stock
Units shall become fully vested and nonforfeitable, and may specify such conditions to vesting as
it deems appropriate, and may specify that such Restricted Stock Units become fully vested and
nonforfeitable pursuant to the satisfaction of one or more Performance Goals or other specific
performance goals as the Administrator determines to be appropriate at the time of the grant, in
each case on a specified date or dates or over any period or periods determined by the
Administrator. The Administrator shall specify the distribution dates applicable to each award of
Restricted Stock Units which shall be no earlier than the vesting dates or events of the award and
may be determined at the election of the Employee, Consultant or Non-Employee Director, subject to
compliance with Section 409A of the Code. On the distribution dates, the Company shall issue to
the Holder one unrestricted, fully transferable share of Common Stock for each Restricted Stock
Unit distributed.

          8.7. Term. The term of a Performance Award, Dividend Equivalent Award, Deferred Stock
Award, Stock Payment Award and/or Restricted Stock Unit Award shall be set by the Administrator in
its discretion.

          8.8. Exercise or Purchase Price. The Administrator may establish the exercise or
purchase price of a Performance Award, shares of Deferred Stock, shares distributed as a Stock
Payment Award or shares distributed pursuant to a Restricted Stock Unit Award; provided, however,
that such price shall not be less than the par value of a share of Common Stock, unless otherwise
permitted by applicable state law.

          8.9. Exercise upon Termination of Employment, Termination of Consultancy or Termination of
Directorship. A Performance Award, Dividend Equivalent Award, Deferred Stock Award, Stock
Payment Award and/or Restricted Stock Unit Award is exercisable or distributable only while the
Holder is an Employee, Consultant or Non-Employee Director, as

19

 

applicable; provided, however, that the Administrator in its discretion may provide that the
Performance Award, Dividend Equivalent Award, Deferred Stock Award, Stock Payment Award and/or
Restricted Stock Unit Award may be exercised or distributed subsequent to a Termination of
Employment, Termination of Directorship or Termination of Consultancy, as applicable, following a
“change of control or ownership” (within the meaning of Section 1.162-27(e)(2)(v) or any successor
regulation thereto) of the Company; and, provided further, that, except with respect to Performance
Awards granted to Covered Employees, the Administrator in its discretion may provide that
Performance Awards may be exercised or distributed following a Termination of Employment,
Termination of Directorship or Termination of Consultancy, as applicable, following a Change in
Control, or because of the Holder’s retirement, death or disability or termination without cause,
or otherwise.

          8.10. Form of Payment. Payment of the amount determined under Section 8.2 or 8.3
above shall be in cash, in Common Stock or a combination of both, as determined by the
Administrator. To the extent any payment under this Article VIII is effected in Common Stock, it
shall be made subject to satisfaction of all provisions of Section 6.3.

ARTICLE IX.

STOCK APPRECIATION RIGHTS

          9.1. Grant of Stock Appreciation Rights. A Stock Appreciation Right may be granted to
any Employee, Consultant or Non-Employee Director selected by the Administrator. A Stock
Appreciation Right may be granted: (a) in connection and simultaneously with the grant of an
Option, or (b) independent of an Option. A Stock Appreciation Right shall be subject to such terms
and conditions not inconsistent with the Plan as the Administrator shall impose and shall be
evidenced by an Award Agreement.

          9.2. Coupled Stock Appreciation Rights.

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

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

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

20

 

          9.3. Independent Stock Appreciation Rights.

               (a) An Independent Stock Appreciation Right (“ISAR”) shall be unrelated to any Option
and shall have a term set by the Administrator in its discretion; provided, however, that the term
shall not be more than ten (10) years from the date the ISAR is granted. An ISAR shall be
exercisable in such installments as the Administrator may determine. An ISAR shall cover such
number of shares of Common Stock as the Administrator may determine; provided, however, that unless
the Administrator otherwise provides in the terms of the Award Agreement or otherwise, no ISAR
granted to a person subject to Section 16 of the Exchange Act shall be exercisable until at least
six months have elapsed following the date on which the ISAR was granted. The exercise price per
share of Common Stock subject to each ISAR shall be set by the Administrator; provided, that such
exercise price per share shall not be less than 100% of the Fair Market Value of a share of Common
Stock on the date the ISAR is granted. An ISAR is exercisable only while the Holder is an
Employee, Consultant or Non-Employee Director; provided, that the Administrator may provide that
ISARs may be exercised following a Termination of Employment, Termination of Directorship or
Termination of Consultancy, as applicable, or following a Change in Control, or because of the
Holder’s retirement, death or disability or termination without cause, or otherwise.

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

          9.4. Payment and Limitations on Exercise.

               (a) Payment of the amounts determined under Section 9.2(c) and 9.3(b) above shall be in cash,
shares of Common Stock (based on its Fair Market Value as of the date the Stock Appreciation Right
is exercised), or a combination of both, as determined by the Administrator. The Company shall not
be required to issue or deliver any certificate or certificates for shares of stock issuable upon
the exercise of any Stock Appreciation Right prior to fulfillment of the conditions set forth in
Section 6.3 above.

               (b) Holders of Stock Appreciation Rights may be required to comply with any timing or other
restrictions with respect to the settlement or exercise of a Stock Appreciation Right, including a
window-period limitation, as may be imposed in the discretion of the Administrator.

ARTICLE X.

ADMINISTRATION

          10.1. Committee. The Committee shall consist solely of two or more Directors
appointed by and holding office at the pleasure of the Board, each of whom is intended to qualify

21

 

as both a “non-employee director” as defined by Rule 16b-3 and an “outside director” for purposes of Section 162(m) of the Code. Appointment of Committee members shall be effective
upon acceptance of appointment. Committee members may resign at any time by delivering written
notice to the Board. Vacancies in the Committee may be filled by the Board.

          10.2. Duties and Powers of Committee. It shall be the duty of the Committee to
conduct the general administration of the Plan in accordance with its provisions. The Committee
shall have the power to interpret the Plan and the Award Agreements, and to adopt such rules for
the administration, interpretation and application of the Plan as are not inconsistent therewith,
to interpret, amend or revoke any such rules, to delegate authority in accordance with Section 10.5
and to amend any Award Agreement provided that the rights or obligations of the Holder of the Award
that is the subject of any such Award Agreement are not affected adversely. Any such grant or
award under the Plan need not be the same with respect to each Holder. Any such interpretations
and rules with respect to Incentive Stock Options shall not be inconsistent with the provisions of
Section 422 of the Code. In its discretion, the Board may at any time and from time to time
exercise any and all rights and duties of the Committee under the Plan except with respect to
matters which under Rule 16b-3 or Section 162(m) of the Code, or any regulations or rules issued
thereunder, are required to be determined in the discretion of the Committee. Notwithstanding the
foregoing, the full Board, acting by a majority of its members in office, shall conduct the general
administration of the Plan with respect to Awards granted to Non-Employee Directors.

          10.3. Majority Rule; Unanimous Written Consent. The Committee shall act by a majority
of its members in attendance at a meeting at which a quorum is present or by a memorandum or other
written instrument signed by all members of the Committee.

          10.4. Compensation; Professional Assistance; Good Faith Actions. Members of the
Committee shall receive such compensation, if any, for their services as members as may be
determined by the Board. All expenses and liabilities which members of the Committee incur in
connection with the administration of the Plan shall be borne by the Company. The Committee may
employ attorneys, consultants, accountants, appraisers, brokers or other persons. The Committee,
the Company and the Company’s officers and Directors shall be entitled to rely upon the advice,
opinions or valuations of any such persons. All actions taken and all interpretations and
determinations made by the Committee or the Board in good faith shall be final and binding upon all
Holders, the Company and all other interested persons. No members of the Committee or Board shall
be personally liable for any action, determination or interpretation made in good faith with
respect to the Plan or Awards, and all members of the Committee and the Board shall be fully
protected by the Company in respect of any such action, determination or interpretation.

          10.5. Delegation of Authority to Grant Awards. To the extent permitted by applicable
law, the Committee may, but need not, delegate from time to time some or all of its authority to
grant Awards under the Plan to a committee or committees consisting of one or more members of the
Board and/or one or more officers of the Company; provided, however, that the authority to grant
awards to the following individuals may not be delegated: (a) individuals who are subject to the
reporting rules under Section 16(a) of the Exchange Act, (b) individuals who are Covered Employees,
and (c) individuals who are officers of the Company who are delegated authority by the Committee
hereunder. Any delegation hereunder shall be subject to the

22

 

restrictions and limits that the
Committee specifies at the time of such delegation of authority and may be rescinded at any time by the Committee. At all times, any committee appointed
under this Section 10.5 shall serve in such capacity at the pleasure of the Committee.

ARTICLE XI.

MISCELLANEOUS PROVISIONS

          11.1. Transferability of Awards.

               (a) Except as otherwise provided in Section 11.1(b):

               (i) No Award under the Plan may be sold, pledged, assigned or transferred in
any manner other than by will or the laws of descent and distribution or, subject to
the consent of the Administrator, pursuant to a DRO, unless and until such Award has
been exercised, or the shares underlying such Award have been issued, and all
restrictions applicable to such shares have lapsed;

               (ii) No Award or interest or right therein shall be liable for the debts,
contracts or engagements of the Holder or his successors in interest or shall be
subject to disposition by transfer, alienation, anticipation, pledge, hypothecation,
encumbrance, assignment or any other means whether such disposition be voluntary or
involuntary or by operation of law by judgment, levy, attachment, garnishment or any
other legal or equitable proceedings (including bankruptcy), and any attempted
disposition thereof shall be null and void and of no effect, except to the extent
that such disposition is permitted pursuant to Section 11.1(a)(i); and

               (iii) During the lifetime of the Holder, only the Holder may exercise an Option
or other Award (or any portion thereof) granted to him under the Plan, unless it has
been disposed of pursuant to a DRO; after the death of the Holder, any exercisable
portion of an Option or other Award may, prior to the time when such portion becomes
unexercisable under the Plan or the applicable Award Agreement, be exercised by his
personal representative or by any person empowered to do so under the deceased
Holder’s will or under the then applicable laws of descent and distribution.

               (b) Notwithstanding Section 11.1(a), the Administrator, in its discretion, may determine to
permit a Holder to transfer a Non-Qualified Stock Option to any one or more Permitted Transferees
(as defined below), subject to the following terms and conditions: (i) a Non-Qualified Stock
Option transferred to a Permitted Transferee shall not be assignable or transferable by the
Permitted Transferee other than by will or the laws of descent and distribution; (ii) any
Non-Qualified Stock Option which is transferred to a Permitted Transferee shall continue to be
subject to all the terms and conditions of the Award Agreement evidencing such Non-Qualified Stock
Option as applicable to the original Holder (other than the ability to further transfer the
Non-Qualified Stock Option); and (iii) the Holder and the Permitted Transferee shall execute any
and all documents requested by the Administrator, including,

23

 

without limitation documents to (A)
confirm the status of the transferee as a Permitted Transferee, (B) satisfy any requirements for an exemption for the transfer under applicable
federal, state and foreign securities laws and (C) evidence the transfer. For purposes of this
Section 11.1(b), “Permitted Transferee” shall mean, with respect to a Holder, any child,
stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece,
nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law, including adoptive relationships, any person sharing the Holder’s household (other
than a tenant or employee), a trust in which these persons (or the Holder) control the management
of assets, and any other entity in which these persons (or the Holder) own more than fifty percent
of the voting interests, or any other transferee specifically approved by the Administrator after
taking into account any federal, state, local and foreign tax and securities laws applicable to
transferable Non-Qualified Stock Options.

          11.2. Amendment, Suspension or Termination of the Plan. Except as otherwise provided
in this Section 11.2, the Plan may be wholly or partially amended or otherwise modified, suspended
or terminated at any time or from time to time by the Board, or the Compensation Committee of the
Board. However, without approval of the Company’s stockholders given within twelve (12) months
before or after the action by the Administrator, no action of the Administrator may, except as
provided in Section 11.3, (i) increase the limits imposed in Section 2.1 on the maximum number of
shares which may be issued under the Plan or (ii) decrease the exercise price of any outstanding
Option or Stock Appreciation Right granted under the Plan. Except as provided in Section 11.13, no
amendment, suspension or termination of the Plan shall, without the consent of the Holder, alter or
impair any rights or obligations under any Award theretofore granted or awarded, unless the Award
itself otherwise expressly so provides. No Awards may be granted or awarded during any period of
suspension or after termination of the Plan, and in no event may any Award be granted under the
Plan after the first to occur of the following events:

          (a) The expiration of ten (10) years from the date the Plan is adopted by the Board; or

          (b) The expiration of ten (10) years from the date the Plan is first approved by the
Company’s stockholders (or, if the Company is a wholly-owned subsidiary of Peplin Limited at
such time, the shareholders of Peplin Limited).

          11.3. Changes in Common Stock or Assets of the Company, Acquisition or Liquidation of the
Company and Other Corporate Events.

               (a) Subject to Section 11.3(d), in the event of any extraordinary dividend or other similar
distribution (whether in the form of cash, Common Stock, other securities or other property),
recapitalization, reclassification, stock split, reverse stock split, reorganization, merger,
consolidation, split-up, spin-off, combination, repurchase, liquidation, dissolution, or sale,
transfer, exchange or other disposition of all or substantially all of the assets of the Company,
or exchange of Common Stock or other securities of the Company, issuance of warrants or other
rights to purchase Common Stock or other securities of the Company, or other similar corporate
transaction or event that affects the Common Stock, then the Administrator shall equitably adjust
any or all of the following in order to prevent dilution or enlargement of

24

 

the benefits or potential benefits intended to be made available under the Plan or with
respect to an Award:

               (i) The number and kind of shares of Common Stock (or other securities or
property) with respect to which Awards may be granted or awarded (including, without
limitation, adjustments of the limitations in Section 2.1 on the maximum number and
kind of shares which may be issued under the Plan and adjustments of the Award
Limit);

               (ii) The number and kind of shares of Common Stock (or other securities or
property) subject to outstanding Awards; and

               (iii) The grant or exercise price with respect to any Award.

               (b) Subject to Section 11.3(d), in the event of any transaction or event described in Section
11.3(a) or any unusual or nonrecurring transactions or events affecting the Company, any affiliate
of the Company, or the financial statements of the Company or any affiliate, or of changes in
applicable laws, regulations or accounting principles, the Administrator, in its discretion, and on
such terms and conditions as it deems appropriate, either by the terms of the Award or by action
taken prior to the occurrence of such transaction or event and either automatically or upon the
Holder’s request, is hereby authorized to take any one or more of the following actions whenever
the Administrator determines that such action is appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available under the Plan or
with respect to any Award under the Plan, to facilitate such transactions or events or to give
effect to such changes in laws, regulations or principles:

               (i) To provide for the purchase of any such Award for an amount of cash equal
to the amount that could have been attained upon the exercise of such Award or
realization of the Holder’s rights had such Award been currently exercisable or
payable or fully vested;

               (ii) To provide for the replacement of such Award with other rights or property
selected by the Administrator in its discretion having an aggregate value not
exceeding the amount that could have been attained upon the exercise of such Award
or realization of the Holder’s rights had such Award been currently exercisable or
payable or fully vested;

               (iii) To provide that the Award cannot vest, be exercised or become payable
after such event;

               (iv) To provide that such Award shall be exercisable as to all shares covered
thereby, notwithstanding anything to the contrary in Section 5.3 or the provisions
of such Award;

               (v) To provide that such Award be assumed by the successor or survivor
corporation, or a parent or subsidiary thereof, or shall be

25

 

substituted for by similar options, rights or awards covering the stock of the
successor or survivor corporation, or a parent or subsidiary thereof, with
appropriate adjustments as to the number and kind of shares and prices;

               (vi) To make adjustments in the number and type of shares of Common Stock (or
other securities or property) subject to outstanding Awards, and/or in the terms and
conditions of (including the grant, exercise or purchase price), and the criteria
included in, outstanding options, rights and awards and options, rights and awards
which may be granted in the future; and

               (vii) To provide that, for a specified period of time prior to such event, the
restrictions imposed under an Award Agreement upon some or all shares of Restricted
Stock, Restricted Stock Units or Deferred Stock may be terminated, and, in the case
of Restricted Stock, some or all shares of such Restricted Stock may cease to be
subject to repurchase under Section 7.5 or forfeiture under Section 7.4 after such
event.

               (c) Subject to Sections 11.3(d) and 3.2, the Administrator may, in its discretion, include
such further provisions and limitations in any Award, agreement or certificate, as it may deem
equitable and in the best interests of the Company.

               (d) With respect to Awards which are granted to Covered Employees and are intended to qualify
as performance-based compensation under Section 162(m)(4)(C), no adjustment or action described in
this Section 11.3 or in any other provision of the Plan shall be authorized to the extent that such
adjustment or action would cause such Award to fail to so qualify under Section 162(m)(4)(C), or
any successor provisions thereto. No adjustment or action described in this Section 11.3 or in any
other provision of the Plan shall be authorized to the extent that such adjustment or action would
cause the Plan to violate Section 422(b)(1) of the Code. Furthermore, no such adjustment or action
shall be authorized to the extent such adjustment or action would result in short-swing profits
liability under Section 16 or violate the exemptive conditions of Rule 16b-3 unless the
Administrator determines that the Award is not to comply with such exemptive conditions. The
number of shares of Common Stock subject to any Award shall always be rounded down to the next
whole number.

               (e) The existence of the Plan, the Award Agreement and the Awards granted hereunder shall not
affect or restrict in any way the right or power of the Company or the stockholders of the Company
to make or authorize any adjustment, recapitalization, reorganization or other change in the
Company’s capital structure or its business, any merger or consolidation of the Company, any issue
of stock or of options, warrants or rights to purchase stock or of bonds, debentures, preferred or
prior preference stocks whose rights are superior to or affect the Common Stock or the rights
thereof or which are convertible into or exchangeable for Common Stock, or the dissolution or
liquidation of the company, or any sale or transfer of all or any part of its assets or business,
or any other corporate act or proceeding, whether of a similar character or otherwise.

26

 

               (f) No action shall be taken under this Section 11.3 which shall cause an Award to fail to
comply with Section 409A of the Code or the Treasury Regulations thereunder, to the extent
applicable to such Award.

               (g) No action shall be taken under this Section 11.3 which shall cause an Award to fail to
comply with the ASX Listing Rules, to the extent applicable to such Award.

          11.4. Approval of Plan by Stockholders. The Plan will be submitted for the approval
of the Company’s stockholders within twelve (12) months after the date of the Board’s initial
adoption of the Plan. Awards may be granted or awarded prior to such stockholder approval,
provided that such Awards shall not be exercisable, shall not vest and the restrictions thereon
shall not lapse prior to the time when the Plan is approved by the stockholders, and provided
further that if such approval has not been obtained at the end of said twelve-month period, all
Awards previously granted or awarded under the Plan shall thereupon be canceled and become null and
void.

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

          11.6. Prohibition on Repricing. Subject to Section 11.3, the Administrator shall not,
without the approval of the stockholders of the Company, authorize the amendment of any outstanding
Award to reduce its price per share. Furthermore, no Award shall be canceled and replaced with the
grant of an Award having a lesser price per share without the further approval of stockholders of
the Company. Subject to Section 11.2, the Administrator shall have the authority, without the
approval of the stockholders of the Company, to amend any outstanding award to increase the price
per share or to cancel and replace an Award with the grant of an Award having a price per share
that is greater than or equal to the price per share of the original Award.

          11.7. Forfeiture Provisions. Pursuant to its general authority to determine the terms
and conditions applicable to Awards under the Plan, the Administrator shall have the right

27

 

to provide, in the terms of Awards made under the Plan, or to require a Holder to agree by
separate written instrument, that: (a)(i) any proceeds, gains or other economic benefit actually
or constructively received by the Holder upon any receipt or exercise of the Award, or upon the
receipt or resale of any Common Stock underlying the Award, must be paid to the Company, and (ii)
the Award shall terminate and any unexercised portion of the Award (whether or not vested) shall be
forfeited, if (b)(i) a Termination of Employment, Termination of Directorship or Termination of
Consultancy occurs prior to a specified date, or within a specified time period following receipt
or exercise of the Award, or (ii) the Holder at any time, or during a specified time period,
engages in any activity in competition with the Company, or which is inimical, contrary or harmful
to the interests of the Company, as further defined by the Administrator or (iii) the Holder incurs
a Termination of Employment, Termination of Directorship or Termination of Consultancy for “cause”
(as such term is defined in the discretion of the Administrator, or as set forth in a written
agreement relating to such Award between the Company and the Holder).

          11.8. Effect of Plan upon Other Compensation Plans. The adoption of the Plan shall
not affect any other compensation or incentive plans in effect for the Company or any Subsidiary.
Nothing in the Plan shall be construed to limit the right of the Company or any Subsidiary: (a) to
establish any other forms of incentives or compensation for Employees, Directors or Consultants of
the Company or any Subsidiary, or (b) to grant or assume options or other rights or awards
otherwise than under the Plan in connection with any proper corporate purpose including without
limitation, the grant or assumption of options in connection with the acquisition by purchase,
lease, merger, consolidation or otherwise, of the business, stock or assets of any corporation,
partnership, limited liability company, firm or association.

          11.9. Prohibition on Pre-Service Grants. In no event shall any individual receive an
Award prior to the date of his or her commencement of employment or service with the Company or any
Subsidiary.

          11.10. Compliance with Laws. The Plan, the granting and vesting of Awards under the
Plan and the issuance and delivery of shares of Common Stock and the payment of money under the
Plan or under Awards granted or awarded hereunder are subject to compliance with all applicable
federal, state, local and foreign laws, rules and regulations (including but not limited to
federal, state and foreign securities law and margin requirements) and to such approvals by any
listing, regulatory or governmental authority as may, in the opinion of counsel for the Company, be
necessary or advisable in connection therewith. Any securities delivered under the Plan shall be
subject to such restrictions, and the person acquiring such securities shall, if requested by the
Company, provide such assurances and representations to the Company as the Company may deem
necessary or desirable to assure compliance with all applicable legal requirements. To the extent
permitted by applicable law, the Plan and Awards granted or awarded hereunder shall be deemed
amended to the extent necessary to conform to such laws, rules and regulations.

          11.11. Titles. Titles are provided herein for convenience only and are not to serve
as a basis for interpretation or construction of the Plan.

28

 

          11.12. Governing Law. The Plan and any agreements hereunder shall be administered,
interpreted and enforced under the internal laws of the State of Delaware without regard to
conflicts of laws thereof.

          11.13. Section 409A. To the extent that the Administrator determines that any Award
granted under the Plan is subject to Section 409A of the Code, the Award Agreement evidencing such
Award shall incorporate the terms and conditions required by Section 409A of the Code. To the
extent applicable, the Plan and 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
after the Effective Date. Notwithstanding any provision of the Plan to the contrary, in the event
that following the Effective Date the Administrator determines that any 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 Administrator may adopt such
amendments to the Plan and the applicable Award Agreement or adopt other policies and procedures
(including amendments, policies and procedures with retroactive effect), or take any other actions,
that the Administrator determines are necessary or appropriate to (a) exempt the Award from Section
409A of the Code and/or preserve the intended tax treatment of the benefits provided with respect
to the Award, or (b) comply with the requirements of Section 409A of the Code and related
Department of Treasury guidance.

          11.14. Foreign Participants. Notwithstanding any provision of the Plan to the
contrary, in order to comply with the laws in other countries in which the Company and its
Subsidiaries operate or have Employees, Consultants or Directors, the Administrator, in its sole
discretion, shall have the power and authority to: (i) determine which Subsidiaries shall be
covered by the Plan; (ii) determine which Employees, Consultants and Directors outside the United
States are eligible to participate in the Plan; (iii) modify the terms and conditions of any Award
granted to Employees, Consultants and Directors outside the United States to comply with applicable
foreign laws; (iv) establish subplans and modify exercise procedures and other terms and
procedures, to the extent such actions may be necessary or advisable (any such subplans and/or
modifications may be attached to this Plan as appendices); provided, however, that no such subplans
and/or modifications shall increase the share limitations contained in Section 2.1(a) or Section
2.3 of the Plan; and (v) take any action, before or after an Award is made, that it deems advisable
to obtain approval or comply with any necessary local governmental regulatory exemptions or
approvals. Notwithstanding the foregoing, the Committee may not take any actions hereunder, and no
Awards shall be granted, that would violate the Exchange Act, the Code, the ASX Listing Rules, any
securities law or governing statute or any other applicable law.

29

 

* * * * *

          I hereby certify that the foregoing Peplin, Inc. 2007 Incentive Award Plan was duly adopted by
the Board of Directors of Peplin, Inc. on                                                  , 2007.

          Executed on this ___ day of                                         , 2007.

	 	 	 	 	 
	 	 	 
	 	
 	 
	 	Corporate Secretary 	 
	 	 	 
	 

* * * * *

          I hereby certify that the foregoing Peplin, Inc. 2007 Incentive Award Plan was approved by the
stockholders of Peplin Limited, the sole stockholder of Peplin, Inc., on                                                  , 2007.

          Executed on this ___ day of                     , 2007.

	 	 	 	 	 
	 	 	 
	 	
 	 
	 	Corporate Secretary 	 
	 	 	 
	 

30

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