Document:

Exhibit 10.13

 

XTENT, INC.

2006 EQUITY INCENTIVE PLAN

(as amended)

 

1.  Purposes of
the Plan.  The purposes of
this Plan are:

 

·   to attract and retain the best available
personnel for positions of substantial responsibility,

 

·   to provide additional incentive to Employees,
Directors and Consultants, and

 

·   to promote the success of the Company’s
business.

 

The Plan
permits the grant of Incentive Stock Options, Nonstatutory Stock Options,
Restricted Stock, Restricted Stock Units, Stock Appreciation Rights,
Performance Units and Performance Shares.

 

2.  Definitions.  As used herein, the following definitions
will apply:

 

(a)  “Administrator”
means the Board or any of its Committees as will be administering the Plan, in
accordance with Section 4 of the Plan.

 

(b)  “Applicable Laws”
means the requirements relating to the administration of equity-based awards
under U.S. state corporate laws, U.S. federal and state securities laws, the
Code, any stock exchange or quotation system on which the Common Stock is listed
or quoted and the applicable laws of any foreign country or jurisdiction where
Awards are, or will be, granted under the Plan.

 

(c)  “Award” means,
individually or collectively, a grant under the Plan of Options, Stock
Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance
Units or Performance Shares.

 

(d)  “Award Agreement”
means the written or electronic agreement setting forth the terms and
provisions applicable to each Award granted under the Plan. The Award Agreement
is subject to the terms and conditions of the Plan.

 

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

 

(f)  “Change in Control”
means the occurrence of any of the following events:

 

(i) Any “person” (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial
owner” (as defined in Rule 13d-3 of the Exchange Act), directly or
indirectly, of securities of the Company representing fifty percent (50%) or
more of the total voting power represented by the Company’s then outstanding
voting securities; or

 

(ii) The consummation of the sale or disposition by
the Company of all or substantially all of the Company’s assets;

 

(iii) A change in the composition of the Board
occurring within a two-year period, as a result of which fewer than a majority
of the directors are Incumbent Directors. “Incumbent Directors” means directors
who either (A) are Directors as of the effective date of the Plan, or (B) are
elected, or nominated for election, to the Board with the affirmative votes of
at least a majority of the Incumbent Directors at the time of such election or
nomination (but will not include an individual whose election or nomination is
in connection with an actual or threatened proxy contest relating to the
election of directors to the Company); or

 

(iv) The consummation of a merger or consolidation
of the Company with any other corporation, other than a merger or consolidation
which would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by

 

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remaining outstanding or by being converted into voting securities of
the surviving entity or its parent) at least fifty percent (50%) of the total
voting power represented by the voting securities of the Company or such
surviving entity or its parent outstanding immediately after such merger or
consolidation.

 

(g)  “Code” means
the Internal Revenue Code of 1986, as amended. Any reference to a section of
the Code herein will be a reference to any successor or amended section of the
Code.

 

(h)  “Committee”
means a committee of Directors or of other individuals satisfying Applicable
Laws appointed by the Board in accordance with Section 4 hereof.

 

(i)  “Common Stock”
means the common stock of the Company.

 

(j)  “Company” means
XTENT, Inc., a Delaware corporation, or any successor thereto.

 

(k)  “Consultant”
means any person, including an advisor, engaged by the Company or a Parent or
Subsidiary to render services to such entity.

 

(l)  “Determination Date”
means the latest possible date that will not jeopardize the qualification of an
Award granted under the Plan as “performance-based compensation” under Section 162(m) of
the Code.

 

(m)  “Director”
means a member of the Board.

 

(n)  “Disability”
means total and permanent disability as defined in Section 22(e)(3) of
the Code, provided that in the case of Awards other than Incentive Stock
Options, the Administrator in its discretion may determine whether a permanent
and total disability exists in accordance with uniform and non-discriminatory
standards adopted by the Administrator from time to time.

 

(o)  “Employee”
means any person, including Officers and Directors, employed by the Company or
any Parent or Subsidiary of the Company. Neither service as a Director nor
payment of a director’s fee by the Company will be sufficient to constitute “employment”
by the Company.

 

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

 

(q)  “Exchange Program”
means a program under which (i) outstanding Awards are surrendered or
cancelled in exchange for Awards of the same type (which may have lower
exercise prices and different terms), Awards of a different type, and/or cash, (ii) Participants
would have the opportunity to transfer any outstanding Awards to a financial
institution or other person or entity selected by the Administrator, and/or (iii) the
exercise price of an outstanding Award is reduced. The Administrator will
determine the terms and conditions of any Exchange Program in its sole
discretion.

 

(r)  “Fair Market Value”
means, as of any date, the value of Common Stock determined as follows:

 

(i)  If the Common Stock is listed on any
established stock exchange or a national market system, including without
limitation the Nasdaq National Market or The Nasdaq SmallCap Market of The
Nasdaq Stock Market, its Fair Market Value will be the closing sales price for
such stock (or the closing bid, if no sales were reported) as quoted on such
exchange or system on the day of determination, as reported in The Wall Street Journal or such other
source as the Administrator deems reliable;

 

(ii)  If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market Value of
a Share will be the mean between the high bid and low asked prices for the
Common Stock on the day of determination, as reported in The Wall Street Journal or such other
source as the Administrator deems reliable;

 

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(iii)  In the absence of an established market
for the Common Stock, the Fair Market Value will be determined in good faith by
the Administrator.

 

(s)  “Fiscal Year”
means the fiscal year of the Company.

 

(t)  “Incentive Stock Option”
means an Option intended to qualify as an incentive stock option within the
meaning of Section 422 of the Code and the regulations promulgated
thereunder.

 

(u)  “Inside Director”
means a Director who is an Employee.

 

(v)  “Nonstatutory Stock Option”
means an Option that by its terms does not qualify or is not intended to
qualify as an Incentive Stock Option.

 

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

 

(x)  “Option” means
a stock option granted pursuant to the Plan.

 

(y)  “Outside Director”
means a Director who is not an Employee.

 

(z)  “Parent” means
a “parent corporation,” whether now or hereafter existing, as defined in Section 424(e) of
the Code.

 

(aa) “Participant” means
the holder of an outstanding Award.

 

(bb) “Performance Goals”
will have the meaning set forth in Section 12 of the Plan.

 

(cc) “Performance Period”
means any Fiscal Year or such other period as determined by the Administrator
in its sole discretion.

 

(dd) “Performance Share”
means an Award denominated in Shares which may be earned in whole or in part
upon attainment of Performance Goals or other vesting criteria as the
Administrator may determine pursuant to Section 10.

 

(ee) “Performance Unit”
means an Award which may be earned in whole or in part upon attainment of
Performance Goals or other vesting criteria as the Administrator may determine
and which may be settled for cash, Shares or other securities or a combination
of the foregoing pursuant to Section 10.

 

(ff) “Period of Restriction”
means the period during which the transfer of Shares of Restricted Stock are
subject to restrictions and therefore, the Shares are subject to a substantial
risk of forfeiture. Such restrictions may be based on the passage of time, the
achievement of target levels of performance, or the occurrence of other events
as determined by the Administrator.

 

(gg) “Plan” means this
2006 Equity Incentive Plan.

 

(hh) “Restricted Stock”
means Shares issued pursuant to a Restricted Stock award under Section 7
of the Plan, or issued pursuant to the early exercise of an Option.

 

(ii) “Restricted Stock Unit”
means a bookkeeping entry representing an amount equal to the Fair Market Value
of one Share, granted pursuant to Section 8. Each Restricted Stock Unit
represents an unfunded and unsecured obligation of the Company.

 

(jj) “Rule 16b-3”
means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3,
as in effect when discretion is being exercised with respect to the Plan.

 

(kk) “Section 16(b)”
means Section 16(b) of the Exchange Act.

 

(ll) “Service Provider”
means an Employee, Director or Consultant.

 

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(mm) “Share” means a
share of the Common Stock, as adjusted in accordance with Section 15 of
the Plan.

 

(nn) “Stock Appreciation Right”
means an Award, granted alone or in connection with an Option, that pursuant to
Section 9 is designated as a Stock Appreciation Right.

 

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

 

3.  Stock Subject
to the Plan.

 

(a)  Stock Subject to the Plan.  Subject to the provisions of Section 15
of the Plan, the maximum aggregate number of Shares that may be issued under
the Plan is (A) 2,412,762 Shares, plus (B) any Shares subject to
stock options or similar awards granted under the Company’s 2002 Stock Plan
(the “2002 Plan”) that expire or otherwise terminate without having been
exercised in full and Shares issued pursuant to awards granted under the 2002
Plan that are forfeited to or repurchased by the Company, up to a maximum of
600,000 Shares. The Shares may be authorized, but unissued, or reacquired
Common Stock.

 

(b)  Automatic Share Reserve
Increase.  The number of
Shares available for issuance under the Plan shall be increased on the first
day of each Fiscal Year beginning with the 2007 Fiscal Year, in an amount equal
to the least of (A) 1,500,000 Shares, (B) four percent (4%) of the
outstanding Shares on the last day of the immediately preceding Fiscal Year or (C) such
number of Shares determined by the Board.

 

(c)  Lapsed Awards.  If an Award expires or becomes unexercisable
without having been exercised in full, is surrendered pursuant to an Exchange
Program, or, with respect to Restricted Stock, Restricted Stock Units,
Performance Units or Performance Shares, is forfeited to or repurchased by the
Company due to failure to vest, the unpurchased Shares (or for Awards other
than Options or Stock Appreciation Rights the forfeited or repurchased Shares)
which were subject thereto will become available for future grant or sale under
the Plan (unless the Plan has terminated). With respect to Stock Appreciation
Rights, only Shares actually issued pursuant to a Stock Appreciation Right will
cease to be available under the Plan; all remaining Shares under Stock
Appreciation Rights will remain available for future grant or sale under the
Plan (unless the Plan has terminated). Shares that have actually been issued
under the Plan under any Award will not be returned to the Plan and will not
become available for future distribution under the Plan; provided, however,
that if Shares issued pursuant to Awards of Restricted Stock, Restricted Stock
Units, Performance Shares or Performance Units are repurchased by the Company
or are forfeited to the Company, such Shares will become available for future
grant under the Plan. Shares used to pay the exercise price of an Award or to
satisfy the tax withholding obligations related to an Award will become
available for future grant or sale under the Plan. To the extent an Award under
the Plan is paid out in cash rather than Shares, such cash payment will not
result in reducing the number of Shares available for issuance under the Plan.
Notwithstanding the foregoing and, subject to adjustment as provided in Section 15,
the maximum number of Shares that may be issued upon the exercise of Incentive
Stock Options shall equal the aggregate Share number stated in Section 3(a),
plus, to the extent allowable under Section 422 of the Code and the
Treasury Regulations promulgated thereunder, any Shares that become available
for issuance under the Plan pursuant to Section 3(c).

 

(d)  Share Reserve.  The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as will be
sufficient to satisfy the requirements of the Plan.

 

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4. 
Administration of the Plan.

 

(a)  Procedure.

 

(i)  Multiple
Administrative Bodies. 
Different Committees with respect to different groups of Service
Providers may administer the Plan.

 

(ii)  Section 162(m).  To the extent that the Administrator
determines it to be desirable to qualify Awards granted hereunder as “performance-based
compensation” within the meaning of Section 162(m) of the Code, the
Plan will be administered by a Committee of two or more “outside directors”
within the meaning of Section 162(m) of the Code.

 

(iii)  Rule 16b-3.  To the extent desirable to qualify transactions
hereunder as exempt under Rule 16b-3, the transactions contemplated
hereunder will be structured to satisfy the requirements for exemption under Rule 16b-3.

 

(iv)  Other
Administration.  Other than as
provided above, the Plan will be administered by (A) the Board or (B) a
Committee, which committee will be constituted to satisfy Applicable Laws.

 

(b)  Powers of the
Administrator.  Subject to the
provisions of the Plan, and in the case of a Committee, subject to the specific
duties delegated by the Board to such Committee, the Administrator will have
the authority, in its discretion:

 

(i)  to determine the Fair Market Value;

 

(ii)  to select the Service Providers to whom
Awards may be granted hereunder;

 

(iii)  to determine the number of Shares to be
covered by each Award granted hereunder;

 

(iv)  to approve forms of Award Agreements for
use under the Plan;

 

(v)  to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any Award granted hereunder. Such
terms and conditions include, but are not limited to, the exercise price, the
time or times when Awards may be exercised (which may be based on performance
criteria), any vesting acceleration or waiver of forfeiture restrictions, and
any restriction or limitation regarding any Award or the Shares relating
thereto, based in each case on such factors as the Administrator will
determine;

 

(vi)  to determine the terms and conditions of
any, and to institute any Exchange Program;

 

(vii)  to construe and interpret the terms of
the Plan and Awards granted pursuant to the Plan;

 

(viii)  to prescribe, amend and rescind rules and
regulations relating to the Plan, including rules and regulations relating
to sub-plans established for the purpose of satisfying applicable foreign laws;

 

(ix)  to modify or amend each Award (subject to
Section 20(c) of the Plan), including the discretionary authority to
extend the post-termination exercisability period of Awards;

 

(x)  to allow Participants to satisfy
withholding tax obligations in such manner as prescribed in Section 16;

 

(xi)  to authorize any person to execute on
behalf of the Company any instrument required to effect the grant of an Award
previously granted by the Administrator;

 

(xii)  to allow a Participant to defer the
receipt of the payment of cash or the delivery of Shares that would otherwise
be due to such Participant under an Award; and

 

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(xiii)  to make all other determinations deemed
necessary or advisable for administering the Plan.

 

(c)  Effect of Administrator’s
Decision.  The Administrator’s
decisions, determinations and interpretations will be final and binding on all
Participants and any other holders of Awards.

 

5.  Eligibility.  Nonstatutory Stock Options, Stock
Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance
Shares and Performance Units may be granted to Service Providers. Incentive
Stock Options may be granted only to Employees.

 

6.  Stock
Options.

 

(a)  Limitations.

 

(i)  Each Option will be designated in the
Award Agreement as either an Incentive Stock Option or a Nonstatutory Stock
Option. However, notwithstanding such designation, to the extent that the
aggregate Fair Market Value of the Shares with respect to which Incentive Stock
Options are exercisable for the first time by the Participant during any
calendar year (under all plans of the Company and any Parent or Subsidiary)
exceeds $100,000, such Options will be treated as Nonstatutory Stock Options.
For purposes of this Section 6(a), Incentive Stock Options will be taken
into account in the order in which they were granted. The Fair Market Value of
the Shares will be determined as of the time the Option with respect to such
Shares is granted.

 

(ii)  The Administrator will have complete
discretion to determine the number of Shares subject to an Option granted to
any Participant, provided that during any Fiscal Year, no Participant will be
granted an Option covering more than 600,000 Shares. Notwithstanding the
limitation in the previous sentence, in connection with his or her initial
service as an Employee, an Employee may be granted Options covering up to an
additional 1,200,000 Shares.

 

(b)  Term of Option.  The term of each Option will be stated in the
Award Agreement. In the case of an Incentive Stock Option, the term will be ten
(10) years from the date of grant or such shorter term as may be provided
in the Award Agreement. Moreover, in the case of an Incentive Stock Option
granted to a Participant who, at the time the Incentive Stock Option is
granted, owns stock representing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or any Parent or
Subsidiary, the term of the Incentive Stock Option will be five (5) years
from the date of grant or such shorter term as may be provided in the Award
Agreement.

 

(c) Option Exercise Price and
Consideration.

 

(i)  Exercise Price.  The per share exercise price for the Shares
to be issued pursuant to exercise of an Option will be determined by the
Administrator, subject to the following:

 

(1)  In the case of an Incentive Stock Option

 

a)  granted to an Employee who,
at the time the Incentive Stock Option is granted, owns stock representing more
than ten percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, the per Share exercise price will be no
less than 110% of the Fair Market Value per Share on the date of grant.

 

b)  granted to any Employee other
than an Employee described in paragraph (a) immediately above, the
per Share exercise price will be no less than 100% of the Fair Market Value per
Share on the date of grant.

 

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(2)  In the case of a Nonstatutory Stock
Option, the per Share exercise price will be no less than 100% of the Fair
Market Value per Share on the date of grant.

 

(3)  Notwithstanding the foregoing, Options may
be granted with a per Share exercise price of less than 100% of the Fair Market
Value per Share on the date of grant pursuant to a transaction described in,
and in a manner consistent with, Section 424(a) of the Code.

 

(ii)  Waiting Period and Exercise Dates.  At the time an Option is granted, the
Administrator will fix the period within which the Option may be exercised and
will determine any conditions that must be satisfied before the Option may be
exercised.

 

(iii)  Form of Consideration.  The Administrator will determine the
acceptable form(s) of consideration for exercising an Option, including
the method of payment. In the case of an Incentive Stock Option, the
Administrator will determine the acceptable form of consideration at the time
of grant. Such consideration may consist entirely of: (1) cash; (2) check;
(3) promissory note; (4) other Shares, provided that such Shares have
a Fair Market Value on the date of surrender equal to the aggregate exercise
price of the Shares as to which said Option will be exercised and provided that
accepting such Shares, in the sole discretion of the Administrator, shall not
result in any adverse accounting consequences to the Company; (5) consideration
received by the Company under a broker assisted (or other) cashless exercise
program implemented by the Company in connection with the Plan; (6) a
reduction in the amount of any Company liability to the Participant, including
any liability attributable to the Participant’s participation in any
Company-sponsored deferred compensation program or arrangement; (7) such
other consideration and method of payment for the issuance of Shares to the
extent permitted by Applicable Laws; or (8) any combination of the
foregoing methods of payment.

 

(d)  Exercise of Option.

 

(i)  Procedure for Exercise; Rights as a Stockholder.  Any Option granted hereunder will be
exercisable according to the terms of the Plan and at such times and under such
conditions as determined by the Administrator and set forth in the Award
Agreement. An Option may not be exercised for a fraction of a Share.

 

An Option will be deemed exercised when the Company receives: (i) notice
of exercise (in such form as the Administrator specifies from time to time)
from the person entitled to exercise the Option, and (ii) full payment for
the Shares with respect to which the Option is exercised (together with
applicable withholding taxes). Full payment may consist of any consideration
and method of payment authorized by the Administrator and permitted by the
Award Agreement and the Plan. Shares issued upon exercise of an Option will be
issued in the name of the Participant or, if requested by the Participant, in
the name of the Participant and his or her spouse. Until the Shares are issued
(as evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company), no right to vote or receive
dividends or any other rights as a stockholder will exist with respect to the
Shares subject to an Option, notwithstanding the exercise of the Option. The
Company will issue (or cause to be issued) such Shares promptly after the
Option is exercised. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the Shares are issued, except as
provided in Section 15 of the Plan.

 

Exercising an Option in any manner will decrease the number of Shares
thereafter available, both for purposes of the Plan and for sale under the
Option, by the number of Shares as to which the Option is exercised.

 

7

 

(ii)  Termination
of Relationship as a Service Provider.  If a Participant ceases to be a Service Provider,
other than upon the Participant’s death or Disability, the Participant may
exercise his or her Option within such period of time as is specified in the
Award Agreement to the extent that the Option is vested on the date of
termination (but in no event later than the expiration of the term of such
Option as set forth in the Award Agreement). In the absence of a specified time
in the Award Agreement, the Option will remain exercisable for three (3) months
following the Participant’s termination. Unless otherwise provided by the
Administrator, if on the date of termination the Participant is not vested as
to his or her entire Option, the Shares covered by the unvested portion of the
Option will revert to the Plan. If after termination the Participant does not
exercise his or her Option within the time specified by the Administrator, the
Option will terminate, and the Shares covered by such Option will revert to the
Plan.

 

(iii)  Disability
of Participant.  If a
Participant ceases to be a Service Provider as a result of the Participant’s
Disability, the Participant may exercise his or her Option within such period
of time as is specified in the Award Agreement to the extent the Option is
vested on the date of termination (but in no event later than the expiration of
the term of such Option as set forth in the Award Agreement). In the absence of
a specified time in the Award Agreement, the Option will remain exercisable for
twelve (12) months following the Participant’s termination. Unless
otherwise provided by the Administrator, if on the date of termination the
Participant is not vested as to his or her entire Option, the Shares covered by
the unvested portion of the Option will revert to the Plan. If after
termination the Participant does not exercise his or her Option within the time
specified herein, the Option will terminate, and the Shares covered by such
Option will revert to the Plan.

 

(iv)  Death
of Participant.  If a
Participant dies while a Service Provider, the Option may be exercised
following the Participant’s death within such period of time as is specified in
the Award Agreement to the extent that the Option is vested on the date of
death (but in no event may the option be exercised later than the expiration of
the term of such Option as set forth in the Award Agreement), by the
Participant’s designated beneficiary, provided such beneficiary has been
designated prior to Participant’s death in a form acceptable to the
Administrator. If no such beneficiary has been designated by the Participant, then
such Option may be exercised by the personal representative of the Participant’s
estate or by the person(s) to whom the Option is transferred pursuant to
the Participant’s will or in accordance with the laws of descent and
distribution. In the absence of a specified time in the Award Agreement, the
Option will remain exercisable for twelve (12) months following
Participant’s death. Unless otherwise provided by the Administrator, if at the
time of death Participant is not vested as to his or her entire Option, the
Shares covered by the unvested portion of the Option will immediately revert to
the Plan. If the Option is not so exercised within the time specified herein,
the Option will terminate, and the Shares covered by such Option will revert to
the Plan.

 

7.  Restricted
Stock.

 

(a)  Grant of Restricted Stock.  Subject to the terms and provisions of the
Plan, the Administrator, at any time and from time to time, may grant Shares of
Restricted Stock to Service Providers in such amounts as the Administrator, in
its sole discretion, will determine.

 

(b)  Restricted Stock
Agreement.  Each Award of
Restricted Stock will be evidenced by an Award Agreement that will specify the
Period of Restriction, the number of Shares granted, and such other terms and
conditions as the Administrator, in its sole discretion, will determine.
Notwithstanding the foregoing sentence, for Restricted Stock intended to
qualify as “performance- based compensation” within the meaning of Section 162(m) of
the Code, during any Fiscal Year

 

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no Participant
will receive more than an aggregate of 300,000 Shares of Restricted Stock.
Notwithstanding the foregoing limitation, in connection with his or her initial
service as an Employee, for Restricted Stock intended to qualify as “performance-based
compensation” within the meaning of Section 162(m) of the Code, an
Employee may be granted an aggregate of up to an additional 600,000 Shares of
Restricted Stock. Unless the Administrator determines otherwise, the Company as
escrow agent will hold Shares of Restricted Stock until the restrictions on
such Shares have lapsed.

 

(c)  Transferability.  Except as provided in this Section 7,
Shares of Restricted Stock may not be sold, transferred, pledged, assigned, or
otherwise alienated or hypothecated until the end of the applicable Period of
Restriction.

 

(d)  Other Restrictions.  The Administrator, in its sole discretion,
may impose such other restrictions on Shares of Restricted Stock as it may deem
advisable or appropriate.

 

(e)  Removal of Restrictions.  Except as otherwise provided in this Section 7,
Shares of Restricted Stock covered by each Restricted Stock grant made under
the Plan will be released from escrow as soon as practicable after the last day
of the Period of Restriction or at such other time as the Administrator may
determine. The Administrator, in its discretion, may accelerate the time at
which any restrictions will lapse or be removed.

 

(f)  Voting Rights.  During the Period of Restriction, Service
Providers holding Shares of Restricted Stock granted hereunder may exercise
full voting rights with respect to those Shares, unless the Administrator
determines otherwise.

 

(g)  Dividends and Other
Distributions.  During the
Period of Restriction, Service Providers holding Shares of Restricted Stock
will be entitled to receive all dividends and other distributions paid with
respect to such Shares, unless the Administrator provides otherwise. If any
such dividends or distributions are paid in Shares, the Shares will be subject
to the same restrictions on transferability and forfeitability as the Shares of
Restricted Stock with respect to which they were paid.

 

(h)  Return of Restricted Stock
to Company.  On the date set
forth in the Award Agreement, the Restricted Stock for which restrictions have
not lapsed will revert to the Company and again will become available for grant
under the Plan.

 

(i)  Section 162(m) Performance
Restrictions.  For purposes of
qualifying grants of Restricted Stock as “performance-based compensation” under
Section 162(m) of the Code, the Administrator, in its discretion, may
set restrictions based upon the achievement of Performance Goals. The
Performance Goals will be set by the Administrator on or before the
Determination Date. In granting Restricted Stock which is intended to qualify
under Section 162(m) of the Code, the Administrator will follow any
procedures determined by it from time to time to be necessary or appropriate to
ensure qualification of the Award under Section 162(m) of the Code
(e.g., in determining the Performance Goals).

 

8.  Restricted
Stock Units.

 

 (a)  Grant.  Restricted Stock Units may be granted at any
time and from time to time as determined by the Administrator. After the
Administrator determines that it will grant Restricted Stock Units under the
Plan, it shall advise the Participant in an Award Agreement of the terms,
conditions, and restrictions related to the grant, including the number of
Restricted Stock Units and the form of payout, which, subject to Section 8(d),
may be left to the discretion of the Administrator. Notwithstanding anything to
the contrary in this subsection (a), for Restricted Stock Units intended
to qualify as “performance-based compensation” within the meaning of Section 162(m) of
the Code, during any Fiscal Year of the Company, no Participant will receive

 

9

 

more than an aggregate of 300,000 Restricted Stock Units.
Notwithstanding the limitation in the previous sentence, for Restricted Stock
Units intended to qualify as “performance-based compensation” within the
meaning of Section 162(m) of the Code, in connection with his or her
initial service as an Employee, an Employee may be granted an aggregate of up
to an additional 600,000 Restricted Stock Units.

 

 (b) 
Vesting Criteria and Other Terms. 
The Administrator shall set vesting criteria in its discretion, which,
depending on the extent to which the criteria are met, will determine the
number of Restricted Stock Units that will be paid out to the Participant. The
Administrator may set vesting criteria based upon the achievement of
Company-wide, business unit, or individual goals (including, but not limited
to, continued employment), or any other basis determined by the Administrator
in its discretion. The Administrator, in its discretion, may accelerate the
time at which any restrictions will lapse or be removed.

 

 (c) 
Earning Restricted Stock Units. 
Upon meeting the applicable vesting criteria, the Participant shall be
entitled to receive a payout as determined by the Administrator.
Notwithstanding the foregoing, at any time after the grant of Restricted Stock
Units, the Administrator, in its sole discretion, may reduce or waive any
vesting criteria that must be met to receive a payout.

 

 (d)  Form and
Timing of Payment.  Payment of
earned Restricted Stock Units shall be made as soon as practicable after the
date(s) determined by the Administrator and set forth in the Award
Agreement. The Administrator, in its sole discretion, may only settle earned
Restricted Stock Units in cash, Shares, or a combination of both. Shares
represented by Restricted Stock Units that are fully paid in cash again will be
available for grant under the Plan.

 

 (e) 
Cancellation.  On the date set
forth in the Award Agreement, all unearned Restricted Stock Units shall be
forfeited to the Company.

 

 (f)  Section 162(m) Performance
Restrictions.  For purposes of
qualifying grants of Restricted Stock Units as “performance-based compensation”
under Section 162(m) of the Code, the Administrator, in its
discretion, may set restrictions based upon the achievement of Performance
Goals. The Performance Goals will be set by the Administrator on or before the
Determination Date. In granting Restricted Stock Units which are intended to
qualify under Section 162(m) of the Code, the Administrator will
follow any procedures determined by it from time to time to be necessary or
appropriate to ensure qualification of the Award under Section 162(m) of
the Code (e.g., in determining the Performance Goals).

 

9. 
Stock Appreciation Rights.

 

 (a) 
Grant of Stock Appreciation Rights. 
Subject to the terms and conditions of the Plan, a Stock Appreciation
Right may be granted to Service Providers at any time and from time to time as
will be determined by the Administrator, in its sole discretion.

 

 (b) 
Number of Shares.  The
Administrator will have complete discretion to determine the number of Stock
Appreciation Rights granted to any Participant; provided, however, that no
Participant will be granted, in any Fiscal Year, Stock Appreciation Rights
covering more than 600,000 Shares. Notwithstanding the limitation in the
previous sentence, in connection with his or her initial service as an
Employee, an Employee may be granted Stock Appreciation Rights covering up to
an additional 1,200,000 Shares.

 

 (c) 
Exercise Price and Other Terms. 
The per share exercise price for the Shares to be issued pursuant to
exercise of an Stock Appreciation Right shall be determined by the
Administrator and shall be no less than 100% of the Fair Market Value per share
on the date of grant. Otherwise, subject to Section 6(a) of the Plan,
the Administrator,subject to the provisions of the Plan, shall

 

10

 

have complete discretion to determine the terms and conditions of Stock
Appreciation Rights granted under the Plan.

 

(d)  Stock Appreciation Right Agreement.  Each Stock Appreciation Right grant will be
evidenced by an Award Agreement that will specify the exercise price, the term
of the Stock Appreciation Right, the conditions of exercise, and such other
terms and conditions as the Administrator, in its sole discretion, will
determine.

 

(e)  Maximum Term/Expiration of Stock Appreciation
Rights.  An Stock Appreciation
Right granted under the Plan will expire upon the date determined by the
Administrator, in its sole discretion, and set forth in the Award Agreement.
Notwithstanding the foregoing, the rules of Section 6(b) relating
to the maximum term and Section 6(d) relating to exercise also will
apply to Stock Appreciation Rights.

 

(f)  Payment of Stock Appreciation Right Amount.  Upon exercise of an Stock Appreciation Right,
a Participant will be entitled to receive payment from the Company in an amount
determined by multiplying:

 

(i)   The difference
between the Fair Market Value of a Share on the date of exercise over the
exercise price; times

 

(ii)   The number of
Shares with respect to which the Stock Appreciation Right is exercised.

 

At the discretion of the Administrator, the payment upon Stock
Appreciation Right exercise may be in cash, in Shares of equivalent value, or
in some combination thereof.

 

10. 
Performance Units and Performance Shares.

 

 (a) 
Grant of Performance Units/Shares. 
Performance Units and Performance Shares may be granted to Service
Providers at any time and from time to time, as will be determined by the
Administrator, in its sole discretion. The Administrator will have complete
discretion in determining the number of Performance Units and Performance
Shares granted to each Participant provided that during any Fiscal Year, for
Performance Units or Performance Shares intended to qualify as “performance-based
compensation” within the meaning of Section 162(m) of the Code, (i) no
Participant will receive Performance Units having an initial value greater than
$5,000,000, and (ii) no Participant will receive more than 300,000
Performance Shares. Notwithstanding the foregoing limitation, for Performance
Shares intended to qualify as “performance-based compensation” within the
meaning of Section 162(m) of the Code, in connection with his or her
initial service, a Service Provider may be granted up to an additional 600,000
Performance Shares.

 

 (b) 
Value of Performance Units/Shares. 
Each Performance Unit will have an initial value that is established by
the Administrator on or before the date of grant. Each Performance Share will
have an initial value equal to the Fair Market Value of a Share on the date of
grant.

 

 (c) 
Performance Objectives and Other Terms.  The Administrator will set performance
objectives or other vesting provisions (including, without limitation, continued
status as a Service Provider) in its discretion which, depending on the extent
to which they are met, will determine the number or value of Performance
Units/Shares that will be paid out to the Service Providers. Each Award of
Performance Units/Shares will be evidenced by an Award Agreement that will
specify the Performance Period, and such other terms and conditions as the
Administrator, in its sole discretion, will determine. The Administrator may
set vesting criteria based upon the achievement of Company-wide, divisional, or
individual goals (including, but not limited to, continued employment), or any
other basis determined by the Administrator in its discretion.

 

 (d) 
Earning of Performance Units/Shares. 
After the applicable Performance Period has ended, the holder of
Performance Units/Shares will be entitled to receive a payout of the number

 

11

 

of Performance Units/Shares earned by the Participant over the
Performance Period, to be determined as a function of the extent to which the
corresponding performance objectives or other vesting provisions have been
achieved. After the grant of a Performance Unit/Share, the Administrator, in
its sole discretion, may reduce or waive any performance objectives or other
vesting provisions for such Performance Unit/Share.

 

 (e)  Form and
Timing of Payment of Performance Units/Shares.  Payment of earned Performance Units/Shares
will be made as soon as practicable after the expiration of the applicable
Performance Period. The Administrator, in its sole discretion, may pay earned
Performance Units/Shares in the form of cash, in Shares (which have an
aggregate Fair Market Value equal to the value of the earned Performance
Units/Shares at the close of the applicable Performance Period) or in a
combination thereof.

 

 (f) 
Cancellation of Performance Units/Shares.  On the date set forth in the Award Agreement,
all unearned or unvested Performance Units/Shares will be forfeited to the
Company, and again will be available for grant under the Plan.

 

 (g)  Section 162(m) Performance
Restrictions.  For purposes of
qualifying grants of Performance Units/Shares as “performance-based
compensation” under Section 162(m) of the Code, the Administrator, in
its discretion, may set restrictions based upon the achievement of Performance
Goals. The Performance Goals will be set by the Administrator on or before the
Determination Date. In granting Performance Units/Shares which are intended to
qualify under Section 162(m) of the Code, the Administrator will
follow any procedures determined by it from time to time to be necessary or
appropriate to ensure qualification of the Award under Section 162(m) of
the Code (e.g., in determining the Performance Goals).

 

11. 
Formula Awards to Outside Directors.

 

 (a) 
General.  Outside Directors
will be entitled to receive all types of Awards (except Incentive Stock
Options) under this Plan, including discretionary Awards not covered under this
Section 11. All grants of Awards to Outside Directors pursuant to this Section will
be automatic and nondiscretionary, except as otherwise provided herein, and
will be made in accordance with the following provisions:

 

 (b) 
Type of Option.  If Options
are granted pursuant to this Section they will be Nonstatutory Stock
Options and, except as otherwise provided herein, will be subject to the other
terms and conditions of the Plan.

 

 (c) 
No Discretion.  No person will
have any discretion to select which Outside Directors will be granted Awards
under this Section or to determine the number of Shares to be covered by
such Awards (except as provided in Sections 11(g) and 15).

 

 (d) 
Initial Award.  Each person
who first becomes an Outside Director will be automatically granted an Option
to purchase 30,000 Shares (the “Initial
Award”) on or about the date on which such person first becomes an
Outside Director, whether through election by the stockholders of the Company
or appointment by the Board to fill a vacancy; provided, however, that an
Inside Director who ceases to be an Inside Director, but who remains a
Director, will not receive an Initial Award.

 

 (e) 
Annual Award.  Each Outside
Director will be automatically granted an Option to purchase 10,000 Shares (an “Annual Award”) on each date of the annual
meeting of the stockholders of the Company beginning in 2007, if as of such
date, he or she will have served on the Board for at least the preceding six (6) months.

 

12

 

 (f) 
Terms.  The terms of each
Award granted pursuant to this Section will be as follows:

 

(i)   The term of the
Award will be ten (10) years.

 

(ii)   The exercise
price for Shares subject to Awards will be 100% of the Fair Market Value on the
grant date.

 

(iii)   Subject to Section 15,
the Initial Award will vest and become exercisable as to one third (1/3rd)
of the Shares subject to the Initial Option on each anniversary of its grant
date, provided that the Participant continues to serve as a Director through
each such date.

 

(iv)   Subject
to Section 15, the Annual Award will vest and become exercisable as to one
hundred percent (100%) of the Shares subject to such Award on the day prior to
the next year’s annual shareholder meeting (but in no event later than December 31
of the calendar year following the calendar year during which the Annual Award
is granted), provided that the Participant continues to serve as a Director
through such date.

 

 (g) 
Adjustments.  The
Administrator in its discretion may change and otherwise revise the terms of
Awards granted under this Section 11, including, without limitation, the
number of Shares and exercise prices thereof, for Awards granted on or after
the date the Administrator determines to make any such change or revision.

 

12. 
Performance-Based Compensation Under Code Section 162(m).

 

 (a) 
General.  If the
Administrator, in its discretion, decides to grant an Award intended to qualify
as “performance-based compensation” under Code Section 162(m), the
provisions of this Section 12 will control over any contrary provision in
the Plan; provided, however, that the Administrator may in its discretion grant
Awards that are not intended to qualify as “performance-based compensation”
under Section 162(m) of the Code to such Participants that are based
on Performance Goals or other specific criteria or goals but that do not
satisfy the requirements of this Section 12.

 

 (b) 
Performance Goals.  The
granting and/or vesting of Awards of Restricted Stock, Restricted Stock Units,
Performance Shares and Performance Units and other incentives under the Plan
may be made subject to the attainment of performance goals relating to one or
more business criteria within the meaning of Code Section 162(m) and
may provide for a targeted level or levels of achievement (“Performance Goals”) including (i) earnings
per Share, (ii) enrollment rates in clinical and similar trials, (iii) financings
and capital raising events, (iv) operating cash flow, (v) operating
income, (vi) product development, (vii) product approval, (viii) profit
after-tax, (ix) profit before-tax, (x) regulatory approval,
(xi) regulatory filings, (xii) return on assets, (xiii) return
on equity, (xiv) return on sales, (xv) revenue, and (xvi) total
shareholder return. Any Performance Goals may be used to measure the performance
of the Company as a whole or a business unit of the Company and may be measured
relative to a peer group or index. The Performance Goals may differ from
Participant to Participant and from Award to Award. Prior to the Determination
Date, the Administrator will determine whether any significant element(s) will
be included in or excluded from the calculation of any Performance Goal with
respect to any Participant.

 

 (c) 
Procedures.  To the extent
necessary to comply with the performance-based compensation provisions of Code Section 162(m),
with respect to any Award granted subject to Performance Goals, within the
first twenty-five percent (25%) of the Performance Period, but in no event more
than ninety (90) days following the commencement of any Performance Period
(or such other time as may be required or permitted by Code Section 162(m)),
the Administrator will, in writing: (i) designate one or more Participants
to whom an Award will be made, (ii) select the Performance Goals
applicable to the Performance Period, (iii) establish the Performance
Goals, and amounts of

 

13

 

such Awards, as applicable, which may be earned for such Performance
Period, and (iv) specify the relationship between Performance Goals and the
amounts of such Awards, as applicable, to be earned by each Participant for
such Performance Period. Following the completion of each Performance Period,
the Administrator will certify in writing whether the applicable Performance
Goals have been achieved for such Performance Period. In determining the
amounts earned by a Participant, the Administrator will have the right to
reduce or eliminate (but not to increase) the amount payable at a given level
of performance to take into account additional factors that the Administrator
may deem relevant to the assessment of individual or corporate performance for
the Performance Period. A Participant will be eligible to receive payment
pursuant to an Award for a Performance Period only if the Performance Goals for
such period are achieved.

 

 (d) 
Additional Limitations. 
Notwithstanding any other provision of the Plan, any Award which is
granted to a Participant and is intended to constitute qualified “performance-based
compensation” under Code Section 162(m) will be subject to any
additional limitations set forth in the Code (including any amendment to Section 162(m))
or any regulations and ruling issued thereunder that are requirements for
qualification as qualified “performance-based compensation” as described in Section 162(m) of
the Code, and the Plan will be deemed amended to the extent necessary to
conform to such requirements.

 

13. 
Leaves of Absence/Transfer Between Locations.  Unless the Administrator provides otherwise,
vesting of Awards granted hereunder will be suspended during any unpaid leave
of absence. A Service Provider will not cease to be an Employee in the case of (i)
any leave of absence approved by the Company, or (ii) transfers between
locations of the Company or between the Company, its Parent, or any Subsidiary.
For purposes of Incentive Stock Options, no such leave may exceed three (3) months,
unless reemployment upon expiration of such leave is guaranteed by statute or
contract. If reemployment upon expiration of a leave of absence approved by the
Company is not so guaranteed, then six (6) months and one day following
the commencement of such leave any Incentive Stock Option held by the
Participant will cease to be treated as an Incentive Stock Option and will be
treated for tax purposes as a Nonstatutory Stock Option.

 

14. 
Transferability of Awards. 
Unless determined otherwise by the Administrator, an Award may not be
sold, pledged, assigned, hypothecated, transferred, or disposed of in any
manner other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Participant, only by the Participant. If
the Administrator makes an Award transferable, such Award will contain such
additional terms and conditions as the Administrator deems appropriate.

 

15. 
Adjustments; Dissolution or Liquidation; Merger or Change in Control.

 

 (a) 
Adjustments.  In the event
that any dividend or other distribution (whether in the form of cash, Shares,
other securities, or other property), recapitalization, stock split, reverse
stock split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase, or exchange of Shares or other securities of the
Company, or other change in the corporate structure of the Company affecting
the Shares occurs, the Administrator, in order to prevent diminution or
enlargement of the benefits or potential benefits intended to be made available
under the Plan, shall appropriately adjust the number and class of Shares that
may be delivered under the Plan and/or the number, class, and price of Shares
covered by each outstanding Award, and the numerical Share limits set forth in
Sections 3, 6, 7, 8, 9, and 10.

 

 (b) 
Dissolution or Liquidation. 
In the event of the proposed dissolution or liquidation of the Company,
the Administrator will notify each Participant as soon as practicable prior to
the effective date of such proposed transaction. To the extent it has not been
previously exercised, an Award will terminate immediately prior to the
consummation of such proposed action.

 

14

 

 (c) 
Change in Control.  In the
event of a merger or Change in Control, each outstanding Award will be treated
as the Administrator determines, including, without limitation, that each Award
be assumed or an equivalent option or right substituted by the successor
corporation or a Parent or Subsidiary of the successor corporation. The
Administrator shall not be required to treat all Awards similarly in the
transaction.

 

In the event that the
successor corporation does not assume or substitute for the Award, unless the
Administrator provides otherwise, the Participant will fully vest in and have
the right to exercise all of his or her outstanding Options and Stock
Appreciation Rights, including Shares as to which such Awards would not
otherwise be vested or exercisable, all restrictions on Restricted Stock and
Restricted Stock Units will lapse, and, with respect to Awards with
performance- based vesting, all Performance Goals or other vesting criteria will
be deemed achieved at one hundred percent (100%) of target levels and all other
terms and conditions met. In addition, if an Option or Stock Appreciation Right
is not assumed or substituted in the event of a Change in Control, the
Administrator will notify the Participant in writing or electronically that the
Option or Stock Appreciation Right will be fully vested and exercisable for a
period of time determined by the Administrator in its sole discretion, and the
Option or Stock Appreciation Right will terminate upon the expiration of such
period.

 

For the purposes of this
subsection (c), an Award will be considered assumed if, following the
Change in Control, the Award confers the right to purchase or receive, for each
Share subject to the Award immediately prior to the Change in Control, the
consideration (whether stock, cash, or other securities or property) or, in the
case of a Stock Appreciation Right upon the exercise of which the Administrator
determines to pay cash or a Restricted Stock Unit, Performance Share or
Performance Unit which the Administrator can determine to pay in cash, the fair
market value of the consideration received in the Change in Control by holders
of Common Stock for each Share held on the effective date of the transaction (and
if holders were offered a choice of consideration, the type of consideration
chosen by the holders of a majority of the outstanding Shares); provided,
however, that if such consideration received in the Change in Control is not
solely common stock of the successor corporation or its Parent, the
Administrator may, with the consent of the successor corporation, provide for
the consideration to be received upon the exercise of an Option or Stock
Appreciation Right or upon the payout of a Restricted Stock Unit, Performance
Unit or Performance Share, for each Share subject to such Award (or in the case
of Performance Units, the number of implied shares determined by dividing the
value of the Performance Units by the per share consideration received by
holders of Common Stock in the Change in Control), to be solely common stock of
the successor corporation or its Parent equal in fair market value to the per
share consideration received by holders of Common Stock in the Change in
Control.

 

Notwithstanding anything in
this Section 15(c) to the contrary, an Award that vests, is earned or
paid-out upon the satisfaction of one or more Performance Goals will not be
considered assumed if the Company or its successor modifies any of such
Performance Goals without the Participant’s consent; provided, however, a
modification to such Performance Goals only to reflect the successor
corporation’s post-Change in Control corporate structure will not be deemed to
invalidate an otherwise valid Award assumption.

 

 (d) 
Outside Director Awards.  With
respect to Awards granted to an Outside Director that are assumed or
substituted for, if on the date of or following such assumption or substitution
the Participant’s status as a Director or a director of the successor
corporation, as applicable, is terminated other than upon a voluntary
resignation by the Participant (unless such resignation is at the request of
the acquiror), then the Participant will fully vest in and have the right to
exercise Options and/or Stock Appreciation Rights as to all of the Shares underlying
such Award, including

 

15

 

those Shares which would not otherwise be vested or exercisable, all
restrictions on Restricted Stock and Restricted Stock Units will lapse, and, with
respect to Performance Units and Performance Shares, all Performance Goals or
other vesting criteria will be deemed achieved at one hundred percent (100%) of
target levels and all other terms and conditions met.

 

16. 
Tax Withholding.

 

 (a) 
Withholding Requirements. 
Prior to the delivery of any Shares or cash pursuant to an Award (or
exercise thereof), the Company will have the power and the right to deduct or
withhold, or require a Participant to remit to the Company, an amount
sufficient to satisfy federal, state, local, foreign or other taxes (including
the Participant’s FICA obligation) required to be withheld with respect to such
Award (or exercise thereof).

 

 (b) 
Withholding Arrangements.  The
Administrator, in its sole discretion and pursuant to such procedures as it may
specify from time to time, may permit a Participant to satisfy such tax
withholding obligation, in whole or in part by (without limitation) (a) paying
cash, (b) electing to have the Company withhold otherwise deliverable cash
or Shares having a Fair Market Value equal to the minimum statutory amount
required to be withheld, or (c) delivering to the Company already-owned
Shares having a Fair Market Value equal to the minimum statutory amount
required to be withheld. The Fair Market Value of the Shares to be withheld or
delivered will be determined as of the date that the taxes are required to be
withheld.

 

17. 
No Effect on Employment or Service.  Neither the Plan nor any Award will confer
upon a Participant any right with respect to continuing the Participant’s
relationship as a Service Provider with the Company, nor will they interfere in
any way with the Participant’s right or the Company’s right to terminate such
relationship at any time, with or without cause, to the extent permitted by
Applicable Laws.

 

18. 
Date of Grant.  The
date of grant of an Award will be, for all purposes, the date on which the
Administrator makes the determination granting such Award, or such other later
date as is determined by the Administrator. Notice of the determination will be
provided to each Participant within a reasonable time after the date of such
grant.

 

19. 
Term of Plan.  Subject
to Section 23 of the Plan, the Plan will become effective upon its
adoption by the Board. It will continue in effect for a term of ten (10) years
from the date adopted by the Board, unless terminated earlier under Section 20
of the Plan.

 

20. 
Amendment and Termination of the Plan.

 

 (a) 
Amendment and Termination. 
The Administrator may at any time amend, alter, suspend or terminate the
Plan.

 

 (b) 
Stockholder Approval.  The
Company will obtain stockholder approval of any Plan amendment to the extent
necessary and desirable to comply with Applicable Laws.

 

 (c) 
Effect of Amendment or Termination. 
No amendment, alteration, suspension or termination of the Plan will
impair the rights of any Participant, unless mutually agreed otherwise between
the Participant and the Administrator, which agreement must be in writing and
signed by the Participant and the Company. Termination of the Plan will not
affect the Administrator’s ability to exercise the powers granted to it
hereunder with respect to Awards granted under the Plan prior to the date of
such termination.

 

21. 
Conditions Upon Issuance of Shares.

 

 (a) 
Legal Compliance.  Shares will
not be issued pursuant to the exercise of an Award unless the exercise of such
Award and the issuance and delivery of such Shares will comply with

 

16

 

Applicable Laws and will be further subject to the approval of counsel
for the Company with respect to such compliance.

 

 (b) 
Investment Representations. 
As a condition to the exercise of an Award, the Company may require the
person exercising such Award to represent and warrant at the time of any such
exercise that the Shares are being purchased only for investment and without
any present intention to sell or distribute such Shares if, in the opinion of
counsel for the Company, such a representation is required.

 

22. 
Inability to Obtain Authority.  The inability of the Company to obtain
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company’s counsel to be necessary to the lawful issuance and sale
of any Shares hereunder, will relieve the Company of any liability in respect
of the failure to issue or sell such Shares as to which such requisite
authority will not have been obtained.

 

23. 
Stockholder Approval. 
The Plan will be subject to approval by the stockholders of the Company
within twelve (12) months after the date the Plan is adopted by the Board.
Such stockholder approval will be obtained in the manner and to the degree
required under Applicable Laws.

 

17

 

XTENT, INC.

 

2006
EQUITY INCENTIVE PLAN

 

STOCK
OPTION AWARD AGREEMENT

 

XTENT, Inc. (the “Company”)
hereby grants you, [NAME] (the “Participant”), a stock option (the “Option”)
under the Company’s 2006 Equity Incentive Plan (the “Plan”), to purchase shares
of common stock of the Company (“Shares”). In general, the latest date this
Option will expire is the Term/Expiration Date listed in Part I of this
Stock Option Award Agreement (the Award Agreement”), below. However, as
provided in Part II of this Award Agreement, this Option may expire
earlier than the Term/Expiration Date.

 

Capitalized terms used and not
defined in this Award Agreement will have the meaning set forth in the Plan.

 

I.                NOTICE OF GRANT

 

Name:

 

Address:

 

You have been granted an Option
to purchase Common Stock of the Company, subject to the terms and conditions of
the Plan and this Award Agreement, as follows:

 

	
  Grant Number

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date of
  Grant

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Vesting
  Commencement Date

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Exercise
  Price per Share

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Total Number
  of Shares Granted

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Total
  Exercise Price

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  
	
  Type of
  Option:

  	
   

  	
  o Incentive Stock Option

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  o Nonstatutory Stock Option

  
	
   

  	
   

  	
   

  
	
  Term/Expiration
  Date:

  	
   

  	
   

  

 

Vesting Schedule:

 

Subject to accelerated vesting
as set forth below or in the Plan, this Option may be exercised, in whole or in
part, in accordance with the following schedule:

 

[Insert
Vesting Schedule]

 

Termination Period:

 

This Option will be exercisable
(to the extent vested) for three (3) months after Participant ceases to be
a Service Provider, unless such termination is due to Participant’s death or
Disability, in which case this Option may be exercised (to the extent vested)
for one (1) year after Participant ceases to be a Service Provider.
Notwithstanding the foregoing sentence, in no event may Participant exercise
this Option after the Term/Expiration Date as provided above and may be subject
to earlier termination as provided in Section 14(c) of the Plan.

 

 

II.            AWARD AGREEMENT

 

A.  Grant of Option.

 

The Company hereby grants to
Participant an Option to purchase the number of Shares, as set forth in the
Notice of Grant, at the exercise price per share set forth in the Notice of
Grant (the “Exercise Price”), subject to the terms and conditions of the Plan,
which is incorporated herein by reference. This Award Agreement is subject to
all the terms and provisions of the Plan. Subject to Section 19(c) of the
Plan, in the event of a conflict between the terms and conditions of the Plan
and the terms and conditions of this Award Agreement, the terms and conditions
of the Plan will prevail.

 

If designated in the Notice of
Grant as an Incentive Stock Option (“ISO”), this Option is intended to qualify
as an Incentive Stock Option under Section 422 of the Code. However, if
this Option is intended to be an Incentive Stock Option, to the extent that it
exceeds the $100,000 rule of Code Section 422(d) it will be treated as a
Nonstatutory Stock Option (“NSO”).

 

B.  Exercise of Option.

 

(a)  Right to
Exercise.  This Option is
exercisable during its term in accordance with the Vesting Schedule set out in
the Notice of Grant and the applicable provisions of the Plan and this Award
Agreement. This Option may not be exercised for a fraction of a Share.

 

(b)  Method of
Exercise.  This Option is
exercisable by delivery of an exercise notice, in the form attached as Exhibit A (the “Exercise Notice”) or
in such other form as the Company may designate, which will state the election
to exercise the Option, the number of Shares in respect of which the Option is
being exercised (the “Exercised Shares”), and such other representations and
agreements as may be required by the Company pursuant to the provisions of the
Plan. The Exercise Notice will be accompanied by payment of the aggregate
Exercise Price as to all Exercised Shares, as such Exercise Price may be
adjusted in accordance with the terms of Section 14 of the Plan. This
Option will be deemed to be exercised upon receipt by the Company of such fully
executed Exercise Notice accompanied by such aggregate Exercise Price, together
with any applicable tax withholding.

 

No Shares will
be issued pursuant to the exercise of this Option unless such issuance and
exercise complies with Applicable Laws. Assuming such compliance, for income
tax purposes the Exercised Shares will be considered transferred to Participant
on the date the Option is exercised with respect to such Exercised Shares.

 

C.  Method of Payment.

 

Payment of the aggregate
Exercise Price will be by any of the following, or a combination thereof, at
the election of Participant:

 

1.   cash;
or

 

2.   check;
or

 

3.   consideration
received by the Company under a formal cashless exercise program implemented by
the Company in connection with the Plan; or

 

4.   to
the extent permitted by the Administrator, surrender of other Shares which,
(i) in the case of Shares acquired either directly or indirectly from the
Company, have been owned by the Participant and not subject to a substantial
risk of forfeiture for more than six (6) months on the date of surrender,
and (ii) have a Fair Market Value on the date of surrender equal to the
aggregate Exercise Price of the Exercised Shares.

 

2

 

D.  Non-Transferability of Option.

 

This Option may not be
transferred in any manner otherwise than by will or by the laws of descent or
distribution and may be exercised during the lifetime of Participant only by
Participant. The terms of the Plan and this Award Agreement will be binding
upon the executors, administrators, heirs, successors and assigns of
Participant.

 

E.  Term of Option.

 

This Option may be exercised
only within the term set out in the Notice of Grant, and may be exercised
during such term only in accordance with the Plan and the terms of this Award
Agreement.

 

F.  Tax Obligations.

 

1.  Withholding
Taxes.  Participant agrees to
make appropriate arrangements with the Company (or the Parent or Subsidiary
employing or retaining Participant) for the satisfaction of all Federal, state,
and local income and employment tax withholding requirements applicable to the
Option exercise. Participant acknowledges and agrees that the Company may
refuse to honor the exercise and refuse to deliver Shares if such withholding
amounts are not delivered at the time of exercise.

 

2.  Notice of
Disqualifying Disposition of ISO Shares.  If the Option granted to Participant herein
is an ISO, and if Participant sells or otherwise disposes of any of the Shares
acquired pursuant to the ISO on or before the later of (1) the date two
years after the Date of Grant, or (2) the date one year after the date of
exercise, Participant will immediately notify the Company in writing of such
disposition. Participant agrees that Participant may be subject to income tax
withholding by the Company on the compensation income recognized by
Participant.

 

3.  Code
Section 409A.  Under Code
Section 409A, an option that vests after December 31, 2004 that was
granted with a per Share exercise price that is determined by the Internal
Revenue Service (the “IRS”) to be less than the fair market value of a Share of
Common Stock on the date of grant (a “discount option”) may be considered “deferred
compensation.” An option that is a “discount option” may result in
(i) income recognition by Participant prior to the exercise of the option,
(ii) an additional 20% tax, and (iii) potential penalty and interest
charges. Participant acknowledges that the Company cannot and has not
guaranteed that the IRS will agree that the per Share exercise price of this
Option equals or exceeds the fair market value of a Share of Common Stock on
the Date of Grant in a later examination. Participant agrees that if the IRS
determines that the Option was granted with a per Share exercise price that was
less than the fair market value of a Share on the Date of Grant, Participant
will be solely responsible for Participant’s costs related to such a
determination.

 

G.  Death of Participant.  Any distribution or delivery to be made to
Participant under this Award Agreement will, if Participant is then deceased,
be made to the administrator of executor of Participant’s estate. Any such
administrator or executor must furnish the Company with (a) written notice
of his or her status as transferee, and (b) evidence satisfactory to the
Company to establish the validity of the transfer and compliance with any laws
or regulations pertaining to said transfer.

 

H.  Entire Agreement; Governing
Law.  The Plan is incorporated
herein by reference. The Plan and this Award Agreement constitute the entire
agreement of the parties with respect to the subject matter hereof and
supersede in their entirety all prior undertakings and agreements of the
Company and Participant with respect to the subject matter hereof, and may not
be modified adversely to Participant’s interest except by means of a writing
signed by the Company and Participant. This Award Agreement is governed by the
internal substantive laws, but not the choice of law rules, of California.

 

3

 

I.  Severability.  In the event that any provision of this Award
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Award Agreement will continue in full
force and effect.

 

J.  Administrator Authority.  The Administrator will have the power to
interpret the Plan and this Award Agreement and to adopt such rules for the
administration, interpretation and application of the Plan as are consistent
therewith and to interpret or revoke any such rules (including, but not limited
to, the determination of whether or not any Shares have vested). All actions
taken and all interpretations and determinations made by the Administrator in
good faith will be final and binding upon Participant, the Company and all
other interested persons. No Administrator will be personally liable for any
action, determination or interpretation made in good faith with respect to the
Plan or this Award Agreement.

 

K.  Address for Notices.  Any notice to be given to the Company under
the terms of this Award Agreement will be addressed to the Company, in care of
its Secretary, at 125 Constitution Drive, Menlo Park, California 94025, or at
such other address as the Company may hereafter designate in writing.

 

L.  Amendment, Suspension or
Termination of the Plan.  By
accepting this Option, Participant expressly warrants that he or she has
received a stock option award under the Plan, and has received, read and
understood a description of the Plan. Participant understands that the Plan is
discretionary in nature and may be amended, altered, suspended or terminated by
the Company at any time.

 

M.  NO GUARANTEE OF CONTINUED
SERVICE.

 

PARTICIPANT ACKNOWLEDGES AND
AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS
EARNED ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (AND
NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED AN OPTION OR PURCHASING
SHARES HEREUNDER). PARTICIPANT FURTHER ACKNOWLEDGES AND AGREES THAT THIS
AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET
FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED
ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT
ALL, AND WILL NOT INTERFERE WITH PARTICIPANT’S RIGHT OR THE COMPANY’S RIGHT TO
TERMINATE PARTICIPANT’S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR
WITHOUT CAUSE.

 

[Remainder of Page Intentionally Left Blank]

 

4

 

By Participant’s signature and
the signature of the Company’s representative below, Participant and the
Company agree that this Option is granted under and governed by the terms and
conditions of the Plan and this Award Agreement. Participant has reviewed the
Plan and this Award Agreement in their entirety, has had an opportunity to obtain
the advice of counsel prior to executing this Award Agreement and fully
understands all provisions of the Plan and Award Agreement. Participant hereby
agrees to accept as binding, conclusive and final all decisions or
interpretations of the Administrator upon any questions relating to the Plan
and Award Agreement. Participant further agrees to notify the Company upon any
change in the residence address indicated below.

 

	
  PARTICIPANT:

  	
   

  	
  XTENT, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature

  	
   

  	
  By

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Print Name

  	
   

  	
  Title

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Residence Address

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

5

 

EXHIBIT A

 

XTENT, INC.

 

2006
EQUITY INCENTIVE PLAN

 

EXERCISE
NOTICE

 

XTENT, Inc.

125 Constitution Drive

Menlo Park, CA 94025

 

Attention: 

 

1.  Exercise of Option.  Effective as of today,                         ,             , the undersigned (“Purchaser”)
hereby elects to purchase               
shares (the “Shares”) of the Common Stock of XTENT, Inc. (the “Company”)
under and pursuant to the 2006 Equity Incentive Plan (the “Plan”) and the Stock
Option Award Agreement dated             
(the “Award Agreement”). Subject to adjustment in accordance with
Section 14 of the Plan, the purchase price for the Shares will be $                        , as required by the Award
Agreement.

 

2.  Delivery of Payment.  Purchaser herewith delivers to the Company
the full purchase price for the Shares, as set forth in the Award Agreement,
and any and all withholding taxes due in connection with the exercise of the
Option.

 

3.  Representations of Purchaser.  Purchaser acknowledges that Purchaser has
received, read and understood the Plan and the Award Agreement and agrees to
abide by and be bound by their terms and conditions.

 

4.  Rights as Stockholder.  Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the Shares, no right to vote or receive dividends or
any other rights as a stockholder will exist with respect to the Optioned
Stock, notwithstanding the exercise of the Option. The Shares so acquired will
be issued to Participant as soon as practicable after exercise of the Option.
No adjustment will be made for a dividend or other right for which the record
date is prior to the date of issuance, except as provided in Section 14 of
the Plan.

 

5.  Tax Consultation.  Purchaser understands that Purchaser may
suffer adverse tax consequences as a result of Purchaser’s purchase or
disposition of the Shares. Purchaser represents that Purchaser has consulted
with any tax consultants Purchaser deems advisable in connection with the
purchase or disposition of the Shares and that Purchaser is not relying on the
Company for any tax advice.

 

6.  Severability.  In the event that any provision of this
Exercise Notice becomes or is declared by a court of competent jurisdiction to
be illegal, unenforceable or void, this Exercise Notice will continue in full
force and effect.

 

7.  Entire Agreement; Governing
Law.  The Plan and Award
Agreement are incorporated herein by reference. This Exercise Notice, the Plan
and the Award Agreement constitute the entire agreement of the parties with
respect to the subject matter hereof and supersede in their entirety all prior
undertakings and agreements of the Company and Purchaser with respect to the
subject matter hereof, and may not be modified adversely to the Purchaser’s
interest except by means of a writing signed by 

 

 

the Company and Purchaser. This
agreement is governed by the internal substantive laws, but not the choice of
law rules, of California.

 

	
  Submitted by:

  	
   

  	
  Accepted by:

  
	
   

  	
   

  	
   

  
	
  PURCHASER:

  	
   

  	
  XTENT, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature

  	
   

  	
  By

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Print Name

  	
   

  	
  Its

  
	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
  Address:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  125 Constitution Drive

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Menlo Park, CA 94025

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date Received

  

 

2Exhibit 10.1

 

	
  

  	
  GT Solar International, Inc.

  243 Daniel Webster Highway

  Merrimack, NH 03054, U.S.A.

  Phone:   603 883 5200

  Fax:       603
  595 6993

  E-Mail:  info@gtsolar.com

  

 

November 10,
2008

 

Mr. Noel G.
Watson

1111 South Arroyo
Parkway

Pasadena, CA 91101-7084

 

Dear Noel:

 

On behalf of GT
Solar International, Inc. (“GT Solar”), I wish to convey our appreciation
for your decision to join the Board of Directors of GT Solar.  We are very excited about our growth
opportunities, and are pleased that you have decided to help us reach our
objectives.

 

According to its
bylaws, the business and affairs of GT Solar shall be managed by or under the
direction of the Board of Directors.  Our
bylaws also state that Directors shall be elected annually and shall hold office
until the next annual meeting.

 

The Board of
Directors will meet on a regular basis, approximately four times each year, in
addition to the Annual Meeting.  Special
meetings may be called periodically by the Chairman of the Board or the
President and CEO of GT Solar, Thomas Zarrella.

 

Your compensation
as a director will be $30,000 per year, payable quarterly in advance.  In addition, you shall be eligible for
additional fees in conjunction with your service on committees of the Board of
Directors.   A fee schedule outlining the
fees for service on the Board and various committees is attached as Exhibit A.  All Board fees are subject to an aggregate
cap of $75,000 annually per Board member. 
You shall also be eligible for reimbursement for reasonable and customary
food, travel and lodging expenses incurred by you in connection with your
service as a member of the Board.

 

As part of your Board membership, you will receive
17,000 restricted stock units, 8,500 of which will vest on the first
anniversary of the grant and the remaining 8,500 of which will vest on the
second anniversary of the grant. 
However, the restricted stock units shall vest for only so long as you
serve as a member of the Board.

 

Notwithstanding the foregoing, in the event of the
termination of your service as a result of a change in control of GT Solar, the
restricted stock units shall vest according to the following schedule: (i) if
the termination occurs on or before the one year anniversary of your joining
the Board, 8,500 of the restricted stock units shall vest, and (ii) if the
termination occurs during the 12 months immediately following the one year
anniversary of your joining the Board, the remaining 8,500 restricted stock
units shall vest.  Finally, any grant to
you shall be subject to the terms of a Restricted Stock Unit Agreement which
shall be furnished upon issuance of the grant.

 

Your date of election to the Board of Directors will
be Tuesday, November 11, 2008, which shall also be the date of the grant
of your restricted stock units.

 

 

We are truly excited about the prospect of your
joining our Board.  I am confident that
your work will prove instrumental in helping us build a world-class
company.  Please confirm your acceptance
by executing the enclosed copies of this letter, and returning one copy to GT
Solar, attention Edwin L. Lewis, in the envelope provided. As always, please
feel free to contact me should you wish to discuss any aspect of your service
on GT Solar’s Board of Directors.

 

Sincerely,

 

	
  /s/ J. Bradford Forth

  	
   

  

 

J. Bradford Forth

Chairman

 

cc: Edwin L. Lewis

 

 

	
   

  	
  Accepted:

  
	
   

  	
   

   

  
	
   

  	
  /s/ Noel G. Watson

  
	
   

  	
  Noel G. Watson

  
	
   

  	
   

  
	
   

  	
  Date: 11/11/08

  

 

2

 

EXHIBIT A

 

GT Solar International, Inc.

Board Service Fee Schedule

 

	
  Service Type

  	
   

  	
  Member Fee

  (Annualized)

  	
   

  	
  Chairman Fee

  (Annualized)

  	
   

  
	
  Board Member Service

  	
   

  	
  $

  	
  30,000

  	
   

  	
  Not Applicable

  	
   

  
	
  Audit Committee

  	
   

  	
  $

  	
  7,500

  	
   

  	
  $

  	
  15,000

  	
   

  
	
  Supplemental pre-IPO Audit Committee

  	
   

  	
  $

  	
  7,500

  	
   

  	
  $

  	
  15,000

  	
   

  
	
  Compensation Committee

  	
   

  	
  $

  	
  5,000

  	
   

  	
  $

  	
  10,000

  	
   

  
	
  Supplemental pre-IPO Compensation Committee

  	
   

  	
  $

  	
  5,000

  	
   

  	
  $

  	
  10,000

  	
   

  
	
  Governance & Nominating Committee

  	
   

  	
  $

  	
  5,000

  	
   

  	
  $

  	
  10,000

  	
   

  
	
  Supplemental pre-IPO Governance &
  Nominating Committee

  	
   

  	
  $

  	
  5,000

  	
   

  	
  $

  	
  10,000

  	
   

  

 

Notes:

1.              The annual maximum annual total combined fee for
GT Solar International, Inc. Board Service is $75,000.

 

2.              Fees are disbursed proportionately on a quarterly
basis gross, (less applicable taxes).

 

3

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