Document:

exv10w1w2

EXHIBIT 10.1.2

EXECUTION VERSION

SECOND AMENDMENT TO AMENDED AND RESTATED

LOAN AND SECURITY AGREEMENT

     THIS SECOND AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (the “Amendment”) is
made effective as of the 31st day of December, 2008, by and among IMPAX LABORATORIES, INC., a
Delaware corporation (“Borrower”), and WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking
association (together with its successors and assigns (“Bank”).

BACKGROUND

     A. Pursuant to that certain Amended and Restated Loan and Security Agreement dated December
15, 2005 by and between Borrower and Bank (as amended by that certain First Amendment to Amended
and Restated Loan and Security Agreement dated October 14, 2008 and as the same may hereafter be
further amended, modified, supplemented or restated from time to time, being referred to herein as
the “Loan Agreement”), Bank agreed, inter alia, to amend and restate an existing revolving line of
credit in the maximum principal amount of Thirty-Five Million Dollars ($35,000,000.00).

     B. Borrower has requested and Bank has agreed to amend the Loan Agreement in accordance with
the terms and conditions contained herein.

     C. All capitalized terms contained herein and not otherwise defined herein shall have the
meanings set forth in the Loan Agreement.

     NOW, THEREFORE, intending to be legally bound hereby, the parties hereto agree as follows:

     1. Termination Date. The reference to “December 31, 2008” contained in the definition
of “Termination Date” in Section 1.1 of the Loan Agreement is hereby deleted and replaced
with “March 31, 2009”.

     2. Amendment/References. The Loan Agreement and the Loan Documents are hereby amended
to be consistent with the terms of this Amendment. All references in the Loan Agreement and the
Loan Documents to (a) the “Loan Agreement” shall mean the Loan Agreement as amended hereby; and (b)
the “Loan Documents” shall include this Amendment and all other instruments or agreements executed
pursuant to or in connection with the terms hereof.

     3. Release. Borrower acknowledges and agrees that it has no claims, suits or causes
of action against Bank and hereby remises, releases and forever discharges Bank, their officers,
directors, shareholders, employees, agents, successors and assigns, and any of them, from any
claims, suits or causes of action whatsoever, in law or at equity, which Borrower has or may have
arising from any act, omission or otherwise, at any time up to and including the date of this
Amendment.

     4. Additional Documents; Further Assurances. Borrower covenants and agrees to execute
and deliver to Bank, or to cause to be executed and delivered to Bank contemporaneously herewith,
at the sole cost and expense of Borrower, the Amendment and any and all documents, agreements,
statements, resolutions, searches, insurance policies, consents, certificates, legal

 

 

opinions and information as Bank may require in connection with the execution and delivery of
this Amendment or any documents in connection herewith, or to further evidence, effect, enforce or
protect any of the terms hereof or the rights or remedies granted or intended to be granted to Bank
herein or in any of the Loan Documents, or to enforce or to protect Bank’s interest in the
Collateral. All such documents, agreements, statements, etc., shall be in form and content
acceptable to Bank in its sole discretion. Borrower hereby authorizes Bank to file, at Borrower’s
cost and expense, financing statements, amendments thereto and other items as Bank may require to
evidence or perfect Bank’s continuing security interest and liens in and against the Collateral.
Borrower agrees to join with Bank in notifying any third party with possession of any Collateral of
Bank’s security interest therein and in obtaining an acknowledgment from the third party that it is
holding the Collateral for the benefit of Bank. Borrower will cooperate with Bank in obtaining
control with respect to Collateral consisting of deposit accounts, investment property,
letter-of-credit rights and electronic chattel paper.

     5. Further Agreements and Representations. Borrower does hereby:

          (a) ratify, confirm and acknowledge that the statements contained in the foregoing Background
are true and complete and that, as amended hereby, the Loan Agreement and the other Loan Documents
are in full force and effect and are valid, binding and enforceable against Borrower and its assets
and properties, all in accordance with the terms thereof, as amended;

          (b) covenant and agree to perform all of Borrower’s obligations under the Loan Agreement and
the other Loan Documents, as amended;

          (c) acknowledge and agree that as of the date hereof, Borrower has no defense, set-off,
counterclaim or challenge against the payment of any of the Obligations or the enforcement of any
of the terms of the Loan Agreement or of the other Loan Documents, as amended;

          (d) acknowledge and agree that all representations and warranties of Borrower contained in the
Loan Agreement and/or the other Loan Documents, as amended (including, without limitation as
modified by the amendments set forth on Schedule A hereto), are true, accurate and correct
on and as of the date hereof as if made on and as of the date hereof;

          (e) represent and warrant that no Default or Event of Default exists;

          (f) covenant and agree that Borrower’s failure to comply with any of the terms of this
Amendment or any other instrument or agreement executed or delivered in connection herewith, shall
constitute an Event of Default under the Loan Agreement and each of the other Loan Documents; and

          (g) acknowledge and agree that nothing contained herein, and no actions taken pursuant to the
terms hereof, are intended to constitute a novation of the Note, the Loan Agreement or of any of
the other Loan Documents and does not constitute a release, termination or waiver of any existing
Event of Default or of any of the liens, security interests, rights or remedies granted to the Bank
in any of the Loan Documents, which liens, security interests, rights and remedies are hereby
expressly ratified, confirmed, extended and continued as security for all of the Obligations.

     Borrower acknowledges and agrees that Bank is relying on the foregoing agreements,
confirmations, representations and warranties of Borrower and the other agreements, representations
and warranties of Borrower contained herein in agreeing to the amendments contained in this
Amendment.

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     6. Fees, Cost, Expenses and Expenditures. Borrower will pay all of Bank’s reasonable,
out-of-pocket expenses in connection with the review, preparation, negotiation, documentation and
closing of this Amendment and the consummation of the transactions contemplated hereunder,
including without limitation, fees, disbursements, expenses and disbursements of counsel retained
by Bank and all fees related to filings, recording of documents, searches, environmental
assessments and appraisal reports, whether or not the transactions contemplated hereunder are
consummated.

     7. No Waiver. Nothing contained herein constitutes an agreement or obligation by Bank
to grant any further amendments to the Loan Agreement or any of the other Loan Documents. Nothing
contained herein constitutes a waiver or release by Bank of any Event of Default or of any rights
or remedies available to Bank under the Loan Documents or at law or in equity.

     8. Inconsistencies. To the extent of any inconsistencies between the terms and
conditions of this Amendment and the terms and conditions of the Loan Agreement or the other Loan
Documents, the terms and conditions of this Amendment shall prevail. All terms and conditions of
the Loan Agreement and other Loan Documents not inconsistent herewith shall remain in full force
and effect and are hereby ratified and confirmed by Borrower.

     9. Binding Effect. This Amendment, upon due execution hereof, shall be binding upon
and inure to the benefit of the parties hereto and their respective successors and assigns.

     10. Governing Law. This Amendment shall be governed and construed in accordance with
the laws of the Commonwealth of Pennsylvania without regard to conflict of law principles.

     11. Severability. The provisions of this Amendment and all other Loan Documents are
deemed to be severable, and the invalidity or unenforceability of any provision shall not affect or
impair the remaining provisions which shall continue in full force and effect.

     12. Modifications. No modification of this Amendment or any of the Loan Documents
shall be binding or enforceable unless in writing and signed by or on behalf of the party against
whom enforcement is sought.

     13. Headings. The headings of the Articles, Sections, paragraphs and clauses of this
Amendment are inserted for convenience only and shall not be deemed to constitute a part of this
Amendment.

     14. Counterparts. This Amendment may be executed in multiple counterparts, each of
which shall constitute an original and all of which together shall constitute the same agreement.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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     IN WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby, have caused this
Amendment to be executed the day and year first above written.

	 	 	 	 	 
	 	IMPAX LABORATORIES, INC.

 	 
	 	By:  	/s/ Arthur A. Koch, Jr.
 	 
	 	Name/Title:  Arthur A. Koch, Jr., SVP - CFO 	 
	 	 	 	 
	 
	 	WACHOVIA BANK, NATIONAL

ASSOCIATION

 	 
	 	By:  	/s/
Margaret A. Byrne
 	 
	 	Name/Title:  Margaret A. Byrne , Director 	 
	 	 	 	 
	 

 

EXHIBIT A

SUPPLEMENTAL DISCLOSURE SCHEDULES

OF

IMPAX LABORATORIES, INC.

Dated: December 30, 2008

Wachovia Bank, National Association

Widener Building

1339 Chestnut Street

Philadelphia, PA 19107

     In connection with delivery of a certain Second Amendment to Amended and Restated Loan and
Security Agreement relating to a financing provided by you (“Lender”), the undersigned (the
“Company”) represents and warrants to Lender the following information about it, its
organizational structure and other matters of interest to Lender as a supplement to the information
initially disclosed to Lender in the Supplemental Informational Certificate of Impax Laboratories,
Inc. dated October 10, 2008 (the “Information Certificate”). The disclosures in these
Schedules modify or supersede any inconsistent disclosures in the Information Certificate to the
extent described herein.

1. Schedule 8.2 to the Information Certificate is hereby deleted in its entirety and replaced with
the following:

SCHEDULE 8.2

To

INFORMATION CERTIFICATE

Locations

A. Chief Executive Offices

121 New Britain Boulevard, Chalfont, PA 18914

30831 Huntwood Avenue, Hayward, CA 94544

B. Location of Books and Records

121 New Britain Boulevard, Chalfont, PA 18914

30831 Huntwood Avenue, Hayward, CA 94544

3735 Castor Avenue, Philadelphia, PA 19124

31153 San Antonio Street, Hayward, CA 94544

1502 Crocker Avenue, Hayward, CA 94544

C. Locations of Inventory, Equipment and Other Assets

 

	 	 	 	 	 
	Address	 	Ownership	 	Landlord (If Leased)
	30831 Huntwood Avenue

Hayward, CA 94544

	 	Owned	 	 
	 
	 	 	 	 
	31153 San Antonio Street,

Hayward, CA 94544

	 	Owned	 	 
	 
	 	 	 	 
	1502 Crocker Avenue

Hayward, CA 94544

	 	Leased
	 	RREEF Management Co.

26120 Eden Landing Road

Suite 2

Hayward, CA 94545

	 
	 	 	 	 
	3735 Castor Avenue

Philadelphia, PA 19124

	 	Owned	 	 
	 
	 	 	 	 
	30941-30945 San Clemente
St.

Hayward, CA 94544

	 	Leased
	 	Buckhead Industrial Properties, Inc.

c/o Lend Lease Real Estate
Investments, Inc.

One Front St., Suite 1100

San Francisco, CA 94111
	 
	 	 	 	 
	7026 Knoll Center Parkway

Suite 225

Pleasanton, CA 94566

	 	Leased
	 	7-L Northcreek, LLC

4175 Business Center Drive

Fremont, CA 94538
	 
	 	 	 	 
	121 New Britain Blvd.

New Britain, PA 18914

	 	Leased
	 	Nappen & Associates

119 Keystone Drive

Montgomeryville, PA 18936
	 
	 	 	 	 
	1490 Crocker Avenue

Hayward, CA 94544

	 	Owned	 	 
	 
	 	 	 	 
	1508 Crocker Avenue

Hayward, CA 94544

	 	Leased
	 	RREEF Management Co.

26120 Eden Landing Road

Suite 2

Hayward, CA 94545

	 
	 	 	 	 
	31047 Genstar Avenue

Hayward, CA 94544

	 	Leased
	 	United Genstar

31047 Genstar Avenue

Hayward, CA 94544
	 
	 	 	 	 
	41316 Christy Street

Freemont, CA 94538

	 	Leased	 	 

D. Locations of Assets in Prior Five (5) Years not Listed Above – 4580 Mendenhall Road, Memphis, TN

E. Other – Borrower currently has a new plant under construction in Taiwan, P.R.C.

2. Schedule 8.6 to the Information Certificate is hereby deleted in its entirety and replaced with
the following:

SCHEDULE 8.6

To

INFORMATION CERTIFICATE

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Pending Litigation

Patent-Infringement Litigation

AstraZeneca AB et al. v. Impax Laboratories (Omeprazole) 

In litigation commenced against us in the U.S. District Court for the District of Delaware in May
2000, AstraZeneca AB alleged that our submission of an ANDA seeking FDA permission to market
Omeprazole Delayed Release Capsules, 10mg, 20mg and 40mg, constituted infringement of AstraZeneca’s
U.S. patents relating to its Prilosec® product and sought an order enjoining us from
marketing our product until expiration of its patents. The case, along with several similar suits
against other manufacturers of generic versions of Prilosec®, was subsequently
transferred to the U.S. District Court for the Southern District of New York.

In September 2004 , following expiration of the 30-month stay, the FDA approved our ANDA and we and
our alliance agreement partner, Teva, commenced commercial sales of our product. In January 2005,
AstraZeneca added claims of willful infringement, for damages, and for enhanced damages on the
basis of this commercial launch. Claims for damages were subsequently dropped from the suit
against the Company, but were included in a separate suit filed against Teva. In May 2007, the
court found that our product infringed two of AstraZeneca’s patents and that these patents were not
invalid. The court ordered that FDA approval of our ANDA be converted to a tentative approval,
with a final approval date not before October 20, 2007, the expiration date of the relevant
pediatric exclusivity period. In August 2008 the U.S. Court of Appeals for the Federal Circuit
affirmed the lower court’s decision of infringement and validity. If Teva is not ultimately
successful in establishing invalidity or non-infringement in the separate suit against Teva, the
court may award monetary damages associated with Teva’s commercial sale of our omeprazole products.
Under our Teva Agreement, we would be responsible for monetary damages awarded against Teva up to
a specified level, beyond which, monetary damages would be Teva’s responsibility.

Aventis Pharmaceuticals Inc., et al. v. Impax Laboratories, Inc.

(Fexofenadine/Pseudoephedrine)

We are a defendant in an action brought in March 2002 by Aventis Pharmaceuticals Inc. and others in
the U.S. District Court for the District of New Jersey alleging that our proposed Fexofenadine and
Pseudoephedrine hydrochloride tablets, generic to Allegra-D® infringe seven Aventis
patents and seeking an injunction preventing us from marketing the products until expiration of the
patents. The case has since been consolidated with similar actions brought by Aventis against five
other manufacturers (including generics to both Allegra® and Allegra-D®). In
March 2004, Aventis and AMR Technology, Inc. filed a complaint and first amended complaint against
us and one of the other defendants alleging infringement of two additional patents, owned by AMR
and licensed to Aventis, relating to a synthetic process for making the active pharmaceutical
ingredient, Fexofenadine hydrochloride and intermediates in that synthetic process. We believe
that we have defenses to the claims based on non-infringement and invalidity.

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In June 2004, the court granted our motion for summary judgment of non-infringement with respect to
two of the patents and, in May 2005, granted summary judgment of invalidity with respect to a third
patent. We will have the opportunity to file additional summary judgment motions in the future and
to assert both non-infringement and invalidity of the remaining patents (if necessary) at trial.
No trial date has yet been set.

In September 2005, Teva launched its Fexofenadine tablet products (generic to Allegra®),
and Aventis and AMR moved for a preliminary injunction to bar Teva’s sales based on four of the
patents in suit, which patents are common to the Allegra® and Allegra-D®
litigations. The district court denied Aventis’s motion in January 2006, finding that
Aventis did not establish a likelihood of success on the merits, which decision was affirmed on
appeal.

Impax Laboratories, Inc. v. Aventis Pharmaceuticals, Inc. (Riluzole) 

In June 2002, we filed a suit against Aventis Pharmaceuticals, Inc. in the U.S. District Court for
the District of Delaware, seeking a declaration that our filing of an ANDA for Riluzole 50mg
tablets, generic to Rilutek®, for treatment of patients with amyotrophic lateral
scleroses (ALS) did not infringe claims of Aventis’s patent relating to the drug and a declaration
that its patent is invalid. Aventis filed counterclaims for infringement, and, in December 2002,
the district court granted Aventis’ motion for a preliminary injunction enjoining us from marketing
any pharmaceutical product or compound containing Riluzole for the treatment of ALS.

In September 2004, the district court found Aventis’s patent not invalid and infringed by our
proposed product. In November 2006, the Court of Appeals for the Federal Circuit vacated the
district court’s finding that the patent was not invalid and remanded for further findings on that
issue, and, in June 2007, the district court again found that Aventis’s patent is not invalid. In
October 2008, the Court of Appeals for the Federal Circuit affirmed the district court decision.
The court is expected to enter a permanent injunction enjoining us from marketing Riluzole 50mg
tablets for the treatment of ALS until the expiration of Aventis’s patent in June 2013.

Endo Pharmaceuticals Inc., et al. v. Impax Laboratories, Inc. (Oxymorphone)

In November 2007, Endo Pharmaceuticals Inc. and Penwest Pharmaceuticals Co. (collectively, “Endo”)
filed suit against us in the U.S. District Court for the District of Delaware, requesting a
declaration that our Paragraph IV Notices with respect to our ANDA for Oxymorphone Hydrochloride
Extended Release Tablets 5 mg, 10 mg, 20 mg and 40 mg, generic to Opana ER®, are null
and void and, in the alternative, alleging patent infringement in connection with the filing of
that ANDA. Endo subsequently dismissed its request for declaratory relief and in December 2007
filed another patent infringement suit relating to the same ANDA. In July 2008, Endo asserted
additional infringement claims with respect to our amended ANDA, which added 7.5mg, 15mg and 30mg
strengths of the product. We have filed an answer and counterclaims. Discovery is in the early
stages, and no trial date has been set.

Impax Laboratories, Inc. v. Medicis Pharmaceutical Corp. (Minocycline)

In January 2008, we filed a complaint against Medicis Pharmaceutical Corp. in the U.S. District
Court for the Northern District of California, seeking a declaratory judgment that our filing of an
ANDA relating to Minocycline Hydrochloride Extended Release Tablets 45 mg, 90 mg, and 135

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mg, a generic to Solodyn®, did not infringe any valid claim of U.S. Patent No.
5,908,838. Medicis filed a motion to dismiss the complaint for lack of subject matter
jurisdiction. On April 16, 2008, the District Court granted Medicis’ motion to dismiss, and
judgment was entered on April 22, 2008. In November 2008, we entered into an agreement with
Medicis to settle this litigation whereby Medicis agreed to grant us a license to market our
generic version of Solodyn® upon the occurrence of certain conditions, but in any event
no later than November 2011.

Pfizer Inc., et al. v. Impax Laboratories, Inc. (Tolterodine) 

In March 2008, Pfizer Inc., Pharmacia & Upjohn Company LLC and Pfizer Health AB (collectively
“Pfizer”) filed a complaint against us in the U.S. District Court for the Southern District of New
York, alleging that our filing of an ANDA relating to Tolterodine Tartrate Extended Released
Capsules, 4 mg, generic to Detrol LA®, infringes three Pfizer patents. We have filed an
answer and counterclaims seeking declaratory judgment of non-infringement, invalidity or
unenforceability with respect to the patents at suit. In April 2008, the case was transferred to
the U.S. District Court for the District of New Jersey. On September 3, 2008 an amended complaint
was filed alleging infringement based on our ANDA amendment adding a 2mg strength. Discovery is in
the early stages, and no trial date has been set.

Boehringer Ingelheim Pharmaceuticals, et al. v. Impax Laboratories (Tamsulosin)

In July 2008, Boehringer Ingelheim Pharmaceuticals Inc. and Astellas Pharma Inc. (Collectively
“Astellas”) filed a complaint against us in the U.S. District Court for the Northern District of
California, alleging that our filing of an ANDA relating to Tamsulosin Hydrochloride Capsules, 0.4
mg, generic to Flomax®, infringes Astellas’ patent. After filing our answer and counterclaim, we
filed a motion for summary judgment of patent invalidity. The District Court scheduled a hearing
on claim construction for May 2008 and summary judgment for June 2008.

Purdue Pharma Products L.P., et al. v. Impax Laboratories, Inc. (Tramadol)

In August 2008, Purdue Pharma Products L.P., Napp Pharmaceutical Group LTD., Biovail Laboratories
International, SRL, and Ortho-McNeil-Janssen Pharmaceuticals, Inc. (collectively “Purdue”) filed
suit against us in the U.S. District Court for the District of Delaware, alleging patent
infringement for the filing of our ANDA relating to Tramadol Hydrochloride Extended Release
Tablets, 100 mg, generic to 100mg Ultram® ER. We have filed an answer and counterclaims
seeking declaratory judgment of patent non-infringement and invalidity. In November 2008, Purdue
asserted additional infringement claims with respect to our amended ANDA, which added 200 mg and
300 mg strengths of the product. We have filed an answer and counterclaims. Discovery is in the
early stages, and no trial date has been set.

Eli Lilly and Company vs. Impax Laboratories, Inc. (Duloxetine)

In November 2008, Eli Lilly and Company filed suit against us in the United States District Court
for the Southern District of Indiana, alleging patent infringement for the filing of our ANDA
relating to Duloxetine Hydrochloride Delayed Release Capsules, 20 mg, 30 mg, and 60 mg, generic to
Cymbalta®. We are preparing our answer to the complaint.

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Warner Chilcott, Ltd. et.al. v. Impax Laboratories, Inc. (Doryx)

In December 2008, Warner Chilcott Limited announced that one of its subsidiaries and Mayne Pharma
International Pty. Ltd. had sued us in the District Court for the District of New Jersey for
infringement of Mayne’s U.S. Patent No. 6,958,161 which covers Doryx, a tetracycline-class oral
antibiotic. Although we have not yet been served or viewed the actual complaint in this matter,
Warner Chilcott has announced that the lawsuit is in response to the submission of our ANDA
requesting approval to manufacture and sell generic versions of DORYX 100 and 75 mg delayed-release
tablets prior to the expiration in 2022 of the ‘161 Patent. We believe that we have defenses to the
claims based on non-infringement and invalidity and intend to vigorously defend ourselves from this
claim.

Other Litigation Related to Our Business

Axcan Scandipharm Inc. v. Ethex Corp, et al. (Lipram UL). 

In May 2007, Axcan Scandipharm Inc., a manufacturer of the Ultrase® line of pancreatic
enzyme products, brought suit against us in the U.S. District Court for the District of Minnesota,
alleging that we engaged in false advertising, unfair competition, and unfair trade practices under
federal and Minnesota law in connection with the marketing and sale of our now-discontinued
Lipram-UL products. The suit seeks actual and consequential damages, including lost profits,
treble damages, attorneys’ fees, injunctive relief and declaratory judgments that would prohibit
the substitution of Lipram-UL for prescriptions of Ultrase®. The Court granted in part
and denied in part our motion to dismiss the complaint, as well as that of co-defendants Ethex
Corp. and KV Pharmaceutical Co., holding that any claim of false advertising pre-dating June 1,
2001, is barred by the statute of limitations. We have answered the complaint, and discovery is
proceeding.

Securities Litigation

We, our CEO and several former officers and directors are also defendants in several class actions
filed in the United States District Court for the Northern District of California, all of which
have since been consolidated into a single action. These actions, brought on behalf of all
purchasers of our stock between May 5 and November 3, 2004, seek unspecified damages and allege
that Impax and the individual defendants, in violation of the antifraud provisions of the federal
securities laws, artificially inflated the market price of the stock during this period by filing
false financial statements for the first and second quarters of 2004, based upon the subsequent
restatement of its results for those periods. The court twice granted our motions to dismiss the
complaint, both times with leave to amend, but denied our motion to dismiss the fourth amended
complaint as well as two motions for reconsideration. In August 2008, we filed with the U.S. Court
of Appeals for the Ninth Circuit a petition for a writ of mandamus directing the district court to
dismiss the complaint. Subsequently, we have reached an agreement in principle with the plaintiffs
to settle this lawsuit. Upon the terms agreed upon, the plaintiffs are to receive $9 million.

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3. Schedule 8.15 to the Information Certificate is amended to include the following agreement in
its table of Material Contracts:

	 	 	 	 	 
	Agreement	 	Parties	 	Date
	Joint Development Agreement

	 	MEDICIS PHARMACEUTICAL

CORPORATION
	 	November 26, 2008
	 
	 	 	 	 
	 

	 	IMPAX LABORATORIES, INC.	 	 

 7exv10w3w1

EXHIBIT 10.3.1

AMENDMENT NO. 1 TO IMPAX LABORATORIES, INC. 1995 STOCK INCENTIVE PLAN

     Section 1 of the 1995 Stock Incentive Plan is amended to read in its entirety as
follows:

          “The purpose of this plan (the “Plan”) is to secure for Global
Pharmaceutical Corporation (the “Company”), and its stockholders, the
benefits arising from the ownership of stock options by directors,
consultants and key employees (including, without limitation, officers
of the Company or Subsidiaries (as defined in Section 18 hereof) who
are expected to contribute to the Company’s future growth and
success.”

     Paragraph (a) of Section 2 of the 1995 Stock Incentive Plan is amended to read
in its entirety as follows:

          “(a) Types of Awards. Under the Plan, the Company may in its sole
discretion grant, with respect to the Company’s common stock, par value
$.01 per share (“Common Stock”), to key employees and consultants
(together, the “Key Employees”), as authorized by action of the Board of
Directors of the Company (or a committee designated by the Board of
Directors), and the Company shall, subject to the terms and conditions
hereof, grant to each director of the Company who is not an employee and
who was not a director on or before September 1, 1995 (an “Eligible
Director”) and to each director of the Company who is not an employee and
who was a director on or before September 1, 1995 (a “Pre-IPO Director”),
Options in accordance with the formula set forth in Section 7 hereof. As
used in the Plan, an “Award” shall mean an Option and an “Award Owner”
shall mean the owner of an Option. Options granted pursuant to the Plan to
Key Employees may be either incentive stock options (“Incentive Stock
Options”) meeting the requirements of Section 422 of the Internal Revenue
Code of 1986, as amended (the “Code”), or non-statutory options
(“Non-Statutory Stock Options”), which are not intended to or do not meet
the requirements of Code Section 422. Options granted to Eligible Directors
and Pre-IPO Directors pursuant to the Plan shall be only Non-Statutory
Stock Options.”

     The first sentence of Section 4 of the 1995 Stock Incentive Plan is amended to
read in its entirety as follows:

          “Subject to adjustment as provided in Sections 13 and 14 below, the maximum
number of shares of Common Stock of the Company that may be issued and sold
pursuant to Options granted under the Plan is 750,000 shares in the
aggregate (one share per Option).”

 

 

     Paragraph (e) of Section 6 of the 1995 Stock Incentive Plan is amended by adding
the following sentence as the last sentence in the paragraph:

          “Notwithstanding the foregoing, an award issued to a consultant to the
Company may be exercised as specifically set forth in such award.”

     Paragraph (a) of Section 7 of the 1995 Stock Incentive Plan is restated to read
in its entirety as follows:

          “(a) Non-discretionary Grants. Notwithstanding anything to the contrary
contained in this Plan, Eligible Directors shall be granted Options
(“Director Options”) as follows: (i) immediately prior to the initial
public offering of shares of Common Stock, each Eligible Director shall be
granted 30,000 Director Options to purchase 30,000 shares of Common Stock
in the aggregate, subject to vesting as provided in Section 7(d) below,
(ii) on the first business day following the annual meeting of shareholders
of the Company to elect directors in 1996, and thereafter on the first
business day following each successive annual meeting of shareholders, so
long as Director Options remain available for grant, each person who is
elected as a director at that meeting and is an Eligible Director, and each
person who continues to serve as a director after that meeting, and is an
Eligible Director, shall be granted 10,000 Director Options to purchase
10,000 shares of Common Stock in the aggregate, subject to vesting as
provided in Section 7(d) below, and (iii) on the first business day
following the annual meeting of shareholders to elect directors in 1998,
and thereafter on the first business day following each successive annual
meeting of shareholders, so long as Director Options remain available for
grant, each Pre-IPO Director who continues to serve as a director after
that meeting shall be granted 5,000 Director Options to purchase 5,000
shares of Common Stock in the aggregate, subject to vesting as provided in
Section 7(d) below. Notwithstanding the foregoing, each person who is
elected as a director at any time after the date of the annual meeting of
stockholders and is an Eligible Director shall be granted, on the effective
date of such election, 10,000 Director Options to purchase 10,000 shares of
Common Stock in the aggregate, subject to vesting as provided in Section
7(d) below, so long as Director Options remain available for grant. Such
Director Options shall be granted in lieu of the Director Options which
would otherwise be granted to such Eligible Director on the first business
day following the next annual meeting of the stockholders pursuant to the
first sentence of this Section 7(a).”

     The first sentence of Section 15 of the 1995 Stock Incentive Plan is amended to
read in its entirety as follows:

          “Nothing contained in the Plan or in any Award granted under the Plan shall
confer upon any Award Owner any right with respect to the continuation of
his or her employment or consultancy, as applicable, by the Company (or any
Subsidiary) or interfere in any way with the right of the Company (or any
Subsidiary), subject to the terms of any

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separate employment or consulting agreement to the contrary, at any time to
terminate such employment or consultancy, as applicable, or to increase or
decrease the compensation of the Award Owner from the rate in existence at
the time of the grant of an Award.”

     The 1995 Stock Incentive Plan is further amended by replacing all occurrences of
the phrase “Eligible Director” appearing in the 1995 Stock Incentive Plan and
the exhibits thereto with the phrases “Eligible Director and Pre-IPO Director”
or “Eligible Director or Pre-IPO Director” as context shall reasonably dictate.

- 3 -

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