Document:

Exhibit 10.40

EMPLOYMENT AGREEMENT

This Employment Agreement (the “Agreement”) is entered
into by and between Ms. Sharon Surrey-Barbari (“Surrey-Barbari”), an
individual, and Gilead Sciences, Inc. (“Gilead”) as of July 1, 2002.

 

Surrey-Barbari
ceased to be a regular full-time employee of Gilead effective June 30,
2002.  Nevertheless, Surrey-Barbari
continued to be employed by Gilead in a part-time special assignment
position.  Gilead has identified
specific duties that it desires to have Surrey-Barbari perform in order to
provide for an orderly transition to a new Chief Financial Officer and to
implement certain pending projects. 
Accordingly, Surrey-Barbari and Gilead hereby agree as follows:

1.     Employment. 
Effective as of July 1, 2002, Gilead hereby employs Surrey-Barbari in a
part-time special assignment position with the title of Special Advisor to its
Chief Financial Officer, and Surrey-Barbari hereby accepts such employment,
upon the terms and conditions hereinafter set forth.  Surrey-Barbari agrees to resign from her employment with Gilead
and all of its related entities, effective December 31, 2002.  Upon such resignation, this Agreement will
terminate.

 

2.     Duties.

 

(a)           Surrey-Barbari shall report to the
Chief Financial Officer or his designee or successor (the “CFO”).  Surrey-Barbari shall have the duties and
responsibilities as determined and assigned by the CFO in his discretion from
time to time, subject to the approval of Gilead’s Executive Vice President of
Operations (“EVPO”) (or, in the EVPO’s absence, subject to the approval of
Gilead’s General Counsel), including the following:  (i) to advise the CFO on current developments with respect to the
financial and accounting issues and trends affecting public 

 

1

 

companies in general and
the biotechnology industry in particular; (ii) to assist the CFO in preparing
financial reports and to make recommendations for improvement, where
appropriate; (iii) to assist the CFO in the implementation of an international
tax strategy and to make recommendations for improvement, where appropriate;
(iv) to assist the CFO in the implementation of a credit and collections policy
and to make recommendations for improvement, where appropriate; (v) to assist
the CFO in initiating and implementing a business continuity program for
Gilead’s informational business processes; (vi) to assist the CFO in evaluating
finance department staff and completing associate performance assessments;
(vii) to meet with the CFO in December of 2002 at the CFO’s office to review
and evaluate the progress of the implementation of international tax strategy,
the credit and collection policy and the business continuity program referred
to herein; and (viii) to assist the CFO in other matters that are consistent
with Surrey-Barbari’s background and experience as the CFO may assign.

(b)           Subject to the approval of the EVPO
(or, in the EVPO’s absence, subject to the approval of Gilead’s General
Counsel), the CFO has the right to determine the times and places where
Surrey-Barbari will perform her duties under the Agreement.  Gilead shall provide Surrey-Barbari with an
office and secretarial support and any additional support as may be reasonably
necessary, as well as provide Surrey-Barbari with any office equipment, office
furniture and supplies as may be needed to perform the duties under the
Agreement.  Surrey-Barbari may not rent
any office space, purchase any office equipment or hire or pay any assistants
in connection with performing the duties and responsibilities under the
Agreement.

(c)           If requested by the CFO, but subject
to the approval of the EVPO (or, in the EVPO’s absence, subject to the approval
of Gilead’s General Counsel), Surrey-Barbari must attend meetings and programs
related to her area of expertise held in various locations, and 

 

2

 

attend other meetings
required by her duties.  Gilead will
reimburse Surrey-Barbari for reasonable travel expenses pursuant to the
reimbursement policies in place at Gilead at the time the expenses are
incurred.

(d)           Subject to the approval of the EVPO
(or, in the EVPO’s absence, subject to the approval of Gilead’s General
Counsel) and at the request of the CFO, Surrey-Barbari shall provide the CFO
with written or oral reports detailing her progress towards accomplishing the
tasks and directives assigned to her and additional reports as may be requested
by the CFO.  The EVPO (or, in the EVPO’s
absence, Gilead’s General Counsel) shall evaluate Surrey-Barbari’s performance
and control and direct the manner (including the order) in which, and details
and means by which, she performs the services under the Agreement.

(e)           Surrey-Barbari shall work a minimum
of ten hours per month, and if requested by the CFO, a maximum of twenty hours
per month.  Gilead agrees to assign to
Surrey-Barbari a sufficient amount of work assignments to enable her to satisfy
her ten-hour minimum requirement.

(f)            Surrey-Barbari shall comply with all
of Gilead’s company policies and procedures except as set out in this
Agreement.

(g)           Surrey-Barbari shall not accept other
employment with any other corporation or business that will impair her ability
to satisfy her responsibilities to Gilead under this Agreement.

(h)           Surrey-Barbari shall be an employee
of Gilead, not an independent contractor.

3.     Compensation.

 

 

3

 

 

(a)           The Company will continue to pay to
Employee a base salary through December 31, 2002 at the rate in effect on
June 30, 2002, which shall be payable in equal bi-weekly installments on
regular payroll dates in accordance with the Company’s customary practices.
Amounts payable shall be reduced by income tax, employment tax and other
applicable withholding and other authorized deductions.

(b)           Surrey-Barbari will not be eligible
to receive a bonus for her 2002 performance during any period during 2002.

(c)           Gilead will continue to pay the
employer’s portion of Surrey-Barbari’s monthly group medical insurance premium
and provide her with all other employee benefits, including but not limited to
medical benefits, stock option vesting and exercise, and vacation accrual
through December 31, 2002.

(d)           Surrey-Barbari shall continue to be
entitled to receive prompt reimbursement for all reasonable employment expenses
incurred by her in accordance with the policies, practices and procedures as in
effect generally with respect to other peer executives of Gilead.

(e)           Surrey-Barbari shall receive
outplacement services from Right Associates for a twelve month period at
Gilead’s expense.

(f)            Provided that Surrey-Barbari timely
executes the releases described in Paragraph 5 below, Gilead shall pay to
Surrey-Barbari the gross sum of Two Hundred Fifty One Thousand Six Hundred Forty-Eight
Dollars $251,648 (“Severance Payments”), less
standard withholdings and authorized deductions, in equal bi-weekly increments
on regular payroll dates from January 1, 2003 through June 30, 2003, and Gilead
will continue to pay the 

 

4

 

employer’s portion of
Surrey-Barbari’s monthly group medical insurance premium from January 1,
2003 through June 30, 2003 (“Medical Insurance Payments”).

4.     Early Termination.

 

(a)           Death or Incapacity.  Surrey-Barbari’s employment shall terminate
automatically upon her death or incapacity. In the event of Surrey-Barbari’s
incapacity or death, all payments which would otherwise be payable through June
30, 2003 shall immediately become due and payable upon execution of a release
in the form attached hereto as Exhibit B by the personal representative of
Surrey-Barbari (attorney-in-fact or conservator) if Surrey-Barbari is
incapacitated or an executor or trustee, if Surrey-Barbari is deceased.

(b)           Surrey-Barbari may voluntarily
terminate employment under this Agreement at any time.  If Surrey-Barbari voluntarily terminates her
employment with Gilead prior to December 31, 2002, then (i) this Agreement
shall terminate, (ii) Gilead shall pay Surrey-Barbari’s base salary through the
date of termination and (iii) provided that Surrey-Barbari timely executes a
release in the form attached hereto as Exhibit B, she shall be entitled to
the Severance Payments and Medical Insurance Payments described in Paragraph
3(f) at such times as such amounts would otherwise be payable.

(c)           Gilead may terminate Surrey-Barbari’s
employment at any time, with or without cause, and with or without notice.  If Gilead terminates Surrey-Barbari’s
employment for any reason prior to December 31, 2002, Surrey-Barbari shall
be entitled to all of the compensation and benefits that she would have been
entitled to receive under this Agreement if she had remained employed through
December 31, 2002; provided, however, that payment of the Severance
Payments and the Medical Insurance Payments shall be conditional on her timely
execution of a release in the form attached hereto as Exhibit B.

 

5

 

5.     Releases.  In
exchange for the consideration provided to Surrey-Barbari under this Agreement
for the period from July 1, 2002 through December 31, 2002,
Surrey-Barbari agrees to execute and be bound by the general release attached
hereto as Exhibit A (“General Release A”) and to return the executed General
Release A on or before August 1, 2002. 
In consideration of the Severance Payments and Medical Insurance
Payments to be provided to Surrey-Barbari after December 31, 2002,
Surrey-Barbari agrees to execute and be bound by the general release attached
hereto as Exhibit B (“General Release B”) and to deliver the executed General
Release B to Gilead on or about December 31, 2002.  Both General Release A and General Release B
are hereby incorporated into and made part of this Agreement by reference.

 

6.     Successors.

 

(a)           This Agreement is personal to
Surrey-Barbari and shall not, without the prior written consent of Gilead, be
assignable by Surrey-Barbari.

(b)           This Agreement shall inure to the
benefit of and be binding upon Gilead and its successors and assigns and any
such successor or assignee shall be deemed substituted for Gilead under the
terms of this Agreement for all purposes. 
As used herein, “successor” and “assignee” shall include any person,
firm, corporation or other business entity which at any time, whether by purchase,
merger or otherwise, directly or indirectly acquires the stock of Gilead or to
which Gilead assigns this Agreement by operation of law or otherwise.

7.     Surrey-Barbari acknowledges that any employment or contractual
relationship between her and Gilead, or any of its subsidiaries, divisions and
affiliates, other than those contractual rights referenced in or arising out of
this Agreement, will terminate on the effective date of her resignation, and
that she will thereafter have no employment or contractual relationship with
Gilead, or any of its subsidiaries, divisions and affiliates.

 

6

 

8.     This Agreement supersedes and replaces all prior negotiations
and agreements, proposed or otherwise, whether written or oral, concerning the
subject matters of this Agreement with the exception of any Confidentiality
Agreement, the Gilead Sciences, Inc. Indemnity Agreement and option grant
agreements previously signed by Surrey-Barbari issued under the Gilead
Sciences, Inc. 1991 Stock Option Plan. 
Any such Confidentiality Agreement is herein incorporated by reference.

 

9.     This Agreement is an integrated document.

 

10.   If any provision of this Agreement or any
application thereof is held invalid, the invalidity shall not affect other
provisions or applications of this Agreement which can be given effect without
the invalid provision or application. 
To this end, the provisions of this Agreement are declared to be
severable.

 

11.   This Agreement shall be deemed to have been
executed and delivered within the State of California, and the rights and
obligations of the parties under this Agreement shall be construed and enforced
in accordance with, and shall be governed by, the laws of the State of
California without regard to principles of choice of law.

 

12.   Each party has cooperated in the drafting and
preparation of this Agreement, and, accordingly, this Agreement shall not be
construed against either party on the basis that said party was the drafter of
this Agreement.

 

13.   This Agreement may be executed in counterparts,
and each executed counterpart shall have the efficacy of a signed
original.  Photographic copies of such
executed counterparts may be used in lieu of the original for any purpose.

 

14.   Surrey-Barbari agrees that any and all
disputes relating to, or in any way connected with this Agreement or with
respect to Exhibit A, as well as any and all disputes relating to, or in 

 

 

7

 

 

any way connected with, Surrey-Barbari’s employment
with Gilead, or with any of its former subsidiaries, divisions and affiliates,
and Surrey-Barbari’s resignation from such employment, shall be submitted to
final and binding arbitration pursuant to the arbitration procedures set forth
in the American Arbitration Association’s National Rules for the Resolution of
Employment Disputes.  Surrey-Barbari and
Gilead agree that the prevailing party in any arbitration conducted pursuant to
the terms of this Paragraph shall be entitled to recover all costs and expenses
incurred by such party in connection therewith, including reasonable attorneys’
fees.  Surrey-Barbari’s liability for,
or her obligation to pay any such costs and expenses, including Gilead’s
attorney’s fees, shall not exceed Twenty-Five Thousand ($25,000).

 

15.   No waiver of any breach of any term or
provision of this Agreement shall be construed to be, or shall be, a waiver of
any other breach of any term or provision of this Agreement.  No waiver shall be binding unless in writing
and signed by the party waiving the breach.

 

16.   The parties agree to cooperate fully, execute
any supplementary documents, and take all additional actions that may be
necessary or appropriate to give full force and effect to the basic terms and
intent of this Agreement, which are not inconsistent with the terms of this
Agreement.

 

 

8

 

17.   Surrey-Barbari acknowledges and agrees that
this Agreement and Exhibits A and B are the 
final and binding agreements between the parties.  Surrey-Barbari further acknowledges and
agrees that this Agreement and Exhibits A and B shall not be subject to
renegotiation at any time in the future.

 

/
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I declare under
penalty of perjury under the laws of the State of California that I have read
the foregoing Agreement and I accept and agree to the provisions in the
Agreement and hereby execute the Agreement voluntarily with full understanding
of its consequences.

EXECUTED this 15th
day of July, 2002, at ____________, ____________.

 

	
   

  	
  /s/ Sharon Surrey-Barbari

  
	
   

  	
  Sharon Surrey-Barbari

  

 

EXECUTED this 24th
day of July, 2002, at Foster City, California.

 

	
   

  	
   

  	
  GILEAD SCIENCES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Marsha Roberts

  
	
   

  	
   

  	
  Marsha Roberts

  
	
   

  	
   

  	
  Vice President, Human Resources

  

 

 

 

9

EXHIBIT A

GENERAL
RELEASE AGREEMENT

(“GENERAL RELEASE A”)

This
General Release Agreement (the “Release Agreement”) is made as of the date set
forth below by and between Ms. Sharon Surrey-Barbari (“Surrey-Barbari”), an
individual, and Gilead Sciences, Inc. (“Gilead”), a corporation.

 

1.             Except for those obligations
created by or arising from this Release Agreement, the Employment Agreement
(including exhibits) to which this Release Agreement is attached, and any other
agreements executed by the parties contemporaneously with their execution of
the Employment Agreement, as well as the Gilead Sciences, Inc. Indemnity
Agreement, option grant agreements previously signed by Surrey-Barbari issued
under the Gilead Sciences, Inc. 1991 Stock Option Plan, and Gilead Sciences,
Inc.’s 401k plan, Surrey-Barbari, on behalf of herself, her descendants,
ancestors, dependents, heirs, executors, administrators, assigns, and
successors, and each of them, hereby covenants not to sue and fully releases
and discharges Gilead and each and any of its subsidiaries, divisions and
affiliates, past, present and future, and each of them, as well as its and
their trustees, directors, officers, shareholders, agents, representatives,
attorneys, insurers, employees, assigns, and successors, past, present and
future, and each of them, hereinafter together and collectively referred to as
“Releasees,” with respect to and from any and all claims, wages, bonuses,
demands, rights, liens, agreements, contracts, covenants, actions, suits,
causes of action, obligations, debts, costs, expenses, attorneys’ fees,
damages, judgments, orders and liabilities of whatever kind or nature in law,
equity or otherwise, whether now known or unknown, suspected or unsuspected,
and whether or not concealed or hidden, excluding any claims for workers’
compensation benefits, which Surrey-Barbari now owns or holds, or has at any
time heretofore owned or held, or may in the future own or hold as against said
Releasees, or 

 

 

Exhibit A-1

 

 

any of them,
including, without limitation, those arising from or in any way connected
with:  Surrey-Barbari’s employment with
Gilead and any of Gilead’s subsidiaries, divisions and affiliates;
Surrey-Barbari’s resignation from such employment; and any other transactions,
occurrences, acts or omissions or any loss, damage or injury whatever, whether
known or unknown, suspected or unsuspected, resulting from any act or omission
by or on the part of said Releasees, or any of them, committed or omitted prior
to the date of execution of this Agreement.

 

2.             Gilead and Surrey-Barbari expressly
deny any violation of any of Gilead’s policies, procedures, state or federal
laws or regulations.  Accordingly, while
this Release Agreement resolves all issues between Surrey-Barbari and Gilead
relating to any alleged violation of Gilead’s policies or procedures or any
state or federal law or regulation, this Agreement does not constitute an
adjudication or finding on the merits and it is not, and shall not be construed
as, an admission by Gilead or Surrey-Barbari of any violation of its policies,
procedures, state or federal laws or regulations.  Moreover, neither this Release Agreement nor anything in this
Agreement shall be construed to be or shall be admissible in any proceeding as
evidence of or an admission by Gilead or Surrey-Barbari of any violation of
Gilead’s policies, procedures, state or federal laws or regulations.  This Release Agreement may be introduced,
however, in any proceeding to enforce the Agreement.

 

3.             It is the intention of Surrey-Barbari and Gilead in
executing this Release Agreement, that this Agreement shall be effective as a
bar to each and every claim, demand and cause of action herein specified.  In furtherance of this intention, Surrey-Barbari
hereby expressly waives any and all rights and benefits conferred on her by the
provisions of SECTION 1542 OF THE CALIFORNIA CIVIL CODE, and expressly consents
that this Release 

 

Exhibit A-2

 

Agreement shall be given full force and effect
according to each and all of its express terms and provisions, including those
related to unknown and unsuspected claims, demands and causes of action, if
any, as well as those related to any other claims, demands and causes of action
herein specified.  SECTION 1542
provides:

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR.”

Surrey-Barbari
acknowledges that she may hereafter discover claims or facts in addition to, or
different from, those which she now knows or believes to exist with respect to
the subject matter of this Release Agreement, and which, if known or suspected
at the time of execution of this Agreement, might have materially affected her
decision to enter this Agreement. 
Nevertheless, Surrey-Barbari hereby waives any right, claim or cause of
action which might arise as a result of such additional or different claims or
facts.  Surrey-Barbari acknowledges that
she understands the significance and consequence of such release and such
specific waiver of SECTION 1542.

 

4.             Surrey-Barbari expressly acknowledges and agrees that,
by entering into this Release Agreement, she is waiving any and all rights or
claims that she may have arising under the Age Discrimination in Employment Act
of 1967, as amended, which have arisen on or before the date of execution of
this Agreement.  Surrey-Barbari further
expressly acknowledges and agrees that:

 

Exhibit A-3

 

a.             In return for this Release
Agreement, she will receive compensation beyond that which she was already
entitled to receive before entering into this Agreement;

 

b.             She is hereby advised in writing by
this Release Agreement to consult with an attorney before signing this
Agreement;

 

c.             She was given a copy of this
Release Agreement on July 11, 2002 and informed that she had 21 days within
which to consider the Agreement, and that she will execute the attached
Acknowledgment and Waiver if she chooses to execute this Release Agreement
before the expiration of the 21-day period; and

 

d.             She was informed that she has seven
(7) days following the date of execution of the Release Agreement in which to
revoke the Agreement.

 

5.             If any provision of this Release
Agreement or any application thereof is held invalid, the invalidity shall not
affect other provisions or applications of this Agreement which can be given
effect without the invalid provision or application.  To this end, the provisions of this Release Agreement are
declared to be severable.

 

6.             This Release Agreement shall be
deemed to have been executed and delivered within the State of California, and
the rights and obligations of the parties under this Agreement shall be
construed and enforced in accordance with, and shall be governed by, the laws
of the State of California without regard to principles of choice of law.

 

7.             Each party has cooperated in the
drafting and preparation of this Release Agreement, and, accordingly, this
Agreement shall not be construed against either party on the basis that said
party was the drafter of this Agreement.

 

 

Exhibit A-4

 

 

8.             This
Release Agreement may be executed in counterparts, and each executed
counterpart shall have the efficacy of a signed original.  Photographic copies of such executed
counterparts may be used in lieu of the original for any purpose.

 

9.             Surrey-Barbari agrees that any and
all disputes relating to, or in any way connected with this Release Agreement,
shall be resolved through arbitration as set out in the Employment Agreement.

 

10.           No waiver of any breach of any term
or provision of this Release Agreement shall be construed to be, or shall be, a
waiver of any other breach of any term or provision of this Agreement.  No waiver shall be binding unless in writing
and signed by the party waiving the breach.

 

11.           The parties agree to cooperate fully,
execute any supplementary documents, and take all additional actions that may
be necessary or appropriate to give full force and effect to the basic terms
and intent of this Release Agreement, which are not inconsistent with the terms
of this Agreement.

 

 

 

Exhibit A-5

 

 

12.           Surrey-Barbari acknowledges and
agrees that this Release Agreement is a final and binding agreement between the
parties.  Surrey-Barbari further
acknowledges and agrees that this Release Agreement shall not be subject to
renegotiation at any time in the future.

I declare under penalty
of perjury under the laws of the State of California that I have read the
foregoing Release Agreement and I accept and agree to the provisions in the
Agreement and hereby execute the Agreement voluntarily with full understanding
of its consequences.

 

EXECUTED this _____ day
of _____________, _________, at ____________________, California.

 

	
   

  	
   

  
	
   

  	
  Sharon
  Surrey-Barbari

  

 

 

EXECUTED this _____ day of
______________, __________, at Foster City, California.

 

	
   

  	
   

  	
  GILEAD SCIENCES,
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Marsha Roberts

  
	
   

  	
   

  	
  Vice
  President-Human Resources

  

 

 

Exhibit A-6

 

ACKNOWLEDGMENT AND WAIVER

I, Sharon Surrey-Barbari
, hereby acknowledge that I was given 21 days to consider the foregoing Release
Agreement and voluntarily chose to sign the Agreement prior to the expiration
of the 21-day period.

I declare under penalty
of perjury under the laws of the State of California that the foregoing is true
and correct.

EXECUTED this ___________
day of _____________, ______, at _________________, California.

 

	
   

  	
   

  
	
   

  	
  Sharon Surrey-Barbari

  

 

 

 

 

Exhibit
A-7

EXHIBIT B

GENERAL
RELEASE AGREEMENT

(“GENERAL RELEASE B”)

This
General Release Agreement (the “Release Agreement”) is made as of the date set
forth below by and between Ms. Sharon Surrey-Barbari (“Surrey-Barbari”), an
individual, and Gilead Sciences, Inc. (“Gilead”), a corporation.

 

1.             Except for those obligations
created by or arising from this Release Agreement, the Employment Agreement
(including exhibits) to which this Release Agreement is attached, and any other
agreements executed by the parties contemporaneously with their execution of
the Employment Agreement, as well as the Gilead Sciences, Inc. Indemnity
Agreement, option grant agreements previously signed by Surrey-Barbari issued
under the Gilead Sciences, Inc. 1991 Stock Option Plan, and Gilead Sciences,
Inc.’s 401k plan, Surrey-Barbari, on behalf of herself, her descendants,
ancestors, dependents, heirs, executors, administrators, assigns, and
successors, and each of them, hereby covenants not to sue and fully releases
and discharges Gilead and each and any of its subsidiaries, divisions and
affiliates, past, present and future, and each of them, as well as its and
their trustees, directors, officers, shareholders, agents, representatives,
attorneys, insurers, employees, assigns, and successors, past, present and
future, and each of them, hereinafter together and collectively referred to as
“Releasees,” with respect to and from any and all claims, wages, bonuses,
demands, rights, liens, agreements, contracts, covenants, actions, suits,
causes of action, obligations, debts, costs, expenses, attorneys’ fees,
damages, judgments, orders and liabilities of whatever kind or nature in law,
equity or otherwise, whether now known or unknown, suspected or unsuspected,
and whether or not concealed or hidden, excluding any claims for workers’
compensation benefits, which Surrey-Barbari now owns or holds, or has at any
time heretofore owned or held, or may in the future own or hold as against said
Releasees, or 

 

 

 

Exhibit B-1

 

 

any of them,
including, without limitation, those arising from or in any way connected
with:  Surrey-Barbari’s employment with
Gilead and any of Gilead’s subsidiaries, divisions and affiliates;
Surrey-Barbari’s resignation from such employment; and any other transactions,
occurrences, acts or omissions or any loss, damage or injury whatever, whether
known or unknown, suspected or unsuspected, resulting from any act or omission
by or on the part of said Releasees, or any of them, committed or omitted prior
to the date of execution of this Agreement.

 

2.             Gilead and Surrey-Barbari expressly
deny any violation of any of Gilead’s policies, procedures, state or federal
laws or regulations.  Accordingly, while
this Release Agreement resolves all issues between Surrey-Barbari and Gilead
relating to any alleged violation of Gilead’s policies or procedures or any
state or federal law or regulation, this Agreement does not constitute an
adjudication or finding on the merits and it is not, and shall not be construed
as, an admission by Gilead or Surrey-Barbari of any violation of its policies,
procedures, state or federal laws or regulations.  Moreover, neither this Release Agreement nor anything in this
Agreement shall be construed to be or shall be admissible in any proceeding as
evidence of or an admission by Gilead or Surrey-Barbari of any violation of
Gilead’s policies, procedures, state or federal laws or regulations.  This Release Agreement may be introduced,
however, in any proceeding to enforce the Agreement.

 

3.             It is the intention of Surrey-Barbari and Gilead in
executing this Release Agreement, that this Agreement shall be effective as a
bar to each and every claim, demand and cause of action herein specified.  In furtherance of this intention,
Surrey-Barbari hereby expressly waives any and all rights and benefits
conferred on her by the provisions of SECTION 1542 OF THE CALIFORNIA CIVIL
CODE, and expressly consents that this Release 

 

Exhibit B-2

 

Agreement shall be given full force and effect
according to each and all of its express terms and provisions, including those
related to unknown and unsuspected claims, demands and causes of action, if
any, as well as those related to any other claims, demands and causes of action
herein specified.  SECTION 1542
provides:

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR.”

Surrey-Barbari
acknowledges that she may hereafter discover claims or facts in addition to, or
different from, those which she now knows or believes to exist with respect to
the subject matter of this Release Agreement, and which, if known or suspected
at the time of execution of this Agreement, might have materially affected her
decision to enter this Agreement. 
Nevertheless, Surrey-Barbari hereby waives any right, claim or cause of
action which might arise as a result of such additional or different claims or
facts.  Surrey-Barbari acknowledges that
she understands the significance and consequence of such release and such
specific waiver of SECTION 1542.

 

4.             Surrey-Barbari expressly acknowledges and agrees that,
by entering into this Release Agreement, she is waiving any and all rights or
claims that she may have arising under the Age Discrimination in Employment Act
of 1967, as amended, which have arisen on or before the date of execution of
this Agreement.  Surrey-Barbari further
expressly acknowledges and agrees that:

 

Exhibit B-3

 

a.             In return for this Release
Agreement, she will receive compensation beyond that which she was already
entitled to receive before entering into this Agreement;

 

b.             She is hereby advised in writing by
this Release Agreement to consult with an attorney before signing this
Agreement;

 

c.             She was given a copy of this
Release Agreement on July 11, 2002 and informed that she had 21 days within
which to consider the Agreement, and that she will execute the attached
Acknowledgment and Waiver if she chooses to execute this Release Agreement
before the expiration of the 21-day period; and

 

d.             She was informed that she has seven
(7) days following the date of execution of the Release Agreement in which to
revoke the Agreement.

 

5.             If any provision of this Release
Agreement or any application thereof is held invalid, the invalidity shall not
affect other provisions or applications of this Agreement which can be given
effect without the invalid provision or application.  To this end, the provisions of this Release Agreement are
declared to be severable.

 

6.             This Release Agreement shall be
deemed to have been executed and delivered within the State of California, and
the rights and obligations of the parties under this Agreement shall be
construed and enforced in accordance with, and shall be governed by, the laws
of the State of California without regard to principles of choice of law.

 

7.             Each party has cooperated in the
drafting and preparation of this Release Agreement, and, accordingly, this
Agreement shall not be construed against either party on the basis that said
party was the drafter of this Agreement.

 

 

Exhibit B-4

 

 

8.             This
Release Agreement may be executed in counterparts, and each executed
counterpart shall have the efficacy of a signed original.  Photographic copies of such executed
counterparts may be used in lieu of the original for any purpose.

 

9.             Surrey-Barbari agrees that any and
all disputes relating to, or in any way connected with this Release Agreement,
shall be resolved through arbitration as set out in the Employment Agreement.

 

10.           No waiver of any breach of any term
or provision of this Release Agreement shall be construed to be, or shall be, a
waiver of any other breach of any term or provision of this Agreement.  No waiver shall be binding unless in writing
and signed by the party waiving the breach.

 

11.           The parties agree to cooperate fully,
execute any supplementary documents, and take all additional actions that may
be necessary or appropriate to give full force and effect to the basic terms
and intent of this Release Agreement, which are not inconsistent with the terms
of this Agreement.

 

12.           Surrey-Barbari acknowledges and
agrees that this Release Agreement is a final and binding agreement between the
parties.  Surrey-Barbari further
acknowledges and agrees that this Release Agreement shall not be subject to
renegotiation at any time in the future.

I declare under penalty
of perjury under the laws of the State of California that I have read the
foregoing Release Agreement and I accept and agree to the provisions in the
Agreement and hereby execute the Agreement voluntarily with full understanding
of its consequences.

 

Exhibit B-5

 

EXECUTED this _____ day
of _____________, _________, at ____________________, California.

 

	
   

  	
   

  
	
   

  	
  Sharon
  Surrey-Barbari

  

 

 

Exhibit B-6

 

 

EXECUTED this _____ day
of ______________, __________, at Foster City, California.

 

	
   

  	
   

  	
  GILEAD SCIENCES,
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Marsha Roberts

  
	
   

  	
   

  	
  Vice
  President-Human Resources

  

 

 

 

Exhibit B-7

 

ACKNOWLEDGMENT AND WAIVER

I, Sharon Surrey-Barbari
, hereby acknowledge that I was given 21 days to consider the foregoing Release
Agreement and voluntarily chose to sign the Agreement prior to the expiration
of the 21-day period.

I declare under penalty
of perjury under the laws of the State of California that the foregoing is true
and correct.

EXECUTED this ___________
day of _____________, ______, at _________________, California.

 

	
   

  	
   

  
	
   

  	
  Sharon
  Surrey-Barbari

  

 

 

 

Exhibit
B-8QuickLinks
 -- Click here to rapidly navigate through this document
  

 
 

EXHIBIT 10.16    
  

OMNICELL, INC.

1999 EQUITY INCENTIVE PLAN

Adopted September 1, 1999

Amended and Restated November 5, 2002

Termination Date: August 30, 2009  

1.    PURPOSES.  

        (a)  Eligible Stock Award Recipients. The persons eligible to receive Stock Awards are the Employees, Directors and
Consultants of the Company and its Affiliates. 

        (b)  Available Stock Awards. The purpose of the Plan is to provide a means by which eligible recipients of Stock Awards may be
given an opportunity to benefit from increases in value of the Common Stock through the granting of the following Stock Awards: (i) Incentive Stock Options, (ii) Nonstatutory Stock
Options, (iii) stock bonuses and (iv) rights to acquire restricted stock. The Plan also provides for non-discretionary grants of Nonstatutory Stock Options to
Non-Employee Directors of the Company. 

        (c)  General Purpose. The Company, by means of the Plan, seeks to retain the services of the group of persons eligible to
receive Stock Awards, to secure and retain the services of new members of this group and to provide incentives for such persons to exert maximum efforts for the success of the Company and its
Affiliates. 

2.    DEFINITIONS.  

        (a)  "Affiliate" means any parent corporation or subsidiary corporation of the Company, whether now or
hereafter existing, as those terms are defined in Sections 424(e) and (f), respectively, of the Code. 

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

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

        (d)  "Committee" means a committee of one or more members of the Board appointed by the Board in
accordance with subsection 3(c). 

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

        (f)    "Company" means Omnicell, Inc., a Delaware corporation. 

        (g)  "Consultant" means any person, including an advisor, (i) engaged by the Company or an
Affiliate to render consulting or advisory services and who is compensated for such services or (ii) who is a member of the Board of Directors of an Affiliate. However, the term "Consultant"
shall not include either Directors who are not compensated by the Company for their services as Directors or Directors who are merely paid a director's fee by the Company for their services as
Directors. 

        (h)  "Continuous Service" means that the Participant's service with the Company or an Affiliate,
whether as an Employee, Director or Consultant, is not interrupted or terminated. The Participant's Continuous Service shall not be deemed to have terminated merely because of a change in the capacity
in which the Participant renders service to the Company or an Affiliate as an Employee, Consultant or Director or a change in the entity for which the Participant renders such service, provided that
there is no interruption or termination of the Participant's Continuous Service. For example, a change in status from an Employee of the Company to a Consultant of an Affiliate or a Director will not
constitute an 

1

 

interruption of Continuous Service. The Board or the chief executive officer of the Company, in that party's sole discretion, may determine whether Continuous Service shall be considered interrupted
in the case of any leave of absence approved by that party, including sick leave, military leave or any other personal leave. 

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

        (j)    "Director" means a member of the Board of Directors of the Company. 

        (k)  "Disability" means (i) before the Listing Date, the inability of a person, in the opinion
of a qualified physician acceptable to the Company, to perform the major duties of that person's position with the Company or an Affiliate of the Company because of the sickness or injury of the
person and (ii) after the Listing Date, the permanent and total disability of a person within the meaning of Section 22(e)(3) of the Code. 

        (l)    "Employee" means any person employed by the Company or an Affiliate. Mere service as a Director
or payment of a director's fee by the Company or an Affiliate shall not be sufficient to constitute "employment" by the Company or an Affiliate. 

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

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

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

        (ii)  In the absence of such markets for the Common Stock, the Fair Market Value shall be determined in good faith by the
Board. 

        (iii) Prior to the Listing Date, the value of the Common Stock shall be determined in a manner consistent with
Section 260.140.50 of Title 10 of the California Code of Regulations. 

        (o)  "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. 

        (p)  "IPO Date" means the effective date of the initial public offering of the Company's Common Stock. 

        (q)  "Listing Date" means the first date upon which any security of the Company is listed (or approved
for listing) upon notice of issuance on any securities exchange or designated (or approved for designation) upon notice of issuance as a national market security on an interdealer quotation system if
such securities exchange or interdealer quotation system has been certified in accordance with the provisions of Section 25100(o) of the California Corporate Securities Law of 1968. 

        (r)  "Non-Employee Director" means a Director who either (i) is not a current
Employee or Officer of the Company or its parent or a subsidiary, does not receive compensation (directly or indirectly) from the Company or its parent or a subsidiary for services rendered as a
consultant or in any capacity other than as a Director (except for an amount as to which disclosure would not be required under Item 404(a) of Regulation S-K promulgated pursuant to
the Securities Act ("Regulation S-K")), does not possess an interest in any other transaction as to which disclosure would be required under Item 

2

 

404(a) of Regulation S-K and is not engaged in a business relationship as to which disclosure would be required under Item 404(b) of Regulation S-K; or
(ii) is otherwise considered a "non-employee director" for purposes of Rule 16b-3. 

        (s)  "Non-Employee Director Option" means a Non-Statutory Stock Option granted
pursuant to Section 7 hereof. 

        (t)  "Non-Employee Director Option Agreement" means a written agreement between the
Company and a Non-Employee Director evidencing the terms and conditions of a Non-Employee Director Option grant. Each Non-Employee Director Option Agreement shall
be subject to the terms and conditions of the Plan. 

        (u)  "Nonstatutory Stock Option" means an Option not intended to qualify as an Incentive Stock Option. 

        (v)  "Officer" means (i) before the Listing Date, any person designated by the Company as an
officer and (ii) on and after the Listing Date, 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. 

        (w)  "Option" means an Incentive Stock Option or a Nonstatutory Stock Option granted pursuant to the
Plan. 

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

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

        (z)  "Outside Director" means a Director who either (i) is not a current employee of the
Company or an "affiliated corporation" (within the meaning of Treasury Regulations promulgated under Section 162(m) of the Code), is not a former employee of the Company or an "affiliated
corporation" receiving compensation for prior services (other than benefits under a tax qualified pension plan), was not an officer of the Company or an "affiliated corporation" at any time and is not
currently receiving direct or indirect remuneration from the Company or an "affiliated corporation" for services in any capacity other than as a Director or (ii) is otherwise considered an
"outside director" for purposes of Section 162(m) of the Code. 

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

        (bb) "Plan" means this Omnicell, Inc. 1999 Equity Incentive Plan. 

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

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

        (ee) "Stock Award" means any right granted under the Plan, including an Option, a stock bonus and a
right to acquire restricted stock. 

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

        (gg) "Ten Percent Shareholder" means a person who owns (or is deemed to own pursuant to
Section 424(d) of the Code) stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or of any of its Affiliates. 

3

 

3.    ADMINISTRATION.  

        (a)  Administration by Board. The Board shall administer the Plan unless and until the Board delegates administration to a
Committee, as provided in subsection 3(c). 

        (b)  Powers of Board. The Board shall have the power, subject to, and within the limitations of, the express provisions of the
Plan: 

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

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

        (iii) To amend the Plan or a Stock Award as provided in Section 13. 

        (iv)  To effect, at any time and from time to time, with the consent of any adversely affected Optionholder, (1) the
reduction of the exercise price of any outstanding Option under the Plan to the then Fair Market Value and/or (2) the cancellation of any outstanding Option under the Plan and the grant in
substitution therefor of (A) a new Option under the Plan covering the same or a different number of shares of Common Stock, (B) a stock bonus, (C) the right to acquire restricted
stock, (D) cash and/or (E) other valuable consideration (as determined by the Board, in its sole discretion). 

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

        (c)  Delegation to Committee.  

         (i)    General. The Board may delegate administration of the Plan to a Committee or Committees of one (1) or more members of the
Board, and the
term "Committee" shall apply to any person or persons to whom such authority has been delegated. If administration is delegated to a Committee, the Committee shall have, in connection with the
administration of the Plan, the powers theretofore possessed by the Board, including the power to delegate to a subcommittee any of the administrative powers the Committee is authorized to exercise
(and references in this Plan to the Board shall thereafter be to the Committee or subcommittee), subject, however, to such resolutions, not inconsistent with the provisions of the Plan, as may be
adopted from time to time by the Board. The Board may abolish the Committee at any time and revest in the Board the administration of the Plan. 

        (ii)  Committee Composition when Common Stock is Publicly Traded. At such time as the Common Stock is publicly traded, in the
discretion of the Board, a Committee may consist solely of two or more Outside Directors, in accordance with Section 162(m) of the Code, and/or solely of two or more Non-Employee
Directors, in accordance with Rule 16b-3. Within the scope of such authority, the Board or the Committee may (1) delegate to a committee of one or more members of the Board
who are not Outside Directors the authority to grant Stock Awards to eligible persons who are either (a) not then Covered Employees and are not expected to be Covered Employees at the time of
recognition of income resulting from such Stock Award or (b) not 

4

 

persons with respect to whom the Company wishes to comply with Section 162(m) of the Code and/or (2) delegate to a committee of one or more members of the Board who are not
Non-Employee Directors the authority to grant Stock Awards to eligible persons who are not then subject to Section 16 of the Exchange Act. 

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

4.    SHARES SUBJECT TO THE PLAN.  

        (a)  Share Reserve. Subject to the provisions of Section 12 relating to adjustments upon changes in Common Stock, the
Common Stock that may be issued pursuant to Stock Awards shall not exceed in the aggregate five million (5,000,000) shares of Common Stock, plus an annual increase to be added each January 1,
beginning January 1, 2001, equal to the lesser of (i) five and one-half percent (5.5%) of the total number of shares of Common Stock outstanding on such January 1 or
(ii) three million (3,000,000) shares of Common Stock. Notwithstanding the foregoing, the Board may designate a smaller number of shares of Common Stock to be added to the share reserve as of a
particular January 1. The shares that may be issuable under incentive stock options shall be limited to the above maximum number of shares reserved under the Plan. 

        (b)  Reversion of Shares to the Share Reserve. If any Stock Award shall for any reason expire or otherwise terminate, in whole
or in part, without having been exercised in full, the shares of Common Stock not acquired under such Stock Award shall revert to and again become available for issuance under the Plan. In addition,
if any stock award issued under the Company's 1992 Incentive Stock Option Plan and 1995 Management Stock Option Plan shall for any reason expire or otherwise terminate, in whole or in part, without
having been exercised in full, the shares of Common Stock not acquired under such stock award shall revert to and again become available for issuance under this Plan provided such shares shall not be
issuable under an incentive stock option. 

        (c)  Source of Shares. The shares of Common Stock subject to the Plan may be unissued shares or reacquired shares, bought on
the market or otherwise. 

        (d)  Share Reserve Limitation. Prior to the Listing Date and to the extent then required by Section 260.140.45 of Title
10 of the California Code of Regulations, the total number of shares of Common Stock issuable upon exercise of all outstanding Options and the total number of shares of Common Stock provided for under
any stock bonus or similar plan of the Company shall not exceed the applicable percentage as calculated in accordance with the conditions and exclusions of Section 260.140.45 of Title 10 of the
California Code of Regulations, based on the shares of Common Stock of the Company that are outstanding at the time the calculation is made. 

5.    ELIGIBILITY.  

        (a)  Eligibility for Specific Stock Awards. Incentive Stock Options may be granted only to Employees. Stock Awards other than
Incentive Stock Options may be granted to Employees, Directors and Consultants. 

        (b)  Ten Percent Shareholders.

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

        (ii)  Prior to the Listing Date, a Ten Percent Shareholder shall not be granted a Nonstatutory Stock Option unless the
exercise price of such Option is at least (i) one hundred ten percent 

5

 

(110%) of the Fair Market Value of the Common Stock at the date of grant or (ii) such lower percentage of the Fair Market Value of the Common Stock at the date of grant as is permitted by
Section 260.140.41 of Title 10 of the California Code of Regulations at the time of the grant of the Option. 

        (iii) Prior to the Listing Date, a Ten Percent Shareholder shall not be granted a restricted stock award unless the purchase
price of the restricted stock is at least (i) one hundred percent (100%) of the Fair Market Value of the Common Stock at the date of grant or (ii) such lower percentage of the Fair
Market Value of the Common Stock at the date of grant as is permitted by Section 260.140.41 of Title 10 of the California Code of Regulations at the time of the grant of the Option. 

        (c)  Section 162(m) Limitation. Subject to the provisions of Section 12 relating to adjustments upon changes in
the shares of Common Stock, no Employee shall be eligible to be granted Options covering more than one million two hundred thousand (1,200,000) shares of Common Stock during any calendar year. This
subsection 5(c) shall not apply prior to the Listing Date and, following the Listing Date, this subsection 5(c) shall not apply until (i) the earliest of: (1) the first material
modification of the Plan (including any increase in the number of shares of Common Stock reserved for issuance under the Plan in accordance with Section 4); (2) the issuance of all of
the shares of Common Stock reserved for issuance under the Plan; (3) the expiration of the Plan; or (4) the first meeting of shareholders at which Directors are to be elected that occurs
after the close of the third calendar year following the calendar year in which occurred the first registration of an equity security under Section 12 of the Exchange Act; or (ii) such
other date required by Section 162(m) of the Code and the rules and regulations promulgated thereunder. 

        (d)  Consultants.

        (i)    Prior to the Listing Date, a Consultant shall not be eligible for the grant of a Stock Award if, at the time of grant,
either the offer or the sale of the Company's securities to such Consultant is not exempt under Rule 701 of the Securities Act ("Rule 701") because of the nature of the services that the
Consultant is providing to the Company, or because the Consultant is not a natural person, or as otherwise provided by Rule 701, unless the Company determines that such grant need not comply
with the requirements of Rule 701 and will satisfy another exemption under the Securities Act as well as comply with the securities laws of all other relevant jurisdictions. 

        (ii)  From and after the Listing Date, a Consultant shall not be eligible for the grant of a Stock Award if, at the time of
grant, a Form S-8 Registration Statement under the Securities Act ("Form S-8") is not available to register either the offer or the sale of the Company's
securities to such Consultant because of the nature of the services that the Consultant is providing to the Company, or because the Consultant is not a natural person, or as otherwise provided by the
rules governing the use of Form S-8, unless the Company determines both (i) that such grant (A) shall be registered in another manner under the Securities Act
(e.g., on a Form S-3 Registration Statement) or (B) does not require registration under the Securities Act in order to comply
with the requirements of the Securities Act, if applicable, and (ii) that such grant complies with the securities laws of all other relevant jurisdictions. 

        (iii) Rule 701 and Form S-8 generally are available to consultants and advisors only if
(i) they are natural persons; (ii) they provide bona fide services to the issuer, its parents, its majority-owned subsidiaries or majority-owned subsidiaries of the issuer's parent; and
(iii) the services are not in connection with the offer or sale of securities in a capital-raising transaction, and do not directly or indirectly promote or maintain a market for the issuer's
securities. 

6

 

6.    OPTION PROVISIONS.  

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

        (a)  Term. Subject to the provisions of subsection 5(b) regarding Ten Percent Shareholders, no Option granted prior to the
Listing Date shall be exercisable after the expiration of ten (10) years from the date it was granted, and no Incentive Stock Option granted on or after the Listing Date shall be exercisable
after the expiration of ten (10) years from the date it was granted. 

        (b)  Exercise Price of an Incentive Stock Option. Subject to the provisions of subsection 5(b) regarding Ten Percent
Shareholders, the exercise price of each Incentive Stock Option shall be not less than one hundred percent (100%) of the Fair Market Value of the Common Stock subject to the Option on the date the
Option is granted. Notwithstanding the foregoing, an Incentive Stock Option may be granted with an exercise price lower than that set forth in the preceding sentence if such Option is granted pursuant
to an assumption or substitution for another option in a manner satisfying the provisions of Section 424(a) of the Code. 

        (c)  Exercise Price of a Nonstatutory Stock Option. Subject to the provisions of subsection 5(b) regarding Ten Percent
Shareholders, the exercise price of each Nonstatutory Stock Option granted prior to the Listing Date shall be not less than eighty-five percent (85%) of the Fair Market Value of the Common
Stock subject to the Option on the date the Option is granted. The exercise price of each Nonstatutory Stock Option granted on or after the Listing Date shall be not less than eighty-five
percent (85%) of the Fair Market Value of the Common Stock subject to the Option on the date the Option is granted. Notwithstanding the foregoing, a Nonstatutory Stock Option may be granted with an
exercise price lower than that set forth in the preceding sentence if such Option is granted pursuant to an assumption or substitution for another option in a manner satisfying the provisions of
Section 424(a) of the Code. 

        (d)  Consideration. The purchase price of Common Stock acquired pursuant to an Option shall be paid, to the extent permitted
by applicable statutes and regulations, either (i) in cash at the time the Option is exercised or (ii) at the discretion of the Board at the time of the grant of the Option (or
subsequently in the case of a Nonstatutory Stock Option) (1) by delivery to the Company of other Common Stock, (2) according to a deferred payment or other similar arrangement with the
Optionholder or (3) in any other form of legal consideration that may be acceptable to the Board. Unless otherwise specifically provided in the Option, the purchase price of Common Stock
acquired pursuant to an Option that is paid by delivery to the Company of other Common Stock acquired, directly or indirectly from the Company, shall be paid only by shares of the Common Stock of the
Company that have been held for more than six (6) months (or such longer or shorter period of time required to avoid a charge to earnings for financial accounting purposes). At any time that
the Company is incorporated in Delaware, payment of the Common Stock's "par value," as defined in the Delaware General Corporation Law, shall not be made by deferred payment. 

        In
the case of any deferred payment arrangement, interest shall be compounded at least annually and shall be charged at the minimum rate of interest necessary to avoid the treatment as
interest, under any applicable provisions of the Code, of any amounts other than amounts stated to be interest under the deferred payment arrangement. 

7

 

        (e)  Transferability of an Incentive Stock Option. An Incentive Stock Option shall not be transferable except by will or by
the laws of descent and distribution and shall be exercisable during the lifetime of the Optionholder only by the Optionholder. Notwithstanding the foregoing, the Optionholder may, by
delivering written notice to the Company, in a form satisfactory to the Company, designate a third party who, in the event of the death of the Optionholder, shall thereafter be entitled to exercise
the Option. 

        (f)    Transferability of a Nonstatutory Stock Option. A Nonstatutory Stock Option granted prior to the Listing Date shall not
be transferable except by will or by the laws of descent and distribution and, to the extent provided in the Option Agreement, to such further extent as permitted by Section 260.140.41(d) of
Title 10 of the California Code of Regulations at the time of the grant of the Option, and shall be exercisable during the lifetime of the Optionholder only by the Optionholder. A Nonstatutory Stock
Option granted on or after the Listing Date shall be transferable to the extent provided in the Option Agreement. If the Nonstatutory Stock Option does not provide for transferability, then the
Nonstatutory Stock Option shall not be transferable except by will or by the laws of descent and distribution and shall be exercisable during the lifetime of the Optionholder only by the Optionholder.
Notwithstanding the foregoing, the Optionholder may, by delivering written notice to the Company, in a form satisfactory to the Company, designate a third party who, in the event of the death of the
Optionholder, shall thereafter be entitled to exercise the Option. 

        (g)  Vesting Generally. The total number of shares of Common Stock subject to an Option may, but need not, vest and therefore
become exercisable in periodic installments that may, but need not, be equal. The Option may be subject to such other terms and conditions on the time or times when it may be exercised (which may be
based on performance or other criteria) as the Board may deem appropriate. The vesting provisions of individual Options may vary. The provisions of this subsection 6(g) are subject to any Option
provisions governing the minimum number of shares of Common Stock as to which an Option may be exercised. 

        (h)  Minimum Vesting Prior to the Listing Date. Notwithstanding the foregoing subsection 6(g), to the extent that the
following restrictions on vesting are required by Section 260.140.41(f) of Title 10 of the California Code of Regulations at the time of the grant of the Option, then: 

        (i)    Options granted prior to the Listing Date to an Employee who is not an Officer, Director or Consultant shall provide for
vesting of the total number of shares of Common Stock at a rate of at least twenty percent (20%) per year over five (5) years from the date the Option was granted, subject to reasonable
conditions such as continued employment; and 

        (ii)  Options granted prior to the Listing Date to Officers, Directors or Consultants may be made fully exercisable, subject
to reasonable conditions such as continued employment, at any time or during any period established by the Company. 

        (i)    Termination of Continuous Service. In the event an Optionholder's Continuous Service terminates (other than upon the
Optionholder's death or Disability), the Optionholder may exercise his or her Option (to the extent that the Optionholder was entitled to exercise such Option as of the date of termination) but only
within such period of time ending on the earlier of (i) the date three (3) months
following the termination of the Optionholder's Continuous Service (or such longer or shorter period specified in the Option Agreement, which period shall not be less than thirty (30) days for
Options granted prior to the Listing Date unless such termination is for cause), or (ii) the expiration of the term of the Option as set forth in the Option Agreement. If, after termination,
the Optionholder does not exercise his or her Option within the time specified in the Option Agreement, the Option shall terminate. 

        (j)    Extension of Termination Date. An Optionholder's Option Agreement may also provide that if the exercise of the Option
following the termination of the Optionholder's Continuous Service (other 

8

 

than upon the Optionholder's death or Disability) would be prohibited at any time solely because the issuance of shares of Common Stock would violate the registration requirements under the
Securities Act, then the Option shall terminate on the earlier of (i) the expiration of the term of the Option set forth in subsection 6(a) or (ii) the expiration of a period of three
(3) months after the termination of the Optionholder's Continuous Service during which the exercise of the Option would not be in violation of such registration requirements. 

        (k)  Disability of Optionholder. In the event that an Optionholder's Continuous Service terminates as a result of the
Optionholder's Disability, the Optionholder may exercise his or her Option (to the extent that the Optionholder was entitled to exercise such Option as of the date of termination), but only within
such period of time ending on the earlier of (i) the date twelve (12) months following such termination (or such longer or shorter period specified in the Option Agreement, which period
shall not be less than six (6) months for Options granted prior to the Listing Date) or (ii) the expiration of the term of the Option as set forth in the Option Agreement. If, after
termination, the Optionholder does not exercise his or her Option within the time specified herein, the Option shall terminate. 

        (l)    Death of Optionholder. In the event (i) an Optionholder's Continuous Service terminates as a result of the
Optionholder's death or (ii) the Optionholder dies within the period (if any) specified in the Option Agreement after the termination of the Optionholder's Continuous Service for a reason other
than death, then the Option may be exercised (to the extent the Optionholder was entitled to exercise such Option as of the date of death) by the Optionholder's estate, by a person who acquired the
right to exercise the Option by bequest or inheritance or by a person designated to exercise the option upon the Optionholder's death pursuant to subsection 6(e) or 6(f), but only within the period
ending on the earlier of (1) the date eighteen (18) months following the date of death (or such longer or shorter period specified in the Option Agreement, which period shall not be less
than six (6) months for Options granted prior to the Listing Date) or (2) the expiration of the term of such Option as set forth in the Option Agreement. If, after death, the Option is
not exercised within the time specified herein, the Option shall terminate. 

        (m)  Early Exercise. The Option may, but need not, include a provision whereby the Optionholder may elect at any time before
the Optionholder's Continuous Service terminates to exercise the Option as to any part or all of the shares of Common Stock subject to the Option prior to the full vesting of the Option. Subject to
the "Repurchase Limitation" in subsection 11(h), any unvested shares of Common Stock so purchased may be subject to a repurchase option in favor of the Company or to any other
restriction the Board determines to be appropriate. Provided that the "Repurchase Limitation" in subsection 11(h) is not violated, the Company will not exercise its repurchase option until at least
six (6) months (or such longer or shorter period of time required to avoid a charge to earnings for financial accounting purposes) have elapsed following exercise of the Option unless the Board
otherwise specifically provides in the Option. 

        (n)  Right of Repurchase. Subject to the "Repurchase Limitation" in subsection 11(h), the Option may, but need not, include a
provision whereby the Company may elect, prior to the Listing Date, to repurchase all or any part of the vested shares of Common Stock acquired by the Optionholder pursuant to the exercise of the
Option. Provided that the "Repurchase Limitation" in subsection 11(h) is not violated, the Company will not exercise its repurchase option until at least six (6) months (or such longer or
shorter period of time required to avoid a charge to earnings for financial accounting purposes) have elapsed following exercise of the Option unless the Board otherwise specifically provides in the
Option. 

        (o)  Right of First Refusal. The Option may, but need not, include a provision whereby the Company may elect, prior to the
Listing Date, to exercise a right of first refusal following receipt of notice from the Optionholder of the intent to transfer all or any part of the shares of Common Stock received upon the exercise
of the Option. Except as expressly provided in this subsection 6(o), such 

9

 

right of first refusal shall otherwise comply with any applicable provisions of the Bylaws of the Company. 

        (p)  Re-Load Options.

        (i)    Without in any way limiting the authority of the Board to make or not to make grants of Options hereunder, the Board
shall have the authority (but not an obligation) to include as part of any Option Agreement a provision entitling the Optionholder to a further Option (a "Re-Load Option") in the event the
Optionholder exercises the Option evidenced by the Option Agreement, in whole or in part, by surrendering other shares of Common Stock in accordance with this Plan and the terms and conditions of the
Option Agreement. Unless otherwise specifically provided in the Option, the Optionholder shall not surrender shares of Common Stock acquired, directly or indirectly from the Company, unless such
shares have been held for more than six (6) months (or such longer or shorter period of time required to avoid a charge to earnings for financial accounting purposes). 

        (ii)  Any such Re-Load Option shall (1) provide for a number of shares of Common Stock equal to the number
of shares of Common Stock surrendered as part or all of the exercise price of such Option; (2) have an expiration date which is the same as the expiration date of the Option the exercise of
which gave rise to such Re-Load Option; and (3) have an exercise price which is equal to one hundred percent (100%) of the Fair Market Value of the Common Stock subject to the
Re-Load Option on the date of exercise of the original Option. Notwithstanding the foregoing, a Re-Load Option shall be subject to the same exercise price and term provisions
heretofore described for Options under the Plan. 

        (iii) Any such Re-Load Option may be an Incentive Stock Option or a Nonstatutory Stock Option, as the Board may
designate at the time of the grant of the original Option; provided, however, that the designation of any Re-Load Option as an Incentive Stock Option shall be subject to the one hundred
thousand dollar ($100,000) annual limitation on the exercisability of Incentive Stock Options described in subsection 11(d) and in Section 422(d) of the Code. There shall be no
Re-Load Options on a Re-Load Option. Any such Re-Load Option shall be subject to the availability of sufficient shares of Common Stock under subsection 4(a) and the
"Section 162(m) Limitation" on the grants of Options under subsection 5(c) and shall be subject to such other terms and conditions as the Board may determine which are not inconsistent with the
express provisions of the Plan regarding the terms of Options. 

10

   7.    NON-EMPLOYEE DIRECTOR STOCK OPTIONS.  

        Without any further action of the Board, each Non-Employee Director shall be granted Nonstatutory Stock Options as described in subsections 7(a) and
7(b) (collectively, "Non-Employee Director Options"). Each Non-Employee Director Option shall include the substance of the terms set forth in subsections 7(c) through 7(k). 

        (a)  Stock Option Grants.

        (i)    Initial Grants. After the IPO Date, each person who is elected or appointed for the first time to be a
Non-Employee Director automatically shall, upon the date of his or her initial election or appointment to be a Non-Employee Director by the Board or shareholders of the
Company, be granted an Initial Grant to purchase forty thousand (40,000) shares of Common Stock on the terms and conditions set forth herein; provided, that a Non-Employee Director who is
on the Board on the IPO Date shall be granted his or her Initial Grant on that date. 

        (ii)  Annual Grants. After the IPO Date, each person who is a Non-Employee Director on the Board shall
automatically as of the day following the date of the annual shareholders' meeting be granted an Annual Grant to purchase ten thousand (10,000) shares of Common Stock on the terms and conditions set
forth herein. 

        (b)  Term. Each Non-Employee Director Option shall have a term of ten (10) years from the date it is
granted. 

        (c)  Exercise Price. The exercise price of each Non-Employee Director Option shall be one hundred percent (100%)
of the Fair Market Value of the stock subject to the Non-Employee Director Option on the date of grant. Notwithstanding the foregoing, a Non-Employee Director Option may be
granted with an exercise price lower than that set forth in the preceding sentence if such Non-Employee Director Option is granted pursuant to an assumption or substitution for another
option in a manner satisfying the provisions of Section 424(a) of the Code. 

        (d)  Vesting.

        (i)    Initial Grants. Initial Grants shall vest one-thirty-sixth (1/36th) for each month of
Continuous Service of the Non-Employee Director from the date of the stock option grant. 

        (ii)  Annual Grants. Annual Grants shall vest one-twelfth (1/12th) for each month of Continuous
Service of the Non-Employee Director from the date of the stock option grant. 

        (e)  Consideration. The purchase price of stock acquired pursuant to a Non-Employee Director Option may be paid,
to the extent permitted by applicable statutes and regulations, in any combination of (i) cash or check, (ii) delivery to the Company of other Common Stock, (ii) deferred payment
or (iv) any other form of legal consideration that may be acceptable to the Board and provided in the Non-Employee Director Option Agreement; provided, however, that at any time
that the Company is incorporated in Delaware, payment of the Common Stock's "par value," as defined in the Delaware General Corporation Law, shall not be made by deferred payment. In the case of any
deferred payment arrangement, interest shall be compounded at least annually and shall be charged at the minimum rate of interest necessary to avoid the treatment as interest, under any applicable
provisions of the Code, of any amounts other than amounts stated to be interest under the deferred payment arrangement. 

        (f)    Transferability. A Non-Employee Director Option shall not be transferable except by will or by the laws of
descent and distribution and shall be exercisable during the lifetime of the Non-Employee Director only by the Non-Employee Director. Notwithstanding the foregoing, the
Non-Employee Director may, by delivering written notice to the Company, in a form satisfactory to the 

11

 

Company, designate a third party who, in the event of the death of the Non-Employee Director, shall thereafter be entitled to exercise the Non-Employee Director Option. 

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

        (h)  Extension of Termination Date. If the exercise of the Non-Employee Director Option following the termination
of the Non-Employee Director's Continuous Service (other than upon the Non-Employee Director's death or Disability) would be prohibited at any time solely because the issuance
of shares would violate the registration requirements under the Securities Act, then the Non-Employee Director Option shall terminate on the earlier of (i) the expiration of the
term of the Non-Employee Director Option set forth in subsection 7(c) or (ii) the expiration of a period of three (3) months after the termination of the
Non-Employee Director's Continuous Service during which the exercise of the Non-Employee Director Option would not violate such registration requirements. 

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

        (j)    Death of Non-Employee Director. In the event (i) a Non-Employee Director's Continuous
Service terminates as a result of the Non-Employee Director's death or (ii) the Non-Employee Director dies within the three-month period after the termination of the
Non-Employee Director's Continuous Service for a reason other than death, then the Non-Employee Director Option may be exercised (to the extent the Non-Employee
Director was entitled to exercise the Non-Employee Director Option as of the date of death) by the Non-Employee Director's estate, by a person who acquired the right to
exercise the Non-Employee Director Option by bequest or inheritance or by a person designated to exercise the Non-Employee Director Option upon the Non-Employee
Director's death, but only within the period ending on the earlier of (1) the date eighteen (18) months following the date of death or (2) the expiration of the term of such
Non-Employee Director Option as set forth in the Non-Employee Director Option Agreement. If, after death, the Non-Employee Director Option is not exercised within
the time specified herein, the Non-Employee Director Option shall terminate. 

8.    PROVISIONS OF STOCK AWARDS OTHER THAN OPTIONS.  

        (a)  Stock Bonus Awards. Each stock bonus agreement shall be in such form and shall contain such terms and conditions as the
Board shall deem appropriate. The terms and conditions of stock bonus agreements may change from time to time, and the terms and conditions of separate stock bonus agreements need not be identical,
but each stock bonus agreement shall include (through incorporation 

12

 

of provisions hereof by reference in the agreement or otherwise) the substance of each of the following provisions: 

        (i)    Consideration. A stock bonus may be awarded in consideration for past services actually rendered to the Company or an
Affiliate for its benefit. 

        (ii)  Vesting. Subject to the "Repurchase Limitation" in subsection 11(h), shares of Common Stock awarded under the stock
bonus agreement may, but need not, be subject to a share repurchase option in favor of the Company in accordance with a vesting schedule to be determined by the Board. 

        (iii) Termination of Participant's Continuous Service. Subject to the "Repurchase Limitation" in subsection 11(h), in the
event a Participant's Continuous Service terminates, the Company may reacquire any or all of the shares of Common Stock held by the Participant which have not vested as of the date of termination
under the terms of the stock bonus agreement. 

        (iv)  Transferability. For a stock bonus award made before the Listing Date, rights to acquire shares of Common Stock under
the stock bonus agreement shall not be transferable except by will or by the laws of descent and distribution and shall be exercisable during the lifetime of the Participant only by the Participant.
For a stock bonus award made on or after the Listing Date, rights to acquire shares of Common Stock under the stock bonus agreement shall be transferable by the Participant only upon such terms and
conditions as are set forth in the stock bonus agreement, as the Board shall determine in its discretion, so long as Common Stock awarded under the stock bonus agreement remains subject to the terms
of the stock bonus agreement. 

        (b)  Restricted Stock Awards. Each restricted stock purchase agreement shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. The terms and conditions of the restricted stock purchase agreements may change from time to time, and the terms and conditions of separate restricted
stock purchase agreements need not be identical, but each restricted stock purchase agreement shall include (through incorporation of provisions hereof by reference in the agreement or otherwise) the
substance of each of the following provisions: 

        (i)    Purchase Price. Subject to the provisions of subsection 5(b) regarding Ten Percent Shareholders, the purchase price under
each restricted stock purchase agreement shall be such amount as the Board shall determine and designate in such restricted stock purchase agreement. For restricted stock awards made prior to the
Listing Date, the purchase price shall not be less than eighty-five percent (85%) of the Common Stock's Fair Market Value on the date such award is made or at the time the purchase is
consummated. For restricted stock awards made on or after the Listing Date, the purchase price shall not be less than eighty-five percent (85%) of the Common Stock's Fair Market Value on
the date such award is made or at the time the purchase is consummated. 

        (ii)  Consideration. The purchase price of Common Stock acquired pursuant to the restricted stock purchase agreement shall be
paid either: (i) in cash at the time of purchase; (ii) at the discretion of the Board, according to a deferred payment or other similar arrangement with the Participant; or
(iii) in any other form of legal consideration that may be acceptable to the Board in its discretion; provided, however, that at any time that the Company is incorporated in Delaware, then
payment of the Common Stock's "par value," as defined in the Delaware General Corporation Law, shall not be made by deferred payment. 

        (iii) Vesting. Subject to the "Repurchase Limitation" in subsection 11(h), shares of Common Stock acquired under the
restricted stock purchase agreement may, but need not, be subject to a share repurchase option in favor of the Company in accordance with a vesting schedule to be determined by the Board. 

13

 

        (iv)  Termination of Participant's Continuous Service. Subject to the "Repurchase Limitation" in subsection 11(h), in the
event a Participant's Continuous Service terminates, the Company may repurchase or otherwise reacquire any or all of the shares of Common Stock held by the Participant which have not vested as of the
date of termination under the terms of the restricted stock purchase agreement. 

        (v)  Transferability. For a restricted stock award made before the Listing Date, rights to acquire shares of Common Stock
under the restricted stock purchase agreement shall not be transferable except by will or by the laws of descent and distribution and shall be exercisable during the lifetime of the Participant only
by the Participant. For a restricted stock award made on or after the Listing Date, rights to acquire shares of Common Stock under the restricted stock purchase agreement shall be transferable by the
Participant only upon such terms and conditions as are set forth in the restricted stock purchase agreement, as the Board shall determine in its discretion, so long as Common Stock awarded under the
restricted stock purchase agreement remains subject to the terms of the restricted stock purchase agreement. 

9.    COVENANTS OF THE COMPANY.  

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

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

10.  USE OF PROCEEDS FROM STOCK.  

        Proceeds from the sale of Common Stock pursuant to Stock Awards shall constitute general funds of the Company. 

11.  MISCELLANEOUS.  

        (a)  Acceleration of Exercisability and Vesting. The Board shall have the power to accelerate the time at which a Stock Award
may first be exercised or the time during which a Stock Award or any part thereof will vest in accordance with the Plan, notwithstanding the provisions in the Stock Award stating the time at which it
may first be exercised or the time during which it will vest. 

        (b)  Shareholder Rights. No Participant shall be deemed to be the holder of, or to have any of the rights of a holder with
respect to, any shares of Common Stock subject to such Stock Award unless and until such Participant has satisfied all requirements for exercise of the Stock Award pursuant to its terms. 

        (c)  No Employment or other Service Rights. Nothing in the Plan or any instrument executed or Stock Award granted pursuant
thereto shall confer upon any Participant any right to continue to serve the Company or an Affiliate in the capacity in effect at the time the Stock Award was granted or shall affect the right of the
Company or an Affiliate to terminate (i) the employment of an Employee with or without notice and with or without cause, (ii) the service of a Consultant pursuant to the terms of 

14

 

such Consultant's agreement with the Company or an Affiliate or (iii) the service of a Director pursuant to the Bylaws of the Company or an Affiliate, and any applicable provisions of the
corporate law of the state in which the Company or the Affiliate is incorporated, as the case may be. 

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

        (e)  Investment Assurances. The Company may require a Participant, as a condition of exercising or acquiring Common Stock
under any Stock Award, (i) to give written assurances satisfactory to the Company as to the Participant's knowledge and experience in financial and business matters and/or to employ a purchaser
representative reasonably satisfactory to the Company who is knowledgeable and experienced in financial and business matters and that he or she is capable of evaluating, alone or together with the
purchaser representative, the merits and risks of exercising the Stock Award; and (ii) to give written assurances satisfactory to the Company stating that the Participant is acquiring Common
Stock subject to the Stock Award for the Participant's own account and not with any present intention of selling or otherwise distributing the Common Stock. The foregoing requirements, and any
assurances given pursuant to such requirements, shall be inoperative if (1) the issuance of the shares of Common Stock upon the exercise or acquisition of Common Stock under the Stock Award has
been registered under a then currently effective registration statement under the Securities Act or (2) as to any particular requirement, a determination is made by counsel for the Company that
such requirement need not be met in the circumstances under the then applicable securities laws. The Company may, upon advice of counsel to the Company, place legends on stock certificates issued
under the Plan as such counsel deems necessary or appropriate in order to comply with applicable securities laws, including, but not limited to, legends restricting the transfer of the Common Stock. 

        (f)    Withholding Obligations. To the extent provided by the terms of a Stock Award Agreement, the Participant may satisfy any
federal, state or local tax withholding obligation relating to the exercise or acquisition of Common Stock under a Stock Award by any of the following means (in addition to the Company's right to
withhold from any compensation paid to the Participant by the Company) or by a combination of such means: (i) tendering a cash payment; (ii) authorizing the Company to withhold shares of
Common Stock from the shares of Common Stock otherwise issuable to the Participant as a result of the exercise or acquisition of Common Stock under the Stock Award, provided, however, that no shares
of Common Stock are withheld with a value exceeding the minimum amount of tax required to be withheld by law; or (iii) delivering to the Company owned and unencumbered shares of Common Stock. 

        (g)  Information Obligation. Prior to the Listing Date, to the extent required by Section 260.140.46 of Title 10 of the
California Code of Regulations, the Company shall deliver financial statements to Participants at least annually. This subsection 11(g) shall not apply to key Employees whose duties in connection with
the Company assure them access to equivalent information. 

        (h)  Repurchase Limitation. The terms of any repurchase option shall be specified in the Stock Award and may be either at Fair
Market Value at the time of repurchase or at not less than the original purchase price. To the extent required by Section 260.140.41 and Section 260.140.42 of Title 10 of the California
Code of Regulations at the time a Stock Award is made, any repurchase option contained in
a Stock Award granted prior to the Listing Date to a person who is not an Officer, Director or Consultant shall be upon the terms described below: 

        (i)    Fair Market Value. If the repurchase option gives the Company the right to repurchase the shares of Common Stock upon
termination of employment at not less than the Fair Market 

15

 

Value of the shares of Common Stock to be purchased on the date of termination of Continuous Service, then (i) the right to repurchase shall be exercised for cash or cancellation of purchase
money indebtedness for the shares of Common Stock within ninety (90) days of termination of Continuous Service (or in the case of shares of Common Stock issued upon exercise of Stock Awards
after such date of termination, within ninety (90) days after the date of the exercise) or such longer period as may be agreed to by the Company and the Participant (for example, for purposes
of satisfying the requirements of Section 1202(c)(3) of the Code regarding "qualified small business stock") and (ii) the right terminates when the shares of Common Stock become publicly
traded. 

        (ii)  Original Purchase Price. If the repurchase option gives the Company the right to repurchase the shares of Common Stock
upon termination of Continuous Service at the original purchase price, then (i) the right to repurchase at the original purchase price shall lapse at the rate of at least twenty percent (20%)
of the shares of Common Stock per year over five (5) years from the date the Stock Award is granted (without respect to the date the Stock Award was exercised or became exercisable) and
(ii) the right to repurchase shall be exercised for cash or cancellation of purchase money indebtedness for the shares of Common Stock within ninety (90) days of termination of
Continuous Service (or in the case of shares of Common Stock issued upon exercise of Options after such date of termination, within ninety (90) days after the date of the exercise) or such
longer period as may be agreed to by the Company and the Participant (for example, for purposes of satisfying the requirements of Section 1202(c)(3) of the Code regarding "qualified small
business stock"). 

12.  ADJUSTMENTS UPON CHANGES IN STOCK.  

        (a)  Capitalization Adjustments. If any change is made in the Common Stock subject to the Plan, or subject to any Stock Award,
without the receipt of consideration by the Company (through merger, consolidation, reorganization, recapitalization, reincorporation, stock dividend, dividend in property other than cash, stock
split, liquidating dividend, combination of shares, exchange of shares, change in corporate structure or other transaction not involving the receipt of consideration by the Company), the Plan will be
appropriately adjusted in the class(es) and maximum number of securities subject to the Plan pursuant to subsection 4(a) and the maximum number of securities subject to award to any person pursuant to
subsection 5(c), and the outstanding Stock Awards will be appropriately adjusted in the class(es) and number of securities and price per share of Common Stock subject to such outstanding Stock Awards.
The Board shall make such adjustments, and its determination shall be final, binding and conclusive. (The conversion of any convertible securities of the Company shall not be treated as a transaction
"without receipt of consideration" by the Company.) 

        (b)  Change in Control. In the event of (i) a dissolution, liquidation or sale of substantially all of the assets of
the Company, (ii) a merger or consolidation in which the Company is not the surviving corporation or (iii) a reverse merger in which the Company is the surviving corporation but the
shares of Common Stock outstanding immediately preceding the merger are converted by virtue of the merger into other property, whether in the form of securities, cash or otherwise, then, to the extent
permitted by applicable law: (i) any surviving corporation shall assume any Stock Awards outstanding under the Plan or shall substitute similar stock awards (including an award to acquire the
same consideration paid to the shareholders in the transaction described in this subsection 12(c)) for those outstanding under the Plan, or (ii) such Stock Awards shall continue in full force
and effect. In the event any surviving corporation refuses to assume or continue such Stock Awards, or to substitute similar stock awards for those outstanding under the Plan, then with respect to
Stock Awards held by Participants whose Continuous Service has not terminated, the time during which such Stock Awards may be exercised shall be accelerated, and the Stock Awards terminated if not
exercised prior to such event. 

16

 

13.  AMENDMENT OF THE PLAN AND STOCK AWARDS.  

        (a)  Amendment of Plan. The Board at any time, and from time to time, may amend the Plan. However, except as provided in
Section 12 relating to adjustments upon changes in Common Stock, no amendment shall be effective unless approved by the shareholders of the Company to the extent shareholder approval is
necessary to satisfy the requirements of Section 422 of the Code, Rule 16b-3 or any Nasdaq or securities exchange listing requirements. 

        (b)  Shareholder Approval. The Board may, in its sole discretion, submit any other amendment to the Plan for shareholder
approval, including, but not limited to, amendments to the Plan intended to satisfy the requirements of Section 162(m) of the Code and the regulations thereunder regarding the exclusion of
performance-based compensation from the limit on corporate deductibility of compensation paid to certain executive officers. 

        (c)  Contemplated Amendments. It is expressly contemplated that the Board may amend the Plan in any respect the Board deems
necessary or advisable to provide eligible Employees with the maximum benefits provided or to be provided under the provisions of the Code and the regulations promulgated thereunder relating to
Incentive Stock Options and/or to bring the Plan and/or Incentive Stock Options granted under it into compliance therewith. 

        (d)  No Impairment of Rights. Rights under any Stock Award granted before amendment of the Plan shall not be impaired by any
amendment of the Plan unless (i) the Company requests the consent of the Participant and (ii) the Participant consents in writing. 

        (e)  Amendment of Stock Awards. The Board at any time, and from time to time, may amend the terms of any one or more Stock
Awards; provided, however, that the rights under any Stock Award shall not be impaired by any such amendment unless (i) the Company requests the consent of the Participant and (ii) the
Participant consents in writing. 

14.  TERMINATION OR SUSPENSION OF THE PLAN.  

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

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

15.  EFFECTIVE DATE OF PLAN.  

        The Plan shall become effective as determined by the Board, but no Stock Award shall be exercised (or, in the case of a stock bonus, shall be granted) unless and
until the Plan has been approved by the shareholders of the Company, which approval shall be within twelve (12) months before or after the date the Plan is adopted by the Board. 

16.  CHOICE OF LAW.  

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

17

QuickLinks

EXHIBIT 10.16

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