EQUITY INCENTIVE PLAN

 

                                CIMA LABS INC.

                            EQUITY INCENTIVE PLAN
                      AMENDED AND RESTATED MARCH 25, 1996
                 FURTHER AMENDED, EFFECTIVE SEPTEMBER 24, 1996

                                 INTRODUCTION.

     In 1987, the Board of Directors adopted the CIMA LABS, INC. Stock Option 
and Stock Award Plan, which was later amended and restated.  On March 25, 
1996, the Board of Directors adopted a subsequent amendment and restatement 
and retitled this the Equity Incentive Plan.

1.   PURPOSES.

     (a)  The purpose of the Plan is to provide a means by which selected 
Employees and Directors of and Consultants to the Company, and its 
Affiliates, may be given an opportunity to benefit from increases in value of 
the stock of the Company through the granting of (i) Incentive Stock Options, 
(ii) Nonstatutory Stock Options, (iii) stock bonuses, (iv) rights to purchase 
restricted stock, and (v) stock appreciation rights, all as defined below.

     (b)  The Company, by means of the Plan, seeks to retain the services of 
persons who are now Employees or Directors of or Consultants to the Company 
or its Affiliates, to secure and retain the services of new Employees, 
Directors and Consultants, and to provide incentives for such persons to 
exert maximum efforts for the success of the Company and its Affiliates.

    (c)  The Company intends that the Stock Awards issued under the Plan 
shall, in the discretion of the Board or any Committee to which 
responsibility for administration of the Plan has been delegated pursuant to 
subsection 3(c), be either (i) Options granted pursuant to Section 6 hereof, 
including Incentive Stock Options and Nonstatutory Stock Options, (ii) stock 
bonuses or rights to purchase restricted stock granted pursuant to Section 7 
hereof, or (iii) stock appreciation rights granted pursuant to Section 8 
hereof.  All Options shall be separately designated Incentive Stock Options 
or Nonstatutory Stock Options at the time of grant, and in such form as 
issued pursuant to Section 6, and a separate certificate or certificates will 
be issued for shares purchased on exercise of each type of Option.

2.   DEFINITIONS.

    (a)  "AFFILIATE" means any parent corporation or subsidiary corporation, 
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 appointed by the Board in accordance
with subsection 3(c) of the Plan.

    (e)  "COMPANY" means CIMA LABS INC., a Delaware corporation.

     (f)  "CONCURRENT STOCK APPRECIATION RIGHT" or "CONCURRENT RIGHT" means a 
right granted pursuant to subsection 8(b)(2) of the Plan.

     (g)  "CONSULTANT" means any person, including an advisor, engaged by the 
Company or an Affiliate to render consulting services and who is compensated 
for such services, provided that the term "Consultant" shall not include 
Directors who are paid only a director's fee by the Company or who are not 
compensated by the Company for their services as Directors.

     (h)  "CONTINUOUS STATUS AS AN EMPLOYEE, DIRECTOR OR CONSULTANT" means 
the employment or relationship as a Director or Consultant is not interrupted 
or terminated.  The Board or the chief executive officer of the Company, in 
that party's sole discretion, may determine whether Continuous Status as an 
Employee, Director or Consultant shall be considered interrupted in the case 
of:  (i) any leave of absence approved by the Board or chief executive 
officer of the Company, including sick leave, military leave, or any other 
personal leave; or (ii) transfers between locations of the Company or between 
the Company, Affiliates or their successors.

     (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.

     (k)  "EMPLOYEE" means any person, including Officers and Directors, 
employed by the Company or any Affiliate of the Company.  Neither service as 
a Director nor payment of a director's fee by the Company shall be sufficient 
to constitute "employment" by the Company.

     (l)  "EXCHANGE ACT" means the Securities Exchange Act of 1934, as 
amended.

     (m)  "FAIR MARKET VALUE" means, as of any date, the value of the common 
stock of the Company determined as follows:

          (1)  If the common stock is listed on any established stock 
exchange or a national market system, including without limitation the Nasdaq 
National 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 system or exchange (or the exchange with the 
greatest volume of trading in 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;

          (2)  If the common stock is quoted on the Nasdaq Stock Market (but 
not on the National Market thereof) or is regularly quoted by a recognized 
securities dealer but selling prices are not reported, the Fair Market Value 
of a share of common stock shall be the mean between the bid and asked prices 
for 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;

          (3)  In the absence of an established market for the common stock, 
the Fair Market Value shall be determined in good faith by the Board.

     (n)  "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.

     (o)  "INDEPENDENT STOCK APPRECIATION RIGHT" or "INDEPENDENT RIGHT" means 
a right granted pursuant to subsection 8(b)(3) of the Plan.

     (p)  "NON-EMPLOYEE DIRECTOR" means a Director who either (i) is not a 
current Employee or Officer of the Company or its parent or subsidiary, does 
not receive compensation (directly or indirectly) from the Company or its 
parent or 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 of 1933 ("Regulation S-K")), does not possess an interest 
in any other transaction as to which disclosure would be required under Item 
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.

     (q)  "NONSTATUTORY STOCK OPTION" means an Option not intended to qualify 
as an Incentive Stock Option.

     (r)  "OFFICER" means a person who is an officer of the Company within 
the meaning of Section 16 of the Exchange Act and the rules and regulations 
promulgated thereunder.

     (s)  "OPTION" means a stock option granted pursuant to the Plan.

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

     (u)  "OPTIONEE" means an Employee, Director or Consultant who holds an 
outstanding Option.

     (v)  "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.

     (w)  "PLAN" means this CIMA LABS INC. Equity Incentive Plan.

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

     (y)  "STOCK APPRECIATION RIGHT" means any of the various types of rights 
which may be granted under Section 8 of the Plan.

     (z)  "STOCK AWARD" means any right granted under the Plan, including any 
Option, any stock bonus, any right to purchase restricted stock, and any 
Stock Appreciation Right.

     (aa) "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.

     (ab) "TANDEM STOCK APPRECIATION RIGHT" or "TANDEM RIGHT" means a right 
granted pursuant to subsection 8(b)(1) of the Plan.

3.   ADMINISTRATION.

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

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

          (1)  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; whether a Stock Award will be an Incentive Stock Option, a 
Nonstatutory Stock Option, a stock bonus, a right to purchase restricted 
stock, a Stock Appreciation Right, or a combination of the foregoing; 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 stock 
pursuant to a Stock Award; whether a person shall be permitted to receive 
stock upon exercise of an Independent Stock Appreciation Right; and the 
number of shares with respect to which a Stock Award shall be granted to each 
such person.

          (2)  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.

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

          (4)  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)  The Board may delegate administration of the Plan to a committee 
composed of not fewer than two (2) members (the "Committee"), all of the 
members of which Committee may be, in the discretion of the Board, 
Non-Employee Directors and/or Outside Directors.  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 of two (2) or more Outside 
Directors 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 such 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.  Notwithstanding anything 
in this Section 3 to the contrary, at any time the Board or the Committee may 
delegate to a committee of one or more members of the Board the authority to 
grant Stock Awards to eligible persons who (1) are not then subject to 
Section 16 of the Exchange Act and/or (2) are either (i) 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 (ii) not persons 
with respect to whom the Company wishes to avoid the application of Section 
162(m) of the Code.

4.   SHARES SUBJECT TO THE PLAN.

     (a)  Subject to the provisions of Section 12 relating to adjustments 
upon changes in stock, the stock that may be issued pursuant to Stock Awards 
shall not exceed in the aggregate Two Million (2,000,000) shares of the 
Company's common stock.  If any Stock Award shall for any reason expire or 
otherwise terminate, in whole or in part, without having been exercised in 
full, the stock not acquired under such Stock Award shall revert to and again 
become available for issuance under the Plan.  Shares subject to Stock 
Appreciation Rights exercised in accordance with Section 8 of the Plan shall 
not be available for subsequent issuance under the Plan.

     (b)  The stock subject to the Plan may be unissued shares or reacquired 
shares, bought on the market or otherwise.

5.   ELIGIBILITY.

     (a)  Incentive Stock Options and Stock Appreciation Rights appurtenant 
thereto may be granted only to Employees.  Stock Awards other than Incentive 
Stock Options and Stock Appreciation Rights appurtenant thereto may be 
granted only to Employees, Directors or Consultants.

     (b)  No person shall be eligible for the grant of an Incentive Stock 
Option or an award to purchase restricted stock if, at the time of grant, 
such person 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 
unless the exercise price of such Incentive Stock Option is at least one 
hundred ten percent (110%) of the Fair Market Value of such stock at the date 
of grant and the Incentive Stock Option is not exercisable after the 
expiration of five (5) years from the date of grant.

     (c)  Subject to the provisions of Section 12 relating to adjustments 
upon changes in stock, no person shall be eligible to be granted Options and 
Stock Appreciation Rights covering more than five hundred thousand (500,000) 
shares of the Company's common stock in any three (3) calendar year period.

6.   OPTION PROVISIONS.

     Each Option shall be in such form and shall contain such terms and 
conditions as the Board shall deem appropriate.  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.  No Option shall be exercisable after the expiration of ten 
(10) years from the date it was granted.

     (b)  PRICE.  The exercise price of each Incentive Stock Option shall be 
not less than one hundred percent (100%) of the Fair Market Value of the 
stock subject to the Option on the date the Option is granted; the exercise 
price of each Nonstatutory Stock Option shall be determined by the Board. 
Notwithstanding the foregoing, an Option (whether an Incentive Stock Option 
or a Nonstatutory Stock Option) may be granted with an exercise price lower 
than that set forth in the preceding sentence or determined by the Board 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)  CONSIDERATION.  The purchase price of 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 or the Committee, at the time of the grant of the
Option, (A) by delivery to the Company of other common stock of the Company,
(B) according to a deferred payment or other arrangement (which may include,
without limiting the generality of the foregoing, the use of other common stock
of the Company)

with the person to whom the Option is granted or to whom the Option is 
transferred pursuant to subsection 6(d), or (C) in any other form of legal 
consideration that may be acceptable to the Board.

     In the case of any deferred payment arrangement, interest shall be 
payable 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.

     (d)  TRANSFERABILITY.  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 person to whom the Option is 
granted only by such person.  A Nonstatutory Stock Option shall not be 
transferable, except by the Optionee upon such terms and conditions as are 
set forth in the Option Agreement for such Nonstatutory Stock Option, as the 
Board or the Committee shall determine in its discretion.  Notwithstanding 
the foregoing, the person to whom the Option is granted 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 Optionee, shall 
thereafter be entitled to exercise the Option.

     (e)  VESTING.  The total number of shares of stock subject to an Option 
may, but need not, be allotted in periodic installments (which may, but need 
not, be equal).  The Option Agreement may provide that from time to time 
during each of such installment periods, the Option may become exercisable 
("vest") with respect to some or all of the shares allotted to that period, 
and may be exercised with respect to some or all of the shares allotted to 
such period and/or any prior period as to which the Option became vested but 
was not fully exercised.  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 
provisions of this subsection 6(e) are subject to any Option provisions 
governing the minimum number of shares as to which an Option may be exercised.

     (f)  TERMINATION OF EMPLOYMENT OR RELATIONSHIP AS A DIRECTOR OR 
CONSULTANT. In the event an Optionee's Continuous Status as an Employee, 
Director or Consultant terminates (other than upon the Optionee's death or 
disability), the Optionee may exercise his or her Option (to the extent that 
the Optionee was entitled to exercise it at the date of termination) but only 
within such period of time ending on the earlier of (i) the date three (3) 
months after the termination of the Optionee's Continuous Status as an 
Employee, Director or Consultant (or such longer or shorter period specified 
in the Option Agreement), or (ii) the expiration of the term of the Option as 
set forth in the Option Agreement.  If, after termination, the Optionee does 
not exercise his or her Option within the time specified in the Option 
Agreement, the Option shall terminate, and the shares covered by such Option 
shall revert to and again become available for issuance under the Plan.

     An Optionee's Option Agreement may also provide that if the exercise of 
the Option following the termination of the Optionee's Continuous Status as 
an Employee, Director, or Consultant (other than upon the Optionee's death or 
disability) would result in liability under

Section 16(b) of the Exchange Act, then the Option shall terminate on the 
earlier of (i) the expiration of the term of the Option set forth in the 
Option Agreement, or (ii) the tenth (10th) day after the last date on which 
such exercise would result in such liability under Section 16(b) of the 
Exchange Act.  Finally, an Optionee's Option Agreement may also provide that 
if the exercise of the Option following the termination of the Optionee's 
Continuous Status as an Employee, Director or Consultant (other than upon the 
Optionee's death or disability) would be prohibited at any time solely 
because the issuance of shares would violate the registration requirements 
under the Act, then the Option shall terminate on the earlier of (i) the 
expiration of the term of the Option set forth in the first paragraph of this 
subsection 6(f), or (ii) the expiration of a period of three (3) months after 
the termination of the Optionee's Continuous Status as an Employee, Director 
or Consultant during which the exercise of the Option would not be in 
violation of such registration requirements.

     (g)  DISABILITY OF OPTIONEE.  In the event an Optionee's Continuous 
Status as an Employee, Director or Consultant terminates as a result of the 
Optionee's disability, the Optionee may exercise his or her Option (to the 
extent that the Optionee was entitled to exercise it at 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), or (ii) the expiration of 
the term of the Option as set forth in the Option Agreement.  If, at the date 
of termination, the Optionee is not entitled to exercise his or her entire 
Option, the shares covered by the unexercisable portion of the Option shall 
revert to and again become available for issuance under the Plan.  If, after 
termination, the Optionee does not exercise his or her Option within the time 
specified herein, the Option shall terminate, and the shares covered by such 
Option shall revert to and again become available for issuance under the Plan.

     (h)  DEATH OF OPTIONEE.  In the event of the death of an Optionee 
during, or within a period specified in the Option after the termination of, 
the Optionee's Continuous Status as an Employee, Director or Consultant, the 
Option may be exercised (to the extent the Optionee was entitled to exercise 
the Option at the date of death) by the Optionee'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 Optionee's death pursuant 
to subsection 6(d), but only within the period ending on the earlier of (i) 
the date eighteen (18) months following the date of death (or such longer or 
shorter period specified in the Option Agreement), or (ii) the expiration of 
the term of such Option as set forth in the Option Agreement.  If, at the 
time of death, the Optionee was not entitled to exercise his or her entire 
Option, the shares covered by the unexercisable portion of the Option shall 
revert to and again become available for issuance under the Plan.  If, after 
death, the Option is not exercised within the time specified herein, the 
Option shall terminate, and the shares covered by such Option shall revert to 
and again become available for issuance under the Plan.

     (i)  RE-LOAD OPTIONS.  Without in any way limiting the authority of the 
Board or Committee to make or not to make grants of Options hereunder, the 
Board or Committee shall have the authority (but not an obligation) to 
include as part of any Option Agreement a provision entitling the Optionee to 
a further Option (a "Re-Load Option") in the event the Optionee

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.  Any such Re-Load Option 
(i) shall be for a number of shares equal to the number of shares surrendered 
as part or all of the exercise price of such Option; (ii) shall 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 (iii) shall 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 which is an Incentive Stock Option and which is granted to a 10% 
stockholder (as described in subsection 5(b)), shall have an exercise price 
which is equal to one hundred ten percent (110%) of the Fair Market Value of 
the stock subject to the Re-Load Option on the date of exercise of the 
original Option and shall have a term which is no longer than five (5) years.

     Any such Re-Load Option may be an Incentive Stock Option or a 
Nonstatutory Stock Option, as the Board or Committee 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 
exercisability of Incentive Stock Options described in subsection 12(d) of 
the Plan 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 under subsection 4(a) and the limits on the 
grant of options under subsection 5(c) and shall be subject to such other 
terms and conditions as the Board or Committee may determine which are not 
inconsistent with the express provisions of the Plan regarding the terms of 
Options.

7.   TERMS OF STOCK BONUSES AND PURCHASES OF RESTRICTED STOCK.

     Each stock bonus or restricted stock purchase agreement shall be in such 
form and shall contain such terms and conditions as the Board or the 
Committee shall deem appropriate.  The terms and conditions of stock bonus or 
restricted stock purchase agreements may change from time to time, and the 
terms and conditions of separate agreements need not be identical, but each 
stock bonus or 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 as appropriate:

      (a)  PURCHASE PRICE.  The purchase price under each restricted stock 
purchase agreement shall be such amount as the Board or Committee shall 
determine and designate in such agreement.  Notwithstanding the foregoing, 
the Board or the Committee may determine that eligible participants in the 
Plan may be awarded stock pursuant to a stock bonus agreement in 
consideration for past services actually rendered to the Company or for its 
benefit.

      (b)  TRANSFERABILITY.  No rights under a stock bonus or restricted 
stock purchase agreement shall be transferable except by will or the laws of 
descent and distribution so long as stock awarded under such agreement 
remains subject to the terms of the agreement, except as specifically 
provided in the applicable stock bonus or restricted stock purchase agreement.

     (c)  CONSIDERATION.  The purchase price of stock acquired pursuant to a 
restricted stock purchase agreement shall be paid either:  (i) in cash at the 
time of purchase; (ii) at the discretion of the Board or the Committee, 
according to a deferred payment or other arrangement with the person to whom 
the stock is sold; or (iii) in any other form of legal consideration that may 
be acceptable to the Board or the Committee in its discretion.  
Notwithstanding the foregoing, the Board or the Committee to which 
administration of the Plan has been delegated may award stock pursuant to a 
stock bonus agreement in consideration for past services actually rendered to 
the Company or for its benefit.

     (d)  VESTING.  Shares of stock sold or awarded under the Plan may, but 
need not, be subject to a repurchase option in favor of the Company in 
accordance with a vesting schedule to be determined by the Board or the 
Committee.

     (e)  TERMINATION OF EMPLOYMENT OR RELATIONSHIP AS A DIRECTOR OR 
CONSULTANT. In the event a Participant's Continuous Status as an Employee, 
Director or Consultant terminates, the Company may repurchase or otherwise 
reacquire, subject to the limitations described in subsection 7(d), any or 
all of the shares of stock held by that person which have not vested as of 
the date of termination under the terms of the stock bonus or restricted 
stock purchase agreement between the Company and such person.

8.   STOCK APPRECIATION RIGHTS.

     (a)  The Board or Committee shall have full power and authority, 
exercisable in its sole discretion, to grant Stock Appreciation Rights under 
the Plan to Employees or Directors of or Consultants to, the Company or its 
Affiliates.  To exercise any outstanding Stock Appreciation Right, the holder 
must provide written notice of exercise to the Company in compliance with the 
provisions of the Stock Award Agreement evidencing such right.  Except as 
provided in subsection 5(c), no limitation shall exist on the aggregate 
amount of cash payments the Company may make under the Plan in connection 
with the exercise of a Stock Appreciation Rights.

     (b)  Three types of Stock Appreciation Rights shall be authorized for 
issuance under the Plan:

          (1)  TANDEM STOCK APPRECIATION RIGHTS.  Tandem Stock Appreciation 
Rights will be granted appurtenant to an Option, and shall, except as 
specifically set forth in this Section 8, be subject to the same terms and 
conditions applicable to the particular Option grant to which it pertains. 
Tandem Stock Appreciation Rights will require the holder to elect between the 
exercise of the underlying Option for shares of stock and the surrender, in 
whole or in part, of such Option for an appreciation distribution.  The 
appreciation distribution payable on the exercised Tandem Right shall be in 
cash (or, if so provided, in an equivalent number of shares of stock based on 
Fair Market Value on the date of the Option surrender) in an amount up to the 
excess of (A) the Fair Market Value (on the date of the Option surrender) of 
the number of shares of stock covered by that portion of the surrendered 
Option in which the Optionee is vested over (B) the aggregate exercise price 
payable for such vested shares.

          (2)  CONCURRENT STOCK APPRECIATION RIGHTS.  Concurrent Rights will 
be granted appurtenant to an Option and may apply to all or any portion of 
the shares of stock subject to the underlying Option and shall, except as 
specifically set forth in this Section 8, be subject to the same terms and 
conditions applicable to the particular Option grant to which it pertains.  A 
Concurrent Right shall be exercised automatically at the same time the 
underlying Option is exercised with respect to the particular shares of stock 
to which the Concurrent Right pertains.  The appreciation distribution 
payable on an exercised Concurrent Right shall be in cash (or, if so 
provided, in an equivalent number of shares of stock based on Fair Market 
Value on the date of the exercise of the Concurrent Right) in an amount equal 
to such portion as shall be determined by the Board or the Committee at the 
time of the grant of the excess of (A) the aggregate Fair Market Value (on 
the date of the exercise of the Concurrent Right) of the vested shares of 
stock purchased under the underlying Option which have Concurrent Rights 
appurtenant to them over (B) the aggregate exercise price paid for such 
shares.

          (3)  INDEPENDENT STOCK APPRECIATION RIGHTS.  Independent Rights 
will be granted independently of any Option and shall, except as specifically 
set forth in this Section 8, be subject to the same terms and conditions 
applicable to Nonstatutory Stock Options as set forth in Section 6.  They 
shall be denominated in share equivalents.  The appreciation distribution 
payable on the exercised Independent Right shall be not greater than an 
amount equal to the excess of (A) the aggregate Fair Market Value (on the 
date of the exercise of the Independent Right) of a number of shares of 
Company stock equal to the number of share equivalents in which the holder is 
vested under such Independent Right, and with respect to which the holder is 
exercising the Independent Right on such date, over (B) the aggregate Fair 
Market Value (on the date of the grant of the Independent Right) of such 
number of shares of Company stock.  The appreciation distribution payable on 
the exercised Independent Right shall be in cash or, if so provided, in an 
equivalent number of shares of stock based on Fair Market Value on the date 
of the exercise of the Independent Right.

9.   COVENANTS OF THE COMPANY.

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

     (b)  The Company shall seek to obtain from each regulatory commission or 
agency having jurisdiction over the Plan such authority as may be required to 
issue and sell shares of stock upon exercise of the Stock Award; provided, 
however, that this undertaking shall not require the Company to register 
under the Securities Act of 1933, as amended (the "Securities Act") either 
the Plan, any Stock Award or any 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 
stock under the Plan, the Company shall be relieved from any liability for 
failure to issue and sell 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 stock pursuant to Stock Awards shall 
constitute general funds of the Company.

11.  MISCELLANEOUS.

     (a)  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 pursuant to subsection 6(e), 7(d) or 8(b), 
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)  Neither an Employee, Director or Consultant nor any person to whom 
a Stock Award is transferred under subsection 6(d), 7(b), or 8(b) shall be 
deemed to be the holder of, or to have any of the rights of a holder with 
respect to, any shares subject to such Stock Award unless and until such 
person has satisfied all requirements for exercise of the Stock Award 
pursuant to its terms.

     (c)  Nothing in the Plan or any instrument executed or Stock Award 
granted pursuant thereto shall confer upon any Employee, Director, Consultant 
or other holder of Stock Awards any right to continue in the employ of the 
Company or any Affiliate (or to continue acting as a Director or Consultant) 
or shall affect the right of the Company or any Affiliate to terminate the 
employment of any Employee with or without cause the right of the Company's 
Board of Directors and/or the Company's shareholders to remove any Director 
pursuant to the terms of the Company's By-Laws and the provisions of the 
Delaware General Corporation Law, or the right to terminate the relationship 
of any Consultant pursuant to the terms of such Consultant's agreement with 
the Company or Affiliate.

     (d)  To the extent that the aggregate Fair Market Value (determined at 
the time of grant) of stock with respect to which Incentive Stock Options are 
exercisable for the first time by any Optionee 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)  The Company may require any person to whom a Stock Award is 
granted, or any person to whom a Stock Award is transferred pursuant to 
subsection 6(d), 7(b) or 8(b), as a condition of exercising or acquiring 
stock under any Stock Award, (1) to give written assurances satisfactory to 
the Company as to such person'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 (2) to give written assurances satisfactory 
to the Company stating that such person is acquiring the stock subject to the 
Stock Award for such person's own account and not with any present intention 
of selling or otherwise distributing the

stock. The foregoing requirements, and any assurances given pursuant to such 
requirements, shall be inoperative if (i) the issuance of the shares upon the 
exercise or acquisition of stock under the Stock Award has been registered 
under a then currently effective registration statement under the Securities 
Act, or (ii) 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 stock.

     (f)  To the extent provided by the terms of a Stock Award Agreement, the 
person to whom a Stock Award is granted may satisfy any federal, state or 
local tax withholding obligation relating to the exercise or acquisition of 
stock under a Stock Award by any of the following means or by a combination 
of such means:  (1) tendering a cash payment; (2) authorizing the Company to 
withhold shares from the shares of the common stock otherwise issuable to the 
participant as a result of the exercise or acquisition of stock under the 
Stock Award; or (3) delivering to the Company owned and unencumbered shares 
of the common stock of the Company.

12.  ADJUSTMENTS UPON CHANGES IN STOCK.

     (a)  If any change is made in the 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 type(s) 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 during any three (3) calendar year period pursuant to subsection 5(c), 
and the outstanding Stock Awards will be appropriately adjusted in the 
type(s) and number of securities and price per share of stock subject to such 
outstanding Stock Awards.  Such adjustments shall be made by the Board or the 
Committee, the determination of which shall be final, binding and conclusive. 
(The conversion of any convertible securities of the Company shall not be 
treated as a "transaction not involving the receipt of consideration by the 
Company".)

    (b)  In the event of:  (1) a dissolution, liquidation or sale of 
substantially all of the assets of the Company; (2) a merger or consolidation 
in which the Company is not the surviving corporation; (3) a reverse merger 
in which the Company is the surviving corporation but the shares of the 
Company's 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; or (4) the acquisition by any person, entity 
or group within the meaning of Section 13(d) or 14(d) of the Exchange Act, or 
any comparable successor provisions (excluding any employee benefit plan, or 
related trust, sponsored or maintained by the Company or any Affiliate of the 
Company) of the beneficial ownership (within the meaning of Rule 13d-3 
promulgated

under the Exchange Act, or comparable successor rule) of securities of the 
Company representing at least fifty percent (50%) of the combined voting 
power entitled to vote in the election of directors, then to the extent 
permitted by applicable law:  (i) any surviving or acquiring corporation or 
an Affiliate of such surviving or acquiring corporation shall assume any 
Stock Awards outstanding under the Plan or shall substitute similar Stock 
Awards (including a stock award resulting in the acquisition of the same 
consideration paid to the stockholders in the transaction described in this 
subsection 12(b)) for those outstanding under the Plan, or (ii) such Stock 
Awards shall continue in full force and effect.  In the event any surviving 
or acquiring corporation or its Affiliates refuse 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 persons then 
performing services as Employees, Directors or Consultants, the time during 
which such Stock Awards may be exercised shall be accelerated and the Stock 
Awards terminated if not exercised after such acceleration and at or prior to 
such event.

13.  AMENDMENT OF THE PLAN AND STOCK AWARDS.

     (a)  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 stock, no amendment shall be effective unless approved by the 
stockholders of the Company within twelve (12) months before or after the 
adoption of the amendment, where the amendment will:

          (i)     Increase the number of shares reserved for Stock Awards 
under the Plan;

         (ii)     Modify the requirements as to eligibility for 
participation in the Plan (to the extent such modification requires 
stockholder approval in order for the Plan to satisfy the requirements of 
Section 422 of the Code); or

        (iii)     Modify the Plan in any other way if such modification 
requires stockholder approval in order for the Plan to satisfy the 
requirements of Section 422 of the Code or to comply with the requirements of 
Rule 16b-3.

     (b)  The Board may in its sole discretion submit any other amendment to 
the Plan for stockholder 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 promulgated thereunder regarding the exclusion of 
performance-based compensation from the limit on corporate deductibility of 
compensation paid to certain executive officers.

     (c)  It is expressly contemplated that the Board may amend the Plan in 
any respect the Board deems necessary or advisable to provide eligible 
Employees, Directors or Consultants 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)  Rights and obligations 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 person to whom the Stock 
Award was granted and (ii) such person consents in writing.

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

14.  TERMINATION OR SUSPENSION OF THE PLAN.

     (a)  The Board may suspend or terminate the Plan at any time.  Unless 
sooner terminated, the Plan shall terminate on May 31, 2004, which shall be 
within ten (10) years from the date the Plan is adopted by the Board or 
approved by the stockholders 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)  Rights and obligations under any Stock Award granted while the Plan 
is in effect shall not be impaired by suspension or termination of the Plan, 
except with the consent of the person to whom the Stock Award was granted.

15.  EFFECTIVE DATE OF PLAN.

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

 

Basic Info X:

Name: EQUITY INCENTIVE PLAN
Type: Equity Incentive Plan
Date: Nov. 14, 1996
Company: CIMA LABS INC
State: Delaware

Other info:

Date:

  • SEPTEMBER 24 , 1996
  • March 25 , 1996
  • May 31 , 2004

Organization:

  • Board of Directors of the Company
  • Nasdaq National Market
  • Nasdaq Stock Market
  • CIMA LABS INC. Equity Incentive Plan
  • Stock Appreciation Rights
  • The Board or Committee
  • Fair Market Value
  • Company 's Board of Directors
  • Delaware General Corporation Law
  • Nonstatutory Stock Options
  • Incentive Stock Options

Location:

  • Delaware

Money:

  • $ 100,000

Person:

  • Optionee

Percent:

  • one hundred percent 100 %
  • ten percent 110 %
  • fifty percent
  • 50 %