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Exhibit 10.1
OCCULOGIX, INC.
(formerly VASCULAR SCIENCES CORPORATION)
2002 STOCK OPTION PLAN, AS AMENDED IN 2010

1.             Establishment, Purpose and Term of Plan.

1.1           Establishment.  The OccuLogix, Inc. 2002 Stock Option Plan (the
“Plan”) was established effective as of the effective date of the Delaware
reincorporation of OccuLogix Corporation (the predecessor corporation to the
Company) (the “Effective Date”).

1.2           Purpose.  The purpose of the Plan is to advance the interests of
the Participating Company Group and its stockholders by providing an incentive
to attract, retain and reward persons performing services for the Participating
Company Group and by motivating such persons to contribute to the growth and
profitability of the Participating Company Group.

1.3           Term of Plan.  The Plan shall continue in effect until the earlier
of its termination by the Board or the date on which all of the shares of Stock
available for issuance under the Plan have been issued and all restrictions on
such shares under the terms of the Plan and the agreements evidencing Options
granted under the Plan have lapsed.  However, all Options shall be granted, if
at all, within ten (10) years from the earlier of the date the Plan is adopted
by the Board or the date the Plan is duly approved by the stockholders of the
Company.

2.             Definitions and Construction.

2.1           Definitions.  Whenever used herein, the following terms shall have
their respective meanings set forth below:

(a)           “Board” means the Board of Directors of the Company.  If one or
more Committees have been appointed by the Board to administer the Plan, “Board”
also means such Committee(s).

(b)           “Code” means the Internal Revenue Code of 1986, as amended, and
any applicable regulations promulgated thereunder.

(c)           “Committee” means the Compensation Committee or other committee of
the Board duly appointed to administer the Plan and having such powers as shall
be specified by the Board.  Unless the powers of the Committee have been
specifically limited, the Committee shall have all of the powers of the Board
granted herein, including, without limitation, the power to amend or terminate
the Plan at any time, subject to the terms of the Plan and any applicable
limitations imposed by law.

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

(e)           “Consultant” means a person engaged to provide consulting or
advisory services (other than as an Employee or a Director) to a Participating
Company, provided that the identity of such person, the nature of such services
or the entity to which such services are provided would not preclude the Company
from offering or selling securities to such person pursuant to the Plan in
reliance on either the exemption from registration provided by Rule 701 under
the Securities Act or, if the Company is required to file reports pursuant to
Section 13 or 15(d) of the Exchange Act, registration on a Form S-8 Registration
Statement under the Securities Act.

 
 

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(f)           “Director” means a member of the Board or of the board of
directors of any other Participating Company.

(g)           “Disability” means the inability of the Optionee, in the opinion
of a qualified physician acceptable to the Company, to perform the major duties
of the Optionee’s position with the Participating Company Group because of the
sickness or injury of the Optionee.

(h)           “Employee” means any person treated as an employee (including an
Officer or a Director who is also treated as an employee) in the records of a
Participating Company and, with respect to any Incentive Stock Option granted to
such person, who is an employee for purposes of Section 422 of the Code;
provided, however, that neither service as a Director nor payment of a
director’s fee shall be sufficient to constitute employment for purposes of the
Plan.  The Company shall determine in good faith and in the exercise of its
discretion whether an individual has become or has ceased to be an Employee and
the effective date of such individual’s employment or termination of employment,
as the case may be.  For purposes of an individual’s rights, if any, under the
Plan as of the time of the Company’s determination, all such determinations by
the Company shall be final, binding and conclusive, notwithstanding that the
Company or any court of law or governmental agency subsequently makes a contrary
determination.

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

(j)           “Fair Market Value” means, as of any date, the value of a share of
Stock or other property as determined by the Board, in its discretion, or by the
Company, in its discretion, if such determination is expressly allocated to the
Company herein, subject to the following:

(i)             If, on such date, the Stock is listed on a national or regional
securities exchange or market system, the Fair Market Value of a share of Stock
shall be the closing price of a share of Stock (or the mean of the closing bid
and asked prices of a share of Stock if the Stock is so quoted instead) as
quoted on the Nasdaq National Market, The Nasdaq SmallCap Market or such other
national or regional securities exchange or market system constituting the
primary market for the Stock, as reported in The Wall Street Journal or such
other source as the Company deems reliable.  If the relevant date does not fall
on a day on which the Stock has traded on such securities exchange or market
system, the date on which the Fair Market Value shall be established shall be
the last day on which the Stock was so traded prior to the relevant date, or
such other appropriate day as shall be determined by the Board, in its
discretion.

(ii)            If, on such date, the Stock is not listed on a national or
regional securities exchange or market system, the Fair Market Value of a share
of Stock shall be as determined by the Board in good faith without regard to any
restriction other than a restriction which, by its terms, will never lapse.

(k)          “Incentive Stock Option” means an Option intended to be (as set
forth in the Option Agreement) and which qualifies as an incentive stock option
within the meaning of Section 422(b) of the Code.

(l)           “Insider” means an Officer, a Director of the Company or other
person whose transactions in Stock are subject to Section 16 of the Exchange
Act.

(m)         “Involuntary Termination” means the termination of the Service of
any individual which occurs by reason of:

(i)             Such individual’s involuntary dismissal or discharge by the
Company for reasons other than Misconduct, or

 
 

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(ii)            Such individual’s voluntary resignation following (A) a change
in his or her position with the Company which materially reduces his or her
duties and responsibilities or the level of management to which he or she
reports, (B) a reduction in his or her level of compensation (including base
salary, fringe benefits and target bonus under any corporate-performance based
bonus or incentive programs) by more than fifteen percent (15%) or (C) a
relocation of such individual’s place of employment by more than fifty (50)
miles, provided and only if such change, reduction or relocation is effected
without the individual’s consent.

(n)           “Misconduct” means the commission of any act of fraud,
embezzlement or dishonesty by the Optionee, any unauthorized use or disclosure
by such person of confidential information or trade secrets of the Company (or
any Participating Company), or any other intentional misconduct by such person
adversely affecting the business or affairs of the Company (or any Participating
Company) in a material manner.  The foregoing definition shall not in any way
preclude or restrict the right of the Company (or any Participating Company) to
discharge or dismiss any Optionee or other person in the Service of the Company
(or any Participating Company) for any other acts or omissions, but such other
acts or omissions shall not be deemed, for purposes of the Plan, to constitute
grounds for termination for Misconduct.

(o)           “Nonstatutory Stock Option” means an Option not intended to be (as
set forth in the Option Agreement) or which does not qualify as an Incentive
Stock Option.

(p)           “Officer” means any person designated by the Board as an officer
of the Company.

(q)           “Option” means a right to purchase Stock pursuant to the terms and
conditions of the Plan.  An Option may be either an Incentive Stock Option or a
Nonstatutory Stock Option.

(r)           “Option Agreement” means a written agreement between the Company
and an Optionee setting forth the terms, conditions and restrictions of the
Option and Stock Appreciation Right granted to the Optionee and any shares
acquired upon the exercise thereof.  An Option Agreement may consist of a form
of “Notice of Grant of Stock Option” and a form of “Stock Option Agreement”
incorporated therein by reference, or such other form or forms as the Board may
approve from time to time.

(s)           “Optionee” means a person who has been granted one or more Options
and Stock Appreciation Rights.

(t)           “Parent Corporation” means any present or future “parent
corporation” of the Company, as defined in Section 424(e) of the Code.

(u)           “Participating Company” means the Company or any Parent
Corporation or Subsidiary Corporation.

(v)           “Participating Company Group” means, at any point in time, all
corporations collectively which are then Participating Companies.

(w)           “Prior Plan Options” means, any option granted pursuant to the
OccuLogix Corporation 1997 Stock Option Plan which is outstanding on or after
the date on which the Board adopts the Plan or which is granted thereafter and
prior to the Effective Date.

(x)           “Rule 16b-3” means Rule 16b-3 under the Exchange Act, as amended
from time to time, or any successor rule or regulation.

(y)           “Securities Act” means the Securities Act of 1933, as amended.

 
 

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(z)           “Service” means an Optionee’s employment or service with the
Participating Company Group, whether in the capacity of an Employee, a Director
or a Consultant.  An Optionee’s Service shall not be deemed to have terminated
merely because of a change in the capacity in which the Optionee renders Service
to the Participating Company Group or a change in the Participating Company for
which the Optionee renders such Service, provided that there is no interruption
or termination of the Optionee’s Service.  Furthermore, an Optionee’s Service
with the Participating Company Group shall not be deemed to have terminated if
the Optionee takes any military leave, sick leave, or other bona fide leave of
absence approved by the Company; provided, however, that if any such leave
exceeds ninety (90) days, on the ninety-first (91st) day of such leave the
Optionee’s Service shall be deemed to have terminated unless the Optionee’s
right to return to Service with the Participating Company Group is guaranteed by
statute or contract.  Notwithstanding the foregoing, unless otherwise designated
by the Company or required by law, a leave of absence shall not be treated as
Service for purposes of determining vesting under the Optionee’s Option
Agreement.  The Optionee’s Service shall be deemed to have terminated either
upon an actual termination of Service or upon the corporation for which the
Optionee performs Service ceasing to be a Participating Company.  Subject to the
foregoing, the Company, in its discretion, shall determine whether the
Optionee’s Service has terminated and the effective date of such termination.

(aa)          “Stock” means the common stock of the Company, as adjusted from
time to time in accordance with Section 4.2.

(bb)         “Stock Appreciation Right” means a right to surrender to the
Company all or a portion of an Option in exchange for an amount equal to the
excess, if any, of:

(i) the Fair Market Value as of the date such Option or portion thereof is
surrendered of the Stock issuable on exercise of such Option or portion thereof
over (ii) the exercise price of such Option or portion thereof relating to such
stock.

(cc)           “Subsidiary Corporation” means any present or future “subsidiary
corporation” of the Company, as defined in Section 424(f) of the Code.

(dd)          “Ten Percent Owner Optionee” means an Optionee who, at the time an
Option is granted to the Optionee, owns stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of a
Participating Company within the meaning of Section 422(b)(6) of the Code.

2.2            Construction.  Captions and titles contained herein are for
convenience only and shall not affect the meaning or interpretation of any
provision of the Plan.  Except when otherwise indicated by the context, the
singular shall include the plural and the plural shall include the
singular.  Use of the term “or” is not intended to be exclusive, unless the
context clearly requires otherwise.  Where a Stock Appreciation Right has been
granted in conjunction with an Option, the term “Option” shall include the
related Stock Appreciation Right where the context permits.

3.             Administration.

3.1           Administration by the Board.  The Plan shall be administered by
the Board.  All questions of interpretation of the Plan or of any Option shall
be determined by the Board, and such determinations shall be final and binding
upon all persons having an interest in the Plan or such Option.

3.2           Authority of Officers.  Any Officer shall have the authority to
act on behalf of the Company with respect to any matter, right, obligation,
determination or election which is the responsibility of or which is allocated
to the Company herein, provided the Officer has apparent authority with respect
to such matter, right, obligation, determination or election.

 
 

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3.3            Powers of the Board.  In addition to any other powers set forth
in the Plan and subject to the provisions of the Plan, the Board shall have the
full and final power and authority, in its discretion:

(a)            to determine the persons to whom, and the time or times at which,
Options and Stock Appreciation Rights shall be granted and the number of shares
of Stock to be subject to each Option and Stock Appreciation Right;

(b)            to designate Options as Incentive Stock Options or Nonstatutory
Stock Options;

(c)            to determine the Fair Market Value of shares of Stock or other
property;

(d)            to determine the terms, conditions and restrictions applicable to
each Option and Stock Appreciation Right (which need not be identical) and any
shares acquired upon the exercise thereof, including, without limitation, (i)
the exercise price of the Option, (ii) the method of payment for shares
purchased upon the exercise of the Option, (iii) the method for satisfaction of
any tax withholding obligation arising in connection with the Option and Stock
Appreciation Right or such shares, including by the withholding or delivery of
shares of stock, (iv) the timing, terms and conditions of the exercisability of
the Option and Stock Appreciation Right or the vesting of any shares acquired
upon the exercise thereof, (v) the time of the expiration of the Option and
Stock Appreciation Right, (vi) the effect of the Optionee’s termination of
Service with the Participating Company Group on any of the foregoing, and (vii)
all other terms, conditions and restrictions applicable to the Option or such
shares not inconsistent with the terms of the Plan;

(e)            to approve one or more forms of Option Agreement;

(f)            to amend, modify, extend, cancel, renew, reduce the exercise
price of or in any other manner re-price any outstanding Option and Stock
Appreciation Right or to waive any restrictions or conditions applicable to any
outstanding Option and Stock Appreciation Right or any shares acquired upon the
exercise thereof;

(g)           to accelerate, continue, extend or defer the exercisability of any
Option and Stock Appreciation Right or the vesting of any shares acquired upon
the exercise thereof, including with respect to the period following an
Optionee’s termination of Service with the Participating Company Group;

(h)           to prescribe, amend or rescind rules, guidelines and policies
relating to the Plan, or to adopt supplements to, or alternative versions of,
the Plan, including, without limitation, as the Board deems necessary or
desirable to comply with the laws of, or to accommodate the tax policy or custom
of, foreign jurisdictions whose citizens may be granted Options and Stock
Appreciation Rights; and

(i)             to correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Option Agreement and to make all other
determinations and take such other actions with respect to the Plan or any
Option and Stock Appreciation Right as the Board may deem advisable to the
extent not inconsistent with the provisions of the Plan or applicable law.

3.4            Administration with Respect to Insiders.  With respect to
participation by Insiders in the Plan, at any time that any class of equity
security of the Company is registered pursuant to Section 12 of the Exchange
Act, the Plan shall be administered in compliance with the requirements, if any,
of Rule 16b-3.

3.5            Indemnification.  In addition to such other rights of
indemnification as they may have as members of the Board or officers or
employees of the Participating Company Group, members of the Board and any
officers or employees of the Participating Company Group to whom authority to
act for the Board or the Company is delegated shall be indemnified by the
Company against all reasonable expenses, including attorneys’ fees, actually and
necessarily incurred in connection with the defense of any action, suit or
proceeding, or in connection with any appeal therein, to which they or any of
them may be a party by reason of any action taken or failure to act under or in
connection with the Plan, or any right granted hereunder, and against all
amounts paid by them in settlement thereof (provided such settlement is approved
by independent legal counsel selected by the Company) or paid by them in
satisfaction of a judgment in any such action, suit or proceeding, except in
relation to matters as to which it shall be adjudged in such action, suit or
proceeding that such person is liable for gross negligence, bad faith or
intentional misconduct in duties; provided, however, that within sixty (60) days
after the institution of such action, suit or proceeding, such person shall
offer to the Company, in writing, the opportunity at its own expense to handle
and defend the same.

 
 

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4.             Shares Subject to Plan.

4.1           Maximum Number of Shares Issuable.  Subject to adjustment as
provided in Section 4.2, the maximum aggregate number of shares of Stock that
may be issued under the Plan shall be 3,200,000.  This share reserve shall
consist of authorized but unissued or reacquired shares of Stock or any
combination thereof.  However, the share reserve, determined at any time, shall
be reduced by the number of shares subject to Prior Plan Options.  If an
outstanding Option, including any Prior Plan Option, for any reason expires or
is terminated or canceled or if shares of Stock are acquired upon the exercise
of an Option, including any Prior Plan Option, subject to a Company repurchase
option and are repurchased by the Company at the Optionee’s exercise price, the
shares of Stock allocable to the unexercised portion of such Option or Prior
Plan Option or such repurchased shares of Stock shall again be available for
issuance under the Plan.  However, except as adjusted pursuant to Section 4.2,
in no event shall more than 3,200,000 shares of Stock be available for issuance
pursuant to the exercise of Incentive Stock Options (the “ISO Share Issuance
Limit”).  Notwithstanding the foregoing, at any such time as the offer and sale
of securities pursuant to the Plan is subject to compliance with Section
260.140.45 of Title 10 of the California Code of Regulations (“Section
260.140.45”), the total number of shares of Stock issuable upon the exercise of
all outstanding Options (together with options outstanding under any other stock
option plan of the Company) and the total number of shares provided for under
any stock bonus or similar plan of the Company shall not exceed thirty percent
(30%) (or such other higher percentage limitation as may be approved by the
stockholders of the Company pursuant to Section 260.140.45) of the then
outstanding shares of the Company as calculated in accordance with the
conditions and exclusions of Section 260.140.45.

4.2           Adjustments for Changes in Capital Structure.  In the event of any
stock dividend, stock split, reverse stock split, recapitalization, combination,
reclassification or similar change in the capital structure of the Company,
appropriate adjustments shall be made in the number and class of shares subject
to the Plan and to any outstanding Options, in the ISO Share Issuance Limit set
forth in Section 4.1, and in the exercise price per share of any outstanding
Options.  If a majority of the shares which are of the same class as the shares
that are subject to outstanding Options are exchanged for, converted into, or
otherwise become (whether or not pursuant to an Ownership Change Event, as
defined in Section 9.1) shares of another corporation (the “New Shares”), the
Board may unilaterally amend the outstanding Options to provide that such
Options are exercisable for New Shares.  In the event of any such amendment, the
number of shares subject to, and the exercise price per share of, the
outstanding Options shall be adjusted in a fair and equitable manner as
determined by the Board, in its discretion.  Notwithstanding the foregoing, any
fractional share resulting from an adjustment pursuant to this Section 4.2 shall
be rounded down to the nearest whole number, and in no event may the exercise
price of any Option be decreased to an amount less than the par value, if any,
of the stock subject to the Option.  The adjustments determined by the Board
pursuant to this Section 4.2 shall be final, binding and conclusive.

 
 

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5.             Eligibility and Option Limitations.

5.1           Persons Eligible for Options.  Options may be granted only to
Employees, Consultants, and Directors.  For purposes of the foregoing sentence,
“Employees,” “Consultants” and “Directors” shall include prospective Employees,
prospective Consultants and prospective Directors to whom Options are granted in
connection with written offers of an employment or other service relationship
with the Participating Company Group.  Eligible persons may be granted more than
one (1) Option.  However, eligibility in accordance with this Section shall not
entitle any person to be granted an Option, or, having been granted an Option,
to be granted an additional Option.

5.2           Option Grant Restrictions.  Any person who is not an Employee on
the effective date of the grant of an Option to such person may be granted only
a Nonstatutory Stock Option.  An Incentive Stock Option granted to a prospective
Employee upon the condition that such person become an Employee shall be deemed
granted effective on the date such person commences Service with a Participating
Company, with an exercise price determined as of such date in accordance with
Section 6.1.

5.3           Fair Market Value Limitation.  To the extent that options
designated as Incentive Stock Options (granted under all stock option plans of
the Participating Company Group, including the Plan) become exercisable by an
Optionee for the first time during any calendar year for stock having a Fair
Market Value greater than One Hundred Thousand Dollars ($100,000), the portions
of such options which exceed such amount shall be treated as Nonstatutory Stock
Options.  For purposes of this Section 5.3, options designated as Incentive
Stock Options shall be taken into account in the order in which they were
granted, and the Fair Market Value of stock shall be determined as of the time
the option with respect to such stock is granted.  If the Code is amended to
provide for a different limitation from that set forth in this Section 5.3, such
different limitation shall be deemed incorporated herein effective as of the
date and with respect to such Options as required or permitted by such amendment
to the Code.  If an Option is treated as an Incentive Stock Option in part and
as a Nonstatutory Stock Option in part by reason of the limitation set forth in
this Section 5.3, the Optionee may designate which portion of such Option the
Optionee is exercising.  In the absence of such designation, the Optionee shall
be deemed to have exercised the Incentive Stock Option portion of the Option
first.  Separate certificates representing each such portion shall be issued
upon the exercise of the Option.

6.             Terms and Conditions of Options.

Options shall be evidenced by Option Agreements specifying the number of shares
of Stock covered thereby, in such form as the Board shall from time to time
establish.  No Option or purported Option shall be a valid and binding
obligation of the Company unless evidenced by a fully executed Option
Agreement.  Option Agreements may incorporate all or any of the terms of the
Plan by reference and shall comply with and be subject to the following terms
and conditions:

6.1           Exercise Price.  The exercise price for each Option shall be
established in the discretion of the Board; provided, however, that (a) the
exercise price per share for an Incentive Stock Option shall be not less than
the Fair Market Value of a share of Stock on the effective date of grant of the
Option, (b) the exercise price per share for a Nonstatutory Stock Option shall
be not less than eighty-five percent (85%) of the Fair Market Value of a share
of Stock on the effective date of grant of the Option, and (c) no Option granted
to a Ten Percent Owner Optionee shall have an exercise price per share less than
one hundred ten percent (110%) of the Fair Market Value of a share of Stock on
the effective date of grant of the Option.  Notwithstanding the foregoing, an
Option (whether an Incentive Stock Option or a Nonstatutory Stock Option) may be
granted with an exercise price lower than the minimum exercise price set forth
above if such Option is granted pursuant to an assumption or substitution for
another option in a manner qualifying under the provisions of Section 424(a) of
the Code.

 
 

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6.2           Exercisability and Term of Options.  Options shall be exercisable
at such time or times, or upon such event or events, and subject to such terms,
conditions, performance criteria and restrictions as shall be determined by the
Board and set forth in the Option Agreement evidencing such Option; provided,
however, that (a) no Option shall be exercisable after the expiration of ten
(10) years after the effective date of grant of such Option, (b) no Incentive
Stock Option granted to a Ten Percent Owner Optionee shall be exercisable after
the expiration of five (5) years after the effective date of grant of such
Option, (c) no Option granted to a prospective Employee, prospective Consultant
or prospective Director may become exercisable prior to the date on which such
person commences Service with a Participating Company, and (d) with the
exception of an Option granted to an Officer, a Director or a Consultant, no
Option shall become exercisable at a rate less than twenty percent (20%) per
year over a period of five (5) years from the effective date of grant of such
Option, subject to the Optionee’s continued Service.  Subject to the foregoing,
unless otherwise specified by the Board in the grant of an Option, any Option
granted hereunder shall terminate ten (10) years after the effective date of
grant of the Option, unless earlier terminated in accordance with its
provisions.

6.3           Payment of Exercise Price.

(a)           Forms of Consideration Authorized.  Except as otherwise provided
below, payment of the exercise price for the number of shares of Stock being
purchased pursuant to any Option shall be made (i) in cash, by check or cash
equivalent, (ii) by tender to the Company, or attestation to the ownership, of
shares of Stock owned by the Optionee having a Fair Market Value not less than
the exercise price, (iii) by delivery of a properly executed notice together
with irrevocable instructions to a broker providing for the assignment to the
Company of the proceeds of a sale or loan with respect to some or all of the
shares being acquired upon the exercise of the Option (including, without
limitation, through an exercise complying with the provisions of Regulation T as
promulgated from time to time by the Board of Governors of the Federal Reserve
System) (a “Cashless Exercise”), (iv) by such other consideration as may be
approved by the Board from time to time to the extent permitted by applicable
law, or (v) by any combination thereof.  The Board may at any time or from time
to time, by approval of or by amendment to the standard forms of Option
Agreement described in Section 8, or by other means, grant Options which do not
permit all of the foregoing forms of consideration to be used in payment of the
exercise price or which otherwise restrict one or more forms of consideration.

(b)           Limitations on Forms of Consideration.

(i)             Tender of Stock.  Notwithstanding the foregoing, an Option may
not be exercised by tender to the Company, or attestation to the ownership, of
shares of Stock to the extent such tender or attestation would constitute a
violation of the provisions of any law, regulation or agreement restricting the
redemption of the Company’s stock.  Unless otherwise provided by the Board, an
Option may not be exercised by tender to the Company, or attestation to the
ownership, of shares of Stock unless such shares either have been owned by the
Optionee for more than six (6) months (and not used for another Option exercise
by attestation during such period) or were not acquired, directly or indirectly,
from the Company.

(ii)            Cashless Exercise.  The Company reserves, at any and all times,
the right, in the Company’s sole and absolute discretion, to establish, decline
to approve or terminate any program or procedures for the exercise of Options by
means of a Cashless Exercise.

(iii)           Payment by Promissory Note.  No promissory note shall be
permitted if the exercise of an Option using a promissory note would be a
violation of any law.  Any permitted promissory note shall be on such terms as
the Board shall determine.  The Board shall have the authority to permit or
require the Optionee to secure any promissory note used to exercise an Option
with the shares of Stock acquired upon the exercise of the Option or with other
collateral acceptable to the Company.  Unless otherwise provided by the Board,
if the Company at any time is subject to the regulations promulgated by the
Board of Governors of the Federal Reserve System or any other governmental
entity affecting the extension of credit in connection with the Company’s
securities, any promissory note shall comply with such applicable regulations,
and the Optionee shall pay the unpaid principal and accrued interest, if any, to
the extent necessary to comply with such applicable regulations.

 
 

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6.4           Tax Withholding.  The Company shall have the right, but not the
obligation, to deduct from the shares of Stock issuable upon the exercise of an
Option, or to accept from the Optionee the tender of, a number of whole shares
of Stock having a Fair Market Value, as determined by the Company, equal to all
or any part of the federal, state, local and foreign taxes, if any, required by
law to be withheld by the Participating Company Group with respect to such
Option or the shares acquired upon the exercise thereof.  Alternatively or in
addition, in its discretion, the Company shall have the right to require the
Optionee, through payroll withholding, cash payment or otherwise, including by
means of a Cashless Exercise, to make adequate provision for any such tax
withholding obligations of the Participating Company Group arising in connection
with the Option or the shares acquired upon the exercise thereof.  The Fair
Market Value of any shares of Stock withheld or tendered to satisfy any such tax
withholding obligations shall not exceed the amount determined by the applicable
minimum statutory withholding rates.  The Company shall have no obligation to
deliver shares of Stock or to release shares of Stock from an escrow established
pursuant to the Option Agreement until the Participating Company Group’s tax
withholding obligations have been satisfied by the Optionee.

6.5           Repurchase Rights.  Shares issued under the Plan may be subject to
a right of first refusal, one or more repurchase options, or other conditions
and restrictions as determined by the Board in its discretion at the time the
Option is granted.  The Company shall have the right to assign at any time any
repurchase right it may have, whether or not such right is then exercisable, to
one or more persons as may be selected by the Company.  Upon request by the
Company, each Optionee shall execute any agreement evidencing such transfer
restrictions prior to the receipt of shares of Stock hereunder and shall
promptly present to the Company any and all certificates representing shares of
Stock acquired hereunder for the placement on such certificates of appropriate
legends evidencing any such transfer restrictions.

6.6           Effect of Termination of Service.

(a)            Option Exercisability.  Subject to earlier termination of the
Option as otherwise provided herein and unless otherwise provided by the Board
in the grant of an Option and set forth in the Option Agreement, an Option shall
be exercisable after an Optionee’s termination of Service only during the
applicable time period determined in accordance with this Section 6.6 and
thereafter shall terminate:

(i)             Disability.  If the Optionee’s Service terminates because of the
Disability of the Optionee, the Option, to the extent unexercised and
exercisable on the date on which the Optionee’s Service terminated, may be
exercised by the Optionee (or the Optionee’s guardian or legal representative)
at any time prior to the expiration of twelve (12) months (or such longer period
of time as determined by the Board, in its discretion) after the date on which
the Optionee’s Service terminated, but in any event no later than the date of
expiration of the Option’s term as set forth in the Option Agreement evidencing
such Option (the “Option Expiration Date”).

(ii)            Death.  If the Optionee’s Service terminates because of the
death of the Optionee, the Option, to the extent unexercised and exercisable on
the date on which the Optionee’s Service terminated, may be exercised by the
Optionee’s legal representative or other person who acquired the right to
exercise the Option by reason of the Optionee’s death at any time prior to the
expiration of twelve (12) months (or such longer period of time as determined by
the Board, in its discretion) after the date on which the Optionee’s Service
terminated, but in any event no later than the Option Expiration Date.  The
Optionee’s Service shall be deemed to have terminated on account of death if the
Optionee dies within three (3) months (or such longer period of time as
determined by the Board, in its discretion) after the Optionee’s termination of
Service.

 
 

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(iii)           Other Termination of Service.  If the Optionee’s Service
terminates for any reason, except Disability or death, the Option, to the extent
unexercised and exercisable by the Optionee on the date on which the Optionee’s
Service terminated, may be exercised by the Optionee at any time prior to the
expiration of three (3) months (or such longer period of time as determined by
the Board, in its discretion) after the date on which the Optionee’s Service
terminated, but in any event no later than the Option Expiration Date.

(b)            Extension if Exercise Prevented by Law.  Notwithstanding the
foregoing, if the exercise of an Option within the applicable time periods set
forth in Section 6.6(a) is prevented by the provisions of Section 10 below, the
Option shall remain exercisable until three (3) months (or such longer period of
time as determined by the Board, in its discretion) after the date the Optionee
is notified by the Company that the Option is exercisable, but in any event no
later than the Option Expiration Date.

(c)            Extension if Optionee Subject to Section 16(b).  Notwithstanding
the foregoing, if a sale within the applicable time periods set forth in Section
6.6(a) of shares acquired upon the exercise of the Option would subject the
Optionee to suit under Section 16(b) of the Exchange Act, the Option shall
remain exercisable until the earliest to occur of (i) the tenth (10th) day
following the date on which a sale of such shares by the Optionee would no
longer be subject to such suit, (ii) the one hundred and ninetieth (190th) day
after the Optionee’s termination of Service, or (iii) the Option Expiration
Date.

(d)            Extension during Blackout Period.  Notwithstanding the foregoing,
if there is in effect during the applicable time periods set forth in Section
6.6(a) a Company-imposed trading blackout to which the Optionee is subject
(including an Optionee that is an Insider) and provided that neither Section
6.6(b) nor Section 6.6(c) is applicable to the circumstances at hand, the Option
shall remain exercisable until the end of the tenth business day following the
end of the trading blackout.

6.7            Transferability of Options.  During the lifetime of the Optionee,
an Option shall be exercisable only by the Optionee or the Optionee’s guardian
or legal representative.  No Option shall be assignable or transferable by the
Optionee, except by will or by the laws of descent and
distribution.  Notwithstanding the foregoing, to the extent permitted by the
Board, in its discretion, and set forth in the Option Agreement evidencing such
Option, a Nonstatutory Stock Option shall be assignable or transferable subject
to the applicable limitations, if any, described in Section 260.140.41 of Title
10 of the California Code of Regulations, Rule 701 under the Securities Act, and
the General Instructions to Form S-8 Registration Statement under the Securities
Act.

7.             Terms and conditions of stock appreciate rights.

7.1           The Committee may, from time to time, grant Stock Appreciation
Rights to any Employee, Consultant or Director in connection with the grant of
any Option.  Any such grant of Stock Appreciation Rights shall be included in
the Option Agreement.

7.2           Stock Appreciation Rights shall be exerciseable only at the same
time, by the same person and to the same extent, that the Option related thereto
is exerciseable.  Upon exercise of any Stock Appreciation Right, the
corresponding portion of the related Option shall be surrendered to the Company.

7.3           The Company has the absolute right, at any time and from time to
time, to require an Optionee to exercise an Option in lieu of the related Stock
Appreciation Right.

 
 

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8.             Standard Forms of Option Agreement.

8.1           Option Agreement.  Unless otherwise provided by the Board at the
time the Option is granted, an Option shall comply with and be subject to the
terms and conditions set forth in the form of Option Agreement approved by the
Board concurrently with its adoption of the Plan and as amended from time to
time.

8.2           Authority to Vary Terms.  The Board shall have the authority from
time to time to vary the terms of any standard form of Option Agreement
described in this Section 8 either in connection with the grant or amendment of
an individual Option or in connection with the authorization of a new standard
form or forms; provided, however, that the terms and conditions of any such new,
revised or amended standard form or forms of Option Agreement are not
inconsistent with the terms of the Plan.

9.             Change in Control.

9.1           Definitions.

(a)           An “Ownership Change Event” shall be deemed to have occurred if
any of the following occurs with respect to the Company:  (i) the direct or
indirect sale or exchange in a single or series of related transactions by the
stockholders of the Company of more than fifty percent (50%) of the voting stock
of the Company; (ii) a merger or consolidation in which the Company is a party;
(iii) the sale, exchange, or transfer of all or substantially all of the assets
of the Company; or (iv) a liquidation or dissolution of the Company.

(b)           A “Change in Control” shall mean an Ownership Change Event or a
series of related Ownership Change Events (collectively, a “Transaction”)
wherein the stockholders of the Company immediately before the Transaction do
not retain immediately after the Transaction, in substantially the same
proportions as their ownership of shares of the Company’s voting stock
immediately before the Transaction, direct or indirect beneficial ownership of
more than fifty percent (50%) of the total combined voting power of the
outstanding voting securities of the Company or, in the case of a Transaction
described in Section 9.1(a)(iii), the corporation or other business entity to
which the assets of the Company were transferred (the “Transferee”), as the case
may be.  For purposes of the preceding sentence, indirect beneficial ownership
shall include, without limitation, an interest resulting from ownership of the
voting securities of one or more corporations or other business entities which
own the Company or the Transferee, as the case may be, either directly or
through one or more subsidiary corporations or other business entities.  The
Board shall have the right to determine whether multiple sales or exchanges of
the voting securities of the Company or multiple Ownership Change Events are
related, and its determination shall be final, binding and conclusive.

9.2           Effect of Change in Control on Options.  In the event of a Change
in Control, the surviving, continuing, successor, or purchasing corporation or
other business entity or parent thereof, as the case may be (the “Acquiring
Corporation”), may, without the consent of the Optionee, either assume the
Company’s rights and obligations under outstanding Options or substitute for
outstanding Options substantially equivalent options for the Acquiring
Corporation’s stock.  In the event that the Acquiring Corporation does not
assume or substitute for the outstanding Options, the Optionee will fully vest
in and have the right to exercise all of his or her outstanding Options,
including shares of Stock as to which such Options would not otherwise be vested
or exercisable.  Any Options which are neither assumed or substituted for by the
Acquiring Corporation in connection with the Change in Control nor exercised as
of the date of the Change in Control shall terminate and cease to be outstanding
effective as of the date of the Change in Control.  Notwithstanding the
foregoing, shares acquired upon exercise of an Option prior to the Change in
Control and any consideration received pursuant to the Change in Control with
respect to such shares shall continue to be subject to all applicable provisions
of the Option Agreement evidencing such Option except as otherwise provided in
such Option Agreement.  Furthermore, notwithstanding the foregoing, if the
corporation the stock of which is subject to the outstanding Options immediately
prior to an Ownership Change Event described in Section 9.1(a)(i) constituting a
Change in Control is the surviving or continuing corporation and immediately
after such Ownership Change Event less than fifty percent (50%) of the total
combined voting power of its voting stock is held by another corporation or by
other corporations that are members of an affiliated group within the meaning of
Section 1504(a) of the Code without regard to the provisions of Section 1504(b)
of the Code, the outstanding Options shall not terminate unless the Board
otherwise provides in its discretion.  Additionally, and notwithstanding
anything in this Section 9.2 to the contrary, if an Optionee’s Service is
terminated by reason of an Involuntary Termination within eighteen (18) months
following the effective date of a Change in Control in which the Acquiring
Corporation assumes or substitutes for outstanding Options, the shares of Stock
subject to such Optionee’s outstanding Options will automatically accelerate and
vest in full as of the Optionee’s termination of Service, including shares of
Stock as to which such Options would not otherwise be vested or
exercisable.  Any Option so accelerated shall remain exercisable until the
Option’s expiration or, if earlier, the termination of the Option, as provided
in the Optionee’s Option Agreement.

 
 

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10.           Provision of Information.

At least annually, copies of the Company’s balance sheet and income statement
for the just completed fiscal year shall be made available to each Optionee and
purchaser of shares of Stock upon the exercise of an Option.  The Company shall
not be required to provide such information to key employees whose duties in
connection with the Company assure them access to equivalent
information.  Furthermore, the Company shall deliver to each Optionee such
disclosures as are required in accordance with Rule 701 under the Securities
Act.

11.           Compliance with Securities Law.

The grant of Options and the issuance of shares of Stock upon exercise of
Options shall be subject to compliance with all applicable requirements of
federal, state and foreign law with respect to such securities.  Options may not
be exercised if the issuance of shares of Stock upon exercise would constitute a
violation of any applicable federal, state or foreign securities laws or other
law or regulations or the requirements of any stock exchange or market system
upon which the Stock may then be listed.  In addition, no Option may be
exercised unless (a) a registration statement under the Securities Act shall at
the time of exercise of the Option be in effect with respect to the shares
issuable upon exercise of the Option or (b) in the opinion of legal counsel to
the Company, the shares issuable upon exercise of the Option may be issued in
accordance with the terms of an applicable exemption from the registration
requirements of the Securities Act.  The inability of the Company to obtain from
any regulatory body having jurisdiction the authority, if any, deemed by the
Company’s legal counsel to be necessary to the lawful issuance and sale of any
shares hereunder shall relieve the Company of any liability in respect of the
failure to issue or sell such shares as to which such requisite authority shall
not have been obtained.  As a condition to the exercise of any Option, the
Company may require the Optionee to satisfy any qualifications that may be
necessary or appropriate, to evidence compliance with any applicable law or
regulation and to make any representation or warranty with respect thereto as
may be requested by the Company.

12.           Termination or Amendment of Plan.

Without the approval of the Company’s stockholders, the Board may terminate or
amend the Plan at any time.  However, subject to changes in applicable law,
regulations or rules that would permit otherwise, without the approval of the
Company’s stockholders, there shall be (a) no increase in the maximum aggregate
number of shares of Stock that may be issued under the Plan (except by operation
of the provisions of Section 4.2), (b) no change in the class of persons
eligible to receive Incentive Stock Options, (c) no extension of the term of an
Option granted to an Insider, other than as provided for in Section 6.6(d), (d)
no reduction in the exercise price of an Option granted to an Insider, other
than in connection with adjustments for changes in the Company’s capital
structure as permitted pursuant to Section 4.2 and (e) no other amendment of the
Plan that would require approval of the Company’s stockholders under any
applicable law, regulation or rule.  No termination or amendment of the Plan
shall adversely affect any then outstanding Option unless expressly agreed to by
the affected Participant or required by applicable law, legislation or rule.  In
any event, no termination or amendment of the Plan may adversely affect any then
outstanding Option without the consent of the Optionee, unless such termination
or amendment is required to enable an Option designated as an Incentive Stock
Option to qualify as an Incentive Stock Option or is necessary to comply with
any applicable law, regulation or rule.

 
 

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13.           Stockholder Approval.

The Plan or any increase in the maximum aggregate number of shares of Stock
issuable thereunder as provided in Section 4.1 (the “Authorized Shares”) shall
be approved by the stockholders of the Company within twelve (12) months of the
date of adoption thereof by the Board.  Options granted prior to stockholder
approval of the Plan or in excess of the Authorized Shares previously approved
by the stockholders shall become exercisable no earlier than the date of
stockholder approval of the Plan or such increase in the Authorized Shares, as
the case may be.

 

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