Exhibit 10.1

 

TEARLAB CORPORATION

 

(formerly OCCULOGIX, INC. and formerly VASCULAR SCIENCES CORPORATION)

 

2002 STOCK INCENTIVE PLAN

 

AS AMENDED EFFECTIVE AS OF JUNE 19, 2015

 

1.             Establishment, Purpose and Term of Plan.

 

(a)     Establishment. The TearLab Corporation 2002 Stock Incentive Plan (the
“Plan”) was originally established effective as of the effective date of the
Delaware reincorporation of OccuLogix Corporation (the predecessor corporation
to the Company) on June 5, 2002 (the “Original Effective Date”), and is hereby
amended and restated effective as of June 19, 2015 (the “Effective Date”).

 

(b)     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.

 

(c)     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 Awards
granted under the Plan have lapsed. However, all Awards shall be granted, if at
all, within ten (10) years from the earlier of the date this amended and
restated Plan is adopted by the Board or the date the amended and restated Plan
is duly approved by the stockholders of the Company.

 

2.             Definitions and Construction.

 

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

 

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

 

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

 

(iii)     “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).

 

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

 

(v)     “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.

 

(vi)     “Company” means TearLab Corporation, a Delaware corporation, or any
successor corporation thereto.

 

(vii)     “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.

 

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

 

 
 

--------------------------------------------------------------------------------

 

 

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

 

(x)     “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.

 

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

 

(xii)     “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:

 

(1)     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.

 

(2)     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.

 

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

 

(xiv)     “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.

 

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

 

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

 

(2)     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.

 

(xvi)     “Misconduct” means the commission of any act of fraud, embezzlement or
dishonesty by the Participant, 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 Participant 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.

 

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

 

 
 

--------------------------------------------------------------------------------

 

 

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

 

(xix)       “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.

 

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

 

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

 

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

 

(xxiii)     “Performance Goals” means the goal(s) determined by the Committee
(in its discretion) to be applicable to a Participant with respect to an Award.
As determined by the Committee, the Performance Goals applicable to an Award may
provide for a targeted level or levels of achievement using one or more of the
following measures: (i) revenue, (ii) gross margin, (iii) operating margin,
(iv) operating income, (v) pre-tax profit, (vi) pre-tax margin, (vii) earnings
before interest, taxes, depreciation and amortization, (viii) net income, (ix)
cash flow, (x) operating expenses, (xi) the market price of Stock, (xii)
earnings per share, (xiii) earnings yield, (xiv) earnings yield spread, (xv)
total stockholder return, (xvi) return on capital, (xvii) return on assets,
(xviii) product quality, (xix) economic value added, (xx) number of customers,
(xxi) market share, (xxii) return on investments, (xxiii) profit after taxes,
(xxiv) customer satisfaction, (xxv) business divestitures and acquisitions,
(xxvi) supplier awards from significant customers, (xxvii) new product
development, (xxviii) working capital, (xxix) individual objectives, (xxx) time
to market, (xxxi) return on net assets, and (xxxii) sales. The Performance Goals
may differ from Participant to Participant and from Award to Award. Any criteria
used may be measured, as applicable, (i) in absolute terms, (ii) in relative
terms (including, but not limited to, passage of time and/or against another
company or companies), (iii) on a per-share basis, (iv) against the performance
of the Company as a whole or a segment of the Company, and (v) on a pre-tax or
after-tax basis.

 

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

 

(xxv)     “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 Original Effective Date.

 

(xxvi)     “Restricted Stock” means shares of Stock issued pursuant to a
Restricted Stock Award under Section 8 of the Plan.

 

(xxvii)     “Restricted Stock Unit” means a bookkeeping entry representing the
right to receive one share of Stock under Section 9 of the Plan. Each Restricted
Stock Unit represents an unfunded and unsecured obligation of the Company.

 

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

 

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

 

(xxx)     “Service” means a Participant’s employment or service with the
Participating Company Group, whether in the capacity of an Employee, a Director
or a Consultant. A Participant’s Service shall not be deemed to have terminated
merely because of a change in the capacity in which the Participant renders
Service to the Participating Company Group or a change in the Participating
Company for which the Participant renders such Service, provided that there is
no interruption or termination of the Participant’s Service. Furthermore, a
Participant’s Service with the Participating Company Group shall not be deemed
to have terminated if the Participant 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 Participant’s Service shall be deemed to have terminated
unless the Participant’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 Participant’s Award Agreement. The Participant’s Service shall
be deemed to have terminated either upon an actual termination of Service or
upon the corporation for which the Participant performs Service ceasing to be a
Participating Company. Subject to the foregoing, the Company, in its discretion,
shall determine whether the Participant’s Service has terminated and the
effective date of such termination.

 

 
 

--------------------------------------------------------------------------------

 

 

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

 

(xxxii)     “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.

 

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

 

(xxxiv)     “Ten Percent Owner” means a Participant who, at the time an Option
is granted to the Participant, 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.

 

(b)     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.

 

(a)     Administration by the Board. The Plan shall be administered by the
Board. All questions of interpretation of the Plan or of any Award 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 Award.

 

(b)     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.

 

(c)     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:

 

(i)       to determine the persons to whom, and the time or times at which,
Awards shall be granted and the number of shares of Stock to be subject to each
Award;

 

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

 

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

 

(iv)     to determine the terms, conditions and restrictions applicable to each
Award (which need not be identical) and any shares acquired upon the exercise
thereof, including, without limitation, (i) the exercise price of the Award,
(ii) the method of payment for shares purchased upon the exercise of the Award,
(iii) the method for satisfaction of any tax withholding obligation arising in
connection with the Award, including by the withholding or delivery of shares of
stock, (iv) the timing, terms and conditions of the exercisability of the Award
or the vesting of any shares acquired upon the exercise thereof, (v) the time of
the expiration of the Award, (vi) the effect of the Participant’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 Award or such
shares not inconsistent with the terms of the Plan;

 

(v)      to approve one or more forms of Award Agreement;

 

(vi)     to amend, modify, extend, cancel, or renew any outstanding Award or to
waive any restrictions or conditions applicable to any outstanding Award or any
shares acquired upon the exercise thereof;

 

(vii)     to accelerate, continue, extend or defer the exercisability of any
Award or the vesting of any shares acquired upon the exercise thereof, including
with respect to the period following a Participant’s termination of Service with
the Participating Company Group;

 

 
 

--------------------------------------------------------------------------------

 

 

(viii)     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 Awards; and

 

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

 

(d)     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.

 

(e)     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.

 

4.             Shares Subject to Plan.

 

(a)     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 seven million two hundred thousand (7,200,000). 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 Award, including any Prior Plan Option, for any reason expires,
is forfeited, or is terminated or canceled or if shares of Stock are acquired
upon the exercise of an Award, including any Prior Plan Option, subject to a
Company repurchase option and are repurchased by the Company at the
Participant’s exercise price, the shares of Stock allocable to the unexercised
portion of such Award or Prior Plan Option or repurchased, forfeited or
cancelled 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
five million two hundred thousand (5,200,000) shares of Stock be available for
issuance pursuant to the exercise of Incentive Stock Options (the “ISO Share
Issuance Limit”).

 

(b)     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 Awards, in the ISO Share Issuance Limit set
forth in Section 4.1, and in the exercise price per share of any outstanding
Awards. If a majority of the shares which are of the same class as the shares
that are subject to outstanding Awards are exchanged for, converted into, or
otherwise become (whether or not pursuant to an Ownership Change Event, as
defined in Section 11.1) shares of another corporation (the “New Shares”), the
Board may unilaterally amend the outstanding Awards to provide that such Awards
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
Awards 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 Award
be decreased to an amount less than the par value, if any, of the stock subject
to the Award. The adjustments determined by the Board pursuant to this
Section 4.2 shall be final, binding and conclusive.

 

5.             Eligibility and Award Limitations.

 

(a)     Persons Eligible for Awards. Awards 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 Awards 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)
Award. However, eligibility in accordance with this Section shall not entitle
any person to be granted an Award, or, having been granted an Award, to be
granted an additional Award.

 

 
 

--------------------------------------------------------------------------------

 

 

(b)     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.

 

(c)     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 a
Participant 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 Participant may designate which portion of such Option the
Participant is exercising. In the absence of such designation, the Participant
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.

 

(d)     Section 162(m) of the Code Limitation. No Employee may be granted, in
any Company fiscal year: (a) Options and/or Stock Appreciation Rights to
purchase more than 1,000,000 shares of Stock; or (b) Restricted Stock or
Restricted Stock Units to acquire more than 750,000 shares of Stock.

 

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:

 

(a)     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 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.

 

(b)     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 shall be exercisable after the
expiration of five (5) years after the effective date of grant of such Option,
and (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. 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.

 

(c)     Payment of Exercise Price.

 

(i)     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 Participant 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 10, 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.

 

 
 

--------------------------------------------------------------------------------

 

 

(ii)     Limitations on Forms of Consideration.

 

(1)     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 Participant 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.

 

(2)     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.

 

(3)     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
Participant 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
Participant shall pay the unpaid principal and accrued interest, if any, to the
extent necessary to comply with such applicable regulations.

 

(d)     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 Participant 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 Participant, 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
Participant.

 

(e)     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 Participant 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.

 

(f)     Effect of Termination of Service.

 

(i)     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 a Participant’s termination of Service only during the
applicable time period determined in accordance with this Section 6.6 and
thereafter shall terminate:

 

(1)     Disability. If the Participant’s Service terminates because of the
Disability of the Participant, the Option, to the extent unexercised and
exercisable on the date on which the Participant’s Service terminated, may be
exercised by the Participant (or the Participant’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 Participant’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”).

 

 
 

--------------------------------------------------------------------------------

 

 

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

 

(3)     Other Termination of Service. If the Participant’s Service terminates
for any reason, except Disability or death, the Option, to the extent
unexercised and exercisable by the Participant on the date on which the
Participant’s Service terminated, may be exercised by the Participant 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
Participant’s Service terminated, but in any event no later than the Option
Expiration Date.

 

(ii)     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 11 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 Participant is
notified by the Company that the Option is exercisable, but in any event no
later than the Option Expiration Date.

 

(iii)     Extension if Participant 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 Participant 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 Participant would no
longer be subject to such suit, (ii) the one hundred and ninetieth (190th) day
after the Participant’s termination of Service, or (iii) the Option Expiration
Date.

 

(iv)     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 Participant is
subject (including a Participant 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.

 

(g)     Transferability of Options. During the lifetime of the Participant, an
Option shall be exercisable only by the Participant or the Participant’s
guardian or legal representative. No Option shall be assignable or transferable
by the Participant, 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 Appreciation Rights.

 

(a)     Grant of Stock Appreciation Rights. The Committee may, from time to
time, grant Stock Appreciation Rights to any Participant in connection with the
grant of any Option. Any such grant of Stock Appreciation Rights shall be
included in the Option Agreement.

 

(b)     Specific Terms of Stock Appreciation Rights. Stock Appreciation Rights
shall be exercisable only at the same time, by the same person and to the same
extent, that the Option related thereto is exercisable. Upon exercise of any
Stock Appreciation Right, the corresponding portion of the related Option shall
be surrendered to the Company.

 

(c)     Exercise of Stock Appreciation Rights. The Company has the absolute
right, at any time and from time to time, to require a Participant to exercise
an Option in lieu of the related Stock Appreciation Right.

 

8.             Terms and Conditions of Restricted Stock.

 

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

 

(b)     Restricted Stock Agreement. Each Award of Restricted Stock will be
evidenced by an Award Agreement that will specify the Period of Restriction, the
number of shares of Restricted Stock granted, and such other terms and
conditions as the Board, in its sole discretion, will determine. Unless the
Board determines otherwise, the Company as escrow agent will hold shares of
Restricted Stock until the restrictions on such shares of Restricted Stock have
lapsed.

 

 
 

--------------------------------------------------------------------------------

 

 

(c)     Transferability. Except as provided in this Section 8 or the Award
Agreement, shares of Restricted Stock may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated until the end of the applicable
Period of Restriction.

 

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

 

(e)     Removal of Restrictions. Except as otherwise provided in this Section 8,
shares of Restricted Stock covered by each Restricted Stock grant made under the
Plan will be released from escrow as soon as practicable after the last day of
the Period of Restriction or at such other time as the Board may determine. The
Board, in its discretion, may accelerate the time at which any restrictions will
lapse or be removed.

 

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

 

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

 

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

 

9.             Terms and Conditions of Restricted Stock Units.

 

(a)     Grant. Restricted Stock Units may be granted at any time and from time
to time as determined by the Board. After the Board determines that it will
grant Restricted Stock Units under the Plan, it will advise the Participant in
an Award Agreement of the terms, conditions, and restrictions related to the
grant, including the number of Restricted Stock Units.

 

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

 

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

 

(d)     Form and Timing of Payment. Payment of earned Restricted Stock Units
will be made as soon as practicable after the date(s) determined by the Board
and set forth in the Award Agreement. The Board, in its sole discretion, may
only settle earned Restricted Stock Units in cash, shares of Stock, or a
combination of both.

 

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

 

10.           Standard Forms of Award Agreement.

 

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

 

(b)     Authority to Vary Terms. The Board shall have the authority from time to
time to vary the terms of any standard form of Award Agreement described in this
Section 10 either in connection with the grant or amendment of an individual
Award 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 Award Agreement are not inconsistent with the
terms of the Plan.

 

 
 

--------------------------------------------------------------------------------

 

 

11.           Change in Control.

 

(a)     Definitions.

 

(i)     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.

 

(ii)     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 11.1(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.

 

(b)     Effect of Change in Control on Awards. 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 Participant, either assume the
Company’s rights and obligations under outstanding Awards or substitute for
outstanding Awards substantially equivalent awards for the Acquiring
Corporation’s stock. In the event that the Acquiring Corporation does not assume
or substitute for the outstanding Awards, the Participant will fully vest in and
have the right to exercise all of his or her outstanding Awards, including
shares of Stock as to which such Awards would not otherwise be vested or
exercisable. Any Awards 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 Award 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 Award Agreement evidencing such Award except as otherwise provided in
such Award Agreement. Furthermore, notwithstanding the foregoing, if the
corporation the stock of which is subject to the outstanding Awards immediately
prior to an Ownership Change Event described in Section 11.1(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 Awards shall not terminate unless the Board
otherwise provides in its discretion. Additionally, and notwithstanding anything
in this Section 11.2 to the contrary, if a Participant’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 Awards, the shares of Stock subject to
such Participant’s outstanding Awards will automatically accelerate and vest in
full as of the Participant’s termination of Service, including shares of Stock
as to which such Awards would not otherwise be vested or exercisable. Any Award
so accelerated shall remain exercisable until the Award’s expiration or, if
earlier, the termination of the Award, as provided in the Participant’s Award
Agreement.

 

12.           Compliance with Securities Law.

 

The grant of Awards and the issuance of shares of Stock upon exercise of Awards
shall be subject to compliance with all applicable requirements of federal,
state and foreign law with respect to such securities. Awards 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 Award may be exercised
unless (a) a registration statement under the Securities Act shall at the time
of exercise of the Award be in effect with respect to the shares issuable upon
exercise of the Award or (b) in the opinion of legal counsel to the Company, the
shares issuable upon exercise of the Award 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 Award, the Company may require the
Participant 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.

 

 
 

--------------------------------------------------------------------------------

 

 

13.           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
Award granted to an Insider, other than as provided for in Section 6.6(d),
(d) no reduction in the exercise price of an Award 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 Award 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 Award without the consent of the Participant, unless such
termination or amendment is required to enable an Award 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.

 

14.           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. Awards 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.

 

 
 

--------------------------------------------------------------------------------

 

 

PLAN HISTORY

 

 

June 2002

Board of Directors of OccuLogix Corporation, a Florida corporation (“OccuLogix”)
adopts Plan, with an initial reserve of Two Million Six Hundred Seventy-Eight
Thousand Nine Hundred and Ninety-Seven (2,678,997) shares. This share reserve
includes the number of shares of stock underlying outstanding options and the
number of shares available for grant as options under the OccuLogix Corporation
1997 Stock Option Plan. However, this share reserve, at any time, shall be
reduced by the number of shares subject to Prior Plan Options.

   

June 2002

Stockholders of OccuLogix approve Plan, with an initial reserve of Two Million
Six Hundred Seventy-Eight Thousand Nine Hundred and Ninety-Seven (2,678,997)
shares. This share reserve includes the number of shares of stock underlying
outstanding options and the number of shares available for grant as options
under the OccuLogix Corporation 1997 Stock Option Plan. However, this share
reserve, at any time, shall be reduced by the number of shares subject to Prior
Plan Options.

   

June 2002

Effective date of Delaware reincorporation of OccuLogix.

   

December 2004

Board of Directors of OccuLogix, Inc. amends Plan to increase the share reserve
to 4,456,000.

   

April 2007

Board of Directors of OccuLogix, Inc. resolves to submit to the stockholders of
OccuLogix, Inc., for their authorization at the 2007 Annual Meeting, a proposal
to increase the share reserve under the Plan by 2,000,000, from 4,456,000 to
6,456,000.

   

June 2007

Stockholders of OccuLogix, Inc. approve the proposal to increase the share
reserve under the Plan by 2,000,000, from 4,456,000 to 6,456,000.

   

May 2008

Board of Directors of OccuLogix, Inc. resolves to submit to the stockholders of
OccuLogix, Inc., for their authorization at the 2008 Annual and Special Meeting,
a proposal to increase the share reserve under the Plan by 53,544,000, from
6,456,000 to 60,000,000.

   

September 2008

Stockholders of OccuLogix, Inc. approve the proposal to increase the share
reserve under the Plan by 53,544,000, from 6,456,000 to 60,000,000.

   

October 2008

OccuLogix, Inc. effects a 1:25 reverse stock split, as a result of which every
25 issued and outstanding shares of common stock were combined into one share
(and any fractional share was converted into a whole share) and the share
reserve under the Plan was decreased to 2,400,000.

   

December 2009

Board of Directors of OccuLogix, Inc. resolves to submit to the stockholders of
OccuLogix, Inc., for their authorization at the 2010 Annual Meeting, a proposal
to increase the share reserve under the Plan by 800,000, from 2,400,000 to
3,200,000.

   

May 2010

Board of Directors of OccuLogix, Inc. approves the amendment of the Plan to
provide for full vesting acceleration of all outstanding stock options in the
event of a change in control in which the acquiring corporation does not assume
or substitute for outstanding stock options under the Plan; and (ii) full
vesting acceleration of all outstanding stock options held by an optionee in the
event the optionee’s service with OccuLogix (or its successor) is involuntarily
terminated within 18 months following a change in control in which the acquiring
corporation assumes or substitutes for outstanding stock options under the Plan.

   

June 2010

Stockholders of TearLab Corporation (formerly OccuLogix, Inc.) approve the
proposal to increase the share reserve under the Plan by 800,000, from 2,400,000
to 3,200,000.

   

April 2012

Board of Directors of TearLab Corporation approve the amendment of the Plan to
provide for (i) an increase in the share reserve under the Plan by 1,000,000
from 3,200,000 to 4,200,000 and (ii) ability to grant Restricted Stock and
Restricted Stock Units.

   

June 2012

Stockholders of TearLab Corporation approve the amendment of the Plan to provide
for (i) an increase in the share reserve under the Plan by 1,000,000 from
3,200,000 to 4,200,000 and (ii) ability to grant Restricted Stock and Restricted
Stock Units.

 

 
 

--------------------------------------------------------------------------------

 

 

March 2013

Board of Directors of TearLab Corporation approve the amendment of the Plan to
provide for (i) an increase in the share reserve under the Plan by 1,000,000
from 4,200,000 to 5,200,000.

   

February 2014

Board of Directors of TearLab Corporation approve the amendment of the Plan to
provide for (i) an increase in the share reserve under the Plan by 1,000,000
from 5,200,000 to 6,200,000.

   

June 2014

Stockholders of TearLab Corporation approve the amendment of the Plan to provide
for an increase in the share reserve under the Plan by 1,000,000 from 5,200,000
to 6,200,000.

   

February 2015

Board of Directors of TearLab Corporation approve the amendment of the Plan to
provide for an increase in the share reserve under the Plan by 1,000,000 from
6,200,000 to 7,200,000.

    June 2015 Stockholders of TearLab Corporation approve the amendment of the
Plan to provide for an increase in the share reserve under the Plan by 1,000,000
from 6,200,000 to 7,200,000.