Exhibit 10.2

 

2009 STOCK OPTION PLAN

OF

IRIS BIOTECHNOLOGIES INC.

 

1.                                      PURPOSES OF THE PLAN

 

The purposes of the 2009 Stock Option Plan (the “Plan”) of Iris BioTechnologies
Inc., a California corporation (the “Company”), are to:

 

(A)                                  ENCOURAGE SELECTED EMPLOYEES, DIRECTORS AND
CONSULTANTS TO IMPROVE OPERATIONS AND INCREASE PROFITS OF THE COMPANY;

 

(B)                                 ENCOURAGE SELECTED EMPLOYEES, DIRECTORS AND
CONSULTANTS TO ACCEPT OR CONTINUE EMPLOYMENT OR ASSOCIATION WITH THE COMPANY OR
ITS AFFILIATES; AND

 

(C)                                  INCREASE THE INTEREST OF SELECTED
EMPLOYEES, DIRECTORS AND CONSULTANTS IN THE COMPANY’S WELFARE THROUGH
PARTICIPATION IN THE GROWTH IN VALUE OF THE COMMON STOCK OF THE COMPANY (THE
“COMMON STOCK”).

 

Options granted under this Plan (“Options”) may be “incentive stock options”
(“ISOs”) intended to satisfy the requirements of Section 422 of the Internal
Revenue Code of 1986, as amended (the “Code”), or “nonqualified options”
(“NQOs”).

 

2.                                      ELIGIBLE PERSONS

 

Every person who at the date of grant of an Option is an employee of the Company
or of any Affiliate (as defined below) of the Company is eligible to receive
NQOs or ISOs under this Plan.  Every person who at the date of grant is a
consultant to, or nonemployee director of, the Company or any Affiliate (as
defined below) of the Company is eligible to receive NQOs under this Plan.  The
term “Affiliate” as used in the Plan means a parent or subsidiary corporation as
defined in the applicable provisions (currently Sections 424(e) and (f),
respectively) of the Code.  The term “employee” includes an officer or director
who is an employee of the Company.  The term “consultant” includes persons
employed by, or otherwise affiliated with, a consultant.

 

3.                                      STOCK SUBJECT TO THIS PLAN

 

Subject to the provisions of Section 6.1.1 of the Plan, the total number of
shares of stock which may be issued under options granted pursuant to this Plan
and the total number of shares provided for issuance under this Plan shall be
2,184,108 shares of Common Stock and shall at no time exceed the applicable
percentage as calculated in accordance with Section 260.140.45 of Chapter 3 of
Title 10 of the California Code of Regulations.  The shares covered by the
portion of any grant under the Plan, which expires unexercised shall become
available again for grants under the Plan.

 

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

 

4.                                      ADMINISTRATION

 

4.1                                 GENERAL.  THIS PLAN SHALL BE ADMINISTERED BY
THE BOARD OF DIRECTORS OF THE COMPANY (THE “BOARD”) OR, EITHER IN ITS ENTIRETY
OR ONLY INSOFAR AS REQUIRED PURSUANT TO SECTION 4(B) HEREOF, BY A COMMITTEE (THE
“COMMITTEE”) OF AT LEAST TWO BOARD MEMBERS TO WHICH ADMINISTRATION OF THE PLAN,
OR OF PART OF THE PLAN, IS DELEGATED (IN EITHER CASE, THE “ADMINISTRATOR”).

 

4.2                                 PUBLIC COMPANY.  FROM AND AFTER SUCH TIME AS
THE COMPANY REGISTERS A CLASS OF EQUITY SECURITIES UNDER SECTION 12 OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE “EXCHANGE ACT”), IT IS INTENDED
THAT THIS PLAN SHALL BE ADMINISTERED IN ACCORDANCE WITH THE DISINTERESTED
ADMINISTRATION REQUIREMENTS OF RULE 16B-3 PROMULGATED BY THE SECURITIES AND
EXCHANGE COMMISSION (“RULE 16B-3”), OR ANY SUCCESSOR RULE THERETO.

 

4.3                                 AUTHORITY OF ADMINISTRATOR.  SUBJECT TO THE
OTHER PROVISIONS OF THIS PLAN, THE ADMINISTRATOR SHALL HAVE THE AUTHORITY, IN
ITS DISCRETION: (I) TO GRANT OPTIONS; (II) TO DETERMINE THE FAIR MARKET VALUE OF
THE COMMON STOCK SUBJECT TO OPTIONS; (III) TO DETERMINE THE EXERCISE PRICE OF
OPTIONS GRANTED; (IV) TO DETERMINE THE PERSONS (EACH AN “OPTIONEE”) TO WHOM, AND
THE TIME OR TIMES AT WHICH, OPTIONS SHALL BE GRANTED, AND THE NUMBER OF SHARES
SUBJECT TO EACH OPTION; (V) TO INTERPRET THIS PLAN; (VI) TO PRESCRIBE, AMEND,
AND RESCIND RULES AND REGULATIONS RELATING TO THIS PLAN; (VII) TO DETERMINE THE
TERMS AND PROVISIONS OF EACH OPTION GRANTED (WHICH NEED NOT BE IDENTICAL),
INCLUDING BUT NOT LIMITED TO, THE TIME OR TIMES AT WHICH OPTIONS SHALL BE
EXERCISABLE; (VIII) WITH THE CONSENT OF THE OPTIONEE, TO MODIFY OR AMEND ANY
OPTION; (IX) TO DEFER (WITH THE CONSENT OF THE OPTIONEE) THE EXERCISE DATE OF
ANY OPTION; (X) TO AUTHORIZE ANY PERSON TO EXECUTE ON BEHALF OF THE COMPANY ANY
INSTRUMENT EVIDENCING THE GRANT OF AN OPTION; AND (XI) TO MAKE ALL OTHER
DETERMINATIONS DEEMED NECESSARY OR ADVISABLE FOR THE ADMINISTRATION OF THIS
PLAN.  THE ADMINISTRATOR MAY DELEGATE NONDISCRETIONARY ADMINISTRATIVE DUTIES TO
SUCH EMPLOYEES OF THE COMPANY AS IT DEEMS PROPER.

 

4.4                                 INTERPRETATION BY ADMINISTRATOR.  ALL
QUESTIONS OF INTERPRETATION, IMPLEMENTATION, AND APPLICATION OF THIS PLAN SHALL
BE DETERMINED BY THE ADMINISTRATOR.  SUCH DETERMINATIONS SHALL BE FINAL AND
BINDING ON ALL PERSONS.

 

4.5                                 RULE 16B-3.  WITH RESPECT TO PERSONS SUBJECT
TO SECTION 16 OF THE EXCHANGE ACT, IF ANY, TRANSACTIONS UNDER THIS PLAN ARE
INTENDED TO COMPLY WITH THE APPLICABLE CONDITIONS OF RULE 16B-3, OR ANY
SUCCESSOR RULE THERETO.  TO THE EXTENT ANY PROVISION OF THIS PLAN OR ACTION BY
THE ADMINISTRATOR FAILS TO SO COMPLY, IT SHALL BE DEEMED NULL AND VOID, TO THE
EXTENT PERMITTED BY LAW AND DEEMED ADVISABLE BY THE ADMINISTRATOR.
NOTWITHSTANDING THE ABOVE, IT SHALL BE THE RESPONSIBILITY OF SUCH PERSONS, NOT
OF THE COMPANY OR THE ADMINISTRATOR, TO COMPLY WITH THE REQUIREMENTS OF
SECTION 16 OF THE EXCHANGE ACT; AND NEITHER THE COMPANY NOR THE ADMINISTRATOR
SHALL BE LIABLE IF THIS PLAN OR ANY TRANSACTION UNDER THIS PLAN FAILS TO COMPLY
WITH THE APPLICABLE CONDITIONS OF RULE 16B-3 OR ANY SUCCESSOR RULE THERETO, OR
IF ANY SUCH PERSON INCURS ANY LIABILITY UNDER SECTION 16 OF THE EXCHANGE ACT.

 

2

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

 

5.                                      GRANTING OF OPTIONS; OPTION AGREEMENT

 

5.1                                 TERMINATION OF PLAN.  NO OPTIONS SHALL BE
GRANTED UNDER THIS PLAN AFTER TEN YEARS FROM THE DATE OF ADOPTION OF THIS PLAN
BY THE BOARD.

 

5.2                                 STOCK OPTION AGREEMENT.  EACH OPTION SHALL
BE EVIDENCED BY A WRITTEN STOCK OPTION AGREEMENT (THE “OPTION AGREEMENT”), IN
FORM SATISFACTORY TO THE COMPANY, EXECUTED BY THE COMPANY AND THE PERSON TO WHOM
SUCH OPTION IS GRANTED; PROVIDED, HOWEVER, THAT THE FAILURE BY THE COMPANY, THE
OPTIONEE, OR BOTH, TO EXECUTE THE OPTION AGREEMENT SHALL NOT INVALIDATE THE
GRANTING OF AN OPTION, ALTHOUGH THE EXERCISE OF EACH OPTION SHALL BE SUBJECT TO
SECTION 6.1.3.

 

5.3                                 TYPE OF OPTION.  THE OPTION AGREEMENT SHALL
SPECIFY WHETHER EACH OPTION IT EVIDENCES IS AN NQO OR AN ISO.

 

5.4                                 EARLY APPROVAL OF GRANTS.  SUBJECT TO
SECTION 6.3.3 WITH RESPECT TO ISOS, THE ADMINISTRATOR MAY APPROVE THE GRANT OF
OPTIONS UNDER THIS PLAN TO PERSONS WHO ARE EXPECTED TO BECOME EMPLOYEES,
DIRECTORS OR CONSULTANTS OF THE COMPANY, BUT ARE NOT EMPLOYEES, DIRECTORS OR
CONSULTANTS AT THE DATE OF APPROVAL.

 

6.                                      TERMS AND CONDITIONS OF OPTIONS

 

Each Option granted under this Plan shall be subject to the terms and conditions
set forth in Section 6.1.  NQOs shall be also subject to the terms and
conditions set forth in Section 6.2, but not those set forth in Section 6.3. 
ISOs shall also be subject to the terms and conditions set forth in Section 6.3,
but not those set forth in Section 6.2.

 

6.1                                 TERMS AND CONDITIONS TO WHICH ALL OPTIONS
ARE SUBJECT.  OPTIONS GRANTED UNDER THIS PLAN SHALL BE SUBJECT TO THE FOLLOWING
TERMS AND CONDITIONS:

 

6.1.1                        CHANGES IN CAPITAL STRUCTURE.  SUBJECT TO
SECTION 6.1.2, IF THE STOCK OF THE COMPANY IS CHANGED BY REASON OF A STOCK
SPLIT, REVERSE STOCK SPLIT, STOCK DIVIDEND, OR RECAPITALIZATION, COMBINATION OR
RECLASSIFICATION, APPROPRIATE ADJUSTMENTS SHALL BE MADE BY THE BOARD IN (A) THE
NUMBER AND CLASS OF SHARES OF STOCK SUBJECT TO THIS PLAN AND EACH OPTION
OUTSTANDING UNDER THIS PLAN, AND (B) THE EXERCISE PRICE OF EACH OUTSTANDING
OPTION; PROVIDED, HOWEVER, THAT THE COMPANY SHALL NOT BE REQUIRED TO ISSUE
FRACTIONAL SHARES AS A RESULT OF ANY SUCH ADJUSTMENTS.  EACH SUCH ADJUSTMENT
SHALL BE SUBJECT TO APPROVAL BY THE BOARD IN ITS ABSOLUTE DISCRETION.

 

6.1.2                        CORPORATE TRANSACTIONS.

 

(A)                                  DISSOLUTION OR LIQUIDATION.  IN THE EVENT
OF THE PROPOSED DISSOLUTION OR LIQUIDATION OF THE COMPANY, THE ADMINISTRATOR
SHALL NOTIFY EACH OPTIONEE AT LEAST 30 DAYS PRIOR TO SUCH PROPOSED ACTION.  TO
THE EXTENT NOT PREVIOUSLY EXERCISED, ALL OPTIONS WILL TERMINATE IMMEDIATELY
PRIOR TO THE CONSUMMATION OF SUCH PROPOSED ACTION.

 

3

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

 

(B)                                 MERGER OR ASSET SALE.  IN THE EVENT OF A
MERGER OF THE COMPANY WITH OR INTO ANOTHER CORPORATION, OR THE SALE OF
SUBSTANTIALLY ALL OF THE ASSETS OF THE COMPANY:

 

(I)                                     OPTIONS.  EACH OPTION SHALL BE ASSUMED
OR AN EQUIVALENT OPTION SUBSTITUTED BY THE SUCCESSOR CORPORATION (INCLUDING AS A
“SUCCESSOR” ANY PURCHASER OF SUBSTANTIALLY ALL OF THE ASSETS OF THE COMPANY) OR
A PARENT OR SUBSIDIARY OF THE SUCCESSOR CORPORATION.  IN THE EVENT THAT THE
SUCCESSOR CORPORATION REFUSES TO ASSUME OR SUBSTITUTE FOR THE OPTION, THE
OPTIONEE SHALL HAVE THE RIGHT TO EXERCISE THE OPTION AS TO ALL OF THE SHARES OF
COMMON STOCK COVERED BY THE OPTION, INCLUDING SHARES AS TO WHICH IT WOULD NOT
OTHERWISE BE EXERCISABLE.  IF AN OPTION IS EXERCISABLE IN LIEU OF ASSUMPTION OR
SUBSTITUTION IN THE EVENT OF A MERGER OR SALE OF ASSETS, THE ADMINISTRATOR SHALL
NOTIFY THE OPTIONEE THAT THE OPTION SHALL BE FULLY EXERCISABLE FOR A PERIOD OF
15 DAYS FROM THE DATE OF SUCH NOTICE, AND THE OPTION SHALL TERMINATE UPON THE
EXPIRATION OF SUCH PERIOD.  FOR THE PURPOSES OF THIS PARAGRAPH, THE OPTION SHALL
BE CONSIDERED ASSUMED IF, FOLLOWING THE MERGER OR SALE OF ASSETS, THE OPTION
CONFERS THE RIGHT TO PURCHASE OR RECEIVE, FOR EACH SHARE OF COMMON STOCK SUBJECT
TO THE OPTION IMMEDIATELY PRIOR TO THE MERGER OR SALE OF ASSETS, THE
CONSIDERATION (WHETHER STOCK, CASH, OR OTHER SECURITIES OR PROPERTY) RECEIVED IN
THE MERGER OR SALE OF ASSETS BY HOLDERS OF COMMON STOCK FOR EACH SHARE HELD ON
THE EFFECTIVE DATE OF THE TRANSACTION (AND IF HOLDERS WERE OFFERED A CHOICE OF
CONSIDERATION, THE TYPE OF CONSIDERATION CHOSEN BY THE HOLDERS OF A MAJORITY OF
THE OUTSTANDING SHARES); PROVIDED, HOWEVER, THAT IF SUCH CONSIDERATION RECEIVED
IN THE MERGER OR SALE OF ASSETS WAS NOT SOLELY COMMON STOCK OF THE SUCCESSOR
CORPORATION OR ITS PARENT ENTITY, THE ADMINISTRATOR MAY, WITH THE CONSENT OF THE
SUCCESSOR CORPORATION, PROVIDE FOR THE CONSIDERATION TO BE RECEIVED UPON THE
EXERCISE OF THE OPTION, FOR EACH SHARE OF COMMON STOCK SUBJECT TO THE OPTION, TO
BE SOLELY COMMON STOCK OF THE SUCCESSOR CORPORATION OR ITS PARENT ENTITY EQUAL
IN FAIR MARKET VALUE TO THE PER SHARE CONSIDERATION RECEIVED BY HOLDERS OF
COMMON STOCK IN THE MERGER OR SALE OF ASSETS.

 

6.1.3                        TIME OF OPTION EXERCISE.  SUBJECT TO SECTION 5 AND
SECTION 6.3.4, OPTIONS GRANTED UNDER THIS PLAN SHALL BE EXERCISABLE
(A) IMMEDIATELY AS OF THE EFFECTIVE DATE OF THE OPTION AGREEMENT GRANTING THE
OPTION, OR (B) IN ACCORDANCE WITH A SCHEDULE RELATED TO THE DATE OF THE GRANT OF
THE OPTION, THE DATE OF FIRST EMPLOYMENT, OR SUCH OTHER DATE AS MAY BE SET BY
THE ADMINISTRATOR (IN ANY CASE, THE “VESTING BASE DATE”) AND SPECIFIED IN THE
OPTION AGREEMENT RELATING TO SUCH OPTION; PROVIDED, HOWEVER, THAT WITH RESPECT
TO OPTIONS GRANTED TO EMPLOYEES WHO ARE NOT OFFICERS, DIRECTORS OR CONSULTANTS,
THE RIGHT TO EXERCISE AN OPTION MUST VEST AT THE RATE OF AT LEAST 20% PER YEAR
OVER FIVE YEARS FROM THE DATE THE OPTION WAS GRANTED.  OPTIONS GRANTED TO
OFFICERS, DIRECTORS OR CONSULTANTS MAY BECOME FULLY EXERCISABLE, SUBJECT TO
REASONABLE CONDITIONS SUCH AS CONTINUED EMPLOYMENT, AT ANY TIME OR DURING ANY
PERIOD ESTABLISHED BY THE BOARD OF THE ADMINISTRATOR IN ACCORDANCE WITH THIS
PLAN.  IN ANY CASE, NO OPTION SHALL BE EXERCISABLE UNTIL A WRITTEN OPTION
AGREEMENT IN FORM SATISFACTORY TO THE COMPANY IS EXECUTED BY THE COMPANY AND THE
OPTIONEE.

 

6.1.4                        OPTION GRANT DATE.  EXCEPT IN THE CASE OF ADVANCE
APPROVALS DESCRIBED IN SECTION 5.4, THE DATE OF GRANT OF AN OPTION UNDER THIS
PLAN SHALL BE THE DATE AS OF WHICH THE ADMINISTRATOR APPROVES THE GRANT.

 

4

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

 

6.1.5                        NONASSIGNABILITY OF OPTION RIGHTS.  EXCEPT AS
OTHERWISE DETERMINED BY THE ADMINISTRATOR AND EXPRESSLY SET FORTH IN THE OPTION
AGREEMENT, NO OPTION GRANTED UNDER THIS PLAN SHALL BE ASSIGNABLE OR OTHERWISE
TRANSFERABLE BY THE OPTIONEE EXCEPT BY WILL OR BY THE LAWS OF DESCENT AND
DISTRIBUTION.  DURING THE LIFE OF THE OPTIONEE, EXCEPT AS OTHERWISE DETERMINED
BY THE ADMINISTRATOR AND EXPRESSLY SET FORTH IN THE OPTION AGREEMENT, AN OPTION
SHALL BE EXERCISABLE ONLY BY THE OPTIONEE.

 

6.1.6                        PAYMENT.  EXCEPT AS PROVIDED BELOW, PAYMENT IN
FULL, IN CASH, SHALL BE MADE FOR ALL STOCK PURCHASED AT THE TIME WRITTEN NOTICE
OF EXERCISE OF AN OPTION IS GIVEN TO THE COMPANY, AND PROCEEDS OF ANY PAYMENT
SHALL CONSTITUTE GENERAL FUNDS OF THE COMPANY.  AT THE TIME AN OPTION IS GRANTED
OR EXERCISED, THE ADMINISTRATOR, IN THE EXERCISE OF ITS ABSOLUTE DISCRETION
AFTER CONSIDERING ANY TAX OR ACCOUNTING CONSEQUENCES, MAY AUTHORIZE ANY ONE OR
MORE OF THE FOLLOWING ADDITIONAL METHODS OF PAYMENT:

 

(A)                                  ACCEPTANCE OF THE OPTIONEE’S FULL RECOURSE
PROMISSORY NOTE FOR ALL OR PART OF THE OPTION PRICE, PAYABLE ON SUCH TERMS AND
BEARING SUCH INTEREST RATE AS DETERMINED BY THE ADMINISTRATOR (BUT IN NO EVENT
LESS THAN THE MINIMUM INTEREST RATE SPECIFIED UNDER THE CODE AT WHICH NO
ADDITIONAL INTEREST WOULD BE IMPUTED AND IN NO EVENT MORE THAN THE MAXIMUM
INTEREST RATE ALLOWED UNDER APPLICABLE USURY LAWS), WHICH PROMISSORY NOTE MAY BE
EITHER SECURED OR UNSECURED IN SUCH MANNER AS THE ADMINISTRATOR SHALL APPROVE
(INCLUDING, WITHOUT LIMITATION, BY A SECURITY INTEREST IN THE SHARES OF THE
COMPANY); AND

 

(B)                                 DELIVERY BY THE OPTIONEE OF COMMON STOCK
ALREADY OWNED BY THE OPTIONEE FOR ALL OR PART OF THE OPTION PRICE, PROVIDED THE
VALUE (DETERMINED AS SET FORTH IN SECTION 6.1.11) OF SUCH COMMON STOCK IS EQUAL
ON THE DATE OF EXERCISE TO THE OPTION PRICE, OR SUCH PORTION THEREOF AS THE
OPTIONEE IS AUTHORIZED TO PAY BY DELIVERY OF SUCH STOCK; PROVIDED, HOWEVER, THAT
IF AN OPTIONEE HAS EXERCISED ANY PORTION OF ANY OPTION GRANTED BY THE COMPANY BY
DELIVERY OF COMMON STOCK, THE OPTIONEE MAY NOT, WITHIN SIX MONTHS FOLLOWING SUCH
EXERCISE, EXERCISE ANY OPTION GRANTED UNDER THIS PLAN BY DELIVERY OF COMMON
STOCK WITHOUT THE CONSENT OF THE ADMINISTRATOR.

 

6.1.7                        TERMINATION OF EMPLOYMENT.

 

(A)                                  IF, FOR ANY REASON OTHER THAN DEATH,
DISABILITY OR “CAUSE” (AS DEFINED BELOW), AN OPTIONEE CEASES TO BE EMPLOYED BY
THE COMPANY OR ANY OF ITS AFFILIATES (SUCH EVENT BEING CALLED A “TERMINATION”),
OPTIONS HELD AT THE DATE OF TERMINATION (TO THE EXTENT THEN EXERCISABLE) MAY BE
EXERCISED IN WHOLE OR IN PART AT ANY TIME WITHIN THREE MONTHS OF THE DATE OF
SUCH TERMINATION, OR SUCH OTHER PERIOD OF NOT LESS THAN 30 DAYS AFTER THE DATE
OF SUCH TERMINATION AS IS SPECIFIED IN THE OPTION AGREEMENT (BUT IN NO EVENT
AFTER THE EXPIRATION DATE); PROVIDED, THAT IF SUCH EXERCISE OF THE OPTION WOULD
RESULT IN LIABILITY FOR THE OPTIONEE UNDER SECTION 16(B) OF THE EXCHANGE ACT,
THEN SUCH 90-DAY PERIOD AUTOMATICALLY SHALL BE EXTENDED UNTIL THE TENTH DAY
FOLLOWING THE LAST DATE UPON WHICH OPTIONEE HAS ANY LIABILITY UNDER
SECTION 16(B) (BUT IN NO EVENT AFTER THE EXPIRATION DATE).

 

(B)                                 IF AN OPTIONEE DIES WHILE EMPLOYED BY THE
COMPANY OR AN AFFILIATE OR WITHIN THE PERIOD THAT THE OPTION REMAINS EXERCISABLE
AFTER TERMINATION, OPTIONS THEN

 

5

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

 

HELD (TO THE EXTENT THEN EXERCISABLE) MAY BE EXERCISED, IN WHOLE OR IN PART, BY
THE OPTIONEE, BY THE OPTIONEE’S PERSONAL REPRESENTATIVE, OR BY THE PERSON TO
WHOM THE OPTION IS TRANSFERRED BY DEVISE OR THE LAWS OF DESCENT AND
DISTRIBUTION, AT ANY TIME WITHIN 12 MONTHS AFTER THE DEATH OF THE OPTIONEE, OR
SUCH OTHER PERIOD OF NOT LESS THAN SIX MONTHS FROM THE DATE OF TERMINATION AS IS
SPECIFIED IN THE OPTION AGREEMENT (BUT IN NO EVENT AFTER THE EXPIRATION DATE).

 

(C)                                  IF AN OPTIONEE CEASES TO BE EMPLOYED BY THE
COMPANY AS A RESULT OF HIS OR HER DISABILITY, THE OPTIONEE MAY, BUT ONLY WITHIN
SIX MONTHS AFTER THE DATE OF TERMINATION (AND IN NO EVENT AFTER THE EXPIRATION
DATE), EXERCISE THE OPTION TO THE EXTENT OTHERWISE ENTITLED TO EXERCISE IT AT
THE DATE OF TERMINATION; PROVIDED, HOWEVER, THAT IF SUCH DISABILITY IS NOT A
“DISABILITY” AS SUCH TERM IS DEFINED IN SECTION 22(E)(3) OF THE CODE, IN THE
CASE OF AN ISO SUCH ISO SHALL AUTOMATICALLY CONVERT TO AN NQO ON THE DAY THREE
MONTHS AND ONE DAY FOLLOWING SUCH TERMINATION.  TO THE EXTENT THAT THE OPTIONEE
WAS NOT ENTITLED TO EXERCISE THE OPTION AT THE DATE OF TERMINATION OR IF THE
OPTIONEE DOES NOT EXERCISE SUCH OPTION TO THE EXTENT SO ENTITLED WITHIN THE TIME
SPECIFIED HEREIN, THE OPTION SHALL TERMINATE, AND THE SHARES COVERED BY SUCH
OPTION SHALL REVERT TO THE PLAN.

 

(D)                                 IF AN OPTIONEE IS TERMINATED FOR “CAUSE” ALL
OPTIONS THEN HELD BY SUCH OPTIONEE SHALL TERMINATE AND NO LONGER BE EXERCISABLE
AS OF THE DATE OF TERMINATION.

 

(E)                                  FOR PURPOSES OF THIS SECTION 6.1.7,
“EMPLOYMENT” INCLUDES SERVICE AS AN EMPLOYEE, A DIRECTOR OR AS A CONSULTANT.

 

(F)                                    FOR PURPOSES OF THIS SECTION 6.1.7, AN
OPTIONEE’S EMPLOYMENT SHALL NOT BE DEEMED TO TERMINATE BY REASON OF SICK LEAVE,
MILITARY LEAVE OR OTHER LEAVE OF ABSENCE APPROVED BY THE ADMINISTRATOR, IF THE
PERIOD OF ANY SUCH LEAVE DOES NOT EXCEED THREE MONTHS OR, IF LONGER, IF THE
OPTIONEE’S RIGHT TO REEMPLOYMENT BY THE COMPANY OR ANY AFFILIATE IS GUARANTEED
EITHER CONTRACTUALLY OR BY STATUTE.

 

(G)                                 FOR PURPOSES OF THIS SECTION 6.1.7, “CAUSE”
SHALL MEAN TERMINATION (I) BY REASON OF OPTIONEE’S COMMISSION OF A FELONY,
MISDEMEANOR OR OTHER ILLEGAL CONDUCT INVOLVING DISHONESTY, FRAUD OR OTHER
MATTERS OF MORAL TURPITUDE, (II) BY REASON OF OPTIONEE’S DISHONESTY TOWARDS,
FRAUD UPON, OR DELIBERATE INJURY OR ATTEMPTED INJURY TO THE COMPANY OR ANY OF
ITS AFFILIATES, OR (III) BY REASON OF OPTIONEE’S WILLFULLY ENGAGING IN
MISCONDUCT WHICH IS MATERIALLY AND DEMONSTRABLY INJURIOUS TO THE COMPANY OR ANY
OF ITS AFFILIATES.

 

6.1.8                        WITHHOLDING AND EMPLOYMENT TAXES.  AT THE TIME OF
EXERCISE OF AN OPTION OR AT SUCH OTHER TIME AS THE AMOUNT OF SUCH OBLIGATIONS
BECOMES DETERMINABLE (THE “TAX DATE”), THE OPTIONEE SHALL REMIT TO THE COMPANY
IN CASH ALL APPLICABLE FEDERAL AND STATE WITHHOLDING AND EMPLOYMENT TAXES.  IF
AUTHORIZED BY THE ADMINISTRATOR IN ITS ABSOLUTE DISCRETION, AFTER CONSIDERING
ANY TAX OR ACCOUNTING CONSEQUENCES, AN OPTIONEE MAY ELECT TO (I) DELIVER A FULL
RECOURSE PROMISSORY NOTE ON SUCH TERMS AS THE ADMINISTRATOR DEEMS APPROPRIATE,
(II) TENDER TO THE COMPANY PREVIOUSLY OWNED SHARES OF STOCK OR OTHER SECURITIES
OF THE COMPANY, OR (III) HAVE SHARES OF COMMON STOCK WHICH ARE ACQUIRED UPON
EXERCISE OF THE OPTION WITHHELD BY THE

 

6

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

 

COMPANY TO PAY SOME OR ALL OF THE AMOUNT OF TAX THAT IS REQUIRED BY LAW TO BE
WITHHELD BY THE COMPANY AS A RESULT OF THE EXERCISE OF SUCH OPTION, SUBJECT TO
THE FOLLOWING LIMITATIONS:

 

(A)                                  ANY ELECTION PURSUANT TO CLAUSE (III) ABOVE
BY AN OPTIONEE SUBJECT TO SECTION 16 OF THE EXCHANGE ACT SHALL EITHER (X) BE
MADE AT LEAST SIX MONTHS BEFORE THE TAX DATE AND SHALL BE IRREVOCABLE; OR
(Y) SHALL BE MADE IN (OR MADE EARLIER TO TAKE EFFECT IN) ANY TEN-DAY PERIOD
BEGINNING ON THE THIRD BUSINESS DAY FOLLOWING THE DATE OF RELEASE FOR
PUBLICATION OF THE COMPANY’S QUARTERLY OR ANNUAL SUMMARY STATEMENTS OF EARNINGS
AND SHALL BE SUBJECT TO APPROVAL BY THE ADMINISTRATOR, WHICH APPROVAL MAY BE
GIVEN AT ANY TIME AFTER SUCH ELECTION HAS BEEN MADE.  IN ADDITION, IN THE CASE
OF (Y), THE OPTION SHALL BE HELD AT LEAST SIX MONTHS PRIOR TO THE TAX DATE.

 

(B)                                 ANY ELECTION PURSUANT TO CLAUSE (II) ABOVE,
WHERE THE OPTIONEE IS TENDERING COMMON STOCK ISSUED PURSUANT TO THE EXERCISE OF
AN OPTION, SHALL REQUIRE THAT SUCH SHARES BE HELD AT LEAST SIX MONTHS PRIOR TO
THE TAX DATE.

 

Any of the foregoing limitations may be waived (or additional limitations may be
imposed) by the Administrator, in its absolute discretion, if the Administrator
determines that such foregoing limitations are not required (or that such
additional limitations are required) in order that the transaction shall be
exempt from Section 16(b) of the Exchange Act pursuant to Rule 16b-3, or any
successor rule thereto.  In addition, any of the foregoing limitations may be
waived by the Administrator, in its sole discretion, if the Administrator
determines that Rule 16b-3, or any successor rule thereto, is not applicable to
the exercise of the Option by the Optionee or for any other reason.

 

Any securities tendered or withheld in accordance with this Section 6.1.9 shall
be valued by the Company as of the Tax Date.

 

6.1.9                        OTHER PROVISIONS.  EACH OPTION GRANTED UNDER THIS
PLAN MAY CONTAIN SUCH OTHER TERMS, PROVISIONS, AND CONDITIONS NOT INCONSISTENT
WITH THIS PLAN AS MAY BE DETERMINED BY THE ADMINISTRATOR, AND EACH ISO GRANTED
UNDER THIS PLAN SHALL INCLUDE SUCH PROVISIONS AND CONDITIONS AS ARE NECESSARY TO
QUALIFY THE OPTION AS AN “INCENTIVE STOCK OPTION” WITHIN THE MEANING OF
SECTION 422 OF THE CODE.  IF OPTIONS PROVIDE FOR A RIGHT OF FIRST REFUSAL IN
FAVOR OF THE COMPANY WITH RESPECT TO STOCK ACQUIRED BY EMPLOYEES, DIRECTORS OR
CONSULTANTS, SUCH OPTIONS SHALL PROVIDE THAT THE RIGHT OF FIRST REFUSAL SHALL
TERMINATE UPON THE EARLIER OF (I) THE CLOSING OF THE COMPANY’S INITIAL
REGISTERED PUBLIC OFFERING TO THE PUBLIC GENERALLY, OR (II) THE DATE TEN YEARS
AFTER THE GRANT DATE AS SET FORTH IN SECTION 6.1.4.

 

6.1.10                  DETERMINATION OF VALUE.  FOR PURPOSES OF THE PLAN, THE
VALUE OF COMMON STOCK OR OTHER SECURITIES OF THE COMPANY SHALL BE DETERMINED AS
FOLLOWS:

 

(A)                                  IF THE STOCK OF THE COMPANY IS LISTED ON
ANY ESTABLISHED STOCK EXCHANGE OR A NATIONAL MARKET SYSTEM, INCLUDING WITHOUT
LIMITATION THE NATIONAL MARKET SYSTEM OF THE NATIONAL ASSOCIATION OF SECURITIES
DEALERS, INC. AUTOMATED QUOTATION SYSTEM, ITS FAIR MARKET VALUE SHALL BE THE
CLOSING SALES PRICE FOR SUCH STOCK OR THE CLOSING BID IF NO SALES WERE REPORTED,
AS QUOTED ON SUCH SYSTEM OR EXCHANGE (OR THE LARGEST SUCH EXCHANGE) FOR THE DATE
THE

 

7

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

 

VALUE IS TO BE DETERMINED (OR IF THERE ARE NO SALES FOR SUCH DATE, THEN FOR THE
LAST PRECEDING BUSINESS DAY ON WHICH THERE WERE SALES), AS REPORTED IN THE WALL
STREET JOURNAL OR SIMILAR PUBLICATION.

 

(B)                                 IF THE STOCK OF THE COMPANY IS REGULARLY
QUOTED BY A RECOGNIZED SECURITIES DEALER BUT SELLING PRICES ARE NOT REPORTED,
ITS FAIR MARKET VALUE SHALL BE THE MEAN BETWEEN THE HIGH BID AND LOW ASKED
PRICES FOR THE STOCK ON THE DATE THE VALUE IS TO BE DETERMINED (OR IF THERE ARE
NO QUOTED PRICES FOR THE DATE OF GRANT, THEN FOR THE LAST PRECEDING BUSINESS DAY
ON WHICH THERE WERE QUOTED PRICES).

 

(C)                                  IN THE ABSENCE OF AN ESTABLISHED MARKET FOR
THE STOCK, THE FAIR MARKET VALUE THEREOF SHALL BE DETERMINED IN GOOD FAITH BY
THE ADMINISTRATOR, BY CONSIDERATION OF SUCH FACTORS AS THE ADMINISTRATOR IN ITS
DISCRETION DEEMS APPROPRIATE AMONG THE RECENT ISSUE PRICE OF OTHER SECURITIES OF
THE COMPANY, THE COMPANY’S NET WORTH, PROSPECTIVE EARNING POWER, DIVIDEND-PAYING
CAPACITY, AND OTHER RELEVANT FACTORS, INCLUDING THE GOODWILL OF THE COMPANY, THE
ECONOMIC OUTLOOK IN THE COMPANY’S INDUSTRY, THE COMPANY’S POSITION IN THE
INDUSTRY AND ITS MANAGEMENT, AND THE VALUES OF STOCK OF OTHER CORPORATIONS IN
THE SAME OR A SIMILAR LINE OF BUSINESS.

 

6.1.11                  OPTION TERM.  SUBJECT TO SECTION 6.3.5, NO OPTION SHALL
BE EXERCISABLE MORE THAN TEN YEARS AFTER THE DATE OF GRANT, OR SUCH LESSER
PERIOD OF TIME AS IS SET FORTH IN THE OPTION AGREEMENT (THE END OF THE MAXIMUM
EXERCISE PERIOD STATED IN THE STOCK OPTION AGREEMENT IS REFERRED TO IN THIS PLAN
AS THE “EXPIRATION DATE”).

 

6.1.12                  EXERCISE PRICE.  THE EXERCISE PRICE OF ANY OPTION
GRANTED TO ANY PERSON WHO OWNS, DIRECTLY OR BY ATTRIBUTION UNDER THE CODE
(CURRENTLY SECTION 424(D)), STOCK POSSESSING MORE THAN TEN PERCENT OF THE TOTAL
COMBINED VOTING POWER OF ALL CLASSES OF STOCK OF THE COMPANY OR OF ANY AFFILIATE
(A “TEN PERCENT SHAREHOLDER”) SHALL IN NO EVENT BE LESS THAN 110% OF THE FAIR
MARKET VALUE (DETERMINED IN ACCORDANCE WITH SECTION 6.1.11) OF THE STOCK COVERED
BY THE OPTION AT THE TIME THE OPTION IS GRANTED.

 

6.2                                 EXERCISE PRICE OF NQOS.  EXCEPT AS SET FORTH
IN SECTION 6.1.13, THE EXERCISE PRICE OF ANY NQO GRANTED UNDER THIS PLAN SHALL
BE NOT LESS THAN 85% OF THE FAIR MARKET VALUE (DETERMINED IN ACCORDANCE WITH
SECTION 6.1.11) OF THE STOCK SUBJECT TO THE OPTION ON THE DATE OF GRANT.

 

6.3                                 TERMS AND CONDITIONS TO WHICH ONLY ISOS ARE
SUBJECT. OPTIONS GRANTED UNDER THIS PLAN WHICH ARE DESIGNATED AS ISOS SHALL BE
SUBJECT TO THE FOLLOWING TERMS AND CONDITIONS:

 

6.3.1                        EXERCISE PRICE.  EXCEPT AS SET FORTH IN
SECTION 6.1.13, THE EXERCISE PRICE OF AN ISO SHALL BE DETERMINED IN ACCORDANCE
WITH THE APPLICABLE PROVISIONS OF THE CODE AND SHALL IN NO EVENT BE LESS THAN
THE FAIR MARKET VALUE (DETERMINED IN ACCORDANCE WITH SECTION 6.1.11) OF THE
STOCK COVERED BY THE OPTION AT THE TIME THE OPTION IS GRANTED.

 

8

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

 

6.3.2                        DISQUALIFYING DISPOSITIONS.  IF STOCK ACQUIRED BY
EXERCISE OF AN ISO GRANTED PURSUANT TO THIS PLAN IS DISPOSED OF IN A
“DISQUALIFYING DISPOSITION” WITHIN THE MEANING OF SECTION 422 OF THE CODE, THE
HOLDER OF THE STOCK IMMEDIATELY BEFORE THE DISPOSITION SHALL PROMPTLY NOTIFY THE
COMPANY IN WRITING OF THE DATE AND TERMS OF THE DISPOSITION AND SHALL PROVIDE
SUCH OTHER INFORMATION REGARDING THE OPTION AS THE COMPANY MAY REASONABLY
REQUIRE.

 

6.3.3                        GRANT DATE.  IF AN ISO IS GRANTED IN ANTICIPATION
OF EMPLOYMENT AS PROVIDED IN SECTION 5.4, THE OPTION SHALL BE DEEMED GRANTED,
WITHOUT FURTHER APPROVAL, ON THE DATE THE GRANTEE ASSUMES THE EMPLOYMENT
RELATIONSHIP FORMING THE BASIS FOR SUCH GRANT, AND, IN ADDITION, SATISFIES ALL
REQUIREMENTS OF THIS PLAN FOR OPTIONS GRANTED ON THAT DATE.

 

6.3.4                        VESTING.  NOTWITHSTANDING ANY OTHER PROVISION OF
THIS PLAN, ISOS GRANTED UNDER ALL INCENTIVE STOCK OPTION PLANS OF THE COMPANY
AND ITS SUBSIDIARIES MAY NOT “VEST” FOR MORE THAN $100,000 IN FAIR MARKET VALUE
OF STOCK (MEASURED ON THE GRANT DATES(S)) IN ANY CALENDAR YEAR.  FOR PURPOSES OF
THE PRECEDING SENTENCE, AN OPTION “VESTS” WHEN IT FIRST BECOMES EXERCISABLE. 
IF, BY THEIR TERMS, SUCH ISOS TAKEN TOGETHER WOULD VEST TO A GREATER EXTENT IN A
CALENDAR YEAR, AND UNLESS OTHERWISE PROVIDED BY THE ADMINISTRATOR, THE VESTING
LIMITATION DESCRIBED ABOVE SHALL BE APPLIED BY DEFERRING THE EXERCISABILITY OF
THOSE ISOS OR PORTIONS OF ISOS WHICH HAVE THE HIGHEST PER SHARE EXERCISE PRICES;
BUT IN NO EVENT SHALL MORE THAN $100,000 IN FAIR MARKET VALUE OF STOCK (MEASURED
ON THE GRANT DATE(S)) VEST IN ANY CALENDAR YEAR.  THE ISOS OR PORTIONS OF ISOS
WHOSE EXERCISABILITY IS SO DEFERRED SHALL BECOME EXERCISABLE ON THE FIRST DAY OF
THE FIRST SUBSEQUENT CALENDAR YEAR DURING WHICH THEY MAY BE EXERCISED, AS
DETERMINED BY APPLYING THESE SAME PRINCIPLES AND ALL OTHER PROVISIONS OF THIS
PLAN INCLUDING THOSE RELATING TO THE EXPIRATION AND TERMINATION OF ISOS.  IN NO
EVENT, HOWEVER, WILL THE OPERATION OF THIS SECTION 6.3.4 CAUSE AN ISO TO VEST
BEFORE ITS TERMS OR, HAVING VESTED, CEASE TO BE VESTED.

 

7.                                      MANNER OF EXERCISE

 

7.1                                 WRITTEN NOTICE; PAYMENT.  AN OPTIONEE
WISHING TO EXERCISE AN OPTION SHALL GIVE WRITTEN NOTICE TO THE COMPANY AT ITS
PRINCIPAL EXECUTIVE OFFICE, TO THE ATTENTION OF THE OFFICER OF THE COMPANY
DESIGNATED BY THE ADMINISTRATOR, ACCOMPANIED BY PAYMENT OF THE EXERCISE PRICE AS
PROVIDED IN SECTION 6.1.6.  THE DATE THE COMPANY RECEIVES WRITTEN NOTICE OF AN
EXERCISE HEREUNDER ACCOMPANIED BY PAYMENT OF THE EXERCISE PRICE WILL BE
CONSIDERED AS THE DATE SUCH OPTION WAS EXERCISED.

 

7.2                                 DELIVERY OF STOCK.  PROMPTLY AFTER RECEIPT
OF WRITTEN NOTICE OF EXERCISE OF AN OPTION, THE COMPANY SHALL, WITHOUT STOCK
ISSUE OR TRANSFER TAXES TO THE OPTIONEE OR OTHER PERSON ENTITLED TO EXERCISE THE
OPTION, DELIVER TO THE OPTIONEE OR SUCH OTHER PERSON A CERTIFICATE OR
CERTIFICATES FOR THE REQUISITE NUMBER OF SHARES OF STOCK.  AN OPTIONEE OR
PERMITTED TRANSFEREE OF AN OPTIONEE SHALL NOT HAVE ANY PRIVILEGES AS A
SHAREHOLDER WITH RESPECT TO ANY SHARES OF STOCK COVERED BY THE OPTION UNTIL THE
DATE OF ISSUANCE (AS EVIDENCED BY THE APPROPRIATE ENTRY ON THE BOOKS OF THE
COMPANY OR A DULY AUTHORIZED TRANSFER AGENT) OF SUCH SHARES.

 

9

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

 

8.                                      EMPLOYMENT OR CONSULTING RELATIONSHIP

 

Nothing in this Plan or any Option granted thereunder shall interfere with or
limit in any way the right of the Company or of any of its Affiliates to
terminate any Optionee’s employment or consulting at any time, nor confer upon
any Optionee any right to continue in the employ of, or consult with, the
Company or any of its Affiliates, nor interfere in any way with provisions in
the Company’s charter documents or applicable law relating to the election,
appointment, terms of office, and removal of members of the Board.

 

9.                                      FINANCIAL INFORMATION

 

The Company shall provide to each Optionee during the period such Optionee holds
an outstanding Option, and to each holder of Common Stock acquired upon exercise
of Options granted under the Plan for so long as such person is a holder of such
Common Stock, annual financial statements of the Company as prepared either by
the Company or independent certified public accountants of the Company.  Such
financial statements shall include, at a minimum, a balance sheet and an income
statement, and shall be delivered as soon as practicable following the end of
the Company’s fiscal year.  The provisions of this Section 9 shall not apply
with respect to Optionees who are key employees of the Company whose duties in
connection with the Company assures them access to information equivalent to the
information provided in the financial statements.

 

10.                               CONDITIONS UPON ISSUANCE OF SHARES

 

Shares of Common Stock shall not be issued pursuant to the exercise of an Option
unless the exercise of such Option and the issuance and delivery of such shares
pursuant thereto shall comply with all relevant provisions of law, including,
without limitation, the Securities Act of 1933, as amended (the “Securities
Act”).

 

11.                               NONEXCLUSIVITY OF THE PLAN

 

The adoption of the Plan shall not be construed as creating any limitations on
the power of the Company to adopt such other incentive arrangements as it may
deem desirable, including, without limitation, the granting of stock options
other than under the Plan.

 

12.                               MARKET STANDOFF

 

Each Optionee, if so requested by the Company or any representative of the
underwriters in connection with any registration of the offering of any
securities of the Company under the Securities Act shall not sell or otherwise
transfer any shares of Common Stock acquired upon exercise of Options during the
180-day period following the effective date of a registration statement of the
company filed under the Securities Act; provided, however, that such restriction
shall apply only to the first two registration statements of the Company to
become effective under the  Securities Act which includes securities to be sold
on behalf of the Company to the public in an underwritten public offering under
the Securities Act.  The Company may impose stop-transfer instructions with
respect to securities subject to the foregoing restriction until the end of such
180-day period.

 

10

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

 

13.                               AMENDMENTS TO PLAN

 

The Board may at any time amend, alter, suspend or discontinue this Plan. 
Without the consent of an Optionee, no amendment, alteration, suspension or
discontinuance may adversely affect outstanding Options except to conform this
Plan and ISOs granted under this Plan to the requirements of federal or other
tax laws relating to incentive stock options.  No amendment, alteration,
suspension or discontinuance shall require shareholder approval unless
(a) shareholder approval is required to preserve incentive stock option
treatment for federal income tax purposes, or (b) the Board otherwise concludes
that shareholder approval is advisable.

 

14.                               EFFECTIVE DATE OF PLAN

 

This Plan shall become effective upon adoption by the Board provided, however,
that no Option shall be exercisable unless and until written consent of the
shareholders of the Company, or approval of shareholders of the Company voting
at a validly called shareholders’ meeting, is obtained within 12 months after
adoption by the Board.  If such shareholder approval is not obtained within such
time, Options granted hereunder shall terminate and be of no force and effect
from and after expiration of such 12-month period.  Options may be granted and
exercised under this Plan only after there has been compliance with all
applicable federal and state securities laws.

 

Plan adopted by the Board of Directors on:

February 27, 2009

Plan approved by Shareholders on:

February 27, 2009

 

11

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