Exhibit 10.1
SYMBOLLON PHARMACEUTICALS, INC.
2006 NON-EMPLOYEE DIRECTORS’ STOCK OPTION PLAN

PART 1.  PLAN ADMINISTRATION AND ELIGIBILITY
 
 I. PURPOSE
 
The purpose of this 2006 Non-Employee Directors' Stock Option Plan (the "Plan")
of Symbollon Pharmaceuticals, Inc. (the "Corporation") is to make service on the
Board of Directors of the Corporation (the "Board") more attractive to present
and prospective outside directors of the Corporation, since the continued
services of qualified and experienced outside directors are considered essential
to the Corporation's sustained progress and business success.
 
II. ADMINISTRATION
 
The Plan shall be administered by the Board or by a committee of at least two
directors appointed by the Board (the "Committee"). In the event the Board fails
to appoint or refrains from appointing a Committee, the Board shall have all
power and authority to administer the Plan. In such event, the word "Committee"
whenever used herein shall be deemed to mean the Board. Grants of stock options
under the Plan and the amount and nature of the awards to be granted shall be
automatic as described in Section VI. The Plan is intended to meet the
requirements of a formula plan pursuant to Note 3 to Rule 16b-3 adopted under
the Securities Exchange Act of the 1934 (the " `34 Act") and accordingly is
intended to be self-governing. To this end the Plan requires no discretionary
action by any administrative body with regard to any transaction under the Plan.
To the extent, if any, that any questions of interpretation arise, these shall
be resolved by the Committee in its sole discretion and such determination shall
be final and binding upon all persons having an interest in the Plan. Any or all
powers and discretion vested in the Committee under this Plan may be exercised
by any one Committee member who is so authorized by the Committee. In no event
shall the Committee or any member thereof exercise discretion with respect to
designating the recipient of an option, the number of shares subject to an
option, the date of grant or exercise price of an option.
 
III. PARTICIPATION IN THE PLAN
 
All directors of the Corporation shall participate in the Plan unless they are
(i) employees of the Corporation or (ii) employees of any subsidiary of the
Corporation ("Eligible Director").
 
IV.  STOCK SUBJECT TO THE PLAN
 
A. The Stock which is to made the subject of awards granted under the Plan shall
be the Corporation's Class A common stock, par value $.001 per share ("Common
Stock"). In connection with the issuance of shares of Common Stock under the
Plan, the Corporation may, without specific authorization from its Board of
Directors, from time to time use, in whole or in part, authorized but unissued
shares or shares acquired or repurchased by the Corporation and held in its
treasury.
 
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B. AGGREGATE AMOUNT.
 
(1) Subject to adjustment as provided in Section X1, the total number of shares
of Common Stock issuable under the Plan shall not exceed 500,000 shares.
 
(2) If any outstanding option under the Plan expires or is terminated for any
reason without being exercised in whole or in part, then the Common Stock
allocable to the unexercised portion of such option shall not be charged against
the limitation of Section IV(B)(1) and may again become the subject of a stock
option granted under the Plan.
 

 
Part 2.  STOCK OPTIONS
 

 
V.  NON-STATUTORY STOCK OPTIONS
 
All options granted under the Plan shall be non-statutory options not entitled
to special tax treatment under Section 422A of the Internal Revenue Code of
1986, as amended to date and as may thereafter be amended from time to time (the
"Code").
 
 
VI. TERMS, CONDITIONS AND FORM OF OPTIONS
 
Each option granted under the Plan shall be evidenced by a written agreement in
such form as the Committee shall from time to time approve. Each agreement shall
be issued as soon as convenient to the Corporation after the Grant Date (as
hereinafter defined) and shall comply with and be subject to the following terms
and conditions, provided that any agreement may contain such terms, provisions
and conditions as are not inconsistent with the Plan:
 
A. OPTION GRANT DATES. One option shall be granted automatically on January 1 of
each calendar year or, if such date is not a day on which banks in Massachusetts
are open for business (a "Business Day"), on the next succeeding Business Day
(the "Grant Date"), to each Eligible Director commencing on January 1, 2007, or,
if such date is not a Business Day, on the next succeeding Business Day.
 
B. OPTION FORMULA. Options granted to Eligible Directors on each Grant Date
shall be an option to purchase 10,000 shares of Common Stock.
 
C. OPTION NON-TRANSFERABLE. Each option granted under the Plan by its terms
shall not be transferable by the director other than by will, or by the laws of
descent and distribution, or pursuant to a qualified domestic relations order as
defined by the Code or Title I of the Employee Retirement Income Security Act
("ERISA"), or the rules thereunder and shall be exercised, during the lifetime
of the director, only by the participating director, except as provided above.
Except as provided above, no option or interest therein may be transferred,
assigned, pledged or hypothecated by the director during his lifetime, whether
by operation of law or otherwise, or be made subject to execution, attachment or
similar process.
 
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D. OPTION PERIOD. Options vest and become exercisable in two annual installments
of 50% each on the first and second anniversaries of the Grant Date; provided,
however, that any option granted pursuant to the Plan to any director who ceases
to be a member of the Board by reason of his or her death, retirement or
permanent disability shall vest and become exercisable in full upon such death
or permanent disability.
 
Options shall expire ten (10) years from the Grant Date, subject to prior
termination as hereinafter provided.
 
E. MANNER OF EXERCISE OF OPTIONS. Options may he exercised, in lots of not less
than 100 shares, only by written notice given to the Treasurer of the
Corporation at the Corporation headquarters accompanied by payment, of the full
consideration for such shares. Payment may be by delivery of (i) cash or a check
payable to the order of the Corporation, (ii) shares of Common stock owned by
the person exercising the option valued at fair market value determined in
accordance with the provisions of Section VII, or (iii) any combination of (i)
and (ii); provided, however, that payment of the option price by delivery of
shares of Common Stock owned by the person exercising the option may be made
only upon the condition that such payment does not result in a charge to
earnings for financial accounting purposes as determined by the Committee,
unless such condition is waived by the Committee. No fractional shares will be
issued.
 
F. TERMINATION PRIOR TO EXPIRATION OF OPTIONS. Each option and all right, title
and interest of a director in and to an option (whether or not vested), to the
extent that it has not been exercised, shall terminate upon his or her ceasing
to serve as a director of the Corporation for any reason other than death,
retirement or permanent disability and in case of such retirement or disability,
six (6) months from the date thereof. In the event of the death of the director,
the option shall terminate upon failure of the personal representative to
exercise the option in accordance with the time period provided in subsection G
below.
 
G. DEATH OF DIRECTOR. Any option granted under the Plan and outstanding on the
date of an Eligible Director's death may be exercised by the personal
representative of the director's estate or by the person or persons to whom the
option is transferred pursuant to the director's will or in accordance with the
laws of descent and distribution, at any time prior to the specified expiration
date of such option or the first anniversary of the director's death, whichever
is the first to occur. Upon the occurrence of the earlier event, the option
shall terminate and be null and void.
 
 
VII. OPTION PRICE
 
The option price per share for the shares covered by each grant shall be one
hundred per cent (100%) of the fair marker value of a share of Common Stock on
the Grant Date. The fair market value of a share of Common Stock shall be its
closing sales price on the Grant Date on the principal national securities
exchange on which the Common Stock is traded, if the Common Stock is then traded
on a national securities exchange; or on the NASDAQ System, if the Common Stock
is not then traded on a national securities exchange but is quoted on the NASDAQ
System; or on an established quotation service, if the Common Stock is not then
traded on a national securities exchange or quoted on the NASDAQ System. If
there is no quotation available for such day, then the price on the proceeding
day for which there does exist such a quotation shall be determinative of fair
market value.
 
 
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PART 3. GENERAL PROVISIONS
 
 
VIII. ASSIGNABILITY
 
The rights and benefits under this Plan shall not be assignable or transferable
by a director other than by will or by the laws of descent and distribution or
pursuant to a qualified domestic relations order as defined by the Code or Title
I of ERISA, or the rules thereunder, and except as provided above, during the
lifetime of the director options granted under the Plan shall be exercisable
only by each such director.
 

 
IX. TIME FOR GRANTING OPTIONS
 
No options may he granted under the Plan after January 1, 2017, or if January 1,
2017 is not a Business Day, after the next succeeding Business Day.
 

 
X. LIMITATION OF RIGHTS
 
A.  No RIGHT TO CONTINUE AS A DIRECTOR. Neither the Plan, nor the granting of an
option nor any other action taken pursuant to the Plan, shall constitute or be
evidence of any agreement or understanding, express or implied, that the
Corporation will retain a director for any period of time, or at any particular
rate of compensation.
 
B. NO SHAREHOLDERS' RIGHTS FOR OPTIONS. Neither the recipient of an option under
the Plan nor an optionee's successor or successors shall have any rights as a
shareholder with respect to the shares covered by options awarded to that
optionee until the date of the issuance to such optionee or its successor of a
stock certificate therefore, and no adjustment will be made for any dividends,
or other distribution or rights for which the records date is prior to the date
such certificate is issued.
 

 

 
XI.
ADJUSTMENTS FOR RECAPITALIZATION, REORGANIZATIONS AND THE LIKE

 
In the event that the outstanding shares of the Common Stock are changed into or
exchanged for a different number or kind of shares or other securities of the
Corporation or of another corporation by reason of any reorganization, merger,
consolidation, recapitalization, reclassification, stock split, combination of
shares, or dividends payable in capital stock, appropriate adjustment shall be
made in the number and kind of shares as to which options may be granted under
the Plan and as to which outstanding options or portions thereof then
unexercised, shall be exercisable, to the end that the proportionate interest of
the optionee shall be maintained as before the occurrence of such event; such
adjustment in outstanding options shall be made without change in the total
price applicable to the unexercised portion of such options and with a
corresponding adjustment in the option price per share.
 
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In addition, in the case of any (i) sale or conveyance to another entity of all
or substantially all of the property and assets of the Corporation or (ii)
Change in Control (as hereinafter defined) of the Corporation, any and all
options then outstanding under the Plan shall automatically accelerate and
become exercisable in full, notwithstanding any limitations in this Plan or in
the option agreement, from and after the date which is immediately prior to the
effective date of such sale, conveyance or Change in Control.
 
A "Change in Control" shall be deemed to have occurred if any person, or any two
or more persons acting as a group, and all affiliates of such person or persons,
who prior to such time owned less than fifty percent (50% ) of the combined
voting power of all classes of stock of the Corporation then outstanding, shall
acquire such additional shares of stock of the Corporation in one or more
transactions, or series of transactions, such that following such transaction or
transactions, such person or group and affiliates beneficially own fifty percent
(50%) or more of the combined voting power of all classes of stock of the
Corporation outstanding.
 
Upon dissolution or liquidation of the Corporation, all options granted under
this Plan shall terminate, but each holder shall have the right, immediately
prior to such dissolution or liquidation, to exercise his or her option to the
extent then exercisable.
 
If by reason of a corporate merger, consolidation, acquisition of property or
stock, separation, reorganization or liquidation, the Committee shall authorize
the issuance or assumption of a stock option or stock options in a transaction
to which Section 424(a) of the Code applies, then, notwithstanding any other
provision of the Plan, the Committee may grant an option or options upon such
terms and conditions as it may deem appropriate for the purpose of assumption of
the old option, or substitution of a new option for the old option, in
conformity with the provisions of such Section 424(a) of the Code and the
regulations thereunder, and any such option grant shall not reduce the number of
shares otherwise available for issuance under the Plan.
 
No fraction of a share shall be purchasable or deliverable upon the exercise of
any option, but in the event any adjustment hereunder in the number of shares
covered by the option shall cause such number to include a fraction of a share,
such fraction shall be adjusted to the nearest smaller whole number of shares.
 

 
XII. WITHHOLDING
 
The Corporation's obligation to deliver shares upon the exercise of any option
granted under the Plan shall be subject to the satisfaction by the person
exercising the option of all applicable Federal, state and local income and
employment tax withholding requirements. The Corporation and option holder may
agree to withhold shares of Common Stock purchased upon exercise of an option to
satisfy the above-mentioned withholding requirements; provided, however, no such
agreement may be made by an option holder who is subject to Section 16 of the
'34 Act if it would result in short-swing profit recovery pursuant to said
Section 16.
 

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XIII. RESTRICTIONS ON ISSUANCE OF SHARES
 

 
Notwithstanding any other provisions of this Plan, the Corporation shall have no
obligation to deliver any certificate or certificates upon exercise of an option
until one of the following conditions shall be satisfied:
 
(1) The shares with respect to which the option has been exercised are at the
time of the issue of such shares effectively registered under applicable Federal
and state securities laws as now in force or hereafter amended; or
 

 
(2) Counsel for the Corporation shall be given an opinion that such shares are
exempt from registration under Federal and state securities laws as now in force
or hereafter amended; and the Corporation has complied with all applicable laws
and regulations with respect thereto, including without limitation all
regulations required by any stock exchange or association upon which the
Corporation's outstanding Common Stock is then listed or quoted.
 

 
XIV.  REPRESENTATION OF OPTION HOLDER
 
If requested by the Corporation, the option holder shall deliver to the
Corporation written representations and warranties upon exercise of the option
that are necessary to show compliance with Federal and state securities laws,
including representations and warranties to the effect that a purchase of shares
under the option is made for investment and not with a view to their
distribution (as that term is used in the Securities Act of 1933).
 

 
XV.  COMPLIANCE WITH REGULATIONS
 
It is the Corporation's intent that the Plan comply in all respects with Rule
I6b-3 under the '34 Act (or any successor or amended version thereof) and any
applicable Securities and Exchange Commission interpretations thereof. If any
provision of this Plan is deemed not to be in compliance with Rule 16b-3, the
provision shall be null and void.
 

 
XVI.  EFFECTIVE DATE OF THE PLAN
 
The Plan was authorized by the Board as of March 29, 2006, subject to and
conditioned upon approval by the shareholders of the Corporation in accordance
with the requirements of Rule 16b-3(d)(2) under the '34 Act, which approval was
obtained on May 24, 2006. No options may be granted pursuant to the Plan until
January 1, 2007.
 

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XVII.  AMENDMENT OF THE PLAN
 
The Committee may suspend, amend or terminate the Plan at any time, in its sole
and absolute discretion: provided, however, that without prior approval of the
shareholders, no revision or amendment shall change the number of shares subject
to the Plan (except as provided in Section XI), change the designation of the
class of persons eligible to receive options, or materially increase the
benefits accruing to participants under the Plan. Further, no amendment of the
Plan may alter or impair any rights or obligations of any option previously
granted without the consent of the recipient. The Plan provisions may not he
amended more than once every six months, other than to comport with changes in
the Code, ERISA, or the rules thereunder or Rule 16b-3 under the '34 Act.
 
XVIII.  NOTICE
 
Any notice to the Corporation under any of the provisions of this Plan shall be
in writing, addressed to the Treasurer of the Corporation and shall become
effective upon receipt.
 

 
XIX.  GOVERNING LAW
 
The Plan and all determinations made and actions taken pursuant hereto shall be
governed solely by the internal laws of the State of Delaware and construed
accordingly.
 

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