Exhibit 10.2

 

INOVIO BIOMEDICAL CORPORATION
AMENDED AND RESTATED 2000 STOCK OPTION PLAN
(as amended by the Board of Directors through July 2, 2008
with approvals by stockholders through May 29, 2009)

 

1.    INTERPRETATION

 

        1.1   Defined Terms—For the purposes of this Plan, the following terms
shall have the following meanings:

 

        (a)   “Affiliate” means a Parent Corporation or a Subsidiary Corporation
of a corporation;

 

        (b)   “Associate” means, where used to indicate a relationship with any
Person,

 

        (i)    any relative of that Person,

 

        (ii)   any person of the opposite sex to whom that Person is married or
with whom that Person is living in a conjugal relationship outside marriage,

 

        (iii)  any relative of a Person mentioned in clause (ii) who has the
same home as that Person,

 

        (iv)  any partner of that Person,

 

        (v)   any trust or estate in which such Person has a substantial
beneficial interest or as to which such Person serves as trustee or in a similar
capacity, or

 

        (vi)  any corporation of which such Person beneficially owns, directly
or indirectly, voting securities carrying more than 10 percent of the voting
rights attached to all outstanding voting securities of the corporation;

 

        (c)   “Beneficial Owner” of a security includes any Person who, directly
or indirectly, through any contract, arrangement, understanding, relationship or
otherwise has voting power over the security or the power to dispose or direct
the disposition of the security, and any Person who uses a trust or other
arrangement with the purpose or effect of divesting such Person of beneficial
ownership as part of a plan to evade the reporting requirements of section 13 of
the Exchange Act shall be deemed to be the Beneficial Owner of the security;

 

        (d)   “Board” means the Board of Directors of Inovio Biomedical
Corporation;

 

        (e)   “Change of Control” means, and shall be deemed to have occurred
upon the occurrence of any one of the following events:

 

        (i)    the acquisition in one or more transactions, other than from the
Company, by an individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act), other than the Company, a
Subsidiary Corporation or any employee benefit plan (or related trust) sponsored
or maintained by the Company or a Subsidiary Corporation, of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of a number of Company Voting Securities in excess of twenty

 

 

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five percent (25%) of the Company Voting Securities unless such acquisition has
been approved by the Board;

 

        (ii)   any election has occurred to persons to the Board that causes
two-thirds of the Board to consist of persons other than (i) persons who were
members of the Board on the Effective Date of the Plan and (ii) persons who were
nominated for election as members of the Board at a time when two-thirds of the
Board consisted of persons who were members of the Board on the Effective Date
of the Plan, provided, however, than any person nominated for election by a
Board at least two-thirds of whom constituted persons described in
clauses (i) and/or (ii) or by persons who were themselves nominated by such
Board shall, for this purpose, be deemed to have been nominated by a Board
composed of persons described in clause (i);

 

        (iii)  the consummation (i.e. closing) of a reorganization, merger or
consolidation involving the Company, unless, following such reorganization,
merger or consolidation, all or substantially all of the individuals and
entities who were the respective beneficial owners of the Outstanding Shares and
Company Voting Securities immediately prior to such reorganization, merger or
consolidation, following such reorganization, merger or consolidation
beneficially own, directly or indirectly, more than seventy five percent (75%)
of, respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors or trustees, as the case may be, of the
entity resulting from such reorganization, merger or consolidation in
substantially the same proportion as their ownership of the Outstanding Shares
and Company Voting Securities immediately prior to such reorganization, merger
or consolidation, as the case may be;

 

        (iv)  the consummation (i.e. closing) of a sale or other disposition of
all or substantially all of the assets of the Company, unless, following such
sale or disposition, all or substantially all of the individuals and entities
who were the respective beneficial owners of the Outstanding Shares and Company
Voting Securities immediately prior to such reorganization, merger or
consolidation, following such reorganization, merger or consolidation
beneficially own, directly or indirectly, as the case may be, of the entity
purchasing such assets in substantially the same proportion as their ownership
of the Outstanding Shares and Company Voting Securities immediately prior to
such sale or disposition, as the case may be; or

 

        (v)   a complete liquidation or dissolution of the Company.

 

        (f)    “Code” means the United States Internal Revenue Code of 1986, as
amended from time to time;

 

        (g)   “Committee” means a committee of the Board appointed in accordance
with this Plan, or if no such committee is appointed, the Board itself;

 

        (h)   “Company” means Inovio Biomedical Corporation;

 

        (i)    “Company Voting Securities” means the combined voting power of
all outstanding voting securities of the Company entitled to vote generally in
the election of directors to the Board.

 

        (j)    “Covered Employee” means the chief executive officer and the four
(4) other highest compensated officers of the Company for whom total
compensation is required to be reported to shareholders under the Exchange Act,
as determined for purposes of Section 162(m) of the Code;

 

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        (k)   “Date of Grant” means the date on which a grant of an Option is
effective;

 

        (l)    “Direct or Indirect Ownership” of securities by a Person is
calculated in accordance with the following rules:

 

        (i)    the Person shall be deemed to own stock owned, directly or
indirectly, by or for siblings (including half siblings), spouse, ancestors and
lineal descendants, and

 

        (ii)   stock owned, directly or indirectly, by or for a corporation,
partnership, estate or trust, shall be deemed to be owned proportionately by or
for its shareholders, partners or beneficiaries;

 

        (m)  “Disability” means a medically determinable physical or mental
impairment which causes an individual to be unable to engage in any substantial
gainful activity, as determined by the Committee;

 

        (n)   “Disposition” includes a sale, exchange, gift, or transfer of
legal title, but does not include a pledge, hypothecation, transfer from a
decedent to an estate, transfer by bequest or inheritance, or the other excepted
circumstances referred to in section 424(c) of the Code;

 

        (o)   “Effective Date” means the Effective Date of the Plan, as adopted
by the Board as of July 31, 2000, subject to the approval of the shareholders of
the Company;

 

        (p)   “Exchange Act” means the Securities Exchange Act of 1934, as
amended;

 

        (q)   “Fair Market Value” means:

 

        (i)    where the Shares are listed for trading on a stock exchange or
over the counter market, the closing price of the Shares on the trading day
immediately prior to the date of grant on such stock exchange or over the
counter market as may be selected for such purpose by the Committee, or

 

        (ii)   where the Shares are not listed for trading on a stock exchange
or over the counter market, the value which is determined by the Committee to be
the fair value of the Shares at the Date of Grant, taking into consideration all
factors that the Committee deems appropriate, including, without limitation,
recent sale and offer prices of the Shares in private transactions negotiated at
arm’s length;

 

        (r)   “Guardian” means the guardian, if any, appointed for an Optionee;

 

        (s)   “ISO” means an Option granted to an employee of the Company or an
Affiliate of the Company that is intended to qualify as an “incentive stock
option” for purposes of section 422 of the Code and is therefore subject to
favourable tax treatment under the Code;

 

        (t)    “ISO Optionee” means an Optionee to whom an ISO has been granted;

 

        (u)   “Modification” means any change in the terms of an Option which
gives the Optionee additional benefits under the Option within the meaning of
section 424(h) of the Code, but such change shall not include a change in the
terms of an Option:

 

        (i)    in the case of an Option not immediately exercisable in full, to
accelerate the time within which the Option may be exercised, or

 

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        (ii)   attributable to the issuance or assumption of an Option by reason
of a corporate merger, consolidation, acquisition of property or stock,
separation, reorganization or liquidation if the new Option or assumption of the
old Option does not give the Optionee additional benefits which he did not have
under the old Option;

 

        (v)   “Non-Employee Director” means a member of the Board who either
(i) is not a current employee or officer (within the meaning of Section 16 of
the Exchange Act and the rules and regulations promulgated thereunder) of the
Company or an Affiliate of the Company, does not receive compensation (directly
or indirectly) from the Company or an Affiliate of the Company for services
rendered as a consultant or in any capacity other than as a director (except for
an amount as to which disclosure would not be required under Item 404(a) of
Regulation S-K promulgated pursuant to the Securities Act (“Regulation S-K”),
does not possess an interest in any other transaction as to which disclosure
would be required under Item 404(a) of Regulation S-K, and is not engaged in a
business relationship as to which disclosure would be required under
Item 404(b) of Regulation S-K; or (ii) is otherwise considered a “non-employee
director” for purposes of Rule 16b-3;

 

        (w)  “Non-ISO” means an Option that is not intended to qualify as an
“incentive stock option” for purposes of section 422 of the Code;

 

        (x)   “Non-ISO Optionee” means an Optionee to whom a Non-ISO has been
granted;

 

        (y)   “Option” means an option to purchase Shares granted pursuant to
the terms of this Plan;

 

        (z)   “Option Agreement” means a written agreement between an Optionee
and the Company, specifying the terms of the Option being granted to the
Optionee under the Plan;

 

        (aa) “Option Price” means the price at which an Option is exercisable to
purchase Shares;

 

        (bb) “Optionee” means a person to whom an Option has been granted;

 

        (cc) “Outside Director” means a director who either (i) is not a current
employee of the Company or an “affiliated corporation” (within the meaning of
the United States Treasury regulations promulgated under Section 162(m) of the
Code), is not a former employee of the Company or an “affiliated corporation”
receiving compensation for prior services (other than benefits under a tax
qualified pension plan), was not an officer of the Company or an “affiliated
corporation” at any time, and is not currently receiving direct or indirect
remuneration from the Company or an “affiliated corporation” for services in any
capacity other than as a director, or (ii) is otherwise considered an “outside
director” for purposes of Section 162(m) of the Code;

 

        (dd) “Outstanding Shares” means , at any time, the issued and
outstanding Shares.

 

        (ee) “Parent Corporation” means any corporation in an unbroken chain of
corporations ending with Inovio Biomedical Corporation if, at the Date of Grant,
each corporation other than Inovio Biomedical Corporation owns stock possessing
50 percent or more of the total combined voting power of all classes of stock in
one of the other corporations in such chain;

 

        (ff)  “Person”    means a natural person, company, government, or
political subdivision or agency of a government; and where two or more Persons
act as a partnership, limited partnership, syndicate or other group for the
purpose of acquiring, holding or disposing of securities of an issuer, such
syndicate or group shall be deemed to be a Person;

 

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        (gg) “Plan” means this Stock Option Plan of the Company. The Plan was
adopted by the Board as of July 31, 2000 and approved by the shareholders of the
Company on August 7, 2000. The Plan was amended by the Committee through July 2,
2008, subject to the approval of the shareholders of the Company and required
regulatory approvals;

 

        (hh) “Rule 16b-3” means Rule 16b-3 of the Exchange Act or any successor
to Rule 16b-3 as in effect with respect to the Company at the time discretion is
being exercised regarding the Plan;

 

        (ii)   “Qualified Successor” means a person who is entitled to ownership
of an Option upon the death of an Optionee, pursuant to a will or the applicable
laws of descent and distribution upon death;

 

        (jj)   “Securities Act” means the Securities Act of 1933, as amended;

 

        (kk) “Shares” means the common shares without par value in the capital
of Inovio Biomedical Corporation;

 

        (ll)   “Subsidiary Corporation” means any corporation in an unbroken
chain of corporations beginning with Inovio Biomedical Corporation if, at the
Date of Grant, each of the corporations other than the last corporation owns
stock possessing 50 percent or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain; and

 

        (mm)  “Term” means the period of time during which an Option is
exercisable.

 

2.    STATEMENT OF PURPOSE

 

        2.1   Principal Purposes—The principal purposes of the Plan are to
provide the Company and its shareholders with the advantages of the incentive
inherent in stock ownership on the part of employees, officers, directors, and
consultants responsible for the continued success of the Company; to create in
such individuals a proprietary interest in, and a greater concern for, the
welfare and success of the Company; to encourage such individuals to remain with
the Company; and to attract new employees, officers, directors and consultants
to the Company.

 

        2.2   ISOs and Non-ISOs—Under this Plan, the Company may grant either
ISOs or Non-ISOs. Each ISO granted hereunder is intended to constitute an
“incentive stock option,” for the purposes of section 422 of the Code, and this
Plan and each such ISO is intended to comply with all of the requirements of
Section 422 of the Code and of all other provisions of the Code applicable to
incentive stock options and to plans issuing the same. Each Non-ISO granted
hereunder is intended to constitute an Option that is not an “incentive stock
option” for the purposes of section 422 of the Code, and that does not comply
with the requirements of Section 422 of the Code.

 

3.    ADMINISTRATION

 

        3.1   Board or Committee—The Plan shall be administered by the Board or
by a committee of the Board appointed in accordance with Section 3.2 or 3.4
below.

 

        3.2   Appointment of Committee—The Board may at any time appoint a
Committee, consisting of not less than two of its members, to administer the
Plan on behalf of the Board in accordance with such terms and conditions as the
Board may prescribe, consistent with this Plan. Once appointed, the Committee
shall continue to serve until otherwise directed by the Board. From time to
time, the Board may increase the size of the Committee and appoint additional
members, remove members (with or without cause) and appoint

 

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new members in their place, fill vacancies however caused, or remove all members
of the Committee and thereafter directly administer the Plan. In the discretion
of the Board, a Committee may consist solely of two (2) or more Non-Employee
Directors, and/or Outside Directors. Notwithstanding anything in this Section 3
to the contrary, the Board or the Committee may delegate to a Committee of one
or more members of the Board the authority to grant Options to eligible persons
who (a) are not then subject to Section 16 of the Exchange Act and/or (b) are
either (i) not then Covered Employees and are not expected to be Covered
Employees at the time of recognition of income resulting from such Options, or
(ii) not persons with respect to whom the Company wishes to comply with
Section 162(m) of the Code.

 

        3.3   Quorum and Voting—A majority of the members of the Committee shall
constitute a quorum, and, subject to the limitations in this Section 3, all
actions of the Committee shall require the affirmative vote of members who
constitute a majority of such quorum.

 

        3.4   Committee Complying with Section 162(m) of the Code—If the Company
is a “publicly held corporation” within the meaning of Section 162(m), the Board
may establish a Committee of “outside directors” within the meaning of
Section 162(m) to approve the grant of any Option which might reasonably be
anticipated to result in the payment of employee remuneration that would
otherwise exceed the limit on employee remuneration deductible for income tax
purposes pursuant to Section 162(m) of the Code.

 

        3.5   Powers of Committee—Any Committee appointed under Section 3.2 or
3.4 above shall have the authority to do the following:

 

        (a)   administer the Plan in accordance with its express terms;

 

        (b)   determine all questions arising in connection with the
administration, interpretation, and application of the Plan, including all
questions relating to the value of the Shares;

 

        (c)   correct any defect, supply any information, or reconcile any
inconsistency in the Plan in such manner and to such extent as shall be deemed
necessary or advisable to carry out the purposes of the Plan;

 

        (d)   prescribe, amend, and rescind rules and regulations relating to
the administration of the Plan;

 

        (e)   determine the duration and purposes of leaves of absence from
employment which may be granted to Optionees without constituting a termination
of employment for purposes of the Plan;

 

        (f)    do the following with respect to the granting of Options:

 

        (i)    determine the employees, officers, directors, or consultants to
whom Options shall be granted, based on the eligibility criteria set out in this
Plan,

 

        (ii)   determine whether such Options shall be ISOs or Non-ISOs,

 

        (iii)  determine the terms and provisions of the Option Agreement to be
entered into with any Optionee (which need not be identical with the terms of
any other Option Agreement),

 

        (iv)  amend the terms and provisions of Option Agreements, provided the
Committee obtains:

 

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        (A)  the consent of the Optionee, if the amendment would adversely
affect the rights, or increase the obligations, of the Optionee under the
Option, and

 

        (B)  the approval of any stock exchange on which the Company is listed,
if such approval is required pursuant to the rules and policies of such stock
exchange,

 

        (v)   determine when Options shall be granted,

 

        (vi)  determine the number of Shares subject to each Option,

 

        (vii) make all other determinations necessary or advisable for
administration of the Plan, and

 

        (viii)  determine the Fair Market Value of the Shares.

 

        3.6   Administration by Committee—The Committee’s exercise of the
authority set out in Section 3.4 shall be consistent with the intent that ISOs
issued under the Plan be qualified under the terms of Section 422 of the Code,
and that Non-ISOs shall not be so qualified. All determinations made by the
Committee in good faith on matters referred to in Section 3.4 shall be final,
conclusive, and binding upon all Persons. The Committee shall have all powers
necessary or appropriate to accomplish its duties under this Plan. In addition,
the Committee’s administration of the Plan shall in all respects be consistent
with the policies and rules of any stock exchange or over the counter market on
which the Shares are listed.

 

4.    ELIGIBILITY

 

        4.1   Eligibility for ISOs—An ISO may only be granted to a person who is
an employee of the Company or an Affiliate of the Company, including directors
or officers who are employees of the Company or an Affiliate of the Company.

 

        4.2   Eligibility for Non-ISOs—Non-ISOs may be granted to any employee,
officer, director or consultant of the Company or an Affiliate of the Company.

 

        4.3   No Violation of Securities Laws—No Option shall be granted to any
Optionee unless the Committee has determined that the grant of such Option and
the exercise thereof by the Optionee will not violate applicable securities
laws.

 

        4.4   Limit on Maximum Grant to any Optionee—Notwithstanding anything in
this Plan to the contrary, no officer or employee of the Company or an Affiliate
of the Company shall receive Options exercisable for more than two million one
hundred thousand (2,100,000) Shares over any three year period, nine hundred
thirty-five thousand (935,000) Shares over any one year period or 5% of the
outstanding Shares.

 

5.    SHARES SUBJECT TO THE PLAN

 

        5.1   Number of Shares—The Committee, from time to time, may grant
Options to purchase an aggregate of up to four million seven hundred fifty
thousand (4,750,000) Shares, subject to regulatory approval, to be made
available from authorized, but unissued or reacquired, Shares. In calculating
the foregoing four million seven hundred fifty thousand (4,750,000) Shares, the
Committee shall include the 1,116,819 Shares subject to options outstanding as
of the Effective Date of the Plan. The foregoing number of Shares shall be
adjusted, where necessary, to take account of the events referred to in
Section 11 hereof.

 

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        5.2   Decrease in Number of Shares Subject to Plan—Upon exercise of an
Option, the number of Shares thereafter available under the Plan and under the
Option shall decrease by the number of Shares as to which the Option was
exercised.

 

        5.3   Expiry of Option—If an Option expires or terminates for any reason
without having been exercised in full, the unpurchased Shares subject thereto
shall again be available for the purposes of the Plan.

 

        5.4   Reservation of Shares—The Company will at all times reserve and
keep available such number of Shares as shall be sufficient to satisfy the
requirements of the Plan.

 

6.    OPTION TERMS

 

        6.1   Option Agreement—With respect to each Option to be granted to an
Optionee, the Committee shall specify the following terms in the Option
Agreement between the Company and the Optionee:

 

        (a)   whether such Option is an ISO or a Non-ISO;

 

        (b)   the number of Shares subject to purchase pursuant to such Option,
provided that the number of Shares reserved for issuance to any one person
pursuant to Options does not exceed 5% of the outstanding Shares;

 

        (c)   the Date of Grant;

 

        (d)   the Term, provided that:

 

        (i)    the Term shall in no event be more than ten (10) years following
the Date of Grant; and

 

        (ii)   if an ISO Option is granted to an Optionee who on the Date of
Grant has Direct or Indirect Ownership of more than 10% of the total combined
voting power of all classes of stock of the Company, the Term of the Option
shall not exceed five (5) years;

 

        (e)   the Option Price, provided that:

 

        (i)    the Option Price shall not be less than the Fair Market Value of
the Shares; and

 

        (ii)   if an Option is granted to an Optionee who on the Date of Grant
has Direct or Indirect Ownership of more than 10% of the total combined voting
power of all classes of stock of the Company or an Affiliate of the Company,
then the Option Price shall be at least 110% of the Fair Market Value of the
Shares on the Date of Grant, with the proviso that, with respect to a non-ISO,
this pricing limitation shall not be applicable if the shares are listed on a
national stock exchange;

 

        (f)    any vesting schedule upon which the exercise of an Option is
contingent, including discretion to;

 

        (i)    allow full and immediate vesting upon the grant of such Option,

 

        (ii)   permit partial vesting in stated percentage amounts based on the
length of the Term of such Option;

 

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        (iii)  permit full vesting after a stated period of time has passed from
the Date of Grant; and

 

        (iv)  permit exercise of an Option for unvested Shares, provided
however, that generally any unvested Shares so purchased shall be subject to a
repurchase right in favor of the Company, with the repurchase price to be equal
to the original purchase price of the stock, or to any other restriction the
Board determines to be appropriate, but that (A) such repurchase right shall be
exercisable only within (I) the ninety (90) day period following the termination
of employment or the relationship as a director or consultant, or (II) such
longer period as may be agreed to by the Company and the Optionee (for example,
for purposes of satisfying the requirements of Section 1202(c)(3) of the Code
(regarding “qualified small business stock”)), and (B) such right shall be
exercisable only for cash or cancellation of purchase money indebtedness for the
shares; and

 

        (g)   such other terms and conditions as the Committee deems advisable
and are consistent with the purposes of this Plan.

 

        6.2   No Grant After Ten Years From Effective Date—No Option shall be
granted under the Plan later than ten (10) years from the Effective Date of the
Plan. Except as expressly provided herein, nothing contained in this Plan shall
require that the terms and conditions of Options granted under the Plan be
uniform.

 

        6.3   No Disposition for Six Months—An Optionee who is subject to
Section 16 of the Exchange Act and whose Option grant is not exempt from
Section 16 under Rule 16b-3 shall not make a Disposition of any Shares issued
upon exercise of an Option unless at least six (6) months has elapsed between
the Date of Grant of the Option and the date of Disposition of the Shares issued
upon exercise of such Option. Notwithstanding the foregoing, other than
termination for just cause, if a sale within the applicable time periods set
forth in this Section 6 or Section 9 of Shares acquired upon the exercise of an
Option would subject the Optionee to suit under Section 16(b) of the Exchange
Act, the Option shall remain exercisable until the earliest to occur of (i) the
tenth (10th) day following the date on which a sale of such Shares by the
Optionee would no longer be subject to suit, (ii) the one hundred and ninetieth
(190th) day after the Optionee’s termination of employment, or (iii) the Option
Expiry Date.

 

7.    LIMITATION ON GRANTS OF OPTIONS

 

        7.1   US$100,000 Limit on ISOs.—If the aggregate Fair Market Value
(valued as of the Date of Grant of each ISO) of:

 

        (a)   Shares underlying ISOs which have been granted to an Optionee
under this Plan and which are exercisable for the first time during a calendar
year, and

 

        (b)   Shares underlying incentive stock options which have been granted
to such Optionee under any other plan of the Company or its Affiliates and which
are exercisable for the first time during that calendar year,

 

exceeds US$100,000, as such amount may be adjusted from time to time under
Section 422(d) of the Code, then to the extent of such excess such options shall
be treated as options that are not “incentive stock options” for purposes of the
Code.

 

8.    EXERCISE OF OPTION

 

        8.1   Method of Exercise—Subject to any limitations or conditions
imposed upon an Optionee pursuant to the Option Agreement or Section 6 above, an
Optionee may exercise an Option by giving

 

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written notice thereof to the Company at its principal place of business,
provided that any Options granted after the Plan is approved by the required
regulatory authorities but prior to the date on which shareholder approval to
the Plan is given, may not be exercised unless and until the Plan receives
shareholder approval.

 

        8.2   Payment of Option Price—The notice described in Section 8.1 shall
be accompanied by full payment of the aggregate Option Price to the extent the
Option is so exercised, and full payment of any amounts the Company determines
must be withheld for tax purposes from the Optionee pursuant to the Option
Agreement. Such payment shall be:

 

        (a)   in lawful money (United States funds) by cheque;

 

        (b)   at the discretion of the Committee and if such form of payment is
permitted under the corporate laws then governing the Company and if the Company
has disclosed to its shareholders that it will accept such payment for the
exercise of Options, by delivery of the Optionee’s personal recourse note
bearing interest at a rate deemed appropriate by the Committee;

 

        (c)   at the discretion of the Committee, and subject to all applicable
securities laws, through delivery by the Optionee and/or withholding by the
Company, of Shares having a market value as of the date of exercise equal to the
cash exercise price of the Option plus any amounts that the Company determines
must be withheld from the Optionee for U.S. or Canadian tax purposes. The market
value of each of the Shares on the date of delivery shall be determined in good
faith by the Committee, which determination shall be binding for all purposes
hereunder; or

 

        (d)   at the discretion of the Committee, by any combination of
Sections 8.2(a) to 8.2(c) above.

 

        8.3   Issuance of Stock Certificate—As soon as practicable after
exercise of an Option in accordance with Sections 8.1 and 8.2 above, the Company
shall issue a stock certificate evidencing the Shares with respect to which the
Option has been exercised. Until the issuance of such stock certificate, no
right to vote or receive dividends or any other rights as a shareholder shall
exist with respect to such Shares, notwithstanding the exercise of the Option.
No adjustment will be made for a dividend or other right for which the record
date is prior to the date the stock certificate is issued, except as provided in
Section 11 below.

 

        8.4   Tax Withholding in General—The Company shall have the right to
deduct from any and all payments made under the Plan, or to require the
Optionee, through cash payment or otherwise, to make adequate provision for, the
federal, state, local and foreign taxes, if any, required by law to be withheld
by the Company with respect to an Option or the Shares acquired pursuant
thereto. The Company shall have no obligation to deliver Shares or to release
Shares from an escrow established pursuant to an Option Agreement until the
Company’s tax withholding obligations have been satisfied by the Optionee.

 

9.    TRANSFERABILITY OF OPTIONS

 

        9.1   Non-Transferable—Unless otherwise specified in an Option
Agreement, and except as provided otherwise in this Section 9, Options are
non-assignable and non-transferable.

 

        9.2   Death of Optionee—If the employment of an Optionee as an employee
or consultant of the Company or an Affiliate of the Company, or the position of
an Optionee as a director of the Company or an Affiliate of the Company,
terminates as a result of Optionee’s death, any Options held by such Optionee
shall pass to the Qualified Successor of the Optionee, and shall be exercisable
by the Qualified Successor on or before the date which is the earlier of twelve
(12) months following the date of death or the last day of the Term.

 

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        9.3   Disability of Optionee—If the employment of an Optionee as an
employee or consultant of the Company or an Affiliate of the Company, or the
position of an Optionee as a director of the Company or an Affiliate of the
Company, terminates as a result of the Optionee’s Disability, any Option held by
such Optionee that could have been exercised immediately prior to such
termination of service shall be exercisable by such Optionee, or by such
Optionee’s Guardian, on or before the date which is the earlier of twelve
(12) months following the termination of service of such Optionee, and the last
day of the Term.

 

        9.4   Disability and Death of Optionee—If an Optionee who has ceased to
be employed by the Company or an Affiliate of the Company by reason of such
Optionee’s Disability dies within six (6) months after the termination of such
employment, any Option held by such Optionee that could have been exercised
immediately prior to such Optionee’s death shall pass to the Qualified Successor
of such Optionee, and shall be exercisable by the Qualified Successor:

 

        (a)   in the case of an ISO, on or before a date which is the earlier of
six (6) months following the death of such Optionee, and the last day of the
Term, and

 

        (b)   in the case of a Non-ISO, on or before a date which is the earlier
of twelve (12) months following the death of such Optionee, and the last day of
the Term.

 

        9.5   Deemed Non-Interruption of Employment—Employment shall be deemed
to continue intact during any military or sick leave or other bona fide leave of
absence if the period of such leave does not exceed ninety (90) days or, if
longer, for so long as the Optionee’s right to re-employment with the Company or
an Affiliate of the Company is guaranteed either by statute or by contract. If
the period of such leave exceeds ninety (90) days and the Optionee’s
re-employment is not so guaranteed, then such Optionee’s employment shall be
deemed to have terminated ninety-one (91) days from the date such leave
commenced.

 

10.    TERMINATION OF OPTIONS

 

        10.1 Termination of Options—To the extent not earlier exercised or
terminated in accordance with section 9 above, an Option shall terminate at the
earliest of the following dates:

 

        (a)   the termination date specified for such Option in the Option
Agreement;

 

        (b)   where the Optionee’s position as an employee, officer, consultant
or director of the Company or an Affiliate of the Company is terminated for just
cause, and the Optionee has no continuing business relationship with the Company
or an Affiliate of the Company as an employee, officer, consultant or director,
the date of such termination for just cause;

 

        (c)   where the Optionee’s position as an employee, officer, consultant
or director of the Company or an Affiliate of the Company terminates for a
reason other than the Optionee’s Disability, death, or termination for just
cause, and the Optionee has no continuing business relationship with the Company
or an Affiliate of the Company as an employee, officer, consultant or director:

 

        (i)    where the Optionee is an Outside Director of the Company, then
one (1) year after such date of termination, or

 

        (ii)   where the Optionee held any other position(s) with the Company,
then ninety (90) days after such date of termination, except for an Optionee who
is subject to restricted trading periods due to his or her status as an insider,
as determined by the Company, in which case the Option shall terminate one
(1) year or ninety (90) days,

 

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respectively, after the date the next trading window, immediately following such
date of termination of the Optionee, opens; and

 

        (d)   the date of any sale, transfer, assignment or hypothecation, or
any attempted sale, transfer, assignment or hypothecation, of such Option in
violation of Section 9.1 above.

 

        10.2 Vesting—In the event that an Optionee’s position as an employee,
officer, consultant or director of the Company or of an Affiliate of the Company
is terminated, and the Optionee has no continuing business relationship with the
Company or an Affiliate of the Company as an employee, officer, consultant, or
director, the Option held by such Optionee shall cease to vest as at the date of
termination, regardless of whether the Optionee is subject to restricted trading
periods due to his or her status as an insider, as determined by the Company.

 

11.    ADJUSTMENTS TO OPTIONS

 

        11.1 Alteration in Capital Structure—If there is a material alteration
in the capital structure of the Company resulting from a recapitalization, stock
split, reverse stock split, stock dividend, or otherwise, the Committee shall
make such adjustments to this Plan (and to the Options then outstanding under
this Plan) as the Committee determines to be appropriate and equitable under the
circumstances, so that the proportionate interest of each holder of any such
Option shall, to the extent practicable, be maintained as before the occurrence
of such event. Such adjustments may include, without limitation (a) a change in
the number or kind of shares of stock of the Company covered by such Options, or
other property for which Shares are exchanged as part of such adjustment, and
(b) a change in the Option Price payable per share; provided, however, that the
aggregate Option Price applicable to the unexercised portion of existing Options
shall not be altered, it being intended that any adjustments made with respect
to such Options shall apply only to the price per share and the number of shares
subject thereto. For purposes of this Section 11.1, neither (i) the issuance of
additional shares of stock of the Company in exchange for adequate consideration
(including services), nor (ii) the conversion of outstanding preferred shares of
the Company into Shares shall be deemed to be material alterations of the
capital structure of the Company.

 

        11.2 Corporate Reorganization—In the event of a reorganization as
defined in this Section 11.2 in which the Company is not the surviving or
acquiring corporation, or in which the Company is or becomes a wholly-owned
subsidiary of another corporation after the effective date of the
reorganization, outstanding Options shall be subject to the agreement governing
the reorganization, which may provide, without limitation, for the assumption of
each Option granted under this Plan or its parent or subsidiary, for the
substitution by surviving corporation or its parent or subsidiary of its own
options for such Options, for accelerated vesting and accelerated expiration, or
for settlement in cash or cash equivalents. In any event, the exercise and/or
vesting of any Option that was permissible solely be reason of this Section 11.2
shall be conditioned upon the consummation of the reorganization. For purposes
of this Section 11.2, “reorganization” shall mean any statutory merger,
statutory consolidation, sale of all or substantially all of the assets of the
Company, or sale, pursuant to an agreement with the Company, of securities of
the Company pursuant to which the Company is or becomes a wholly-owned
subsidiary of another corporation after the effective date of the
reorganization.

 

        11.3 Acceleration of Vesting Schedule—The Committee shall have the
right, in its sole discretion, to accelerate the vesting schedule of any Option.

 

        11.4 Change of Control—Unless otherwise provided by the Committee in the
applicable Option Agreement, in the event of a Change of Control, all Options
outstanding on the date of such Change of Control shall become immediately and
fully exercisable. The provisions of this Section 11.4 shall not be applicable
to any Options granted to an Optionee if any Change of Control results from such
Optionee’s

 

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beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act)
of Shares or Company Voting Securities.

 

        11.5 Determinations to be Made By Committee—Adjustments and
determinations under this Section 11 shall be made by the Committee, whose
decisions as to what adjustments or determination shall be made, and the extent
thereof, shall be final, binding, and conclusive.

 

12.    TERMINATION AND AMENDMENT OF PLAN

 

        12.1 Termination of Plan—Unless earlier terminated as provided in
Section 12.2 below, the Plan shall terminate on, and no Option shall be granted
under the Plan, after the end of the day prior to the tenth (10th) anniversary
of the Effective Date.

 

        12.2 Power of Committee to Terminate or Amend Plan—Subject to the
approval of any stock exchange on which the Company is listed, the Committee may
terminate, suspend or amend the terms of the Plan; provided, however, that no
amendment shall be effective unless approved by the shareholders of the Company
within twelve (12) months before or after the adoption of the amendment, where
the amendment will: (a) increase the number of shares reserved for Options under
the Plan; (b) modify the requirements as to eligibility for participation in the
Plan (to the extent such modification requires shareholder approval in order for
the Plan to satisfy the requirements of Section 422 of the Code); or (c) modify
the Plan in any other way if such modification requires shareholder approval in
order for the Plan to satisfy the requirements of Section 422 of the Code,
Rule 16b-3 or any Nasdaq or securities exchange listing requirements. Upon any
termination, suspension or amendment of the Plan, the Company shall notify the
Optionees then holding Options under the Plan of such termination, suspension or
amendment, and upon receipt of such notification, all Optionees will then be
deemed to be bound by such termination, suspension or the provisions of such
amendment to the Plan, as the case may be.

 

        12.3 No Grant During Suspension of Plan—No Option may be granted during
any suspension, or after termination, of the Plan. Amendment, suspension, or
termination of the Plan shall not, without the consent of the Optionee, impair
any rights or increase any obligations of the Optionee under any Option
previously granted prior to such amendment, suspension or termination.

 

13.    CONVERSION OF ISOS INTO NON-ISOS

 

        13.1 Conversion of ISOs into Non-ISOs—At the written request of any ISO
Optionee, the Committee may in its discretion take such actions as may be
necessary to convert such Optionee’s ISOs (or any installments or portions of
installments thereof) that have not been exercised on the date of conversion
into Non-ISOs at any time prior to the expiration of such ISOs, regardless of
whether the Optionee is an employee of the Company or an Affiliate of the
Company at the time of such conversion. Such actions include, but shall not be
limited to, extending the exercise period of such ISOs. At the time of such
conversion, the Committee, with the consent of the Optionee, may impose such
conditions on the exercise of the resulting Non-ISOs as the Committee in its
discretion may determine, provided that such conditions are consistent with this
Plan. Nothing in the Plan shall be deemed to give any Optionee the right to have
such Optionee’s ISOs converted into Non-ISOs, and no such conversion shall occur
until and unless the Committee takes appropriate action, unless such conversion
is required by applicable law. The Committee, with the consent of the Optionee,
may also terminate any portion of any ISO that has not been exercised at the
time of such conversion.

 

14.    CONDITIONS PRECEDENT TO ISSUANCE OF SHARES

 

        14.1 Compliance with Securities Laws—Options shall not be granted and
Shares shall not be issued pursuant to the exercise of any Option unless the
grant and exercise of such Option and the issuance and

 

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delivery of such Shares comply with all relevant provisions of law, including,
without limitation, the Securities Act, the Exchange Act, any applicable state
or provincial securities law, the rules and regulations promulgated thereunder,
and the requirements of any stock exchange upon which the Shares may then be
listed or otherwise traded.

 

        14.2 Regulatory Approval to Issuance of Shares—The Company shall seek to
obtain from regulatory commission or agency having jurisdiction over the Plan
such authority as may be required to issue and sell Shares upon the exercise of
any Option; provided, however, that this undertaking shall not require the
Company to register under the Securities Act (or any other applicable law for
the registration and sale of securities) either the Plan, any Option or any
Shares issued or issuable pursuant to any such Option. If, after reasonable
efforts, the Company is unable to obtain from any such regulatory commission or
agency the authority which counsel for the Company deems necessary for the
lawful issuance and sale of stock under the Plan, the Company shall be relieved
from any liability for failure to issue and sell stock upon exercise of any such
Options unless and until such authority is obtained.

 

15.    USE OF PROCEEDS

 

        15.1 Use of Proceeds—Proceeds from the sale of Shares made pursuant to
the exercise of an Option shall constitute general funds of the Company and
shall be used for general corporate purposes.

 

16.    NOTICES

 

        16.1 Notices—All notices, requests, demands and other communications
required or permitted to be given under this Plan and the Options granted under
this Plan shall be in writing and shall be either served personally on the party
to whom notice is to be given, in which case notice shall be deemed to have been
duly given on the date of such service; telefaxed, in which case notice shall be
deemed to have been duly given on the date the telefax is sent; or mailed to the
party to whom notice is to be given, by registered or certified first class
mail, return receipt requested, postage prepaid, and addressed to the party at
his, her or its most recent known address, in which case such notice shall be
deemed to have been duly given on the tenth (10th) postal delivery day following
the date of such mailing.

 

17.    MISCELLANEOUS PROVISIONS

 

        17.1 No Obligation to Exercise—An Optionee shall be under no obligation
to exercise such Optionee’s Option.

 

        17.2 No Obligation to Retain Optionee—Nothing contained in this Plan
shall obligate the Company or an Affiliate of the Company to retain an Optionee
as an employee, officer, director, or consultant for any period, nor shall this
Plan interfere in any way with the right of the Company or an Affiliate of the
Company to reduce such Optionee’s compensation.

 

        17.3 Binding Agreement—The provisions of this Plan and each Option
Agreement with an Optionee shall be binding upon such Optionee and any Qualified
Successor or Guardian of such Optionee.

 

        17.4 Use of Terms—Where the context so requires, references herein to
the singular shall include the plural, and vice versa.

 

        17.5 Headings—The headings used in this Plan are for convenience of
reference only and shall not in any way affect or be used in interpreting any of
the provisions of this Plan.

 

18.    SHAREHOLDER APPROVAL OF PLAN

 

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        18.1 Shareholder Approval of Plan—This Plan must be approved by a
majority of the votes cast at a meeting of the shareholders of the Company,
other than votes attaching to securities beneficially owned by:

 

        (a)   insiders of the Company, meaning directors, officers and greater
than 10% shareholders; and

 

        (b)   Associates of persons referred to in subparagraph 18.1(a) above.

 

19.    MERGER OF FORMER STOCK OPTION PLANS

 

        19.1 Upon receipt of shareholder and regulatory approval, the 1997 Stock
Option Plan and the 1995 Stock Option Plan of the Company, as amended, shall
both be deemed to be merged herein, such that all options outstanding under the
1997 Stock Option Plan of the Company (the “1997 Options”) and the 1995 Stock
Option Plan of the Company (the “1995 Options”) shall be deemed to be
outstanding under the Plan to the same extent as if they were originally granted
hereunder, and shall be governed hereby and entitled to all of the benefits and
obligations herein. The Committee shall be authorized to amend, at any time and
from time to time, all or any of the 1997 Options and the 1995 Options as the
Committee may determine necessary or advisable or may otherwise deem
appropriate, to conform such agreements to this Plan.

 

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