Exhibit
10.1


 


EXPRESSION
DIAGNOSTICS, INC.


(Formerly
Known as BioCardia Inc. and Hippocratic Engineering, Inc.)


1998
STOCK PLAN


ADOPTED JANUARY 1, 1999

As Amended on October 1, 2000


As Amended on January 6, 2003


 


1.                                       Purposes of the Plan.
The purposes of this Stock Plan are to attract and retain the best available
personnel for positions of substantial responsibility, to provide additional
incentive to Employees, Directors and Consultants and to promote the success of
the Company’s business. Options granted under the Plan may be Incentive Stock
Options or Nonstatutory Stock Options, as determined by the Administrator at
the time of grant. Stock Purchase Rights may also be granted under the Plan.


 


2.                                       Definitions.
As used herein, the following definitions shall apply:


 


2.1.                              “Administrator”
means the Board or any of its Committees as shall be administering the Plan in
accordance with Section 4 hereof.


 


2.2.                              “Applicable
Laws” means the requirements relating to the administration of stock option
plans under U.S. state corporate laws, U.S. federal and state securities laws,
the Code, any stock exchange or quotation system on which the Common Stock is
listed or quoted and the applicable laws of any other country or jurisdiction
where Options or Stock Purchase Rights are granted under the Plan.


 


2.3.                              “Board”
means the Board of Directors of the Company.


 


2.4.                              “Code”
means the Internal Revenue Code of 1986, as amended.


 


2.5.                              “Committee”  means a committee of Directors appointed by
the Board in accordance with Section 4 hereof.


 


2.6.                              “Common
Stock” means the Common Stock of the Company.


 


2.7.                              “Company”
means BioCardia, Inc., a Delaware corporation.


 


2.8.                              “Consultant”
means any person who is engaged by the Company or any Parent or Subsidiary to
render consulting or advisory services to such entity.


 


2.9.                              “Director”
means a member of the Board of Directors of the Company.


 


2.10.                        “Disability”
means total and permanent disability as defined in Section 22(e)(3) of the
Code.


 





















 


2.11.                        “Employee”
means any person, including Officers and Directors, employed by the Company or
any Parent or Subsidiary of the Company. A Service Provider shall not cease to
be an Employee in the case of (i) any leave of absence approved by the
Company or (ii) transfers between locations of the Company or between the
Company, its Parent, any Subsidiary, or any successor. For purposes of
Incentive Stock Options, no such leave may exceed ninety days, unless
reemployment upon expiration of such leave is guaranteed by statute or contract.
If reemployment upon expiration of a leave of absence approved by the Company
is not so guaranteed, on the 181st day of such leave any Incentive Stock Option
held by the Optionee shall cease to be treated as an Incentive Stock Option and
shall be treated for tax purposes as a Nonstatutory Stock Option. Neither
service as a Director nor payment of a director’s fee by the Company shall be
sufficient to constitute “employment” by the Company.


 


2.12.                        “Exchange
Act” means the Securities Exchange Act of 1934, as amended.


 


2.13.                        “Fair Market
Value” means, as of any date, the value of Common Stock determined as
follows:


 


2.13.1.               If the Common Stock
is listed on any established stock exchange or a national market system,
including without limitation the Nasdaq National Market or The Nasdaq SmallCap
Market of The Nasdaq Stock Market, 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 exchange or system for the last market trading day prior to the
time of determination, as reported in The Wall Street Journal
or such other source as the Administrator deems reliable;


 


2.13.2.               If the Common Stock
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 Common Stock on the last market trading day prior to
the day of determination; or


 


2.13.3.               In the absence of
an established market for the Common Stock, the Fair Market Value thereof shall
be determined in good faith by the Administrator.


 


2.14.                        “Incentive
Stock Option” means an Option intended to qualify as an incentive stock
option within the meaning of Section 422 of the Code.


 


2.15.                        “Nonstatutory
Stock Option” means an Option not intended to qualify as an Incentive Stock
Option.


 


2.16.                        “Officer”
means a person who is an officer of the Company within the meaning of Section
16 of the Exchange Act and the rules and regulations promulgated thereunder.


 


2.17.                        “Option”
means a stock option granted pursuant to the Plan.


 





















 


2.18.                        “Option
Agreement” means a written or electronic agreement between the Company and
an Optionee evidencing the terms and conditions of an individual Option grant. The
Option Agreement is subject to the terms and conditions of the Plan.


 


2.19.                        “Option
Exchange Program” means a program whereby outstanding Options are exchanged
for Options with a lower exercise price.


 


2.20.                        “Optioned Stock”
means the Common Stock subject to an Option or a Stock Purchase Right.


 


2.21.                        “Optionee”
means the holder of an outstanding Option or Stock Purchase Right granted under
the Plan.


 


2.22.                        “Parent”
means a “parent corporation,” whether now or hereafter existing, as defined in
Section 424(e) of the Code.


 


2.23.                        “Plan”
means this 1998 Stock Plan.


 


2.24.                        “Restricted
Stock” means shares of Common Stock acquired pursuant to a grant of a Stock
Purchase Right under Section 11 below.


 


2.25.                        “Section
16(b)” means Section 16(b) of the Securities Exchange Act of 1934, as
amended.


 


2.26.                        “Service
Provider”  means an Employee,
Director or Consultant.


 


2.27.                        “Share”
means a share of the Common Stock, as adjusted in accordance with Section 12
below.


 


2.28.                        “Stock
Purchase Right” means a right to purchase Common Stock pursuant to Section
11 below.


 


2.29.                        “Subsidiary”
means a “subsidiary corporation,” whether now or hereafter existing, as defined
in Section 424(f) of the Code.


 


3.                                       Stock Subject to the Plan.
Subject to the provisions of Section 12 of the Plan, the maximum aggregate
number of Shares which may be subject to option and sold under the Plan is
9,080,000 Shares. The Shares may be authorized but unissued, or reacquired
Common Stock.


 


If an Option or Stock
Purchase Right expires or becomes unexercisable without having been exercised
in full, or is surrendered pursuant to an Option Exchange Program, the
unpurchased Shares which were subject thereto shall become available for future
grant or sale under the Plan (unless the Plan has terminated). However, Shares
that have actually been issued under the Plan, upon exercise of either an
Option or Stock Purchase Right, shall not be returned to the Plan and shall not
become available for future distribution under the Plan, except that if Shares
of Restricted Stock


 





















 


are repurchased by the Company at their original purchase
price, such Shares shall become available for future grant under the Plan.


 


4.                                       Administration of the Plan.


 


4.1.                              Administrator.
The Plan shall be administered by the Board or a Committee appointed by the
Board, which Committee shall be constituted to comply with Applicable Laws.


 


4.2.                              Powers of the Administrator.
Subject to the provisions of the Plan and, in the case of a Committee, the
specific duties delegated by the Board to such Committee, and subject to the
approval of any relevant authorities, the Administrator shall have the
authority in its discretion:


 


4.2.1.                     to determine
the Fair Market Value;


 


4.2.2.                     to select the
Service Providers to whom Options and Stock Purchase Rights may from time to
time be granted hereunder;


 


4.2.3.                     to determine
the number of Shares to be covered by each such award granted hereunder;


 


4.2.4.                     to approve
forms of agreement for use under the Plan;


 


4.2.5.                     to determine
the terms and conditions, of any Option or Stock Purchase Right granted
hereunder. Such terms and conditions include, but are not limited to, the
exercise price, the time or times when Options or Stock Purchase Rights may be
exercised (which may be based on performance criteria), any vesting
acceleration or waiver of forfeiture restrictions, and any restriction or
limitation regarding any Option or Stock Purchase Right or the Common Stock
relating thereto, based in each case on such factors as the Administrator, in
its sole discretion, shall determine;


 


4.2.6.                     to determine
whether and under what circumstances an Option may be settled in cash under
subsection 9(e) instead of Common Stock;


 


4.2.7.                     to reduce the
exercise price of any Option to the then current Fair Market Value if the Fair
Market Value of the Common Stock covered by such Option has declined since the
date the Option was granted;


 


4.2.8.                     to initiate
an Option Exchange Program;


 


4.2.9.                     to prescribe,
amend and rescind rules and regulations relating to the Plan, including rules
and regulations relating to sub-plans established for the purpose of qualifying
for preferred tax treatment under foreign tax laws;


 


4.2.10.               to allow Optionees
to satisfy withholding tax obligations by electing to have the Company withhold
from the Shares to be issued upon exercise of an Option or Stock


 





















 


Purchase Right that number of Shares having a Fair
Market Value equal to the amount required to be withheld. The Fair Market Value
of the Shares to be withheld shall be determined on the date that the amount of
tax to be withheld is to be determined. All elections by Optionees to have
Shares withheld for this purpose shall be made in such form and under such
conditions as the Administrator may deem necessary or advisable; and


 


4.2.11.               to construe and
interpret the terms of the Plan and awards granted pursuant to the Plan.


 


4.3.                              Effect of Administrator’s
Decision. All decisions, determinations and interpretations of the
Administrator shall be final and binding on all Optionees.


 


5.                                       Eligibility.


 


5.1.                              Nonstatutory
Stock Options and Stock Purchase Rights may be granted to Service Providers. Incentive
Stock Options may be granted only to Employees.


 


5.2.                              Each
Option shall be designated in the Option Agreement as either an Incentive Stock
Option or a Nonstatutory Stock Option. However, notwithstanding such
designation, to the extent that the aggregate Fair Market Value of the Shares
with respect to which Incentive Stock Options are exercisable for the first
time by the Optionee during any calendar year (under all plans of the Company
and any Parent or Subsidiary) exceeds $100,000, such Options shall be treated
as Nonstatutory Stock Options. For purposes of this Section 5(b),
Incentive Stock Options shall be taken into account in the order in which they
were granted. The Fair Market Value of the Shares shall be determined as of the
time the Option with respect to such Shares is granted.


 


5.3.                              Neither
the Plan nor any Option or Stock Purchase Right shall confer upon any Optionee
any right with respect to continuing the Optionee’s relationship as a Service
Provider with the Company, nor shall it interfere in any way with his or her
right or the Company’s right to terminate such relationship at any time, with
or without cause.


 


6.                                       Term of Plan.
The Plan shall become effective upon its adoption by the Board. It shall
continue in effect for a term of ten (10) years unless sooner terminated under
Section 14 of the Plan.


 


7.                                       Term
of Option. The term of each Option shall be stated in the Option Agreement;
provided, however, that the term shall be no more than ten (10) years from
the date of grant thereof. In the case of an Incentive Stock Option granted to
an Optionee who, at the time the Option is granted, owns stock representing
more than ten percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, the term of the Option shall be five (5)
years from the date of grant or such shorter term as may be provided in the
Option Agreement.


 





















 


8.                                       Option
Exercise Price and Consideration.


 


8.1.                              The
per share exercise price for the Shares to be issued upon exercise of an Option
shall be such price as is determined by the Administrator, but shall be subject
to the following:


 


8.1.1.                     In the case
of an Incentive Stock Option


 


8.1.1.1.            granted to an Employee
who, at the time of grant of such Option, owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of the Company or any
Parent or Subsidiary, the exercise price shall be no less than 110% of the Fair
Market Value per Share on the date of grant.


 


8.1.1.2.            granted to any other Employee,
the per Share exercise price shall be no less than 100% of the Fair Market
Value per Share on the date of grant.


 


8.1.2.                     In the case
of a Nonstatutory Stock Option


 


8.1.2.1.            granted to a Service
Provider who, at the time of grant of such Option, owns stock representing more
than ten percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, the exercise price shall be no less than
110% of the Fair Market Value per Share on the date of grant.


 


8.1.2.2.            granted to any other
Service Provider, the per Share exercise price shall be no less than 85% of the
Fair Market Value per Share on the date of grant.


 


8.1.3.                     Notwithstanding
the foregoing, Options may be granted with a per Share exercise price other
than as required above pursuant to a merger or other corporate transaction.


 


8.2.                              The
consideration to be paid for the Shares to be issued upon exercise of an
Option, including the method of payment, shall be determined by the
Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant). Such consideration  may consist of (1) cash, (2) check,
(3) promissory note, (4) other Shares which (x) in the case of
Shares acquired upon exercise of an Option, have been owned by the Optionee for
more than six months on the date of surrender, and (y) have a Fair Market
Value on the date of surrender equal to the aggregate exercise price of the
Shares as to which such Option shall be exercised, (5) consideration received
by the Company under a cashless exercise program implemented by the Company in
connection with the Plan, or (6) any combination of the foregoing methods
of payment. In making its determination as to the type of consideration to
accept, the Administrator shall consider if acceptance of such consideration
may be reasonably expected to benefit the Company.


 


9.                                       Exercise of Option.


 


9.1.                              Procedure for Exercise;
Rights as a Shareholder. Any Option granted hereunder shall be exercisable
according to the terms hereof at such times and under such conditions as
determined by the Administrator and set forth in the Option Agreement. Except
in the case of Options granted to Officers, Directors and Consultants, Options
shall become exercisable at a rate of


 





















 


no less than 20% per year over five (5) years from the
date the Options are granted. Unless the Administrator provides otherwise,
vesting of Options granted hereunder shall be tolled during any unpaid leave of
absence. An Option may not be exercised for a fraction of a Share.


 


An Option shall be deemed
exercised when the Company receives: (i) written or electronic notice of
exercise (in accordance with the Option Agreement) from the person entitled to
exercise the Option, and (ii) full payment for the Shares with respect to which
the Option is exercised. Full payment may consist of any consideration and
method of payment authorized by the Administrator and permitted by the Option
Agreement and the Plan. Shares issued upon exercise of an Option shall be
issued in the name of the Optionee or, if requested by the Optionee, in the
name of the Optionee and his or her spouse. Until the Shares are issued (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company), no right to vote or receive
dividends or any other rights as a shareholder shall exist with respect to the
Shares, notwithstanding the exercise of the Option. The Company shall issue (or
cause to be issued) such Shares promptly after the Option is exercised. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the Shares are issued, except as provided in
Section 12 of the Plan.


 


Exercise of an Option in
any manner shall result in a decrease in the number of Shares thereafter available,
both for purposes of the Plan and for sale under the Option, by the number of
Shares as to which the Option is exercised.


 


9.2.                              Termination of
Relationship as a Service Provider. If an Optionee ceases to be a Service
Provider, such Optionee may exercise his or her Option within such period of
time as is specified in the Option Agreement (of at least thirty (30) days) to
the extent that the Option is vested on the date of termination (but in no
event later than the expiration of the term of the Option as set forth in the
Option Agreement). In the absence of a specified time in the Option Agreement,
the Option shall remain exercisable for three (3) months following the Optionee’s
termination. If, on the date of termination, the Optionee is not vested as to
his or her entire Option, the Shares covered by the unvested portion of the
Option shall revert to the Plan. If, after termination, the Optionee does not
exercise his or her Option within the time specified by the Administrator, the
Option shall terminate, and the Shares covered by such Option shall revert to
the Plan.


 


9.3.                              Disability
of Optionee. If an Optionee ceases to be a Service Provider as a result of
the Optionee’s Disability, the Optionee may exercise his or her Option within
such period of time as is specified in the Option Agreement (of at least six
(6) months) to the extent the Option is vested on the date of termination (but
in no event later than the expiration of the term of such Option as set forth
in the Option Agreement). In the absence of a specified time in the Option
Agreement, the Option shall remain exercisable for twelve (12) months following
the Optionee’s termination. If, on the date of termination, the Optionee is not
vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option shall revert to the Plan. If, after termination, the
Optionee does not exercise his or her Option within the time specified herein,
the Option shall terminate, and the Shares covered by such Option shall revert
to the Plan.


 





















 


9.4.                              Death of Optionee.
If an Optionee dies while a Service Provider, the Option may be exercised
within such period of time as is specified in the Option Agreement (of at least
six (6) months) to the extent that the Option is vested on the date of death
(but in no event later than the expiration of the term of such Option as set
forth in the Option Agreement) by the Optionee’s estate or by a person who
acquires the right to exercise the Option by bequest or inheritance. In the
absence of a specified time in the Option Agreement, the Option shall remain
exercisable for twelve (12) months following the Optionee’s termination. If, at
the time of death, the Optionee is not vested as to the entire Option, the
Shares covered by the unvested portion of the Option shall immediately revert
to the Plan. If the Option is not so exercised within the time specified
herein, the Option shall terminate, and the Shares covered by such Option shall
revert to the Plan.


 


9.5.                              Buyout
Provisions. The Administrator may at any time offer to buy out for a
payment in cash or Shares, an Option previously granted, based on such terms
and conditions as the Administrator shall establish and communicate to the
Optionee at the time that such offer is made.


 


10.                                 Non-Transferability of Options
and Stock Purchase Rights. The Options and Stock Purchase Rights may not be
sold, pledged, assigned, hypothecated, transferred, or disposed of in any
manner other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Optionee, only by the Optionee.


 


11.                                 Stock
Purchase Rights.


 


11.1.                        Rights
to Purchase. Stock Purchase Rights may be issued either alone, in addition
to, or in tandem with other awards granted under the Plan and/or cash awards
made outside of the Plan. After the Administrator determines that it will offer
Stock Purchase Rights under the Plan, it shall advise the offeree in writing or
electronically of the terms, conditions and restrictions related to the offer,
including the number of Shares that such person shall be entitled to purchase,
the price to be paid, and the time within which such person must accept such
offer. The terms of the offer shall comply in all respects with Section
260.140.42 of Title 10 of the California Code of Regulations. The offer shall
be accepted by execution of a Restricted Stock purchase agreement in the form
determined by the Administrator.


 


11.2.                        Repurchase
Option. Unless the Administrator determines otherwise, the Restricted Stock
purchase agreement shall grant the Company a repurchase option exercisable upon
the voluntary or involuntary termination of the purchaser’s service with the
Company for any reason (including death or disability). The purchase price for
Shares repurchased pursuant to the Restricted Stock purchase agreement shall be
the original price paid by the purchaser and may be paid by cancellation of any
indebtedness of the purchaser to the Company. The repurchase option shall lapse
at such rate as the Administrator may determine. Except with respect to Shares
purchased by Officers, Directors and Consultants, the repurchase option shall
in no case lapse at a rate of less than 20% per year over five (5) years from
the date of purchase.


 


11.3.                        Other
Provisions. The Restricted Stock purchase agreement shall contain such
other terms, provisions and conditions not inconsistent with the Plan as may be
determined by the Administrator in its sole discretion.


 





















 


11.4.                        Rights
as a Shareholder. Once the Stock Purchase Right is exercised, the purchaser
shall have rights equivalent to those of a shareholder and shall be a
shareholder when his or her purchase is entered upon the records of the duly
authorized transfer agent of the Company. No adjustment shall be made for a
dividend or other right for which the record date is prior to the date the
Stock Purchase Right is exercised, except as provided in Section 12 of the
Plan.


 


12.                                 Adjustments Upon Changes in Capitalization,
Merger or Asset Sale.


 


12.1.                        Changes
in Capitalization. Subject to any required action by the shareholders of
the Company, the number of shares of Common Stock covered by each outstanding
Option or Stock Purchase Right, and the number of shares of Common Stock which
have been authorized for issuance under the Plan but as to which no Options or
Stock Purchase Rights have yet been granted or which have been returned to the
Plan upon cancellation or expiration of an Option or Stock Purchase Right, as
well as the price per share of Common Stock covered by each such outstanding
Option or Stock Purchase Right, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting
from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the
number of issued shares of Common Stock effected without receipt of
consideration by the Company. The conversion of any convertible securities of
the Company shall not be deemed to have been “effected without receipt of
consideration.”  Such adjustment shall be
made by the Board, whose determination in that respect shall be final, binding
and conclusive. Except as expressly provided herein, no issuance by the Company
of shares of stock of any class, or securities convertible into shares of stock
of any class, shall affect, and no adjustment by reason thereof shall be made
with respect to, the number or price of shares of Common Stock subject to an
Option or Stock Purchase Right.


 


12.2.                        Dissolution
or Liquidation. In the event of the proposed dissolution or liquidation of
the Company, the Administrator shall notify each Optionee as soon as
practicable prior to the effective date of such proposed transaction. The
Administrator in its discretion may provide for an Optionee to have the right
to exercise his or her Option or Stock Purchase Right until fifteen (15) days
prior to such transaction as to all of the Optioned Stock covered thereby,
including Shares as to which the Option or Stock Purchase Right would not
otherwise be exercisable. In addition, the Administrator may provide that any
Company repurchase option applicable to any Shares purchased upon exercise of
an Option or Stock Purchase Right shall lapse as to all such Shares, provided
the proposed dissolution or liquidation takes place at the time and in the
manner contemplated. To the extent it has not been previously exercised, an
Option or Stock Purchase Right will terminate immediately prior to the
consummation of such proposed action.


 


12.3.                        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,
each outstanding Option and Stock Purchase Right shall be assumed or an
equivalent option or right substituted by the successor corporation or a Parent
or Subsidiary of the successor corporation. In the event that the successor
corporation refuses to assume or substitute for the Option or Stock Purchase
Right, the Optionee shall fully vest in and have the right to exercise the Option
or Stock Purchase Right as to


 





















 


all of the Optioned Stock, including Shares as to
which it would not otherwise be vested or exercisable. If an Option or Stock
Purchase Right becomes fully vested and exercisable in lieu of assumption or
substitution in the event of a merger or sale of assets, the Administrator
shall notify the Optionee in writing or electronically that the Option or Stock
Purchase Right shall be fully exercisable for a period of fifteen (15) days
from the date of such notice, and the Option or Stock Purchase Right shall
terminate upon the expiration of such period. For the purposes of this
paragraph, the Option or Stock Purchase Right shall be considered assumed if,
following the merger or sale of assets, the option or right confers the right
to purchase or receive, for each Share of Optioned Stock subject to the Option
or Stock Purchase Right 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 is not solely common stock of the
successor corporation or its Parent, the Administrator may, with the consent of
the successor corporation, provide for the consideration to be received upon
the exercise of the Option or Stock Purchase Right, for each Share of Optioned
Stock subject to the Option or Stock Purchase Right, to be solely common stock
of the successor corporation or its Parent equal in fair market value to the per
share consideration received by holders of Common Stock in the merger or sale
of assets.


 


13.                                 Time of Granting Options
and Stock Purchase Rights. The date of grant of an Option or Stock Purchase
Right shall, for all purposes, be the date on which the Administrator makes the
determination granting such Option or Stock Purchase Right, or such other date
as is determined by the Administrator. Notice of the determination shall be
given to each Employee to whom an Option or Stock Purchase Right is so granted
within a reasonable time after the date of such grant.


 


14.                                 Amendment and Termination of the Plan.


 


14.1.                        Amendment
and Termination. The Board may at any time amend, alter, suspend or
terminate the Plan.


 


14.2.                        Shareholder
Approval. The Board shall obtain shareholder approval of any Plan amendment
to the extent necessary and desirable to comply with Applicable Laws.


 


14.3.                        Effect of Amendment or Termination.
No amendment, alteration, suspension or termination of the Plan shall impair
the rights of any Optionee, unless mutually agreed otherwise between the
Optionee and the Administrator, which agreement must be in writing and signed
by the Optionee and the Company. Termination of the Plan shall not affect the
Administrator’s ability to exercise the powers granted to it hereunder with
respect to Options granted under the Plan prior to the date of such
termination.


 


15.                                 Conditions Upon Issuance of Shares.


 


15.1.                        Legal
Compliance. Shares 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 shall comply


 





















 


with Applicable Laws and shall be further subject to
the approval of counsel for the Company with respect to such compliance.


 


15.2.                        Investment
Representations. As a condition to the exercise of an Option, the
Administrator may require the person exercising such Option to represent and
warrant at the time of any such exercise that the Shares are being purchased
only for investment and without any present intention to sell or distribute
such Shares if, in the opinion of counsel for the Company, such a
representation is required.


 


16.                                 Inability
to Obtain Authority. The inability of the Company to obtain authority from
any regulatory body having jurisdiction, which authority is deemed by the
Company’s counsel to be necessary to the lawful issuance and sale of any Shares
hereunder, shall relieve the Company of any liability in respect of the failure
to issue or sell such Shares as to which such requisite authority shall not
have been obtained.


 


17.                                 Reservation of Shares.
The Company, during the term of this Plan, shall at all times reserve and keep
available such number of Shares as shall be sufficient to satisfy the
requirements of the Plan.


 


18.                                 Shareholder
Approval. The Plan shall be subject to approval by the shareholders of the
Company within twelve (12) months after the date the Plan is adopted. Such
shareholder approval shall be obtained in the degree and manner required under
Applicable Laws.


 


19.                                 Information
to Optionees and Purchasers. The Company shall provide to each Optionee and
to each individual who acquires Shares pursuant to the Plan, not less
frequently than annually during the period such Optionee or purchaser has one
or more Options or Stock Purchase Rights outstanding, and, in the case of an
individual who acquires Shares pursuant to the Plan, during the period such
individual owns such Shares, copies of annual financial statements. The Company
shall not be required to provide such statements to key employees whose duties
in connection with the Company assure their access to equivalent information.


 





















 


EXPRESSION
DIAGNOSTICS, INC.


 


1998
STOCK PLAN


 


STOCK
OPTION AGREEMENT


 


Unless otherwise defined
herein, the terms defined in the Plan shall have the same defined meanings in
this Option Agreement.


 


	
  I. NOTICE
  OF STOCK OPTION GRANT

  
	
   

  
	
  Name:

  	
  <<Optionee>>

  	
   

  
	
   

  
	
  Address:

  	
  <<Address_1>>

  	
   

  
	
   

  	
  <<Address_2>>

  	
   

  
				



 


The undersigned Optionee
has been granted an Option to purchase Common Stock of the Company, subject to
the terms and conditions of the Plan and this Option Agreement, as follows:


 


Date of Grant                                                                                                                                                                         <<Grantdate>>                                                                                                                                                                


 


Vesting Commencement Date                                                                                    <<Vestdate>>                                                                                                                                                                     


 


Exercise Price per Share                                                                                                                   $<<Price>>                                                                                                                                                                                                                                    


 


Total Number of Shares
Granted                                                                     <<Shares>>                                                                                                                                                                                


 


Total Exercise Price                                                                                                                                         $<<Total>>                                                                                                                                                                                  


 


Type of Option:                                                                                                                                                           x                                  Incentive
Stock Option


 


                                                                                                                                                                                                                                                o                                    Nonstatutory
Stock Option


 


Term/Expiration Date:                                                                                                                             <<Expiration>>                                                                                                                                                               


 


Vesting Schedule:


 


This Option shall be
exercisable, in whole or in part, according to the following vesting schedule:


 


Twenty-five percent (25%)
of the Shares subject to this Option shall vest on the one year anniversary of
the Vesting Commencement Date and 1/48th of the total amount of the Shares
subject to this Option shall vest each month thereafter, subject to the Optionee’s
continuing to be a Service Provider on such dates such that 100% of the
Optioned Stock shall be vested after four years.


 

















 


Termination Period:


 


This Option shall be
exercisable for three months after Optionee ceases to be a Service Provider. Upon
Optionee’s death or disability, this Option may be exercised for one year after
Optionee ceases to be a Service Provider. In no event may Optionee exercise
this Option after the Term/Expiration Date as provided above.


 


II.                                     AGREEMENT


 


1.                                       Grant
of Option. The Plan Administrator of the Company hereby grants to the
Optionee named in the Notice of Grant (the “Optionee”), an option (the “Option”)
to purchase the number of Shares set forth in the Notice of Grant, at the
exercise price per Share set forth in the Notice of Grant (the “Exercise Price”),
and subject to the terms and conditions of the Plan, which is incorporated
herein by reference. Subject to Section [14(c)] of the Plan, in the event of a
conflict between the terms and conditions of the Plan and this Option
Agreement, the terms and conditions of the Plan shall prevail.


 


If designated in the
Notice of Grant as an Incentive Stock Option (“ISO”), this Option is intended
to qualify as an Incentive Stock Option as defined in Section 422 of the
Code. Nevertheless, to the extent that it exceeds the $100,000 rule of Code
Section 422(d), this Option shall be treated as a Nonstatutory Stock Option (“NSO”).


 


2.                                       Exercise
of Option.


 


                                                (a)                                  Right
to Exercise. This Option shall be exercisable during its term in accordance
with the Vesting Schedule set out in the Notice of Grant and with the
applicable provisions of the Plan and this Option Agreement.


 


(b)                                       Method
of Exercise. This Option shall be exercisable by delivery of an exercise
notice in the form attached as Exhibit A (the AExercise
Notice@) which shall state the election to
exercise the Option, the number of Shares with respect to which the Option is
being exercised, and such other representations and agreements as may be
required by the Company. The Exercise Notice shall be accompanied by payment of
the aggregate Exercise Price as to all Exercised Shares. This Option shall be
deemed to be exercised upon receipt by the Company of such fully executed
Exercise Notice accompanied by the aggregate Exercise Price.


 


No Shares shall be issued
pursuant to the exercise of an Option unless such issuance and such exercise
complies with Applicable laws. Assuming such compliance, for income tax
purposes the Shares shall be considered transferred to the Optionee on the date
on which the Option is exercised with respect to such Shares.


 


3.                                       Optionee’s
Representations. In the event the Shares have not been registered under the
Securities Act of 1933, as amended, at the time this Option is exercised, the
Optionee shall, if required by the Company, concurrently with the exercise of
all or any portion of this Option, deliver to the


 

















 


Company his or her
Investment Representation Statement in the form attached hereto as
Exhibit B, and shall read the applicable rules of the Commissioner of Corporations
attached to such Investment Representation Statement.


 


4.                                       Lock-Up
Period. Optionee hereby agrees that, if so requested by the Company or any
representative of the underwriters (the “Managing Underwriter”) in connection
with any registration of the offering of any securities of the Company under
the Securities Act, Optionee shall not sell or otherwise transfer any
Shares or other securities of the Company during the 180-day period (or such
other period as may be requested in writing by the Managing Underwriter and
agreed to in writing by the Company) (the “Market Standoff Period”) following
the effective date of a registration statement of the Company filed under the
Securities Act. Such restriction shall apply only  to the first registration statement of the
Company to become effective under the Securities Act that 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 restrictions
until the end of such Market Standoff Period.


 


5.                                       Method
of Payment. Payment of the aggregate Exercise Price shall be by any of the
following, or a combination thereof, at the election of the Optionee:


 


(a)                                        cash
or check;


 


(b)                                        consideration
received by the Company under a formal cashless exercise program adopted by the
Company in connection with the Plan; or


 


(c)                                         surrender of
other Shares which, (i) in the case of Shares acquired upon exercise of an
option, have been owned by the Optionee for more than six (6) months on the
date of surrender, and (ii) have a Fair Market Value on the date of surrender
equal to the aggregate Exercise Price of the Exercised Shares.


 


6.                                       Restrictions
on Exercise. This Option may not be exercised until such time as the Plan
has been approved by the shareholders of the Company, or if the issuance of
such Shares upon such exercise or the method of payment of consideration for
such shares would constitute a violation of any Applicable Law.


 


7.                                       Non-Transferability
of Option. This Option may not be transferred in any manner otherwise than
by will or by the laws of descent or distribution and may be exercised during
the lifetime of Optionee only by Optionee. The terms of the Plan and this
Option Agreement shall be binding upon the executors, administrators, heirs,
successors and assigns of the Optionee.


 


8.                                       Term
of Option. This Option may be exercised only within the term set out in the
Notice of Grant, and may be exercised during such term only in accordance with
the Plan and the terms of this Option.


 

















 


9.                                       Tax
Consequences. Set forth below is a brief summary as of the date of this
Option of some of the federal tax consequences of exercise of this Option and
disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX
LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE OPTIONEE SHOULD CONSULT A TAX
ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.


 


(a)                                        Exercise
of ISO. If this Option qualifies as an ISO, there will be no regular
federal income tax liability upon the exercise of the Option, although the
excess, if any, of the Fair Market Value of the Shares on the date of exercise
over the Exercise Price will be treated as an adjustment to the alternative
minimum tax for federal tax purposes and may subject the Optionee to the
alternative minimum tax in the year of exercise.


 


(b)                                       Exercise
of Nonstatutory Stock Option. There may be a regular federal income tax
liability upon the exercise of a Nonstatutory Stock Option. The Optionee will
be treated as having received compensation income (taxable at ordinary income
tax rates) equal to the excess, if any, of the Fair Market Value of the Shares
on the date of exercise over the Exercise Price. If Optionee is an Employee or
a former Employee, the Company will be required to withhold from Optionee’s
compensation or collect from Optionee and pay to the applicable taxing
authorities an amount in cash equal to a percentage of this compensation income
at the time of exercise, and may refuse to honor the exercise and refuse to
deliver Shares if such withholding amounts are not delivered at the time of
exercise.


 


(c)                                         Disposition
of Shares. In the case of an NSO, if Shares are held for at least one year,
any gain realized on disposition of the Shares will be treated as long-term
capital gain for federal income tax purposes. In the case of an ISO, if Shares
transferred pursuant to the Option are held for at least one year after
exercise and of at least two years after the Date of Grant, any gain realized
on disposition of the Shares will also be treated as long-term capital gain for
federal income tax purposes. If Shares purchased under an ISO are disposed of
within one year after exercise or two years after the Date of Grant, any gain
realized on such disposition will be treated as compensation income (taxable at
ordinary income rates) to the extent of the difference between the Exercise
Price and the lesser of (1) the Fair Market Value of the Shares on the date of
exercise, or (2) the sale price of the Shares. Any additional gain will be
taxed as capital gain, short-term or long-term depending on the period that the
ISO Shares were held.


 


(d)                                        Notice of
Disqualifying Disposition of ISO Shares. If the Option granted to Optionee
herein is an ISO, and if Optionee sells or otherwise disposes of any of the
Shares acquired pursuant to the ISO on or before the later of (1) the date
two years after the Date of Grant, or (2) the date one year after the date
of exercise, the Optionee shall immediately notify the Company in writing of
such disposition. Optionee agrees that Optionee may be subject to income tax
withholding by the Company on the compensation income recognized by the
Optionee.


 


10.                                 Entire
Agreement; Governing Law. The Plan is incorporated herein by reference. The
Plan and this Option Agreement constitute the entire agreement of the parties
with respect to the subject


 

















 


matter hereof and
supersede in their entirety all prior undertakings and agreements of the
Company and Optionee with respect to the subject matter hereof, and may not be
modified adversely to the Optionee’s interest except by means of a writing
signed by the Company and Optionee. This agreement is governed by the internal
substantive laws but not the choice of law rules of California.


 


11.                                 No
Guarantee of Continued Service. OPTIONEE ACKNOWLEDGES AND AGREES THAT THE
VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY
CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (NOT THROUGH THE
ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER). OPTIONEE
FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS
CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT
CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE
PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT
INTERFERE IN ANY WAY WITH OPTIONEE’S RIGHT OR THE COMPANY’S RIGHT TO TERMINATE
OPTIONEE’S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT
CAUSE.


 


Optionee acknowledges
receipt of a copy of the Plan and represents that he or she is familiar with
the terms and provisions thereof, and hereby accepts this Option subject to all
of the terms and provisions thereof. Optionee has reviewed the Plan and this
Option in their entirety, has had an opportunity to obtain the advice of
counsel prior to executing this Option and fully understands all provisions of
the Option. Optionee hereby agrees to accept as binding, conclusive and final
all decisions or interpretations of the Administrator upon any questions
arising under the Plan or this Option. Optionee further agrees to notify the
Company upon any change in the residence address indicated below.


 


	
  OPTIONEE

  	
   

  	
  EXPRESSION DIAGNOSTICS,
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  <<Optionee>>

  	
   

  	
  By

  
	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  <<Address_1>>

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title

  
	
   

  	
   

  	
   

  
	
  <<Address_2>>

  	
   

  	
   

  	
   

  
							



 


[Option
Agreement Signature Page]


 

















 


EXHIBIT A


 


1998
STOCK PLAN


 





 


EXERCISE
NOTICE


 


Expression Diagnostics,
Inc.


750 Gateway Blvd. Suite H


South San Francisco, CA
94080


Attention:  President


 


1.                                       Exercise
of Option. Effective as of today,               ,
20   , the undersigned (“Optionee”) hereby elects to exercise
Optionee’s option to purchase              
shares of the Common Stock (the “Shares”) of Expression Diagnostics, Inc. (the “Company”)
under and pursuant to the 1998 Stock Plan (the “Plan”) and the Stock Option
Agreement dated «Grantdate» (the “Option
Agreement”).


 


2.                                       Delivery
of Payment. Purchaser herewith delivers to the Company the full purchase
price of the Shares, as set forth in the Option Agreement.


 


3.                                       Representations
of Optionee. Optionee acknowledges that Optionee has received, read and
understood the Plan and the Option Agreement and agrees to abide by and be
bound by their terms and conditions.


 


4.                                       Rights
as Shareholder. Until the issuance of the Shares (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company), no right to vote or receive dividends or any other
rights as a shareholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. The Shares shall be issued to the
Optionee as soon as practicable after the Option is exercised. No adjustment
shall be made for a dividend or other right for which the record date is prior
to the date of issuance except as provided in Section 12 of the Plan.


 


5.                                       Company’s
Right of First Refusal. Before any Shares held by Optionee or any
transferee (either being sometimes referred to herein as the “Holder”) may be
sold or otherwise transferred (including transfer by gift or operation of law),
the Company or its assignee(s) shall have a right of first refusal to purchase
the Shares on the terms and conditions set forth in this Section (the “Right of
First Refusal”).


 


(a)                                        Notice
of Proposed Transfer. The Holder of the Shares shall deliver to the Company
a written notice (the “Notice”) stating: 
(i) the Holder’s bona fide intention to sell or otherwise transfer
such Shares; (ii) the name of each proposed purchaser or other transferee
(“Proposed Transferee”); (iii) the number of Shares to be transferred to
each Proposed Transferee; and (iv) the bona fide cash price or other
consideration for which the Holder proposes to transfer the Shares (the “Offered
Price”), and the Holder shall offer the Shares at the Offered Price to the
Company or its assignee(s).


 


(b)                                       Exercise
of Right of First Refusal. At any time within thirty (30) days after
receipt of the Notice, the Company and/or its assignee(s) may, by giving
written notice to the Holder, elect to


 

















 


purchase all, but not
less than all, of the Shares proposed to be transferred to any one or more of
the Proposed Transferees, at the purchase price determined in accordance with
subsection (c) below.


 


(c)                                        Purchase
Price. The purchase price (“Purchase Price”) for the Shares purchased by
the Company or its assignee(s) under this Section shall be the Offered Price. If
the Offered Price includes consideration other than cash, the cash equivalent
value of the non-cash consideration shall be determined by the Board of
Directors of the Company in good faith.


 


(d)                                       Payment.
Payment of the Purchase Price shall be made, at the option of the Company or
its assignee(s), in cash (by check), by cancellation of all or a portion of any
outstanding indebtedness of the Holder to the Company (or, in the case of
repurchase by an assignee, to the assignee), or by any combination thereof
within 30 days after receipt of the Notice or in the manner and at the times
set forth in the Notice.


 


(e)                                        Holder’s
Right to Transfer. If all of the Shares proposed in the Notice to be
transferred to a given Proposed Transferee are not purchased by the Company
and/or its assignee(s) as provided in this Section, then the Holder may sell or
otherwise transfer such Shares to that Proposed Transferee at the Offered Price
or at a higher price, provided that such sale or other transfer is consummated
within 120 days after the date of the Notice, that any such sale or other
transfer is effected in accordance with any applicable securities laws and that
the Proposed Transferee agrees in writing that the provisions of this Section
shall continue to apply to the Shares in the hands of such Proposed Transferee.
If the Shares described in the Notice are not transferred to the Proposed
Transferee within such period, a new Notice shall be given to the Company, and
the Company and/or its assignees shall again be offered the Right of First
Refusal before any Shares held by the Holder may be sold or otherwise transferred.


 


(f)                                          Exception
for Certain Family Transfers. Anything to the contrary contained in this
Section notwithstanding, the transfer of any or all of the Shares during the
Optionee’s lifetime or on the Optionee’s death by will or intestacy to the
Optionee’s immediate family or a trust for the benefit of the Optionee’s
immediate family shall be exempt from the provisions of this Section. “Immediate
Family” as used herein shall mean spouse, lineal descendant or antecedent,
father, mother, brother or sister. In such case, the transferee or other
recipient shall receive and hold the Shares so transferred subject to the
provisions of this Section, and there shall be no further transfer of such
Shares except in accordance with the terms of this Section.


 


(g)                                       Termination
of Right of First Refusal. The Right of First Refusal shall terminate as to
any Shares upon the first sale of Common Stock of the Company to the general
public pursuant to a registration statement filed with and declared effective
by the Securities and Exchange Commission under the Securities Act of 1933, as
amended.


 


6.                                       Tax
Consultation. Optionee understands that Optionee may suffer adverse tax
consequences as a result of Optionee’s purchase or disposition of the Shares. Optionee
represents that


 

















 


Optionee has consulted
with any tax consultants Optionee deems advisable in connection with the
purchase or disposition of the Shares and that Optionee is not relying on the
Company for any tax advice.


 


7.                                       Restrictive
Legends and Stop-Transfer Orders.


 


(a)                                        Legends.
Optionee understands and agrees that the Company shall cause the legends set
forth below or legends substantially equivalent thereto, to be placed upon any
certificate(s) evidencing ownership of the Shares together with any other
legends that may be required by the Company or by state or federal securities
laws:


 


THE SECURITIES
REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
(THE “ACT”) AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR, IN THE OPINION OF
COMPANY COUNSEL SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER,
SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.


 


THE SHARES REPRESENTED BY
THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND A RIGHT OF
FIRST REFUSAL HELD BY THE ISSUER OR ITS ASSIGNEE(S) AS SET FORTH IN THE
EXERCISE NOTICE BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A
COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH
TRANSFER RESTRICTIONS AND RIGHT OF FIRST REFUSAL ARE BINDING ON TRANSFEREES OF
THESE SHARES.


 


(b)                                       Stop-Transfer
Notices. Optionee agrees that, in order to ensure compliance with the
restrictions referred to herein, the Company may issue appropriate “stop
transfer” instructions to its transfer agent, if any, and that, if the
Company  transfers its own securities, it
may make appropriate notations to the same effect in its own records.


 


(c)                                        Refusal
to Transfer. The Company shall not be required (i) to transfer on its
books any Shares that have been sold or otherwise transferred in violation of
any of the provisions of this Agreement or (ii) to treat as owner of such
Shares or to accord the right to vote or pay dividends to any purchaser or
other transferee to whom such Shares shall have been so transferred.


 


8.                                       Successors
and Assigns. The Company may assign any of its rights under this Agreement
to single or multiple assignees, and this Agreement shall inure to the benefit
of the successors and assigns of the Company. Subject to the restrictions on
transfer herein set forth, this Agreement shall be binding upon Optionee and
his or her heirs, executors, administrators, successors and assigns.


 

















 


9.                                       Interpretation.
Any dispute regarding the interpretation of this Agreement shall be submitted
by Optionee or by the Company forthwith to the Administrator which shall review
such dispute at its next regular meeting. The resolution of such a dispute by
the Administrator shall be final and binding on all parties.


 


10.                                 Governing
Law; Severability. This Agreement is governed by the internal substantive
laws but not the choice of law rules, of the State of California.


 


[This
Space Intentionally Left Blank]


 

















 


11.                                 Entire
Agreement. The Plan and Option Agreement are incorporated herein by
reference. This Agreement, the Plan, the Option Agreement and the Investment
Representation Statement constitute the entire agreement of the parties with
respect to the subject matter hereof and supersede in their entirety all prior
undertakings and agreements of the Company and Optionee with respect to the
subject matter hereof, and may not be modified adversely to the Optionee’s
interest except by means of a writing signed by the Company and Optionee.


 


	
  Submitted by:

  	
   

  	
  Accepted by:

  
	
   

  	
   

  	
   

  
	
  OPTIONEE:

  	
   

  	
  EXPRESSION DIAGNOSTICS,
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  <<Optionee>>

  	
   

  	
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  Its:

  
	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
  Address:

  
	
   

  	
   

  	
   

  
	
  <<Address_1>>

  	
   

  	
  750 Gateway Blvd, Suite
  H

  
	
  <<Address_2>>

  	
   

  	
  South San Francisco, CA
  94080

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date Received

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  



 


[Option
Exercise Signature Page]


 

















 


EXHIBIT B


 


INVESTMENT
REPRESENTATION STATEMENT


 


OPTIONEE:                                                                                 «OPTIONEE»


 


COMPANY:                                                                              EXPRESSION
DIAGNOSTICS, INC.


 


SECURITY:                                                                                  COMMON
STOCK


 


AMOUNT:


 


DATE:


 


In connection with the
purchase of the above-listed Securities, the undersigned Optionee represents to
the Company the following:


 


(a)                                        Optionee
is aware of the Company’s business affairs and financial condition and has
acquired sufficient information about the Company to reach an informed and
knowledgeable decision to acquire the Securities. Optionee is acquiring these
Securities for investment for Optionee’s own account only and not with a view
to, or for resale in connection with, any “distribution” thereof within the
meaning of the Securities Act of 1933, as amended (the “Securities Act”).


 


(b)                                       Optionee
acknowledges and understands that the Securities constitute “restricted
securities” under the Securities Act and have not been registered under the
Securities Act in reliance upon a specific exemption therefrom, which exemption
depends upon, among other things, the bona fide nature of Optionee’s investment
intent as expressed herein. In this connection, Optionee understands that, in
the view of the Securities and Exchange Commission, the statutory basis for
such exemption may be unavailable if Optionee’s representation was predicated
solely upon a present intention to hold these Securities for the minimum
capital gains period specified under tax statutes, for a deferred sale, for or
until an increase or decrease in the market price of the Securities, or for a
period of one year or any other fixed period in the future. Optionee further
understands that the Securities must be held indefinitely unless they are
subsequently registered under the Securities Act or an exemption from such
registration is available. Optionee further acknowledges and understands that
the Company is under no obligation to register the Securities. Optionee
understands that the certificate evidencing the Securities will be imprinted
with a legend which prohibits the transfer of the Securities unless they are
registered or such registration is not required in the opinion of counsel
satisfactory to the Company, a legend prohibiting their transfer without the
consent of the Commissioner of Corporations of the State of California and any
other legend required under applicable state securities laws.


 

















 


(c)                                        Optionee
is familiar with the provisions of Rule 701 and Rule 144, each
promulgated under the Securities Act, which, in substance, permit limited public
resale of “restricted securities” acquired, directly or indirectly from the
issuer thereof, in a non-public offering subject to the satisfaction of certain
conditions. Rule 701 provides that if the issuer qualifies under
Rule 701 at the time of the grant of the Option to the Optionee, the
exercise will be exempt from registration under the Securities Act. In the
event the Company becomes subject to the reporting requirements of
Section 13 or 15(d) of the Securities Exchange Act of 1934, ninety (90)
days thereafter (or such longer period as any market stand-off agreement may
require) the Securities exempt under Rule 701 may be resold, subject to
the satisfaction of certain of the conditions specified by Rule 144,
including:  (1) the resale being
made through a broker in an unsolicited “broker’s transaction” or in
transactions directly with a market maker (as said term is defined under
the Securities Exchange Act of 1934); and, in the case of an affiliate,
(2) the availability of certain public information about the Company, (3)
the amount of Securities being sold during any three month period not exceeding
the limitations specified in Rule 144(e), and (4) the timely filing of a
Form 144, if applicable.


 


In the event that the
Company does not qualify under Rule 701 at the time of grant of the
Option, then the Securities may be resold in certain limited circumstances
subject to the provisions of Rule 144, which requires the resale to
occur not less than two years after the later of the date the Securities were sold
by the Company or the date the Securities were sold by an affiliate of the
Company, within the meaning of Rule 144; and, in the case of acquisition
of the Securities by an affiliate, or by a non-affiliate who subsequently holds
the Securities less than three years, the satisfaction of the conditions set
forth in sections (1), (2), (3) and (4) of the paragraph immediately above.


 


(d)                                       Optionee
further understands that in the event all of the applicable requirements of
Rule 701 or 144 are not satisfied, registration under the Securities Act,
compliance with Regulation A, or some other registration exemption will be
required; and that, notwithstanding the fact that Rules 144 and 701 are not
exclusive, the Staff of the Securities and Exchange Commission has expressed
its opinion that persons proposing to sell private placement securities other
than in a registered offering and otherwise than pursuant to Rules 144 or 701
will have a substantial burden of proof in establishing that an exemption from
registration is available for such offers or sales, and that such persons and
their respective brokers who participate in such transactions do so at their
own risk. Optionee understands that no assurances can be given that any such
other registration exemption will be available in such event.


 


(e)                                        Optionee
understands that the certificate evidencing the Securities will be imprinted
with a legend which prohibits the transfer of the Securities without the
consent of the Commissioner of Corporations of California. Optionee has read
the applicable Commissioner’s Rules with respect to such restriction, a copy of
which is attached.


 


	
   

  	
  Signature of Optionee:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
  , 20