Exhibit 10.2


 


CYANOTECH CORPORATION


 


2005 Stock Option Plan


Restated November 5, 2010


 


I.                                        PURPOSE
OF THE PLAN; DEFINITIONS


 


A.            This 2005 Stock Option Plan (the “Plan”) is intended to
promote the interests of Cyanotech Corporation, a Nevada corporation (the “Corporation”),
by providing (i) key employees (including officers) of the Corporation (or
its subsidiary corporations) and (ii) consultants and other independent
contractors who provide valuable services to the Corporation (or its subsidiary
corporations) with the opportunity to acquire, or increase their proprietary
interest in the Corporation as an incentive for them to join or remain in the
service of the Corporation (or its subsidiary corporations).


 


B.            The Plan becomes effective immediately upon approval of
the Corporation’s stockholders at the 2005 Annual Stockholders Meeting to be
held on August 22, 2005.  Such date
is hereby designated as the Effective Date of the Plan.  [revised by reverse stock
split effective November 3, 2006 (“2006 Split”); amended by stockholders
to increase amount of Stock Subject to Plan on September 9, 2008 (“2008
Amendment”)]


 


C.            For purposes of the Plan, the following definitions
apply:


 


Board:  the Corporation’s Board of Directors.


 


Committee:  The Committee of the Corporation’s Board of
Directors appointed by the Board to administer the plan.


 


Common
Stock:  shares of the Corporation’s
common stock, par value $0.02 per share. 
 [2006 Split]


 


Change
in Control:  a change in
ownership or control of the Corporation effected through either of the
following transactions:


 


(i)            any person or related group of persons (other than the
Corporation or a person that directly or indirectly controls, is controlled by,
or is under common control with, the Corporation) directly or indirectly
acquires beneficial ownership (within the meaning of Rule 13d-3 of the
Securities Exchange Act of 1934, as amended, “1934 Act”) of stock possessing
more than fifty percent (50%) of the total combined voting power of the
Corporation’s outstanding stock pursuant to a tender or exchange offer made
directly to the Corporation’s stockholders which the Board does not recommend
such stockholders accept; or


 


(ii)           there is a change in the composition of the Board over a
period of thirty-six (36) consecutive months or less such that a majority of
the Board members (rounded up to the next whole number) ceases, by reason of
one or more proxy contests for the election of Board members, to be comprised
of persons who either (A) have been Board members continuously since the
beginning of such period or (B) have been elected or nominated for
election as Board members during such period by at least a majority of the
Board members described in clause (A) who were still in office at the time
such election or nomination was approved by the Board.


 


Corporate
Transaction:  any of the
following stockholder-approved transactions to which the Corporation is a
party:


 


(i)            a merger or consolidation in which the Corporation is not
the surviving entity, except for a transaction the principal purpose of which
is to change the State in which the Corporation is incorporated,


 


(ii)           the sale, transfer or other disposition of all or
substantially all of the assets of the Corporation in complete liquidation or
dissolution of the Corporation, or


 

















 


(iii)          any reverse merger in which the Corporation is the
surviving entity but in which stock possessing more than fifty percent (50%) of
the total combined voting power of the Corporation’s outstanding stock are
transferred to person or persons different from those who held such stock
immediately prior to such merger.


 


Employee:  a person who performs services while in the
employ of the Corporation or one or more subsidiary corporations, subject to
the control and direction of the employer entity not only as to the work to be
performed but also as to the manner and method of performance.


 


Market
Value:  the last reported price per
share of the Common Stock on the day in question on the NASDAQ Small-Cap
Market, or if the Common Stock is regularly traded in some other market or on
an exchange the closing selling price per share of the Common Stock on the date
in question, as such price is officially quoted by a national reporting
service.  If there is no such reported
price on the date in question, then the fair market value is the price on the
last preceding date for which such quotation exists.


 


Hostile
Take-Over:  a change in
ownership of the Corporation through the following transaction:


 


(i)            any person or related group of persons (other than the
Corporation or a person that directly or indirectly controls, is controlled by,
or is under common control with, the Corporation) directly or indirectly
acquires beneficial ownership (within the meaning of Rule 13d-3 of the
Securities Exchange Act of 1934, as swing profit restrictions of Section 16
of the 1934 Act.


 


Service: the
performance of services on a periodic basis to the Corporation (or any
subsidiary corporation) in the capacity of an Employee or from time to time as
an independent consultant, except to the extent otherwise specifically provided
in the applicable stock option agreement.


 


Take-Over
Price: the greater of (a) the Fair Market Value per share of Common
Stock on the date the option is surrendered to the Corporation in connection
with a Hostile Take-Over or (b) the highest reported price per share of
Common Stock paid by the tender offeror in effecting such Hostile
Take-Over.  However, if the surrendered
option is an Incentive Option, as defined in Section IV (C) of this Article One,
the Take-Over Price shall not exceed the clause (a) price per share.


 


D.            The following provisions shall be applicable in
determining the subsidiary corporations of the Corporation:


 


Each
corporation (other than the Corporation) in an unbroken chain of corporations beginning
with the Corporation shall be considered to be a subsidiary of the Corporation,
provided each such corporation (other than the last corporation) in the
unbroken chain owns, at the time of the determination, stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of
stock in any other corporation in such chain.


 


II.                                   ADMINISTRATION
OF THE PLAN


 


A.            Except as otherwise determined by the Board, the Plan
shall be administered by the Board of Directors or by the Stock Option and
Compensation Committee of the Board (“Committee”) or other named Committee of
the Board designated by the Board of Directors subject to the requirements of
1934 Act Rule 16b-3:


 


(i)            The Committee of three (3) or more non-employee
Board members shall be appointed by the Board to administer the Plan. No Board
member is eligible to serve on the Committee unless such person qualifies as a “Non-Employee
Director” as permitted by 1934 Act Rule 16b-3.


 


(ii)           Members of the Committee serve for such term as the Board
may determine and are subject to removal by the Board at any time.


 


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B.            The Committee by majority action thereof has the power
and authority (subject to the express provisions of the Plan) to establish such
rules and regulations as it may deem appropriate for the proper administration
of the Plan and to make such determinations under, and issue such
interpretations of, the provisions of the Plan and any outstanding option
grants thereunder as it may deem necessary or advisable.  All decisions of the Committee within the
scope of its administrative functions under the Plan are final and binding on
all parties.


 


C.            Service on the Committee is service as a Board member,
and members of the Committee [typo corrected] are
entitled to full indemnification and reimbursement as Board members for their
service on the Committee.  No member of
the Committee is liable for any act or omission made in good faith with respect
to the Plan or any option grant under the Plan.


 


III.                              ELIGIBILITY


 


A.            The persons eligible to participate in the Plan (“Optionees”)
are as follows:


 


(i)            officers and other employees of the Corporation (or its
subsidiary corporations) who render services which contribute to the
management, growth and financial success of the Corporation (or its subsidiary
corporations); and


 


(ii)           those consultants or other independent contractors who
provide valuable services to the Corporation (or its subsidiary corporations).


 


B.            Non-employee Board members are not eligible to
participate in the Plan.


 


C.            The Committee by majority action thereof has the power
and authority to determine which eligible persons are to receive option grants,
the number of shares to be covered by each such grant, the status of the
granted option as either an incentive stock option (“Incentive Option”) which
satisfies the requirements of Section 422 of the Internal Revenue Code or
a non-qualified option not intended to meet such requirements, the time or
times at which each granted option is to become exercisable, the maximum term
for which the Option may remain outstanding and the terms and provisions of the
Stock Option Agreement evidencing the Option.


 


IV.                               STOCK
SUBJECT TO THE PLAN


 


A.            Shares of the Corporation’s Common Stock available for
issuance under the Plan shall be drawn from either the Corporation’s authorized
but unissued shares of Common Stock or from reacquired shares of Common Stock,
including shares repurchased by the Corporation on the open market.  The maximum number of shares of Common Stock
which may be issued over the term of the Plan shall not exceed 700,000 shares,
subject to adjustment from time to time in accordance with the provisions of
this Section IV.  [the 2006 Split reduced maximum Plan shares to 200,000; the 2008
Amendment increased maximum Plan shares to 700,000]


 


B.            If one or more outstanding options under this Plan expire
or terminate for any reason prior to exercise in full then the shares subject
to the portion of each option not so exercised shall be available for
subsequent option grant under the Plan. 
All share issuances under the Plan reduce on a share-for-share basis the
number of shares of Common Stock available for subsequent option grants under
the Plan.  In addition, if the exercise
price of an outstanding option under the Plan is paid with shares of Common
Stock or shares of Common Stock otherwise issuable under the Plan are withheld
by the Corporation in satisfaction of the withholding taxes incurred in
connection with the exercise of an outstanding option under the Plan, then the
number of shares of Common Stock available for issuance under the Plan is
reduced by the gross number of shares for which the option is exercised, and
not by the net number of shares of Common Stock actually issued to the option
holder.


 


C.            If any change is made to the Common Stock issuable under
the Plan by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Corporation’s receipt of
consideration, then appropriate adjustments shall be made to (i) the
maximum number and/or class of stock issuable under the Plan and (ii) the
number and/or class of stock and price per share in effect under each option
outstanding under the Plan.  Such
adjustments to the outstanding options are to be effected in a manner which
precludes the enlargement or dilution of rights and benefits under such
options.  Such adjustments made by the
Committee are final, binding and conclusive.


 


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V.                                    TERMS
AND CONDITIONS OF OPTIONS


 


Options
under the Plan are granted by action of the Committee and may, at the Committee’s
discretion, be either Incentive Options or non-qualified options. Persons who
are not Employees of the Corporation may only be granted non-qualified options.
Each granted option shall be evidenced by a Stock Option Agreement in the form
approved by the Committee; provided, however, that each such agreement complies
with the terms and conditions specified herein. Each Stock Option Agreement
evidencing an Incentive Option shall, in addition, be subject to the applicable
provisions of Section VI hereof.


 


A.            Option Price.


 


1.             The option price per share is determined by the
Committee in accordance with the following provisions:


 


(i)            The option price per share of the Common Stock subject to
an Incentive Option must in no event be less than one hundred percent (100%) of
the Market Value of such Common Stock on the grant date.


 


(ii)           The option price per share of the Common Stock subject to
a non-qualified stock option is the amount determined by the Committee at the
time of grant and may be less than, equal to or more than the Market Value of
such Common Stock on the grant date.


 


2.             The option price is immediately due upon exercise of the
option and payable in one of the alternative forms specified below;


 


(i)            full payment in cash or check made payable to the
Corporation’s order:


 


(ii)           full payment in shares of Common Stock held for the
requisite period necessary to avoid a charge to the Corporation’s earnings for
financial reporting purposes and valued at Market Value on the Exercise Date;


 


(iii)          full payment in a combination of shares of Common Stock
held for the requisite period necessary to avoid a charge to the Corporation’s
reported earnings and valued at Market Value on the Exercise Date and cash or
check payable to the Corporation’s order; or


 


(iv)          full payment through a broker-dealer sale and remittance
procedure pursuant to which the Optionee (a) provides irrevocable written
instructions to a designated brokerage firm to effect the immediate sale of the
purchased shares and remit to the Corporation, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
option price payable for the purchased shares plus all applicable Federal and
State income and employment taxes required to be withheld by the Corporation in
connection with such purchase and (b) provides written directives to the
Corporation to deliver the certificates for the purchased shares directly to
such brokerage firm in order to complete the sale transaction.


 


For
purposes of this subparagraph 2, the Exercise Date is the date on which written
notice of the option exercise is delivered to the Corporation.  Except to the extent the sale and remittance
procedure is utilized in connection with the exercise of the option, payment of
the option price for the purchased shares must accompany such notice.


 


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B.            Term and Exercise of Options.


 


Each
option granted hereunder is exercisable at such time or times, and excluding
all specified vesting periods during the specified term period, and for such
number of shares as is determined by the Committee and set forth in the Stock
Option Agreement evidencing such option. 
No granted option shall, however, have a term in excess of ten (10) years.  Subject to Paragraph E of this Section V,
during the lifetime of the Optionee, the option is exercisable only by the
Optionee and shall not be assignable or transferable other than by transfer of
the option effected by will or by the laws of descent and distribution
following the Optionee’s death, or pursuant to a qualified domestic relations
order as defined by the Internal Revenue Code of 1986, as amended, or Title I
of the Employment Retirement Income Security Act, or the rules thereunder.


 


C.            Termination of Service.


 


1.             If the Optionee ceases Service while holding one or more
options hereunder, each such option will not remain exercisable beyond the
limited post-Service exercise period specified by the Committee in the Stock
Option Agreement evidencing the grant, unless the Committee otherwise extends
such period in accordance with subparagraph C.5 below.


 


2.             During the post-Service exercise period, the option may
not be exercised for more than the number of option shares (if any) in which
the Optionee is vested at the time of cessation of Service.  Upon the expiration of such post-Service
exercise period or (if earlier) upon the expiration of the option term, the
option shall terminate and cease to be outstanding.  In any case, each option terminates and
ceases to be outstanding, at the time of the Optionee’s cessation of Service
with respect to any option shares for which such option is not otherwise at the
time exercisable.


 


3.             If the Optionee dies while holding one or more
outstanding options hereunder, each such option may be exercised, subject to
the limitations of subparagraph 2 above, by the personal representative of the
Optionee’s estate or by the person or persons to whom the option is transferred
pursuant to the Optionee’s will or the laws of descent and distribution or as
otherwise permitted herein.


 


4.             If (i) the Optionee’s Service is terminated for
misconduct (including, but not limited to, any act of dishonesty, willful
misconduct, fraud or embezzlement) or (ii) the Optionee makes any
unauthorized use or disclosure of confidential information or trade secrets of
the Corporation or its subsidiaries, then in any such event all outstanding
options held by the Optionee hereunder terminate immediately and cease to be
outstanding.


 


5.             Except as otherwise determined by the Board the
Committee has full power and authority to extend the period of time for which
the option is to remain exercisable following the Optionee’s cessation of
Service or death from the limited period specified in the instrument evidencing
such grant to such greater period of time as the Committee deems appropriate
under the circumstances.  In no event,
however, shall such option be exercisable after the specified expiration date
of the option term.


 


6.             The Committee has complete discretion, exercisable
either at the time the option is granted or at any time the option remains
outstanding, to permit one or more options granted hereunder to be exercised
not only for the number of shares for which each such option is exercisable at
the time of the Optionee’s cessation of Service but also for one or more
subsequent installments of purchasable shares for which the option would
otherwise have become exercisable had such cessation of Service not occurred.


 


D.            Stockholder Rights.


 


An
Optionee has none of the rights of a stockholder with respect to any option
shares until such person or its nominee, guardian or legal representative has
exercised the option and paid the option price for the purchased shares.


 


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E.            Assignment; Limited Transferability of Stock Options


 


No
option granted under the Plan may be sold, transferred, pledged, assigned, or
otherwise alienated or hypothecated, otherwise than by will, by the laws of
decent and distribution or by a qualified domestic relations order as provided
in Section V, Paragraph B. 
Notwithstanding the foregoing, the Committee may, in its discretion,
authorize all or a portion of the options granted to be on terms that permit
transfer to:


 


(i)            the spouse, children or grandchildren of the Optionee (“Immediate
Family Members”);


 


(ii)           a trust or trusts for the exclusive benefit of such
Immediate Family Members, or;


 


(iii)          a partnership in which such Immediate Family Members are
the only partners, provided that:


 


(A)                               there may be no
consideration for any such transfer;


 


(B)                               the Stock
Option Agreement pursuant to which such Options are granted expressly provides
for transferability in a manner consistent with this Section V, Paragraph
E; and


 


(C)                               subsequent
transfers of transferred Options shall be prohibited except those in accordance
with this Section V, Paragraph E.


 


Following
transfer, any such options continue to be subject to the same terms and
conditions as were applicable immediately prior to transfer, provided that for
purposes of this Section V, Paragraph E the term Optionee shall be deemed
to refer to the transferee.  The
provisions of the option relating to the period of exercisability and
expiration of the Option continue to apply with respect to the original
Optionee, and the Options exercisable or received by the transferee only to the
extent, and for the periods, set forth in said option.


 


VI.                               INCENTIVE
OPTIONS


 


The
terms and conditions specified in this Section VI are applicable to all
Incentive Options granted hereunder.  The
Stock Option Agreement relating to Incentive Options must be in accordance with
Section 422(b) of the Internal Revenue Code or a succession Section thereof.  Incentive Options may only be granted to
persons who are Employees of the Corporation. 
Options which are specifically designated as “non-qualified” options when
issued under the Plan are not subject to this Section VI.


 


A.            Dollar Limitation.


 


The
aggregate Market Value (determined as of the respective date of dates of grant
of the Common Stock) [typo corrected] for
which one or more options granted to any Employee under this Plan (or any other
option Plan of the Corporation or its subsidiary corporations) may for the
first time become exercisable as incentive stock options under the Federal tax
laws during any one calendar year shall not exceed the sum of One Hundred
Thousand dollars ($100,000).  To the
extent the Employee holds two (2) or more such options which become
exercisable for the first time in the same calendar year, the foregoing
limitation on the exercisability of such options as incentive stock options
under the federal tax laws shall be applied on the basis of the order in which
such options are granted.  If the shares
of Common Stock for which any Incentive Option first becomes exercisable in any
calendar year exceed the applicable one hundred thousand dollar ($100,000)
limitation, then the option may nevertheless be exercised in that calendar year
for the excess number of shares as a non-qualified option under the Federal tax
laws.


 


B.            10% Stockholder.


 


If
any person to whom an Incentive Option is granted is the owner of stock (as
determined under Section 424(d) of the Internal Revenue Code)
possessing ten percent (10%) or more of the total combined voting power of all
classes of stock of the corporation, the option price per share must not be
less than one hundred and ten percent (110%) of the fair market value per share
of Common Stock on the grant date, and the option term must not exceed five (5) years,
measured from the grant date.


 


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Except
as modified by the preceding provisions of this Section VI, the provisions
of the Plan apply to all Incentive Options granted hereunder.


 


VII.                          CORPORATE
TRANSACTIONS / CHANGES IN CONTROL


 


A.            Each option outstanding at the time of a Corporate
Transaction automatically accelerates so that each such option shall,
immediately prior to the specified effective date for such Corporate
Transaction, become fully exercisable with respect to the total number of
shares of Common Stock at the time subject to such option and may be exercised
for all or any portion of such shares. 
However, an outstanding option does [typo corrected] not
so accelerate if and to the extent: 
(i) such option is, in connection with the Corporate Transaction,
either to be assumed by the successor corporation or parent thereof or to be
replaced with a comparable option to purchase shares of the capital stock of
the successor corporation or parent thereof, (ii) such option is to be
replaced with a cash incentive program of the successor corporation which
preserves the option spread existing at the time of the Corporate Transaction
and provides for subsequent payout in accordance with the same exercise
schedule applicable to such option, or (iii) the acceleration of such
option is subject to other limitations imposed by the Committee, at the time of
the option grant. The determination of option comparability by the Committee
under clause (i) above is final, binding and conclusive.  The Committee also has full power and
authority to grant options under the Plan which are to automatically accelerate
in whole or in part immediately prior to the Corporate Transaction or upon the
subsequent termination of the Optionee’s Service, whether or not those options
are otherwise to be assumed or replaced in connection with the consummation of
such Corporate Transaction.


 


B.            Upon the consummation of the Corporate Transaction, all
outstanding options shall terminate and cease to be outstanding, except to the
extent assumed by the successor corporation or its parent company.


 


C.            Each outstanding option which is assumed in connection
with the Corporate Transaction or is otherwise to continue in effect shall be
appropriately adjusted, immediately after such Corporate Transaction, to apply
and pertain to the number and class of stock which would have been issued to
the option holder, in consummation of such Corporate Transaction, had such
person exercised the option immediately prior to such Corporate
Transaction.  Appropriate adjustments shall
also be made to the Option price payable per share, provided the aggregate
option price payable for such stock shall remain the same.  In addition, the class and number of stock
available for issuance under the Plan following the consummation of the Corporate
Transaction shall be appropriately adjusted.


 


D.            The grant of options shall in no way affects the right of
the Corporation to adjust, reclassify, reorganize or otherwise change its
capital or business structure or to merge, consolidate, dissolve, liquidate or
sell or transfer all or any part of its business or assets.


 


E.            Except as otherwise determined by the Board, the
Committee has the discretionary authority, exercisable either in advance of any
actually-anticipated Change in Control or at the time of an actual Change in
Control, to provide for the automatic acceleration of one or more outstanding
options upon the occurrence of the Change in Control and to condition any such
option acceleration upon the subsequent termination of the Optionee’s Service
within a specified period following the Change in Control.


 


F.             Any options accelerated in connection with the Change in
Control remain fully exercisable until the expiration of the option term.


 


G.            The exercisability as incentive stock options under the
Federal tax laws of any options accelerated under this Section VII in
connection with a Corporate Transaction or Change in Control remain subject to
the dollar limitation of Section VI, Paragraph A.


 


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VIII.                     CANCELLATION
AND RE-GRANT OF OPTIONS


 


Except
as otherwise determined by the Board, the Committee has the authority to
effect, at any time and from time to time, with the consent of the affected
Optionees, the cancellation of any or all outstanding options hereunder and to
grant in substitution new options under the Plan covering the same or different
numbers of shares of Common Stock but with an option price per share based upon
the Market Value of the Common Stock on the new grant date.


 


IX.                              AMENDMENT
OF THE PLAN AND AWARDS


 


The
Board has complete and exclusive power and authority to amend or modify the
Plan in any or all respects, provided that no such amendment or modification
shall adversely affect rights and obligations with respect to options at the
time outstanding under the Plan, unless the Optionee consents to such
amendment.  In addition, the Board may
not, without the approval of the Corporation’s stockholders, amend the Plan to (i) materially
increase the maximum number of shares issuable under the Plan, except for
permissible adjustments under Section IV Paragraph C, (ii) materially
modify the eligibility requirements for the Plan participation or (iii) materially
increase the benefits accruing to Optionees.


 


X.                                   TAX
WITHHOLDING


 


A.            The Corporation’s obligation to deliver shares of Common
Stock upon exercise of stock options or the vesting of shares acquired upon
exercise of such options under the Plan is subject to the satisfaction of all
applicable Federal, State and local income tax and employment tax withholding
requirements.


 


B.            The Committee may, in its discretion and in accordance
with the provisions of this Section X and such supplemental rules as
the Committee may from time to time adopt (including the applicable safe-harbor
provisions of 1934 Act Rule 16b-3), provide any or all holders of
non-qualified options under the Plan with the right to use shares of Common
Stock in satisfaction of all or part of the Federal, State and local income tax
and employment tax liabilities incurred by such holders in connection with the
exercise of their options. Such right may be provided to any such holder in
either or both of the following formats:


 


(i)            Stock Withholding: The holder of a non-qualified option
may be provided with the election to have the Corporation withhold, from the
shares of Common Stock otherwise issuable upon the exercise of such
non-qualified option, a portion of those shares with an aggregate Fair Market
Value equal to the percentage of the applicable Taxes (up to one hundred
(100%)) as specified by such holder.


 


(ii)           Stock Delivery: The Committee may, in its discretion,
provide the holder of a non-qualified option with the election to deliver to
the Corporation, at the time the non-qualified option is exercised, one or more
shares of Common Stock already held by such person with an aggregate Market
Value (100%) as specified by such person) of the Taxes incurred in connection
with such option exercise.


 


XI.                              TERM OF
THE PLAN


 


The
Plan terminates upon the earlier of (i) August 21, 2015 or (ii) the
date on which all shares available for issuance under the Plan have been issued
or canceled pursuant to the exercise of options granted under the Plan.  If the date of termination is determined
under clause (i) above, then all option grants and unvested stock
issuances outstanding on such date continue to have force and effect in
accordance with the provisions of the Stock Option Agreements evidencing such
grants or issuances.


 


XII.                         USE OF
PROCEEDS


 


Any
cash proceeds received by the Corporation from the sale of shares pursuant to option
grants under the Plan may be used for general corporate purposes.


 


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XIII.                    REGULATORY
APPROVALS


 


A.            The implementation of the Plan, the granting of any
option under the Plan, and the issuance of Common Stock upon the exercise or
surrender of the option grants made hereunder is subject to the Corporation’s
procurement of all approvals and permits required by regulatory authorities
having jurisdiction over the Plan, the options granted under it, and the Common
Stock issued pursuant to it.


 


B.            No shares of Common Stock or other assets are to be
issued or delivered under the Plan unless and until there is compliance with
all applicable requirements of Federal and State securities laws, including the
filing and effectiveness of the Form S-8 registration statement for the
shares of Common Stock issuable under the Plan, and all applicable listing
requirements of any securities exchange on which the Common Stock is then
listed.


 


XIV.                     NO
EMPLOYMENT/SERVICE RIGHTS


 


Neither
the action of the Corporation in establishing the Plan, nor any action taken by
the Committee hereunder, nor any provision of the Plan is to be construed so as
to grant any person the right to remain in the employ or service of the
Corporation (or any subsidiary corporation) for any period of specific
duration, and the Corporation (or any subsidiary corporation retaining the
services of such person) may terminate such person’s employment or service at
any time and for any reason, with or without cause.


 


XV.                          MISCELLANEOUS
PROVISIONS


 


A.            The right to acquire Common Stock under the Plan may not
be assigned, encumbered or otherwise transferred by any Optionee, except as
specifically provided in the Plan.


 


B.            The provisions of the Plan relating to the exercise of
options and the vesting of shares shall be governed by the laws of the State of
Hawaii, as such laws are applied to contracts entered into.


 


C.            The provisions of the Plan shall inure to the benefit of,
and be binding upon, the Corporation and its successors or assigns, whether by
Corporate Transaction or otherwise, and the Optionees, the legal
representatives of their respective estates, their respective heirs or legatees
and their permitted assignees.


 


D.            Except to the extent that federal laws or the Nevada
Corporate Code [revised] control, the Plan and
all Stock Option Agreements hereunder are to be construed in accordance with
and governed by the law of the State of Hawaii.


 


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