**EXHIBIT10.22**

 

**RIGEL PHARMACEUTICALS, INC.**

 

**2000 NON-EMPLOYEE DIRECTORS’ STOCKOPTION PLAN**

 

**ADOPTED AUGUST 18, 2000**

**APPROVEDBY STOCKHOLDERS SEPTEMBER 11, 2000**

**EFFECTIVEDATE: DECEMBER 4, 2000**

**AMENDEDAND RESTATED APRIL 24, 2003**

**AMENDEDAND RESTATED JUNE 20, 2003**

**APPROVEDBY STOCKHOLDERS JUNE 20, 2003**

**AMENDEDAND RESTATED APRIL 22, 2005**

**APPROVEDBY STOCKHOLDERS JUNE 2, 2005**

**AMENDEDAND RESTATED JANUARY 31, 2007**

**APPROVEDBY STOCKHOLDERS MAY 31, 2007**

**AMENDEDAND RESTATED SEPTEMBER 18, 2007**

**AMENDEDAND RESTATED FEBRUARY 21, 2008**

**APPROVEDBY STOCKHOLDERS MAY 29, 2008**

**AMENDEDAND RESTATED MAY 19, 2009**

**AMENDEDAND RESTATED JANUARY 28, 2010**

 

**1.****            ****PURPOSES.**

 

**(a)****         ****Eligible Option Recipients**. The persons eligible to receive Optionsare the Non-Employee Directors of the Company.

 

**(b)****         ****Available Options**. The purpose of the Plan is to provide ameans by which Non-Employee Directors may be given an opportunity to benefitfrom increases in value of the Common Stock through the granting ofNonstatutory Stock Options.

 

**(c)****         ****General Purpose**. The Company, by means of the Plan,seeks to retain the services of its Non-Employee Directors, to secure andretain the services of new Non-Employee Directors and to provide incentives forsuch persons to exert maximum efforts for the success of the Company and itsAffiliates.

 

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**2.****            ****DEFINITIONS.**

 

**(a)****          ****“*****Affiliate***” means, at the time of determination,any “parent” or “subsidiary” of the Company as such terms are defined in Rule 405of the Securities Act.  The Board shallhave the authority to determine the time or times at which “parent” or “subsidiary”status is determined within the foregoing definition.

 

**(b)****          ****“*****AnnualGrant”*** meansan Option granted annually to all Non-Employee Directors who meet the criteriaspecified in subsection 6(b) of the Plan.

 

**(c)****          ****“*****AnnualMeeting”***means the annual meeting of the stockholders of the Company.

 

**(d)****            **“***Board***” means theBoard of Directors of the Company.

 

**(e)****                 **A ***“Change in Control,”*** with respectto Options granted on or after the effective date of the Plan,will be deemed to have occurred upon the first to occur of an event set forthin any one of the following paragraphs:

 

**(i)              **the acquisition(other than from the Company, by any person (as such term is defined in Section 13(c) or14(d) of the Exchange Act of beneficial ownership (within the meaningof Rule 13d-3 promulgated under the Exchange Act) of fiftypercent (50%) or more of the combined voting power of the Company’s thenoutstanding voting securities;

 

**(ii)****          **the individualswho, as of the effective date of the Plan, are members of the Board (the***“Incumbent Board”***), cease for any reason toconstitute at least a majority of the Board, unless the election, or nominationfor election by the Company’s stockholders, of any new director was approved bya vote of at least a majority of the Incumbent Board, and such new directorshall, for purposes of this Plan, be considered as a member of the IncumbentBoard; or

 

**(iii)****        **the closing of:

 

**(1)****          **a merger orconsolidation involving the Company if the stockholders of the Company,immediately before such merger or consolidation, do not, as a result of suchmerger or consolidation, own, directly or indirectly, more than fiftypercent (50%) of the combined voting power of the then outstanding votingsecurities of the corporation resulting from such merger or consolidation insubstantially the same proportion as their ownership of the 

 

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combinedvoting power of the voting securities of the Company outstanding immediatelybefore such merger or consolidation; or

 

**(2)****          **a complete liquidation ordissolution of the Company or an agreement for the sale or other disposition ofall or substantially all of the assets of the Company.

 

Notwithstanding the foregoing, a Change in Controlshall not be deemed to occur solely because fifty percent (50%) or more of thecombined voting power of the Company’s then outstanding securities is acquiredby (i) a trustee or other fiduciary holding securities under one or moreemployee benefit plans maintained by the Company or any of its subsidiaries or (ii) anycorporation which, immediately prior to such acquisition, is owneddirectly or indirectly by the stockholders of the Company in the sameproportion as their ownership of stock in the Company immediately prior tosuch acquisition.

 

For the avoidance of doubt,the term Change in Control shall not include a sale of assets, merger or othertransaction effected exclusively for the purpose of changing the domicile ofthe Company.

 

Notwithstanding the foregoing or any other provisionof this Plan, the definition of Change in Control (or any analogous term) in anindividual written agreement between the Company or any Affiliate andthe Optionholder shall supersede the foregoing definition with respectto Options subject to such agreement; *provided,however,* that if no definition of Change in Control or any analogousterm is set forth in such an individual written agreement, the foregoingdefinition shall apply.

 

**(f)****         ****“*****Code***” means the Internal Revenue Code of1986, as amended.

 

**(g)****        ****“*****CommonStock***” meansthe common stock of the Company.

 

**(h)****        ****“*****Company***” means Rigel Pharmaceuticals, Inc.,a Delaware corporation.

 

**(i)****         ****“*****Consultant***” means any person, including an advisor,(i) engaged by the Company or an Affiliate to render consulting oradvisory services and who is compensated for such services or (ii) who isa member of the Board of Directors of an Affiliate. However, the term “Consultant”shall not include either Directors of the Company who are not compensated bythe Company for their services as Directors or Directors of the Company who aremerely paid a director’s fee by the Company for their services as Directors.

 

**(j)****         ****“*****ContinuousService***”means that the Optionholder’s service with the Company or an Affiliate, whetheras an Employee, Director or Consultant, is not interrupted or terminated. 

 

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The Optionholder’sContinuous Service shall not be deemed to have terminated merely because of achange in the capacity in which the Optionholder renders service to the Companyor an Affiliate as an Employee, Consultant or Director or a change in theentity for which the Optionholder renders such service, provided that there isno interruption or termination of the Optionholder’s service. For example, achange in status without interruption from a Non-Employee Director of theCompany to a Consultant of an Affiliate or an Employee of the Company will notconstitute an interruption of Continuous Service. The Board or the chiefexecutive officer of the Company, in that party’s sole discretion, maydetermine whether Continuous Service shall be considered interrupted in thecase of any leave of absence approved by that party, including sick leave,military leave or any other personal leave.

 

**(k)****        ****“*****Director***” means a member of the Board ofDirectors of the Company.

 

**(l)****         ****“*****Disability”*** means the permanent and total disabilityof a person within the meaning of Section 22(e)(3) of the Code.

 

**(m)****       ****“*****Employee***” means any person employed by theCompany or an Affiliate. Mere service as a Director or payment of a director’sfee by the Company or an Affiliate shall not be sufficient to constitute “employment”by the Company or an Affiliate.

 

**(n)****        ****“*****ExchangeAct***” meansthe Securities Exchange Act of 1934, as amended.

 

**(o)****         ****“*****FairMarket Value***”means, as of any date, the value of the Common Stock determined as follows:

 

**(i)****        **If the Common Stock is listed on any established stockexchange or traded on the Nasdaq National Market or the Nasdaq SmallCap Market,the Fair Market Value of a share of Common Stock shall be the closing salesprice for such stock (or the closing bid, if no sales were reported) as quotedon such exchange or market (or the exchange or market with the greatest volumeof trading in the Common Stock) on the last market trading day prior to the dayof determination, as reported in The Wall Street Journal or such other sourceas the Board deems reliable.

 

**(ii)****      **In the absence of such markets for the Common Stock,the Fair Market Value shall be determined in good faith by the Board.

 

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**(p)****         ****“*****InitialGrant”*** meansan Option granted to a Non-Employee Director who meets the criteria specifiedin subsection 6(a) of the Plan.

 

**(q)****         ****“*****IPODate”*** meansthe effective date of the initial public offering of the Common Stock.

 

**(r)****         ****“*****Non-EmployeeDirector***”means a Director who is not an Employee.

 

**(s)****         ****“*****NonstatutoryStock Option***”means an Option not intended to qualify as an incentive stock option within themeaning of Section 422 of the Code and the regulations promulgatedthereunder.

 

**(t)****         ****“*****Officer***” means a person who is an officer of theCompany within the meaning of Section 16 of the Exchange Act and the rules andregulations promulgated thereunder.

 

**(u)****        ****“*****Option***” means a Nonstatutory Stock Optiongranted pursuant to the Plan.

 

**(v)****         ****“*****OptionAgreement***”means a written agreement between the Company and an Optionholder evidencingthe terms and conditions of an individual Option grant. Each Option Agreementshall be subject to the terms and conditions of the Plan.

 

**(w)****        ****“*****Optionholder***” means a person to whom an Option isgranted pursuant to the Plan or, if applicable, such other person who holds anoutstanding Option.

 

**(x)****         ****“*****Plan***” means this Rigel Pharmaceuticals, Inc.2000 Non-Employee Directors’ Stock Option Plan.

 

**(y)****         ****“*****Rule 16b-3***” means Rule 16b-3 promulgated underthe Exchange Act or any successor to Rule 16b-3, as in effect from time totime.

 

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**(z)****         ****“*****SecuritiesAct***” meansthe Securities Act of 1933, as amended.

 

**3.****            ****ADMINISTRATION.**

 

**(a)****          ****Administration by Board**. The Board shall administer the Plan.The Board may not delegate administration of the Plan to a committee.

 

**(b)****          ****Powers of Board**. The Board shall have the power, subjectto, and within the limitations of, the express provisions of the Plan:

 

**(i)****                                   **To determine the provisions of eachOption to the extent not specified in the Plan.

 

**(ii)****                               **To construe and interpret the Plan and Options grantedunder it, and to establish, amend and revoke rules and regulations for itsadministration. The Board, in the exercise of this power, may correct anydefect, omission or inconsistency in the Plan or in any Option Agreement, in amanner and to the extent it shall deem necessary or expedient to make the Planfully effective.

 

**(iii)****                           **To amend the Plan or an Option as provided in Section 12.

 

**(iv)****                              **To terminate or suspend the Plan as provided in Section 13.

 

**(v)****                                  **Generally, to exercise such powers and toperform such acts as the Board deems necessary or expedient to promote the bestinterests of the Company that are not in conflict with the provisions of thePlan.

 

**(c)****          ****Effect of Board’s Decision.** All determinations, interpretations andconstructions made by the Board in good faith shall not be subject to review byany person and shall be final, binding and conclusive on all persons.

 

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**(d)****         ****Cancellation and Re-Grant of Options**. Notwithstanding anything to thecontrary in the Plan, neither the Board nor any Committee shall have theauthority to: (i) reprice any outstanding Option under the Plan, (ii) canceland re-grant any outstanding Option under the Plan, or (iii) effect anyother action that is treated as a repricing under generally accepted accountingprinciples unless, in each case, the stockholders of the Company have approvedsuch an action within twelve (12) months prior to such an event.

 

**4.****            ****SHARES SUBJECT TO THE PLAN.**

 

**(a)****         ****Share Reserve**. Subject to the provisions of Section 11relating to adjustments upon changes in the Common Stock, the Common Stock thatmay be issued pursuant to Options shall not exceed in the aggregate 535,000shares of Common Stock, which number consists of (i) 33,333 shares ofCommon stock initially reserved for issuance under the Plan plus (ii) 66,667shares of Common stock approved by the Board in April 2003 andsubsequently approved by the Company’s stockholders plus (iii) 225,000shares of Common Stock approved by the Board in April 2005 andsubsequently approved by the Company’s stockholders plus (iv) 110,000shares of Common Stock approved by the Board in January 2007 andsubsequently approved by the Company’s stockholders plus (v) 100,000shares of Common Stock approved by the Board in February 2008 andsubsequently approved by the Company’s stockholders.

 

**(b)****         ****Reversion of Shares to the ShareReserve**. If anyOption shall for any reason expire or otherwise terminate, in whole or in part,without having been exercised in full, the shares of Common Stock not acquiredunder such Option shall revert to and again become available for issuance underthe Plan. If any shares subject to an Option are not delivered to anOptionholder because the Option is exercised through a reduction of sharessubject to the Option (*i.e* ., “netexercised”), the number of shares that are not delivered to the Optionholdershall not remain available for issuance under the Plan. If any shares subjectto an Option are not delivered to an Optionholder because such shares arewithheld in satisfaction of the withholding of taxes incurred in connectionwith the exercise of an Option, the number of shares that are not delivered tothe Optionholder shall not remain available for subsequent issuance under thePlan. If the exercise price of any Option is satisfied by tendering shares ofCommon Stock held by the Optionholder (either by actual delivery orattestation), then the number of shares so tendered shall not remain availablefor subsequent issuance under the Plan.

 

**(c)****         ****Source of Shares**. The shares of Common Stock subject tothe Plan may be unissued shares or reacquired shares, bought on the market orotherwise.

 

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**5.****            ****ELIGIBILITY.**

 

The Options as set forth in section 6 automatically shall be grantedunder the Plan to all Non-Employee Directors who meet the specified criteria.

 

**6.****            ****NON-DISCRETIONARY GRANTS.**

 

**(a)****          ****Initial Grants.** Without any further action of the Board,each person who is elected or appointed for the first time to be a Non-EmployeeDirector automatically shall, upon the date of his or her initial election orappointment to be a Non-Employee Director by the Board or stockholders of theCompany, be granted an Initial Grant to purchase twenty-five thousand (25,000)shares of Common Stock on the terms and conditions set forth herein.

 

**(b)****          ****Annual Grants.** Without any further action of the Board,a Non-Employee Director shall be granted an Annual Grant as follows: On the dayfollowing each Annual Meeting commencing with the Annual Meeting in 2010, eachperson who is then a Non-Employee Director automatically shall be granted anAnnual Grant to purchase fifteen thousand (15,000) shares of Common Stock onthe terms and conditions set forth herein;*provided, however*, that if the person has not been serving as aNon-Employee Director for the entire period since the preceding Annual Meeting,then the number of shares subject to the Annual Grant shall be reduced pro ratafor each full quarter prior to the date of grant during which such person didnot serve as a Non-Employee Director.

 

**7.****            ****OPTION PROVISIONS.**

 

Each Option shall be in such form and shall contain such terms andconditions as required by the Plan. Each Option shall contain such additionalterms and conditions, not inconsistent with the Plan, as the Board shall deemappropriate. Each Option shall include (through incorporation of provisionshereof by reference in the Option or otherwise) the substance of each of thefollowing provisions:

 

**(a)****          ****Term**. No Option shall be exercisable after the expirationof ten (10) years from the date it was granted.

 

**(b)****          ****Exercise Price**. The exercise price of each Option shallbe one hundred percent (100%) of the Fair Market Value of the stock subject tothe Option on the date the Option is granted. Notwithstanding the foregoing, anOption may be granted with an exercise price lower 

 

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than that setforth in the preceding sentence if such Option is granted pursuant to anassumption or substitution for another option in a manner satisfying theprovisions of Section 424(a) of the Code.

 

**(c)****         ****Consideration**. The purchase price of stock acquiredpursuant to an Option may be paid, to the extent permitted by applicablestatutes and regulations, in any combination of the following methods:

 

**(i)****           **By cash or check.

 

**(ii)****          **Provided that at the time of exercise the Common Stockis publicly traded and quoted regularly in*The Wall Street Journal* , by delivery to the Company of shares ofCommon Stock that are owned free and clear of any liens, claims, encumbrancesor security interests, and that are valued at Fair Market Value on the date ofexercise. “Delivery” for these purposes shall include delivery to the Companyof the Optionholder’s attestation of ownership of such shares of Common Stockin a form approved by the Company. Notwithstanding the foregoing, theOptionholder may not exercise the Option by tender to the Company of CommonStock to the extent such tender would violate the provisions of any law,regulation or agreement restricting the redemption of the Company’s stock.

 

**(iii)****        **Provided that at the time of exercise the Common Stockis publicly traded and quoted regularly in*The Wall Street Journal* , pursuant to a program developed underRegulation T as promulgated by the Federal Reserve Board that, prior to theissuance of Common Stock, results in either the receipt of cash (or check) bythe Company or the receipt of irrevocable instructions to pay the aggregateexercise price to the Company from the sales proceeds.

 

**(iv)****         **By a “net exercise” arrangement pursuant to which theCompany will reduce the number of shares of Common Stock issued upon exerciseby the largest whole number of shares with a Fair Market Value that does notexceed the aggregate exercise price;*  provided, however,*  that the Company shall accept a cash or otherpayment from the Optionholder to the extent of any remaining balance of theaggregate exercise price not satisfied by such holding back of whole shares;*  provided,further, however,*  that sharesof Common Stock will no longer be outstanding under an Option and will not beexercisable thereafter to the extent that (i) shares are used to pay theexercise price pursuant to the “net exercise,” (ii) shares are deliveredto the Optionholder as a result of such exercise, and (iii) shares arewithheld to satisfy tax withholding obligations.

 

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**(d)****          ****Transferability**. The Board may, in its sole discretion,impose such limitations on the transferability of Options as the Board shalldetermine.  In the absence of such adetermination by the Board to the contrary, the following restrictions on thetransferability of Options shall apply:

 

**(i)****           ****Restrictions on Transfer.** An Option shall not be transferable except by will or by the laws ofdescent and distribution and shall be exercisable during the lifetime of theOptionholder only by the Optionholder; *provided, however*,that the Board may, in its sole discretion, permit transfer of the Option in amanner that is not prohibited by applicable tax and securities laws upon theOptionholder’s request.  Except asexplicitly provided herein, an Option may not be transferred for consideration.

 

**(ii)****          ****Domestic Relations Orders.** Notwithstanding the foregoing, an Option may be transferred pursuant toa domestic relations order.

 

**(iii)****        ****Beneficiary Designation.** Notwithstanding the foregoing, the Optionholder may, by deliveringwritten notice to the Company, in a form provided by or otherwise satisfactoryto the Company and any broker designated by the Company to effect Optionexercises, designate a third party who, in the event of the death of theOptionholder, shall thereafter be entitled to exercise the Option and receivethe Common Stock or other consideration resulting from such exercise.  In the absence of such a designation, theexecutor or administrator of the Optionholder’s estate shall be entitled toexercise the Option and receive the Common Stock or other considerationresulting from such exercise.

 

**(e)****          ****Exercise Schedule**. The Option shall be exercisable as theshares of Common Stock subject to the Option vest.

 

**(f)****           ****Vesting Schedule.**

 

**(i)****           **Each Option granted as an initial grant shall vest inaccordance with the schedule set forth below that results in a shorter periodof full vesting:

 

**(1)****          **1/36th of the shares of Common Stock subject to theOption shall vest each month after the date of grant over a period of three (3) years;or

 

**(2)****          **the Option shall vest in equal monthly installmentsafter the date of grant over a period commencing on the date that theOptionholder is appointed for the first time to be a Non-Employee Director bythe Board and ending on the date of the Annual Meeting 

 

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at which theOptionholder is first scheduled to be considered for election to be aNon-Employee Director by the stockholders of the Company.

 

**(ii)****          **Each Option granted as an annual grant before theAnnual Meeting in 2008 shall vest such that 1/36th of the shares of Common Stock subject to suchOption shall vest each month after the date of grant over a period of three (3) years;and each Option granted as an annual grant on or after the Annual Meeting in2008 shall vest such that 1/12th  of the shares of Common Stock subject to suchOption shall vest each month after the date of grant over a period of one (1) year.

 

**(g)****          ****Termination of Continuous Service**. In the event an Optionholder’sContinuous Service terminates (other than upon the Optionholder’s death orDisability), the Optionholder may exercise his or her Option (to the extentthat the Optionholder was entitled to exercise it as of the date oftermination) but only within such period of time ending on the earlier of (i) thedate three (3) months following the termination of the Optionholder’sContinuous Service, or (ii) the expiration of the term of the Option asset forth in the Option Agreement. If, after termination, the Optionholder doesnot exercise his or her Option within the time specified in the OptionAgreement, the Option shall terminate.

 

**(h)****          ****Extension of Termination Date**. If the exercise of the Option followingthe termination of the Optionholder’s Continuous Service (other than upon theOptionholder’s death or Disability) would be prohibited at any time solelybecause the issuance of shares would violate the registration requirementsunder the Securities Act, then the Option shall terminate on the earlier of (i) theexpiration of the term of the Option set forth in subsection 7(a) or (ii) theexpiration of a total period of three (3) months (that need not beconsecutive) after the termination of the Optionholder’s Continuous Serviceduring which the exercise of the Option would not be in violation of suchregistration requirements.

 

**(i)****           ****Disability of Optionholder**. In the event an Optionholder’sContinuous Service terminates as a result of the Optionholder’s Disability, theOptionholder may exercise his or her Option (to the extent that theOptionholder was entitled to exercise it as of the date of termination), butonly within such period of time ending on the earlier of (i) the datetwelve (12) months following such termination or (ii) the expiration ofthe term of the Option as set forth in the Option Agreement. If, aftertermination, the Optionholder does not exercise his or her Option within thetime specified herein, the Option shall terminate.

 

**(j)****           ****Death of Optionholder**. In the event (i) an Optionholder’sContinuous Service terminates as a result of the Optionholder’s death or (ii) theOptionholder dies within the three-month period after the termination of theOptionholder’s Continuous Service for a reason other 

 

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than death, thenthe Option may be exercised (to the extent the Optionholder was entitled toexercise the Option as of the date of death) by the Optionholder’s estate, by aperson who acquired the right to exercise the Option by bequest or inheritanceor by a person designated to exercise the Option upon the Optionholder’s death,but only within the period ending on the earlier of (1) the date eighteen(18) months following the date of death or (2) the expiration of the termof such Option as set forth in the Option Agreement. If, after death, theOption is not exercised within the time specified herein, the Option shallterminate.

 

**8.****            ****COVENANTS OF THE COMPANY.**

 

**(a)****          ****Availability of Shares**. During the terms of the Options, theCompany shall keep available at all times the number of shares of Common Stockrequired to satisfy such Options.

 

**(b)****          ****Securities Law Compliance**. The Company shall seek to obtain fromeach regulatory commission or agency having jurisdiction over the Plan suchauthority as may be required to grant Options and to issue and sell shares ofCommon Stock upon exercise of the Options; provided, however, that thisundertaking shall not require the Company to register under the Securities Actthe Plan, any Option or any stock issued or issuable pursuant to any suchOption. If, after reasonable efforts, the Company is unable to obtain from anysuch regulatory commission or agency the authority which counsel for theCompany deems necessary for the lawful issuance and sale of stock under thePlan, the Company shall be relieved from any liability for failure to issue andsell stock upon exercise of such Options unless and until such authority isobtained.

 

**9.****            ****USE OF PROCEEDS FROM STOCK.**

 

Proceeds from the sale of stock pursuant to Options shall constitutegeneral funds of the Company.

 

**10.****         ****MISCELLANEOUS.**

 

**(a)****          ****Stockholder Rights**. No Optionholder shall be deemed to bethe holder of, or to have any of the rights of a holder with respect to, anyshares subject to such Option unless and 

 

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until suchOptionholder has satisfied all requirements for exercise of the Option pursuantto its terms.

 

**(b)****          ****No Service Rights**. Nothing in the Plan or any instrumentexecuted or Option granted pursuant thereto shall confer upon any Optionholderany right to continue to serve the Company as a Non-Employee Director or shallaffect the right of the Company or an Affiliate to terminate (i) theemployment of an Employee with or without notice and with or without cause, (ii) theservice of a Consultant pursuant to the terms of such Consultant’s agreementwith the Company or an Affiliate or (iii) the service of a Director pursuantto the Bylaws of the Company or an Affiliate, and any applicable provisions ofthe corporate law of the state in which the Company or the Affiliate isincorporated, as the case may be.

 

**(c)****          ****Investment Assurances**. The Company may require an Optionholder,as a condition of exercising or acquiring stock under any Option, (i) togive written assurances satisfactory to the Company as to the Optionholder’sknowledge and experience in financial and business matters and/or to employ apurchaser representative reasonably satisfactory to the Company who isknowledgeable and experienced in financial and business matters and that he orshe is capable of evaluating, alone or together with the purchaserrepresentative, the merits and risks of exercising the Option; and (ii) togive written assurances satisfactory to the Company stating that theOptionholder is acquiring the stock subject to the Option for the Optionholder’sown account and not with any present intention of selling or otherwisedistributing the stock. The foregoing requirements, and any assurances givenpursuant to such requirements, shall be inoperative if (iii) the issuanceof the shares upon the exercise or acquisition of stock under the Option hasbeen registered under a then currently effective registration statement underthe Securities Act or (iv) as to any particular requirement, adetermination is made by counsel for the Company that such requirement need notbe met in the circumstances under the then applicable securities laws. TheCompany may, upon advice of counsel to the Company, place legends on stockcertificates issued under the Plan as such counsel deems necessary orappropriate in order to comply with applicable securities laws, including, butnot limited to, legends restricting the transfer of the stock.

 

**(d)****          ****Withholding Obligations**. The Optionholder may satisfy anyfederal, state or local tax withholding obligation relating to the exercise oracquisition of stock under an Option by any of the following means (in additionto the Company’s right to withhold from any compensation paid to theOptionholder by the Company) or by a combination of such means:  (i) tenderinga cash payment; (ii) authorizing the Company to withhold shares from theshares of the Common Stock otherwise issuable to the Optionholder as a resultof the exercise or acquisition of stock under the Option, provided, however,that no shares of Common Stock are withheld with a value exceeding the minimumamount of tax required to be withheld by law; or (iii) delivering to theCompany owned and unencumbered shares of the Common Stock.

 

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**(e)**           **Electronic Delivery**.  Any referenceherein to a “written” agreement or document shall include any agreement ordocument delivered electronically or posted on the Company’s intranet.

 

**11.****         ****ADJUSTMENTS UPON CHANGES IN STOCK.**

 

**(a)****          ****Capitalization Adjustments**. If any change is made in the stocksubject to the Plan, or subject to any Option, without the receipt ofconsideration by the Company (through merger, consolidation, reorganization,recapitalization, reincorporation, stock dividend, dividend in property otherthan cash, stock split, liquidating dividend, combination of shares, exchangeof shares, change in corporate structure or other transaction not involving thereceipt of consideration by the Company), the Board shall appropriately andproportionately adjust (i) the class(es) and maximum number of securitiessubject both to the Plan pursuant to subsection 4(a) and to thenondiscretionary Options specified in Section 5, (ii) the class(es) andnumber of securities and price per share of stock subject to outstandingOptions. The Board shall make such adjustments, and its determination shall befinal, binding and conclusive. (The conversion of any convertible securities ofthe Company shall not be treated as a transaction “without receipt ofconsideration” by the Company.)

 

**(b)****          ****Corporate Transaction**. In the event of (i) a sale, leaseor other disposition of all or substantially all of the securities or assets ofthe Company, (ii) a merger or consolidation in which the Company is notthe surviving corporation or (iii) a reverse merger in which the Companyis the surviving corporation but the shares of Common Stock outstandingimmediately preceding the merger are converted by virtue of the merger intoother property, whether in the form of securities, cash or otherwise, then anysurviving corporation or acquiring corporation may assume any Optionsoutstanding under the Plan or may substitute similar Options (including anoption to acquire the same consideration paid to the stockholders in thetransaction described in this subsection 11(b)) for those outstanding under thePlan. In the event no surviving corporation or acquiring corporation assumessuch Options or substitutes similar Options for those outstanding under thePlan, then with respect to Options held by Optionholders who are in ContinuousService immediately prior to such an event, the vesting of such Options (andthe time during which such Options may be exercised) shall be accelerated in full,and the Options shall terminate if not exercised at or prior to such event.With respect to any other Options outstanding under the Plan, such Optionsshall terminate if not exercised prior to such event.

 

**(c)****                          ****Change in Control**. Upon a Change in Control, all Options held by each Optionholder whoseContinuous Service has not terminated immediately prior to the Change inControl shall become fully vested and exercisable immediately prior to theeffectiveness of such Change in Control.

 

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**12.****         ****AMENDMENT OF THE PLAN AND OPTIONS.**

 

**(a)****          ****Amendment of Plan**. The Board at any time, and from time totime, may amend the Plan. However, except as provided in Section 11relating to adjustments upon changes in stock, no amendment shall be effectiveunless approved by the stockholders of the Company to the extent stockholderapproval is necessary to satisfy the requirements of Rule 16b-3 or anyNasdaq or securities exchange listing requirements.

 

**(b)****          ****Stockholder Approval**. The Board may, in its sole discretion,submit any other amendment to the Plan for stockholder approval.

 

**(c)****          ****No Impairment of Rights**. Rights under any Option granted beforeamendment of the Plan shall not be impaired by any amendment of the Plan unless(i) the Company requests the consent of the Optionholder and (ii) theOptionholder consents in writing.

 

**(d)****          ****Amendment of Options**. The Board at any time, and from time totime, may amend the terms of any one or more Options including, but not limitedto, amendments to provide terms more favorable than previously provided in theagreement evidencing an Option, subject to any specified limits in the Planthat are not subject to Board discretion; provided, however, that the rightsunder any Option shall not be impaired by any such amendment unless (i) theCompany requests the consent of the Optionholder and (ii) the Optionholderconsents in writing.

 

**13.****         ****TERMINATION OR SUSPENSION OF THEPLAN.**

 

**(a)****          ****Plan Term**. The Board may suspend or terminate thePlan at any time. No Options may be granted under the Plan while the Plan issuspended or after it is terminated.

 

**(b)****          ****No Impairment of Rights**. Suspension or termination of the Planshall not impair rights and obligations under any Option granted while the Planis in effect except with the written consent of the Optionholder.

 

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**14.****         ****EFFECTIVE DATE OF PLAN.**

 

The Plan shall become effective on the IPO Date, but no Option shall beexercised unless and until the Plan has been approved by the stockholders ofthe Company, which approval shall be within twelve (12) months before or afterthe date the Plan is adopted by the Board.

 

**15.****         ****CHOICE OF LAW.**

 

All questions concerning the construction, validity and interpretationof this Plan shall be governed by the law of the State of Delaware, withoutregard to such state’s conflict of laws rules.

 

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