**Exhibit 10.1**SUTURA, INC.2001 STOCK OPTION PLAN     Sutura, Inc., a Delaware corporation, by action of its Board of Directors, as approvedby it stockholders, adopted the Sutura, Inc. 2001 Stock Option Plan (the “Plan”)effective on October 25, 2001.1. PURPOSE.     This Plan is intended to provide to officers, directors, key employees, and consultants ofthe corporation an opportunity to acquire a proprietary interest in the corporation, toencourage such key individuals to remain in the employ of or to contract with the corporation,an to attract and retain new employees, consultants, and directors with outstandingqualifications. Pursuant to the Plan, the corporation may grant to officers, directors,consultants, and key employees of the corporation options to purchase shares of common stock ofthe corporation upon such terms and conditions as provided herein.2. DEFINITIONS.     (a) “Affiliate” shall mean any corporation (other than the Corporation) in anunbroken chain of corporations that includes the Corporation if each of such corporations, otherthan the last corporation in the chain, owns at least 50% of the total voting power of one of theothercorporations.     (b) “Board” shall mean the Board of Directors of theCorporation.     (c) “Code” shall mean the Internal Revenue Code of 1986, as amended.     (d) “Committee” shall mean the committee appointed by the Board to administer thePlan, or if no such committee is appointed, the Board.     (e) “Common Stock” shall mean the voting common stock of the Corporation.     (f) “Consultant” shall mean any person who, or any employee of any firm which, isengaged by the Company or any Affiliate to render consulting services and is compensated for suchconsulting services, and any non-employee director of the Company whether compensated for suchservices or not.
 

 
     (g) “Corporation” shall mean Sutura, Inc., a Delawarecorporation.     (h) “Effective Date” shall mean October 25, 2001.     (i) “Employee” shall mean any individual who IS employed, within the meaning ofSection 3401 of the Code and the regulations thereunder, by the Corporation or by any Affiliate.For purposes of the Plan and only for purposes of the Plan, and in regard to Nonstatutory StockOptions but not for Incentive Stock Options, a Consultant or director of the Corporation or anyAffiliate shall be deemed to be an Employee, and service as a Consultant or director *with*theCorporation or any Affiliate shall be deemed to be employment, but no Incentive Stock Option shallbe granted to a Consultant or director who is not an employee of the Corporation or any Affiliatewithin the meaning of Section 3401 of the Code and the regulations thereunder. In the case of anon-employee director or Consultant, the provisions governing when a termination of employment hasoccurred for purposes of the Plan shall be set forth in the written stock option agreement betweenthe Optionee and the corporation, or, if not so set forth, the Committee shall have the discretionto determine when a termination of “employment” has occurred for purposes of the Plan.     (j) ‘’Escrow Agent” shall mean the person selected by the Corporation, if any, tohold the stock certificates representing Shares issued in the name of an Optionee pursuant tosuch Optionee’s exercise of an Option.     (k) “Exchange Act” shall mean the Securities Exchange Act of 1934, asamended.     (1) “Exercise Price” shall mean the price per Share at which an Option maybe exercised, as determined by the Committee and as specified in the Optionee’s stockoption agreement.     (m) “Fair Market Value” shall mean the value of one Share of Common Stock, determinedas follows: (i) if the Shares are traded on an exchange or on the NASDAQ National Market System,the reported “closing price” on the date of valuation or if no trading occurred on such date, thenext preceding day on which trading occurred; (ii) if the Shares are traded over-the-counter onthe NASDAQ System (other than on the NASDAQ National Market System), the mean between the bid andthe ask prices on said System at the close of business on the date of valuation or if no tradingoccurred on such date, the next preceding day on which trading occurred; and (iii) if neither (i)nor (ii) app lies, the fair market value as determined by the Board in good faith.Such determination shall be. conclusive and binding on all persons. .     (n) “Incentive Stock Option” shall mean an Option of the typedescribed in Section 422(b) of the Code.     (o) “Joint Escrow Instructions” shall mean joint escrow instructions entered intobetween Optionee and the Corporation in such form as may be approved by the *Committee*from timeto time.
 

 
     (p) ‘’Nonstatutory Stock Option” shall mean an Option of the type not describedin Section 422(b) or 423(b) of the Code.     (q) “Option” shall mean an option to purchase Common Stock granted pursuant tothePlan.     (r) “Optionee” shall mean any person who holds an Option pursuant to thePlan.     (s) “Plan” shall mean this stock option plan as it may be amended from time totime.     (t) “Purchase Price” shall mean at any particular time the Exercise Price timesthenumber of Shares for which an Option is being exercised.     (u) “Share” shall mean one share of authorized CommonStock.3. ADMINISTRATION.     (a) The Committee.          (i) The Board may administer the Plan or appoint a Committee to administer thePlan. The Committee shall consist of not less than two members who may also be members of theBoard. Members of the Board or the Committee who are either eligible for Options or have beengranted Options may vote on any matters affecting the administration of the Plan or the grant ofany Options pursuant to the Plan, except that no such member shall act upon the granting of anOption to himself or herself, but any such member may be counted in determining the existence of aquorum at any meeting of the Committee and shall be excluded in determining unanimity of an act inwriting, for any action which is taken with respect to the granting of an Option to such member.          (ii) If the Corporation registers any class of any equity security pursuant to Section 12 ofthe Exchange Act from the effective date of such registration until six months after thetermination of such registration, the Plan shall be administered by a Committee of directors whichshall consist of not less than two members, who during the one year prior to service as anadministrator of the Plan, shall not have been granted or awarded equity securities pursuant tothe Plan or any other plan of the Corporation or any of its Affiliates except as permitted underRule 16b- 3 under the Exchange Act which provides that participation in a formal plan meeting theconditions of Rule 16(b )(3)( c )(2)(ii) or in an ongoing securities acquisition plan meeting theconditions in Rule 16(b )(3)( d)(2)(i) shall not disqualify a member of the Committee from servingas an administrator of the Plan. In addition, an election to receive an annual retainer fee ineither cash or an equivalent amount of securities, or partly in cash and partly in securities,shall not disqualify a member of the Committee from serving as an administrator of the Plan. TheBoard may from time to time designate individuals as ineligible to participate in the Plan for aspecified period in order to become eligible to be a member of the Committee.     (b) Powers of the Committee. Subject to the provisions of the Plan, the Committeeshall have the authority, in its discretion and on behalf of the Corporation:
 

 
          (i) to grant Options;          (ii) to determine the Exercise Price per Share of Options to be granted;          (iii) to determine the Employees to whom, and the time or times at which, Optionsshall be granted and the number of Shares for which an Option will be exercisable;          (iv) to interpret the Plan;          (v) to prescribe, amend, and rescind rules and regulations relating to the Plan;          (vi) to determine the terms and provisions of each Option granted and, with the consent ofthe holder thereof, modify or amend each Option;          (vii) to accelerate or defer, with the consent of the Optionee, the exercise dateof any Option;          (viii) to authorize any person to execute on behalf of the Corporation any instrumentrequired to effectuate the grant of an Option previously granted by the Committee;          (ix) with the consent of the Optionee, to reprice, cancel and regrant, or otherwise adjustthe Exercise Price of an Option previously granted by the Committee; and          (x) to make all other determinations deemed necessary or advisable for theadministration of the Plan.     (c) Board’s Determination of Fair Market Value. The Board shall have the authorityto determine, upon review of relevant information, the Fair Market Value of the Common Stock,subject to the provisions of the Plan and irrespective of whether the Board has appointed aCommittee to administer the Plan. The Board may delegate this authority to the Committee.     (d) Committee’s Interpretation of the Plan. The interpretation and construction bythe Committee of any provision of the Plan or of any Option granted hereunder shall be final andbinding on all parties claiming an interest in an Option granted under the Plan. No member ofthe Committee shall be liable for any action or determination made in good faith with respect tothe Plan or any Option.     (e) All Committee Actions to be in Writing. Any and all actions of the Committeetaken in exercise of the powers granted to it in this Section 3 shall be in writing.     (f) Delegation by Committee. Subject to the provisions of the Plan, the Committeeshall have the authority, in its discretion and on behalf of the Corporation, to delegate thefollowing powers to any individual or individuals with respect to the granting of Options tothose Employees who are not subject to the short-swing profit rules of Section 16 of the ExchangeAct:
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          (i) the power to grant Options;          (ii) the power to determine the Employees to whom and the time or times at which Optionsshall be granted and the number of Shares for which an Option will be exercisable; and          (iii) the power to determine the Exercise Price per Share of Options to be granted.In delegating its powers hereunder, the Committee may place any restrictions it deems appropriateon the delegatee(s). Any delegation of power under this Section shall be valid until it expiresby its own terms, until revoked by the Committee, or until revoked by the Board, whichever firstoccurs.4. PARTICIPATION.     (a) Eligibility. The Optionees shall be such persons as the Committee may selectfrom among the Employees, provided that Consultants are not eligible to receive Incentive StockOptions.     (b) Ten Percent Stockholders. Any Employee who owns Stock possessing more than 10%of the total combined voting power of all classes of outstanding stock of the Corporation orany Affiliate shall not be eligible to receive an Option unless:          (i) the Exercise Price of the Shares subject to such Option when granted is atleast 110% of the Fair Market Value of such Shares, and          (ii) such Option by its terms is not exercisable after the expiration of five years fromthe date of grant.     (c) Stock Ownership. For purposes of Paragraph 4(b), in determining stock ownership,an Employee shall be considered as owning the stock owned, directly or indirectly, by or for hisor her brothers and sisters, spouse, ancestors, and lineal descendants. Stock owned, directly orindirectly, by or for a corporation, partnership, estate, or trust shall be considered as beingowned proportionately by or for its shareholders, partners, or beneficiaries, respectively. Stockwith respect to which such Employee or any other person holds an option shall be disregarded.     (d) Outstanding Stock. For purposes of Section 4(b), the term “outstanding stock”shall include all stock actually issued and outstanding immediately after the grant of the Optionto the Optionee but shall not include any share for which an Option is exercisable by any person.5. STOCK.     (a) Shares Subject to This Plan. The aggregate number of Shares which maybe issuedupon exercise of Options under the Plan shall not exceed 2,250,000 Shares, subject to adjustment
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pursuant to Section 9 hereof. For so long as the Corporation is relying upon the exemptionset forth in Section 25102(0) of the California Corporations Code, the total number of Sharesissuable upon exercise of all outstanding Options shall not exceed a number of shares which isequal to 30% of the then outstanding shares of the Corporation (convertible preferred orconvertible senior common shares will be counted on an as if converted basis), exclusive of promotional shares, forwhich the promotional stockholders waive all rights to receive cash or property dividends and toparticipate in any distribution of assets, in the event of liquidation.     (b) Options Not to Exceed Shares Available. The number of Shares for which an Optionis exercisable at any time shall not exceed the number of Shares remaining available for issuanceunder the Plan. If any Option expires or is terminated, the number of Shares for which such Optionwas exercisable may be made exercisable pursuant to other Options under the Plan. If theCorporation reacquires any Shares pursuant to Sections 11 or 12, hereof: such Shares may again bemade exercisable pursuant to an Option. The limitations established by this Section 5(b) shall besubject to adjustment in the manner provided in Section 9 hereof upon the occurrence of an eventspecified therein.6. TERMS AND CONDITIONS OF OPTIONS.     (a) Stock Option Agreements. Options shall be evidenced by a written stock optionagreement between the Optionee and the Corporation either in the form of a Non-statutory StockOption Agreement (attached hereto as Exhibit A), in the form of an Incentive Stock OptionAgreement (attached hereto as Exhibit B) or in such other form as the Committee shall from time totime determine. No Option or purported Option shall be a valid and binding obligation of theCorporation unless so evidenced in writing.     (b) Number of Shares. Each stock option agreement shall state the number of Sharesfor which the Option is exercisable and shall provide for the adjustment thereof in accordancewith Section 9 hereof. Each stock option agreement will also specify whether the option is aNonstatutory Stock Option or an Incentive Stock Option. The maximum number of shares with respectto which options may be granted to anyone Optionee, in the aggregate in any calendar year, shallnot exceed Five Hundred Thousand (500,000) Shares.     (c) Vesting. An Optionee may not exercise his or her Option for any Shares until theOption, in regard to such Shares, has vested. Each stock option agreement shall include a vestingschedule which shall show when the Option becomes exercisable provided, each Option shall vest ata rate of at least twenty percent (20%) per year over a period of five (5) years. The vestingschedule shall not impose upon the Corporation or any Affiliate any obligation to retain theOptionee in its employ or under contract for any period or otherwise change the employment-at-willstatus of an Optionee who is an employee of the Corporation or any Affiliate.     (d) Lapse of Options. Each stock option agreement shall state the time or timeswhen the Option covered thereby lapses and becomes unexercisable in part or in full. An Optionshall lapse on the earliest of the following events (unless otherwise determined by theCommittee and reflected in an option agreement):
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          (i) the tenth anniversary of the date of granting the Option;          (ii) the first anniversary of the Optionee’s death;          (iii) the first anniversary of the date the Optionee ceases to be an Employee due to totaland permanent disability;          (iv) on the date provided in Section 6(h) (i), unless with respect to a Nonstatutory StockOption, the Committee otherwise extends such period before the applicable expiration date;          (v) on the date provided in Section 9 for a transaction described in such Section;          (vi) the date the Optionee files or has filed against him or her a petition inbankruptcy; or          (vii) the expiration date specified in an Optionee’s stock option agreement.     (e) Exercise Price. Each stock option agreement shall state the Exercise Price forthe Shares for which the Option is exercisable. Subject to Section 4(b), the Exercise Price of anIncentive Stock Option and a Nonstatutory Stock Option shall, when granted, be not less than 100%and 85% of the Fair Market Value of the Shares for which the Option is exercisable, respectively,and not less than the par value of the Shares.     (f) Medium and Time of Payment. The Purchase Price shall be payable in full in cashupon the exercise of an Option but the Committee may allow the Optionee to pay the PurchasePrice:          (i) by surrendering Shares in good form for transfer, owned by the Optionee and having a FairMarket Value on the date of exercise equal to the Purchase Price;          (ii) by delivery of a full recourse promissory note (“Note’’) made by the Optionee in theamount of the Purchase Price, bearing interest, compounded semiannually, at a rate not less thanthe rate determined under Section 7872 of the Code to insure that no “foregone interest”, asdefined in such section, will accrue, together with the delivery of a du1y executed standard formsecurity agreement securing the Note by a pledge of the Shares purchased; or          (iii) in any combination of such consideration or such other consideration and method ofpayment for the issuance of Shares to the extent permitted under applicable law as long as thesum of the cash so paid, the Fair Market Value of the Shares so surrendered, and the amount ofany Note equals the Purchase Price.The Committee or a stock option agreement may prescribe requirements with respect to the exerciseof Options, including the submission by the Optionee of such forms and documents as the Committeemay require and, the delivery by the Optionee of cash sufficient to satisfy applicable
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withholding requirements. The Committee may vary the exercise requirements and proceduresfrom time to time to facilitate, for example, the broker-assisted exercise of Options.     (g) Nontransferability of Options. During the lifetime of the Optionee, the Optionshall be exercisable only by the Optionee or the Optionee’s conservator or legal representativeand shall not be assignable or transferable. In the event of the Optionee’s death, the Optionshall not be transferable by the Optionee other than by will or the laws of descent anddistribution.     (h) Termination of Employment Other than by Death orDisability.          (i) If an Optionee ceases to be an Employee for any reason other than his or herdeath or disability, the Optionee shall have the right, subject to the provisions of this Section6, to exercise any Option held by the Optionee at any time within thirty (30) days after his orher termination of employment, but not beyond the otherwise applicable term of the Option and onlyto the extent that on such date of termination of employment the Optionee’s right to exercise suchOption had vested.          (ii) For purposes of this Section 6(h), the employment relationship shall be treated ascontinuing intact while the Optionee is an active employee of the Corporation or any Affiliate,or is on military leave, sick leave, or other bona fide leave of absence to be determined in thesole discretion of the Committee. The preceding sentence notwithstanding, in the case of anIncentive Stock Option, employment shall be deemed to terminate on the date the Optionee ceasesactive employment with the Corporation or any Affiliate, unless the Optionee’s reemploymentrights are guaranteed by statute or contract.     (i) Death of Optionee. If an Optionee dies while an Employee, or after ceasing to bean Employee but during the period while he or she could have exercised an Option under Section6(h),any Option granted to the Optionee may be exercised, to the extent it had vested at the time ofdeath and subject to the Plan, at any time within 12 months after the Optionee’s death, by theexecutors or administrators of his or her estate or by any person or persons who acquire theOption by will or the laws of descent and distribution, but not beyond the otherwise applicableterm of the Option.     G) Disability of Optionee. If an Optionee ceases to be an Employee due to becomingtotally and permanently disabled within the meaning of Section 22(e) (3) of the Code, any Optiongranted to the Optionee may be exercised to the extent it had vested at the time of cessationand, subject to the Plan, at any time within 12 months after the Optionee’s termination ofemployment, but not beyond the otherwise applicable term of the Option.     (k) Rights as a Stockholder. An Optionee, or a transferee of an Optionee, shall haveno rights as a stockholder of the Corporation with respect to any Shares for which his or herOption is exercisable until the date of the issuance of a stock certificate for such Shares. Noadjustment shall be made for dividends, ordinary or extraordinary or whether in currency,securities, or other property, distributions, or other rights for which the record date is priorto the date such stock certificate is issued, except as provided in Section 9 hereof.
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     (1) Modification. Extension. and Renewal of Options. Within the limitations of thePlan, the Committee may modify, extend or renew outstanding Options or accept the cancellation ofoutstanding Options for the granting of new Options in substitution therefor. Notwithstanding thepreceding sentence, no modification of an Option shall, without the consent of the Optionee, alteror impair any rights or obligations under any Option previously granted.     (m) Other Provisions. The stock option agreements authorized under the Plan maycontain such other provisions which are not inconsistent with the terms of the Plan,including, without limitation, restrictions upon the exercise of the Option, as theCommittee shall deem advisable.7. $100.000 PER YEAR LIMITATION ON VESTING OF ISOs.     To the extent that the Fair Market Value of Shares (determined for each Share as of the dateof grant of the Option covering such Share) subject to Options granted under this Plan (or anyotherplan of the Corporation or any Affiliate) which are designated as incentive Stock Options andwhich become exercisable by an Optionee for the first time during a single calendar year exceeds$100,000, the Option(s) (or portion thereof) covering such Shares shall be recharacterized (to theextent of such excess over $100,000) as a Nonstatutory Stock Option. ill determining whichOption(s) shall be treated as Nonstatutory Stock Options under the preceding sentence, the Optionsshall be taken into account in the order granted, with the result that a later granted Optionshall be recharacterized as a Nonstatutory Stock Option prior to such recharacterization of apreviously granted Option.8. TERM OF PLAN.     Options may be granted pursuant to the Plan until ten (10) years following the EffectiveDate, and all Options which are outstanding on such date shall remain in effect until they areexercised or expire by their terms. The Plan shall expire for all purposes on the date ten (10)years following the Effective Date.9. RECAPITALIZATION. TAKEOVERS. AND LIOUIDATIONS.     (a) Reorganizations. The number of Shares covered by the Plan, as provided inSection 5 hereof, and the number of Shares for which each Option is exercisable shall beproportionately adjusted for any increase or decrease in the number of issued Shares resultingfrom the payment of a Common Stock dividend, a stock split, a reverse stock split,recapitalization, combination, reclassification or any other event which results in an increaseor decrease in the number of issued Shares effected without receipt of consideration by theCorporation, and the Exercise Price shall be proportionately increased in the event the number ofShares subject to such Option are decreased and shall be proportionately decreased in the eventthe number of Shares subject to such Option are increased. For the purposes of this paragraph,conversion of any convertible securities of the Corporation shall not be deemed to have been“effected without receipt of consideration.” Adjustments shall be made by the Board, whosedetermination in that respect shall be final, binding and conclusive. Except as expresslyprovided herein, no issuance by the
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Corporation of shares of stock of any class, or securities convertible into shares of stockof any class, shall affect, and no adjustment by reason thereof shall be made with respect to, thenumber or price of shares of Common Stock subject to an Option.     (b) Liquidation. In the event of the dissolution or liquidation of the Corporation,each Option shall terminate immediately prior to the consummation of such action. The Committeeshall notify the Optionee not less than fifteen (15) days prior to the proposed consummation of apending dissolution or liquidation, and the Option shall be exercisable as to all Shares which arevested prior to expiration until immediately prior to the consummation of such action.     (c) Merger. In the event of (i) a proposed merger of the Corporation with or intoanother corporation, as a result of which the Corporation is not the surviving corporation and(ii) theOption is not assumed or an equivalent option substituted by the successor corporation or aparent or subsidiary of the successor corporation, then in such case each Option shall terminateimmediately prior to the consummation of such transaction. The Committee shall notify the Optioneenot less than fifteen (15) days prior to the proposed consummation of such transaction, and theOption shall be exercisable as to all Shares which are vested prior to expiration and untilimmediately prior to the consummation of such transaction.     (d) Determination by Committee. All adjustments described in this Section 9 shallbe made by the Committee, whose determination shall be conclusive and binding on all persons.     (e) Limitation on Rights of Optionee. Except as expressly provided in this Section 9,no Optionee shall have any rights by reason of any payment of any stock dividend, stock split orreverse stock split or any other increase or decrease in the number of shares of stock of anyclass, or by reason of any reorganization, consolidation, dissolution, liquidation, merger,exchange, split-up or reverse split-up, or spin-off of assets or stock of another corporation. Anyissuance by the Corporation of Shares, Options or securities convertible into Shares or Optionsshall not affect, and no adjustment by reason thereof shall be made with respect to, the number orExercise Price of the Shares for which an Option is exercisable. Notwithstanding the foregoing, ifthe Corporation shall enter into a transaction affecting the Corporation’s capital stock ordistributions to the holders of its capital stock for which a revision in the terms of each Optionis not required pursuant to this Section 9, the Committee shall have the right, but not theobligation, to revise the terms of each Option in a manner the Committee, in its sole discretion,deems fair and reasonable given the transaction involved. If necessary or appropriate inconnection with such transaction, the Committee may declare that any Option shall terminate as ofa date fixed by the Committee and give each Optionee the right to exercise his Option in whole orin part, including exercise as to Shares to which the Option would not otherwise be exercisable.     (f) No Restriction on Rights of Corporation. The grant of an Option shall not affector restrict in any way the right or power of the Corporation to make adjustments,reclassifications, reorganizations, or changes of its capital or business structure, or to mergeor consolidate, or to dissolve, liquidate, sell, or transfer al~ or any part of its business orassets.10. SECURITIES LAW REOUIREMENTS.
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     (a) Legality of Issuance. No Share shall be issued upon the exercise of anyOption unless and until the Corporation has determined that:          (i) the Corporation and the Optionee have taken all actions required to exempt the issuanceof the Shares from the registration requirements under the Securities Act of 1933, as amended(the “Act”), or the Corporation and the Optionee shall determine that the registrationrequirements of the Act do not apply to such exercise;          (ii) any applicable listing requirement of any stock exchange on which the Common Stock islisted has been satisfied; and          (iii) any other applicable provision of state or Federal law has beensatisfied.     (b) Restrictions on Transfer: Representations of Optionee: Legends. Regardless ofwhether the offering and sale of Shares has been registered under the Act or has been registeredor qualified under the securities laws of any state, the Corporation may impose restrictions uponthe sale, pledge, or other transfer of such Shares, including the placement of appropriate legendson stock certificates, if, in the judgment of the Corporation and its counsel, such restrictionsare necessary or desirable in order to achieve compliance with the provisions of the Act, thesecurities laws of any state, or any other law. If the sale of Shares is not registered under theAct and the Corporation shall determine that the registration requirements of the Act apply tosuch sale, but an exemption is available which requires an investment representation or otherrepresentation, the Optionee shall be required, as a condition to purchasing Shares by exercise ofhis or her Option, to represent that such Shares are being acquired for investment, and not with aview to the sale or distribution thereof, except in compliance with the Act, and to make suchother representations as are deemed necessary or appropriate by the Corporation and its counsel.Stock certificates evidencing Shares acquired pursuant to an unregistered transaction to which theAct applies shall bear a restrictive legend substantially in the following form and such otherrestrictive legends as are required or deemed advisable under the Plan or the provisions of anyapplicable law:“THE SHARES REPRESENTED BY THIS CERTIFICATE HA VB NOT BEEN REGISTERED UNDER THESECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR QUALIFIED UNDER THE SECURITIESLAWS OF ANY STATE. THESE SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH AVIEW TO OR FOR SALE IN CONNECTION WITH ANY DISTRIBUTION THEREOF, AND MAY NOT BESOLD, MORTGAGED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVEREGISTRATION UNDER THE ACT AND/OR QUALIFICATION UNDER ANY APPLICABLE STATESECURITIES LAWS, OR WITHOUT AN OPINION OF COUNSEL ACCEPTABLE TO THE CORPORATION ANDITS COUNSEL THAT SUCH REGISTRATION OR QUALIFICATION IS NOT REQUIRED.”The Corporation shall also place legends on stock certificates representing its rightof repurchase under Section 11 hereof and the right of first refusal under Section 12hereof.
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Any determination by the Corporation and its counsel in connection with any of the mattersset forth in this Section 10 shall be conclusive and binding on all persons.     (c) Registration or Qualification of Securities. The Corporation may, but shall notbe obligated to, register or qualify the sale of Shares under the Act or any other applicablelaw. In connection with any such registration or qualification, the Corporation shall provideeach Optionee with such information required pursuant to all applicable laws and regulations.     (d) Exchange of Certificates. If, in the opinion of the Corporation and itscounsel, any legend placed on a stock certificate representing Shares sold hereunder is nolonger required, the Optionee or the holder of such certificate shall be entitled to exchangesuch certificate for a certificate representing the same number of Shares but lacking suchlegend.     (e) Market Standoff Agreement. By acceptance of an Option, each Optionee agreesthat if so requested by the Corporation or any representative of the underwriters inconnection with any registration of any securities of the Corporation under the Act,Optionee shall not sell or otherwise transfer any of the Shares or other securities of theCorporation during the period requested by the Corporation or the representative of theunderwriters, as the case may be. Each Optionee agrees that the Corporation may imposestop-transfer instructions with respect to the securities subject to the foregoing restrictions.11. RIGHT OF REPURCHASE.     (a) Repurchase Right. At the Committee’s discretion, Shares issued pursuant to theexercise of an Option may be subject to a right, but not an obligation, of repurchase by theCorporation (the “Right of Repurchase”), at the price specified in Section 11 (b), if theOptionee ceases to be an Employee for any reason (“Employment Termination”) at any time after thegrant of the Option pursuant to which such Shares were issued. Shares issued by the Corporationshall only be transferable by the Optionee subject to the Right of Repurchase, and the Corporationshall legend the Right of Repurchase on the stock certificates evidencing such Shares and shalltake such other steps as it deems necessary to ensure compliance with this restriction. TheCorporation’s rights under this Section 11 (a) shall be freely assignable, in whole or in part.     (b) Repurchase Price. The price per Share at which the Corporation may exercise theRight of Repurchase under Section 11 (a) (the “Repurchase Price”) shall be the higher of theExercise Price of each Share as paid by the Optionee, or Fair Market Value of the Shares on thedate the Corporation sends the notice to the Optionee of its exercise of its Right of Repurchasepursuant to Section 11 (a).     (c) Repurchase Procedure. The Corporation may exercise its Right of Repurchase bysending a written notice to the Optionee and to the Escrow Agent, if any, of its taking suchaction and specifying the number of Shares being repurchased. The
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Corporation’s Right of Repurchase shall terminate if not exercised by written notice from theCorporation to the Optionee within ninety (90) days of the date on which the Corporation learns ofthe Employment Termination or the last date any Option granted to such Optionee is exercised,which ever is later. If the Corporation exercises its Right of Repurchase, the Optionee, or ifapplicable, the Escrow Agent, shall deliver to the Corporation every stock certificaterepresenting the Shares being repurchased, together with appropriate Assignments Separate fromCertificates, and the Corporation shall then promptly pay the total Repurchase Price in cash tothe Optionee, or if applicable, to the Escrow Agent, for delivery to the Optionee.     (d) Election to Defer Purchase of Incentive Stock Option Shares.          (i) Notwithstanding the preceding provisions of this Section 11, an Optionee whose Shareswere issued pursuant to an Incentive Stock Option may elect to defer the Corporation’s repurchaseof such Shares pursuant to this Section 11 until the holding period requirements of Section 422(a) of the Code are met. Such election shall be in writing in such form as the Committee mayrequire and shall be delivered to the Corporation and to the Escrow Agent by certified mail nolater than seven (7) days after the date on which the Optionee receives notice that theCorporation elects to exercise its Right of Repurchase. Such election shall pertain to all suchShares issued to the Optionee and shall be irrevocable.          (ii) With respect to an Optionee who makes the election described in subsection 11 (d) (i),the Corporation shall repurchase such Shares on or before the date which is ninety (90) daysfollowing the earlier of the date on which the Optionee dies or the date on which the holdingperiod requirements of Section 422(a) of the Code are met. The Repurchase Price of each such Sharedetermined under Section 11 (b) shall be calculated by substituting for the Optionee’s EmploymentTermination date the earlier of the date on which the Optionee dies or the date on which suchholding period requirements are met.     (e) Escrow. To facilitate the consummation of the Corporation’s Right of Repurchaseunder this Section 11, at the request of the Committee, the Optionee and the Corporation shallexecute Joint Escrow instructions and the Optionee shall deliver and deposit with the Escrow Agentnamed in the Joint Escrow instructions two “Assignments Separate from Certificate”, together withall certificates evidencing the Shares of Common Stock issued to the Optionee pursuant to thePlan, duly endorsed in blank. The Escrow Agent shall hold such documents and deliver the same tothe Corporation pursuant to the Joint Escrow instructions and in accordance with the terms of thisSection 11, as applicable.     (f) Binding Effect. The Corporation’s Right of Repurchase shall inure to the benefitof its successors and assigns and shall be binding upon any representative, executor,administrator, heir, or legatee of the Optionee.     (g) Payment of Net Amount Owing. Notwithstanding anything to the contrary containedherein, if the Corporation determines to exercise its rights of repurchase pursuant
 

 
to this Section before any Shares have been issued as a result of an exercise of an Option, inlieu of issuing any Shares, the Corporation shall have the right, but not the obligation, to payto the Optionee the net amount owing to the Optionee.     (h) Termination or Right of Repurchase. Notwithstanding any other provision of thisSection 11, in the event that the Common Stock is listed on any United States securitiesexchange or traded on any formal over-the-counter market in general use in the United States atthe time the Optionee would otherwise be required to transfer his or her Shares, the Corporationshall no longer have the Right of Repurchase, and the Optionee shall have no obligation tocomply with this Section 11.12. RIGHT OF FIRST REFUSAL.     (a) Right of First Refusal. At the Committee’s discretion, shares issued pursuant tothe exercise of an Option may be subject to a requirement that if an Optionee proposes to sell,pledge, or otherwise transfer any Shares acquired pursuant to exercise of an Option, or anyinterest in such Shares, to any person or entity, the Corporation shall have a right of firstrefusal (the ''Right of First Refusal”) with respect to such Shares. Any Optionee desiring totransfer Shares subject to the Right of First Refusal shall give a written notice (the ''TransferNotice”) to the Corporation describing fully the proposed transfer, including the number of Sharesproposed to be transferred, the proposed transfer price, and the name and address of the proposedtransferee. The Transfer Notice shall be signed both by the Optionee and by the proposedtransferee and must constitute a binding commitment of both parties to the transfer of the Shares.The Corporation shall have the right to purchase the Shares subject to the Transfer Notice on theterms of the proposal referred to in the Transfer Notice, subject to any change in such termspermitted under Section 12(b) hereof, by delivery of a notice of exercise of the Right of FirstRefusal within 30 days after the date the Transfer Notice is received by the Corporation. TheCorporation’s rights under this Section 12(a) shall be freely assignable, in whole or in part.     (b) Transfer of Shares. If the Corporation fails to exercise the Right of FirstRefusal within 30 days after the date on which it receives the Transfer Notice, the Optionee may,not later than six months following receipt of the Transfer Notice by the Corporation, consummatea transfer of the Shares subject to the Transfer Notice on the terms and conditions described inthe Transfer Notice. Any proposed transfer on terms and conditions different from those describedin the Transfer Notice, as well as any subsequent proposed transfer by the Optionee, shall againbe subject to the Right of First Refusal and shall again require compliance with the proceduredescribed in Section 12(a). If the Corporation exercises its Right of First Refusal, the Optioneeshall immediately endorse and deliver to the Corporation every stock certificate representing theShares being purchased, and the Corporation shall then promptly pay the purchase price inaccordance with the terms set forth in the Transfer Notice.     (c) Repurchase Payment. The amount payable to an Optionee pursuant to theCorporation’s exercise of the Right of First Refusal shall be paid to the Optionee in
 

 
accordance with the terms and conditions of the Transfer Notice or may, at the election ofthe Corporation, be paid in full in cash.     (d) Binding Effect. The Corporation’s Right of First Refusal shall inure to thebenefit of its successors and assigns and shall be binding upon any transferee of the Shares,other than a transferee acquiring Shares in a transaction with respect to which the Corporationfailed to exercise its Right of First Refusal (a ''Free Transferee’’) or a transferee of a FreeTransferee.     (e) Termination of Right of First Refusal. Notwithstanding any other provision ofthis Section 12, if the Common Stock is listed on any United States securities exchange or tradedon any formal over-the-counter market in general use in the United States at the time the Optioneedesires to transfer his or her Shares, the Corporation shall no longer have the Right of FirstRefusal, and the Optionee shall have no obligation to comply with this Section 12.13. EXERCISE OF UNVESTED OPTIONS.     The Committee may grant any Optionee the right to exercise any Option prior to the completevesting of such Option. Without limiting the generality of the foregoing, the Committee mayprovide that if an Option is exercised prior to having completely vested, the Shares issued uponsuch exercise shall remain subject to vesting at the same rate as under the Option so exercisedand shall be subject to a right, but not an obligation, of repurchase by the Corporation withrespect to all unvested Shares if the Optionee ceases to be an Employee for any reason. For thepurposes of facilitating the enforcement of any such right of repurchase, at the request of theCommittee, the Optionee shall enter into the Joint Escrow Instructions with the Corporation anddeliver every certificate for his or her unvested Shares with a stock power executed in blank bythe Optionee and by the Optionee’s spouse, if required for transfer.14. AMENDMENT OF THE PLAN.     The Board or the Committee may, from time to time, terminate, suspend or discontinue thePlan, in whole or in part, or revise or amend it in any respect whatsoever including, but notlimited to, the adoption of any amendment( s) deemed necessary or advisable to qualify theOptions under rules and regulations promulgated by the Securities and Exchange Commission withrespect to Employees who are subject to the provisions of Section 16 of the Securities ExchangeAct of 1934, as amended, or to correct any defect or supply any omission or reconcile anyinconsistency in the Plan or in any Option granted thereunder, without approval of thestockholders of the Corporation, but without the approval of the Corporation’s stockholders, nosuch revision or amendment shall:     (i) increase the number of Shares subject to the Plan, other than any increasepursuant to Section 9;
 

 
     (ii) materially modify the requirements as to eligibility for participation in thePlan;     (iii) materially increase the benefits accruing to Optionees under the Plan;     (iv) extend the term of the Plan; or     (v) amend this Section 14 to defeat its purpose.No amendment, termination or modification of the Plan shall affect any Option theretoforegranted in any material adverse way without the consent of the Optionee.15. APPLICATION OF FUNDS.     The proceeds received by the Corporation from the sale of Common Stock pursuant to theexercise of an Option shall be used for general corporate purposes.16. APPROVAL OF STOCKHOLDERS.     The Plan shall be subject to approval by the affirmative vote of the holders of a majorityof all classes of the outstanding shares present and entitled to vote at the first meeting ofstockholders of the Corporation following the adoption of the Plan or by writtenconsent, and in no event later than one (1) year following the Effective Date. Prior to suchapproval, Options may be granted but shall not be exercisable. Any- amendment described inSection 14 (i) to (iv) shall also be subject to approval by the Corporation’s stockholders.17. WITHHOLDING OF TAXES.     In the event the Corporation or an Affiliate determines that it is required to withholdFederal, state, or local taxes in connection with the exercise of an Option or the dispositionof Shares issued pursuant to the exercise of an Option, the Optionee or any personsucceeding to the rights of the Optionee, as a condition to such exercise or disposition, may berequired to make arrangements satisfactory to the Corporation or the Affiliate to enable it tosatisfy such withholding requirements.18. RIGHTS AS AN EMPLOYEE.     Neither the Plan nor any Option granted pursuant thereto shall be construed to give anyperson the right to remain in the employ of the Corporation or any Affiliate, or to affect theright of the Corporation or any Affiliate to terminate such individual’s employment at any timewith or without cause. The grant of an Option shall not entitle the Optionee to, or disqualify theOptionee from, participation in the grant of any other Option under the Plan or participation inany other benefit plan maintained by the Corporation or any Affiliate.
 

 
19. DISAVOWAL OF REPRESENTATIONS. UNDERTAKINGS OR CREATIONOF IMPLIED RIGHTS.     ill adopting and maintaining this Plan and granting options hereunder, neither theCorporation nor any Affiliate makes any representations or undertakings with respect to theinitial qualification or treatment of Options under federal or state tax or securities laws. TheCorporation and each Affiliate expressly disavows the creation of any rights in Employees,Optionees, or beneficiaries of any obligations on the part of the Corporation, any Affiliate orthe Committee, except as expressly provided herein.20. INSPECTION OF RECORDS.     Copies of the Plan, records reflecting each Optionee’s Option, and any other documents andrecords which an Optionee is entitled by law to inspect shall be open to inspection by theOptionee and his or her duly authorized representative at the office of the Committee at anyreasonable business hour.21. INFORMATION TO OPTIONEES.     Each Optionee shall be provided with such information regarding the Corporation as theCommittee from time to time deems necessary or appropriate; provided however, that each Optioneeshall at all times be provided with such information as is required to be provided from time totime pursuant to applicable regulatory requirements, including, but not limited to, any applicablerequirements of the Securities and Exchange Commission, the California Department of Corporationsand other state securities agencies.
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**AMENDMENT NO.1****TO****SUTURA, INC.****2001 STOCK OPTION PLAN****The 2001 Stock Option Plan is amended by adding the following provision after the existinglanguage in Section**6(c):“However, notwithstanding the foregoing, options granted to anyOptionee, for which at least one year has elapsed since the VestingCommencement Date at the time of a Change of Control of theCorporation (as defined below), shall become immediately vested uponsuch Change of Control.For purposes of *this*Section 6, a Change of Control shallbe            defined as (i) the sale by the Corporation of all orsubstantially all of its assets, or (ii) the Corporation’s mergerinto or consolidation with any other corporation or other entity, orany other corporate reorganization, in which the holders of theCorporation’s voting shares, immediately prior to such transactionown, immediately after such transaction, securities representing lessthan fifty percent (50%) of the voting power of the Corporation orother entity surviving such transaction, provide that a mergereffected exclusively for the purpose of changing the domicile of theCorporation shall not be a Change of Control.”