Exhibit 10.26


 


RIGEL PHARMACEUTICALS, INC.


 


2000 NON-EMPLOYEE DIRECTORS’ STOCK OPTION
PLAN


 


ADOPTED AUGUST 18, 2000


APPROVED BY STOCKHOLDERS SEPTEMBER 11,
2000


EFFECTIVE DATE: DECEMBER 4, 2000


AMENDED AND RESTATED APRIL 24, 2003


AMENDED AND RESTATED JUNE 20, 2003


APPROVED BY STOCKHOLDERS JUNE 20, 2003


AMENDED AND RESTATED APRIL 22, 2005


APPROVED BY STOCKHOLDERS JUNE 2, 2005


AMENDED AND RESTATED JANUARY 31, 2007


APPROVED BY STOCKHOLDERS MAY 31, 2007


AMENDED AND RESTATED SEPTEMBER 18, 2007


AMENDED AND RESTATED FEBRUARY 21, 2008


APPROVED BY STOCKHOLDERS MAY 29, 2008


 


1.                                   PURPOSES.


 


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


 


(b)                                  Available
Options.  The purpose of the Plan is
to provide a means by which Non-Employee Directors may be given an opportunity
to benefit from increases in value of the Common Stock through the granting of
Nonstatutory Stock Options.


 


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


 


2.                                   DEFINITIONS.


 


(a)                                  “Affiliate” means any parent
corporation or subsidiary corporation of the Company, whether now or hereafter
existing, as those terms are defined in Sections 424(e) and (f),
respectively, of the Code.


 


(b)                                  “Annual
Grant” means an Option granted annually to all Non-Employee Directors
who meet the criteria specified in subsection 6(b) of the Plan.


 


(c)                                  “Annual
Meeting” means the annual meeting of the stockholders of the Company.


 


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


 


(e)                                  A
“Change in Control,” with
respect to 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 forth in 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) or
14(d) of the Exchange Act of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of fifty percent (50%) or more of the
combined voting power of the Company’s then outstanding voting securities;


 


(ii)                                the individuals who, as
of the effective date of the Plan, are members of the Board (the “Incumbent Board”),
cease for any reason to constitute at least a majority of the Board, unless the



 


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election, or nomination for
election by the Company’s stockholders, of any new director was approved by a
vote of at least a majority of the Incumbent Board, and such new director
shall, for purposes of this Plan, be considered as a member of the Incumbent
Board; or


 


(iii)                            the closing of:


 


(1)                                 a merger or
consolidation involving the Company if the stockholders of the Company,
immediately before such merger or consolidation, do not, as a result of such
merger or consolidation, own, directly or indirectly, more than fifty percent
(50%) of the combined voting power of the then outstanding voting securities of
the corporation resulting from such merger or consolidation in substantially
the same proportion as their ownership of the combined voting power of the
voting securities of the Company outstanding immediately before such merger or
consolidation; or


 


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


 


Notwithstanding the foregoing,
a Change in Control shall not be deemed to occur solely because fifty percent
(50%) or more of the combined voting power of the Company’s then outstanding
securities is acquired by (i) a trustee or other fiduciary holding
securities under one or more employee benefit plans maintained by the Company
or any of its subsidiaries or (ii) any corporation which, immediately
prior to such acquisition, is owned directly or indirectly by the stockholders
of the Company in the same proportion as their ownership of stock in the
Company immediately prior to such acquisition.


 


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


 


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


 


(f)                                    “Code” means the Internal Revenue Code
of 1986, as amended.


 


(g)                                 “Common Stock” means the 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 or advisory services and who is compensated for such services or (ii) who
is a 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 by
the Company for their services as Directors or Directors of the Company who are
merely paid a director’s fee by the Company for their services as Directors.


 


(j)                                    “Continuous Service” means that the
Optionholder’s service with the Company or an Affiliate, whether as an
Employee, Director or Consultant, is not interrupted or terminated. The
Optionholder’s Continuous Service shall not be deemed to have terminated merely
because of a change in the capacity in which the Optionholder renders service
to the Company or an Affiliate as an Employee, Consultant or Director or a
change in the entity for which the Optionholder renders such service, provided
that there is no interruption or termination of the Optionholder’s service. For
example, a change in status without interruption from a Non-Employee Director
of the Company to a Consultant of an Affiliate or an Employee of the Company
will not constitute an interruption of Continuous Service. The Board or the
chief executive officer of the Company, in that party’s sole discretion, may
determine whether 


 


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Continuous Service shall be
considered interrupted in the case 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
of Directors of the Company.


 


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


 


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


 


(n)                                 “Exchange Act” means the Securities
Exchange Act of 1934, as amended.


 


(o)                                  “Fair Market 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 stock exchange 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 sales price for such stock (or the closing
bid, if no sales were reported) as quoted on such exchange or market (or the exchange
or market with the greatest volume of trading in the Common Stock) on the last
market trading day prior to the day of determination, as reported in The Wall Street Journal or such other
source as 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.


 


(p)                                  “Initial
Grant” means an Option granted to a Non-Employee Director who meets the
criteria specified in subsection 6(a) of the Plan.


 


(q)                                  “IPO
Date” means the effective date of the initial public offering of the
Common Stock.


 


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


 


(s)                                  “Nonstatutory Stock Option” means an
Option not intended to qualify as an incentive stock option within the meaning
of Section 422 of the Code and the regulations promulgated thereunder.


 


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


 


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


 


(v)                                   “Option Agreement” means a written
agreement between the Company and an Optionholder evidencing the terms and
conditions of an individual Option grant. Each Option Agreement shall be
subject to the terms and conditions of the Plan.


 


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


 


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


 


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


 


(z)                                  “Securities Act” means the Securities
Act of 1933, as amended.


 


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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,
subject to, and within the limitations of, the express provisions of the Plan:


 


(i)                                    To determine the
provisions of each Option to the extent not specified in the Plan.


 


(ii)                                To construe and
interpret the Plan and Options granted under it, and to establish, amend and
revoke rules and regulations for its administration. The Board, in the
exercise of this power, may correct any defect, omission or inconsistency in
the Plan or in any Option Agreement, in a manner and to the extent it shall
deem necessary or expedient to make the Plan fully 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 to perform such acts as the Board deems necessary or
expedient to promote the best interests of the Company that are not in conflict
with the provisions of the Plan.


 


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


 


(d)                                  Cancellation
and Re-Grant of Options. 
Notwithstanding anything to the contrary in the Plan, neither the Board
nor any Committee shall have the authority to: (i) reprice any outstanding
Option under the Plan, (ii) cancel and re-grant any outstanding Option
under the Plan, or (iii) effect any other action that is treated as a
repricing under generally accepted accounting principles unless, in each case, the
stockholders of the Company have approved such 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 11 relating to adjustments upon changes in the Common Stock,
the Common Stock that may be issued pursuant to Options shall not exceed in the
aggregate 535,000 shares of Common Stock, which number consists of (i) 33,333
shares of Common stock initially reserved for issuance under the Plan plus (ii) 66,667
shares of Common stock approved by the Board in April 2003 and
subsequently approved by the Company’s stockholders plus (iii) 225,000
shares of Common Stock approved by the Board in April 2005 and
subsequently approved by the Company’s stockholders plus (iv) 110,000
shares of Common Stock approved by the Board in January 2007 and
subsequently approved by the Company’s stockholders plus (v) 100,000
shares of Common Stock approved by the Board in February 2008 and subsequently approved by the Company’s
stockholders.


 


(b)                                  Reversion
of Shares to the Share Reserve.  If
any Option 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
acquired under such Option shall revert to and again become available for
issuance under the Plan. If any shares subject to an Option are not delivered
to an Optionholder because the Option is exercised through a reduction of
shares subject to the Option (i.e.,
“net exercised”), the number of shares that are not delivered to the
Optionholder shall not remain available for issuance under the Plan. If any
shares subject to an Option are not delivered to an Optionholder because such
shares are withheld in satisfaction of the withholding of taxes incurred in
connection with the exercise of an Option, the number of shares that are not
delivered to the Optionholder shall not remain available for 


 


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subsequent issuance under the
Plan. If the exercise price of any Option is satisfied by tendering shares of
Common Stock held by the Optionholder (either by actual delivery or
attestation), then the number of shares so tendered shall not remain available
for subsequent issuance under the Plan.


 


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


 


5.                                      ELIGIBILITY.


 


The Options as
set forth in section 6 automatically shall be granted under the Plan to
all Non-Employee Directors.


 


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-Employee Director after the IPO Date automatically shall, upon the date
of his or her initial election or appointment to be a Non-Employee Director by
the Board or stockholders of the Company, be granted an Initial Grant to
purchase twenty thousand (20,000) 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 day following each Annual Meeting commencing with the Annual
Meeting in 2001, each person who is then a Non-Employee Director automatically
shall be granted an Annual Grant to purchase ten thousand (10,000) shares of
Common Stock on the terms and conditions set forth herein; provided, however, that if the person has
not been serving as a Non-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 rata for each full quarter prior to the date of grant
during which such person did not serve as a Non-Employee Director.


 


7.                                      OPTION
PROVISIONS.


 


Each Option
shall be in such form and shall contain such terms and conditions as required
by the Plan. Each Option shall contain such additional terms and conditions,
not inconsistent with the Plan, as the Board shall deem appropriate. Each
Option shall include (through incorporation of provisions hereof by reference
in the Option or otherwise) the substance of each of the following provisions:


 


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


 


(b)                                  Exercise
Price.  The exercise price of each
Option shall be one hundred percent (100%) of the Fair Market Value of the
stock subject to the Option on the date the Option is granted. Notwithstanding
the foregoing, an Option may be granted with an exercise price lower than that
set forth in the preceding sentence if such Option is granted pursuant to an
assumption or substitution for another option in a manner satisfying the
provisions of Section 424(a) of the Code.


 


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


 


(i)                                    By cash or check.


 


(ii)                                Provided that at the
time of exercise the Common Stock is publicly traded and quoted regularly in The Wall Street Journal, by delivery of
already-owned shares of Common Stock either that the Optionholder has held for
more than six (6) months (or such longer or shorter period of time
required to avoid a charge to earnings for financial accounting purposes) or
that the Optionholder did not acquire, directly or indirectly from the Company,
that are owned free and 


 


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clear of any
liens, claims, encumbrances or security interests, and that are valued at Fair
Market Value on the date of exercise. “Delivery” for these purposes shall
include delivery to the Company of the Optionholder’s attestation of ownership
of such shares of Common Stock in a form approved by the Company. Notwithstanding
the foregoing, the Optionholder may not exercise the Option by tender to the
Company of Common Stock 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 Stock is publicly traded and quoted regularly in The Wall Street Journal, pursuant to a
program developed under Regulation T as promulgated by the Federal Reserve
Board that, prior to the issuance of Common Stock, results in either the
receipt of cash (or check) by the Company or the receipt of irrevocable
instructions to pay the aggregate exercise price to the Company from the sales
proceeds.


 


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


 


(d)                                  Transferability.  An Option is transferable by will or by the
laws of descent and distribution. An Option also is transferable (i) by
instrument to an inter vivos or testamentary trust, in a form accepted by the
Company, in which the Option is to be passed to beneficiaries upon the death of
the trustor (settlor) and (ii) by gift, in a form accepted by the Company,
to a member of the “immediate family” of the Optionholder as that term is
defined in 17 C.F.R. 240.16a-1(e). An Option shall be exercisable during the
lifetime of the Optionholder only by the Optionholder and a permitted
transferee as provided herein. However, the Optionholder may, by delivering
written notice to the Company, in a form satisfactory to the Company, designate
a third party who, in the event of the death of the Optionholder, shall
thereafter be entitled to exercise the Option.


 


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


 


(f)                                    Vesting
Schedule.


 


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


 


(1)                                 1/36th of
the shares of Common Stock subject to the Option 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 installments after the date of grant over a period commencing
on the date that the Optionholder is appointed for the first time to be a Non-Employee
Director by the Board and ending on the date of the Annual Meeting at which the
Optionholder is first scheduled to be considered for election to be a Non-Employee
Director by the stockholders of the Company.


 


(ii)                                Each Option granted as
an annual grant before the Annual Meeting in 2008 shall vest such that 1/36th of
the shares of Common Stock subject to such Option 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 in 2008 shall vest
such that 1/12th of the shares of Common Stock subject to such
Option shall vest each month after the date of grant over a period of one (1) year.


 


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(g)                                 Termination
of Continuous Service.  In the event
an Optionholder’s Continuous Service terminates (other than upon the
Optionholder’s death or Disability), the Optionholder may exercise his or her
Option (to the extent that the Optionholder was entitled to exercise it as of
the date of termination) but only within such period of time ending on the
earlier of (i) the date three (3) months following the termination of
the Optionholder’s Continuous Service, or (ii) the expiration of the term
of the Option as set forth in the Option Agreement. If, after termination, the
Optionholder does not exercise his or her Option within the time specified in
the Option Agreement, the Option shall terminate.


 


(h)                                 Extension
of Termination Date.  If the exercise
of the Option following the termination of the Optionholder’s Continuous
Service (other than upon the Optionholder’s death or Disability) would be
prohibited at any time solely because the issuance of shares would violate the
registration requirements under the Securities Act, then the Option shall
terminate on the earlier of (i) the expiration of the term of the Option
set forth in subsection 7(a) or (ii) the expiration of a period
of three (3) months after the termination of the Optionholder’s Continuous
Service during which the exercise of the Option would not be in violation of
such registration requirements.


 


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


 


(j)                                    Death
of Optionholder.  In the event (i) an
Optionholder’s Continuous Service terminates as a result of the Optionholder’s
death or (ii) the Optionholder dies within the three-month period after
the termination of the Optionholder’s Continuous Service for a reason other
than death, then the Option may be exercised (to the extent the Optionholder
was entitled to exercise the Option as of the date of death) by the
Optionholder’s estate, by a person who acquired the right to exercise the
Option by bequest or inheritance or 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 term of such Option as set forth in the
Option Agreement. If, after death, the Option is not exercised within the time
specified herein, the Option shall terminate.


 


8.                                      COVENANTS
OF THE COMPANY.


 


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


 


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


 


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9.                                      USE
OF PROCEEDS FROM STOCK.


 


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


 


10.                               MISCELLANEOUS.


 


(a)                                  Stockholder
Rights.  No Optionholder shall be
deemed to be the holder of, or to have any of the rights of a holder with
respect to, any shares subject to such Option unless and until such
Optionholder has satisfied all requirements for exercise of the Option pursuant
to its terms.


 


(b)                                  No
Service Rights.  Nothing in the Plan
or any instrument executed or Option granted pursuant thereto shall confer upon
any Optionholder any right to continue to serve the Company as a Non-Employee
Director or shall affect the right of the Company or an Affiliate to terminate (i) the
employment of an Employee with or without notice and with or without cause, (ii) the
service of a Consultant pursuant to the terms of such Consultant’s agreement
with the Company or an Affiliate or (iii) the service of a Director
pursuant to the Bylaws of the Company or an Affiliate, and any applicable
provisions of the corporate law of the state in which the Company or the
Affiliate is incorporated, 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) to give written assurances satisfactory to the Company as to
the Optionholder’s knowledge and experience in financial and business matters
and/or to employ a purchaser representative reasonably satisfactory to the
Company who is knowledgeable and experienced in financial and business matters
and that he or she is capable of evaluating, alone or together with the
purchaser representative, the merits and risks of exercising the Option; and (ii) to
give written assurances satisfactory to the Company stating that the
Optionholder is acquiring the stock subject to the Option for the Optionholder’s
own account and not with any present intention of selling or otherwise
distributing the stock. The foregoing requirements, and any assurances given
pursuant to such requirements, shall be inoperative if (iii) the issuance
of the shares upon the exercise or acquisition of stock under the Option has
been registered under a then currently effective registration statement under
the Securities Act or (iv) as to any particular requirement, a
determination is made by counsel for the Company that such requirement need not
be met in the circumstances under the then applicable securities laws. The
Company may, upon advice of counsel to the Company, place legends on stock
certificates issued under the Plan as such counsel deems necessary or
appropriate in order to comply with applicable securities laws, including, but
not limited to, legends restricting the transfer of the stock.


 


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


 


11.                               ADJUSTMENTS
UPON CHANGES IN STOCK.


 


(a)                                  Capitalization
Adjustments.  If any change is made
in the stock subject to the Plan, or subject to any Option, without the receipt
of consideration by the Company (through merger, consolidation, reorganization,
recapitalization, reincorporation, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange
of shares, change in 


 


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corporate structure or other
transaction not involving the receipt of consideration by the Company), the
Plan will be appropriately adjusted in the class(es) and maximum number of
securities subject both to the Plan pursuant to subsection 4(a) and
to the nondiscretionary Options specified in Section 5, and the
outstanding Options will be appropriately adjusted in the class(es) and number
of securities and price per share of stock subject to such outstanding Options.
The Board shall make such adjustments, and its determination shall be final,
binding and conclusive. (The conversion of any convertible securities of the
Company shall not be treated as a transaction “without receipt of consideration”
by the Company.)


 


(b)                                  Corporate
Transaction.  In the event of (i) a
sale, lease or other disposition of all or substantially all of the securities
or assets of the Company, (ii) a merger or consolidation in which the
Company is not the surviving corporation or (iii) a reverse merger in
which the Company is the surviving corporation but the shares of Common Stock
outstanding immediately preceding the merger are converted by virtue of the
merger into other property, whether in the form of securities, cash or
otherwise, then any surviving corporation or acquiring corporation may assume
any Options outstanding under the Plan or may substitute similar Options
(including an option to acquire the same consideration paid to the stockholders
in the transaction described in this subsection 11(b)) for those
outstanding under the Plan. In the event no surviving corporation or acquiring
corporation assumes such Options or substitutes similar Options for those outstanding
under the Plan, then with respect to Options held by Optionholders who are in
Continuous Service immediately prior to such an event, the vesting of such
Options (and the 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 Options shall terminate if not exercised prior to such event.


 


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


 


12.                               AMENDMENT
OF THE PLAN AND OPTIONS.


 


(a)                                  Amendment
of Plan.  The Board at any time, and
from time to time, may amend the Plan. However, except as provided in Section 11
relating to adjustments upon changes in stock, no amendment shall be effective
unless approved by the stockholders of the Company to the extent stockholder
approval is necessary to satisfy the requirements of Rule 16b-3 or any
Nasdaq 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 before amendment 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) the Optionholder consents in writing.


 


(d)                                  Amendment
of Options.  The Board at any time,
and from time to time, may amend the terms of any one or more Options;
provided, however, that the rights under any Option shall not be impaired by
any such amendment unless (i) the Company requests the consent of the
Optionholder and (ii) the Optionholder consents in writing.


 


13.                               TERMINATION
OR SUSPENSION OF THE PLAN.


 


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


 


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


 


14.                               EFFECTIVE
DATE OF PLAN.


 


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


 


15.                               CHOICE
OF LAW.


 


All questions
concerning the construction, validity and interpretation of this Plan shall be
governed by the law of the State of Delaware, without regard to such state’s
conflict of laws rules.


 


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