exv10w2



 






Exhibit 10.2




DESCRIPTION OF THE 1996 DIRECTOR STOCK OPTION PLAN

AS LAST AMENDED AND RESTATED JULY 2005



Generally: Cardiogenesis’ Director Stock Option Plan (the “Director Plan”) was originally approved
by the Board of Directors and shareholders in April 1996 and was last amended and restated in July
2005. The total number of shares currently reserved for issuance under the Director Plan is
1,025,000 shares. The original term of the Director Plan expires on or about March 31, 2006.
However, in July 2005 the shareholders approved an extension of the term of the Director Plan for
an additional nine (9) years, which extended the term of the Director Plan through March 31, 2015.



The Director Plan is not qualified under Section 401(a) of the Code and is not subject to the
Employee Retirement Income Security Act of 1974 (“ERISA”).



Purpose: The purposes of the Director Plan are to attract and retain the best available individuals
to serve as Directors of the Company and to encourage their continued service on the Board.



Administration: Generally, the Director Plan will be administered by the Board. With respect to
First Option grants and Subsequent Option grants, the Board has no discretion to determine which
Directors will be granted Options, to determine the number of shares subject to Options, to
determine the exercise price of the Options or to determine any terms of such Options.



The interpretation of any provision of the Director Plan by the Administrator shall be final and
binding. Members of the Board receive no additional compensation for their services in
administering the Director Plan.



Eligibility: Options may be granted only to Directors who are not employees of the Company.



Directors’ Options: The Director Plan provides for First Option grants of 22,500 shares to each
Director upon his election to the Board of Directors and Subsequent Option grants of 7,500 shares
upon his re-election each year (provided that such re-election is at least six (6) months after the
date of election to the Board of Directors). The option term shall be ten years, and shall be
exercisable while such person remains a Director. The exercise price shall be 100% of fair market
value on the date of grant. The fair market value of the Common Stock shall be the closing price as
of the date prior to the date of grant as reported by the NASDAQ National Market or other stock
exchange. Stock subject to a First Option shall vest as to one-thirty-sixth of the Shares on a
monthly basis from the date of grant of such Option for a period of thirty-six months. Stock
subject to a Subsequent Option shall vest as to one-twelfth of the Shares from the date of grant of
such Option for a period of twelve months. If the Optionee ceases to serve as a Director for any
reason, vesting shall cease as of the date of such termination.



Purchase Price; Payment: The exercise price of Options granted under the Director Plan must be paid
in full by cash, check, Shares of the Company (which, in the case of Shares acquired upon exercise
of an Option either have been owned by the Optionee for more than six months on the date of
surrender or were not acquired, directly or indirectly, from the Company and which have a fair
market value on the exercise date equal to the aggregate exercise price of the Shares as to which
said Option shall be exercised) or promissory note. The Administrator may authorize as payment the
retention of Shares having a fair market value on the date of exercise equal to the exercise price
for the total number of Shares as to which the Option is exercised or it may authorize delivery of
a properly executed exercise notice together with irrevocable instructions to a broker to promptly
deliver to the Company the amount of sale or loan proceeds required to pay the exercise price. The
Administrator may also authorize payment by any combination of the foregoing methods.



Termination: In the event of termination of status as a Director, the Option may thereafter be
exercised (to the extent it was exercisable), for a period of sixty (60) days, subject to the
stated term of the Option. If an




 









 







Optionee’s status as a Director is terminated by reason of the death or disability, the Option will
in general be exercisable for twelve (12) months following death, subject to the stated term of the
Option. Except as otherwise designated by the Board, Options are not transferable by the Optionee
other than by will or the laws of descent or distribution, and each option is exercisable during
the lifetime of the Director only by such Director.



Adjustments for Stock Dividends, Mergers, Liquidations, etc.: The Board is authorized to make
appropriate adjustments in connection with outstanding Options to reflect stock dividends, stock
splits and similar events. In the event of a liquidation or dissolution, to the extent an Option
has not been previously exercised, it shall terminate. In the event of the merger or sale of
substantially all of the assets of the Company, the Options shall be substituted or assumed by the
successor corporation. If substitution or assumption is not possible, the Options shall be fully
vested and exercisable, including as to shares as to which would not otherwise be exercisable, for
a period of 30 days. To the extent such Options are not exercised within such period, such Options
shall terminate.



Amendment and Termination: The Board may amend, alter, suspend or discontinue the Director Plan at
any time, but such amendment, alteration, suspension or discontinuation shall not impair any rights
then outstanding under the Director Plan without the participant’s consent. Additionally, no stock
option shall be issued or repriced with an exercise price less than 100% of the fair market value
on the date of its issuance without the approval of a majority of the shares present and entitled
to vote at a duly convened meeting of shareholders of Cardiogenesis.