QuickLinks
 -- Click here to rapidly navigate through this document

Exhibit 10.1  


 IMPLANT SCIENCES CORPORATION

2000 EMPLOYEE STOCK PURCHASE PLAN  


Wakefield,
Massachusetts

October 12, 2000 


 
 

IMPLANT SCIENCES CORPORATION
  2000 INCENTIVE AND NONQUALIFIED STOCK OPTION PLAN    
    


SECTION 1. PURPOSES OF PLAN; DEFINITIONS  



        1.1    General Purposes.    Implant Sciences Corporation, a Massachusetts corporation (the Company), desires to afford
certain executives, key employees and directors of, and certain other individuals providing services to, the Company or its subsidiary companies an opportunity to initiate or increase their
proprietary interests in the Company, and thus to create in such persons an increased interest in and greater concern for the long-term welfare of the Company. The Company, by granting
under this 2000 Incentive and Nonqualified Stock Option Plan (this Plan) stock options to acquire shares of common stock of the Company (an Option), seeks to retain the services of persons now holding
key positions with the Company and to secure the services of other persons capable of filling key positions with the Company or its subsidiary companies. 


        1.2    Definitions.    For purposes of this Plan, the following terms shall have the indicated meanings: 


        Board
means the Board of Directors of the Company. 


        Cause
shall mean, with respect to any Option holder, a determination by the Company (including the Board) that the Holder's employment or other relationship with the Company should be
terminated as a result of (i) a material breach by the Option holder of any agreement to which the Option holder and the Company are parties, (ii) any act (other than retirement) or
omission to act by the Option holder that may have a material and adverse effect on the business of the Company or on the Option holder's ability to perform services for the Company, including,
without limitation, the proven or admitted commission of any crime (other than an ordinary traffic violation), or (iii) any material misconduct or material neglect of duties by the Option
holder in connection with the business or affairs of the Company. 


        Code
means the Internal Revenue Code of 1986, as amended, and any successor code thereto, together with related rules, regulations and interpretations; and any reference herein to a
particular Section of the Code shall include any successor provision of the Code. 


        Committee
has the meaning set forth in Section 2.1 hereof. 


        Common
Stock means the Common Stock, par value $.10 per share, of the Company, subject to adjustment pursuant to Section 8 hereof. 


        Greater-Than-Ten-Percent
Stockholder means any individual who, at the time he or she is granted an Option, owns or, as a result of the attribution
rules of Section 424(d) of the Code, is deemed to own more than ten percent of the total combined voting power of all classes of stock of the Company. 


        Incentive
Option means any Option designated and qualified as an incentive stock option within the meaning of Section 422 of the Code. The Company intends that Incentive Options
will qualify as incentive stock options within the meaning of Section 422 of the Code, and the terms of this Plan shall be interpreted in accordance with this intention; the Company makes no
warranty, however, as the qualification of any Option as an Incentive Option. 


        Nonqualified
Option means any Option that is not an Incentive Option. 








        Non-Employee
Director means any director who is not also an employee of the Company, its parent or any subsidiary. 


        Outside
Director means any director who (i) is not an employee of the Company or of any affiliated group, as such term is defined in Section 1504(a) of the Code, which
includes the Company (an Affiliate), (ii) is not a former employee of the Company or any Affiliate who is receiving compensation for prior services (other than benefits under a
tax-qualified retirement plan) during the Company's or any Affiliate's taxable year, (iii) has not been an officer of the Company or any Affiliate and (iv) does not receive
remuneration from the Company or any Affiliate, either directly or indirectly, in any capacity other than as a director. Outside Director shall be determined in accordance with Section 162(m)
of the Code and the Treasury regulations issued thereunder. 


        Securities
Act means the Securities Act of 1933, as amended, and any successor act thereto, together with related rules, regulations and interpretations. 


SECTION 2. ADMINISTRATION  


        2.1    Committee.    This Plan shall be administered by a committee (the Committee) consisting of at least two Outside
Directors. It is the intention of the Company that the Plan shall be administered to comply with the provisions of Rule 16b-3 under the Securities Exchange Act of 1934 (the Exchange
Act), but the authority and validity of any act taken or not taken by the Committee shall not be affected if any person administering the Plan is not a Non-Employee Director as defined in
the Rule. Except as specifically reserved to the Board under the terms of the Plan, and subject to Section 4.2 hereof, the Committee shall have full and final authority to operate, manage and
administer the Plan on behalf of the Company. Any or all powers and functions of the Committee may at any time and from time to time be exercised by the Board, and any reference in this Plan to the
Committee shall be deemed to refer to the Board to the extent the Board is exercising any of the powers and functions of the Committee. 


        2.2    Powers of the Committee.    Subject to the terms and conditions of this Plan and except with respect to Options
granted pursuant to Section 4.2, the Committee shall have the power: 



	(a)
	to
determine from time to time the individuals to whom Options shall be granted and the terms, conditions, restrictions and provisions (which need not be identical) of each of those
Options, including, with respect to each Option, the time at which the Option shall be granted, the number of shares of Common Stock that shall be subject to the Option, the exercise price for each
share of Common Stock subject to the Option (which price shall be subject to the requirements of Section 6.3), the period during which the Option shall be exercisable (whether in whole or in
part) and the time or times when each Option shall become exercisable;



	(b)
	to
modify or amend, in its sole discretion, conditionally or unconditionally, any outstanding Option granted under this Plan, including a reduction of the exercise price, an
acceleration of the vesting schedule, or an extension of the expiration date;



	(c)
	to
accelerate, in its sole discretion, an Option holder's right to exercise his or her Option in whole or in part, conditionally or unconditionally, at any time, including upon
consummation of the initial public offering of Common Stock;



	(d)
	generally,
to exercise such powers and to perform such acts as are deemed necessary or expedient to promote the best interests of the Company with respect to this Plan;



	(e)
	the
power to delegate to other persons the responsibility for performing ministerial acts in furtherance of the Plan's purpose;



	(f)
	the
power to engage the services of persons or organizations in furtherance of the Plan's purpose, including but not limited to banks, insurance companies, brokerage firms and
consultants; and 









	(g)
	to
construe and interpret this Plan and Options granted hereunder and to establish, amend, and revoke rules and regulations for the interpretation, management and administration of
this Plan. In this connection, the Committee may supply any omission, reconcile any inconsistency, or correct any other defect in this Plan or in any Option agreement in the manner and to the extent
it shall deem necessary or expedient to make this Plan fully effective. 




        All
decisions and determinations by the Committee in the exercise of the foregoing powers shall be final and binding upon the Company and Option holders. No member or former member of
the Committee or the Board shall be liable for any action or determination made in good faith with respect to this Plan or any Option. 


        2.3    Appointment and Proceedings of Committee.    The Board may from time to time appoint members of the Committee
in substitution for or in addition to members previously appointed, and subject to Section hereof, may fill vacancies, however caused, in the Committee. The Committee shall select one of its members
as its chairman and shall hold its meetings at such times and places as it shall deem advisable. A majority of its members shall constitute a quorum, and all actions of the Committee shall require the
affirmative vote of a majority of its members. Any action may be taken by a written instrument signed by all of the members, and any action so taken shall be as fully effective as if it had been taken
by a vote of a majority of the members at a meeting duly called and held. 



SECTION 3. STOCK  


        3.1    Stock to be Issued.    The stock subject to Options granted under this Plan may be shares of authorized and
issued Common Stock, shares of Common Stock held in treasury or both, at the discretion of the Company. The total number of shares of Common Stock that may be issued pursuant to Options granted under
the Plan shall not exceed 1,000,000 in the aggregate; provided, however, that the class and aggregate number of shares subject to Options shall be subject to adjustment as provided in Section hereof. 


        3.2    Termination of Option.    If any Option granted under this Plan expires or otherwise terminates without having
been exercised in whole or in part, the shares of Common Stock previously subject to the unexercised portion of that Option may be the subject of new Options under this Plan. 


        3.3    No Fractional Shares.    In no event shall any Option be exercisable for a fraction of a share of Common Stock. 


SECTION 4. ELIGIBILITY  


        4.1    Individuals Eligible.    Incentive Options may be granted only to officers and other employees of the Company,
including members of the Board who are also employees of the Company. Nonqualified Options may be granted to officers or other employees of the Company, including members of the Board, and to
consultants and other individuals who render services to the Company regardless of whether they are employees. Nonqualified Options may be granted to Non-Employee Directors only as
provided in Section 4.2 hereof. 


        4.2    Non-Discretionary Option Grants to Non-Employee Directors.    Any other provision of
this Plan to the contrary notwithstanding, Non-Employee Directors shall not be eligible to receive Options under the Plan except pursuant to this Section 4.2. Each
Non-Employee Director who is elected by the stockholders of the Company to the Board initially on or subsequent to the date on which this Plan is approved by stockholders pursuant to
Section 13 shall automatically be granted, upon such election, a Nonqualified Option to purchase 10,000 shares of Common Stock. Each Non-Employee Director who is reelected by the
stockholder of the Company to the Board on or subsequent to said date of stockholder approval of this Plan still automatically be granted, upon each such reelection, a Nonqualified Option to purchase
10,000 shares of Common Stock. Options shall be granted pursuant to this Section 4.2 only to persons who are serving as Non-Employee Directors on the Grant Date. Any share grant
referred to in this Section shall be subject to adjustment in accordance with Section 8 








hereof.
The purchase price per share of the Common Stock under each Option granted pursuant to this Section 4.2 shall be equal to the fair market value of the Common Stock, determined in
accordance with Section 6.3 hereof, on the date the Option is granted. Each such Option shall expire on the fifth anniversary of the date of grant. 


        4.3    Greater-Than-Ten-Percent Stockholders.    Except as may otherwise be
permitted by the Code or other applicable law or regulation, no Incentive Option shall be granted to a Greater-Than-Ten-Percent Stockholder unless (a) the
exercise price per share under the Incentive Option is not less than 110% of the fair market value of the Common Stock at the time at which the Incentive Option is granted and (ii) the
Incentive Option is not exercisable to any extent after the fifth anniversary of the date on which the Incentive Option is granted. 


        4.4    Maximum Aggregate Fair Market Value.    The aggregate fair market value (determined at the time the Incentive
Option is granted) of the Common Stock with respect to which Incentive Options are exercisable for the first time by any Option holder during any calendar year under this Plan and any other plans of
the Company for the issuance of incentive stock options (within the meaning of Section 422 of the Code) shall not exceed $100,000 or such greater amount as may from time to time be permitted
with respect to incentive stock options by the Code or any other applicable law or regulation. To the extent any Option exceeds the foregoing limitation, it shall be deemed a Nonqualified Option. 


        4.5    Limitation on Grants.    There is no limitation on the number of Options an individual may be granted in any
calendar year. 


SECTION 5. TERMINATION OF EMPLOYMENT OR DEATH OF OPTION HOLDER  



        5.1    Termination of Employment.    Except as otherwise expressly provided herein, an Option shall terminate on the
earliest of: 



	(a)
	the
date of expiration thereof;



	(b)
	the
date of cancellation thereof pursuant to Section 8.3(c);



	(c)
	sixty
days after the date on which the Option holder's employment with, or directorship or other services to, the Company are terminated other than for Cause; provided, however, that
if, before the date of expiration of the Option, the Option holder shall be retired in good standing from the employ of the Company for reasons of age under the then established rules of the Company,
the Option shall terminate on the earlier of such date of expiration or 90 days after the date of such retirement. In the event of such retirement, the Option holder shall have the right prior
to the termination of such Option to exercise the Option to the extent to which the Option holder was entitled to exercise such Option immediately prior to such retirement; and



	(d)
	the
date on which the Option holder's employment with, or directorship or other services to, the Company is terminated voluntarily by the Option holder or by the Company for Cause;
provided, however, that Nonqualified Options need not, unless the Committee determines otherwise, be subject to the provisions set forth in clauses (c) and (d) above nor to
Section 5.2 below. Whether authorized leave of absence, or absence on military or government service, shall constitute termination of an employment relationship between the Company and the
Option holder shall be determined by the Committee at the commencement thereof, and the Committee shall promptly notify the Option holder of such determination. Options shall not be affected by any
Option holder's change of employment within the Company or change in the identity of the Company to whom directorship or other services are provided, so long as the Option holder continues to be an
employee of, or to provide such services to, the Company. 






        5.2    Death or Permanent Disability of Option Holder.    In the event of the death or permanent and total disability
of an Option holder prior to termination of the Option holder's services to the Company 






and
prior to the date of expiration of such Option, such Option shall terminate on the earliest of its date of expiration, its date of cancellation pursuant to Section 8.3(c), and the date that
is 180 days after the date of such death or disability. After the death of the Option holder, his or her executors, administrators or any individual or individuals to whom the Option may be
transferred by will or by the laws of descent and distribution, shall have the right, at any time prior to the date of such termination, to exercise the Option to the extent the Option holder was
entitled to exercise the Option immediately prior to his or her death. Permanent and total disability for these purposes shall be determined in accordance with Section 22(e)(3) of the Code and
the rules, regulations and interpretations issued thereunder. 


SECTION 6. TERMS OF OPTION AGREEMENTS  


        Each Option shall be evidenced by an agreement (an Option Agreement) in writing that shall contain such terms, conditions, restrictions and other provisions as
the Committee shall from time to time deem appropriate. Any additional provisions shall not, however, be inconsistent with any other term or condition of this Plan and shall not cause any Incentive
Option to fail to qualify as an incentive stock option within the meaning of Section 422 of the Code. Option agreements need not be identical, but each Option agreement shall, by appropriate
language, include the substance of the following provisions: 


        6.1    Expiration of Option.    Subject to Section 4.2 hereof, notwithstanding any other provision of this Plan
or of the Option agreement, such Option shall expire on the date specified in the Option agreement, which date shall not, in the case of an Incentive Option, be later than the tenth anniversary (the
fifth anniversary in the case of a Greater-Than-Ten-Percent Stockholder) of the date on which the Option was granted, or as specified in Section 5 hereof. 


        6.2    Exercise    Subject to Section 4.2 hereof, each Option may be exercised so long as it is valid and
outstanding, from time to time in part or as a whole, subject to any limitations with respect to the number of shares for which the Option may be exercised at a particular time and to such other
conditions as the Committee in its discretion may specify upon granting the Option. 


        6.3    Exercise Price.    Subject to Section 4.2 hereof, the exercise price per share under each Option shall
be determined by the Committee at the time the Option is granted and shall not be less than the par value of the Common Stock obtainable upon the exercise thereof; provided, however, that the exercise
price of any Incentive Option shall not, unless otherwise permitted by the Code, be less than the fair market value of the Common Stock on the date the Option is granted (110% of the fair market value
in the case of a Greater- Than-Ten-Percent Stockholder). For these purposes, the fair market value of the Common Stock shall equal (a) the closing price per share on the
date of grant of the Option as reported by a nationally recognized stock exchange, (b) if the Common Stock is not listed on such an exchange, as reported by the National Market System or
another automated quotation system of the National Association of Securities Dealers, Inc., or (c) if the Common Stock is not quoted on any such system, the fair market value as
determined by the Committee. 


        6.4    Transferability of Options and Option Shares.    No Option shall be transferable by its holder or by operation
of law, otherwise than by will or under the laws of descent and distribution and shall not be subject to execution, attachment or similar process. Each Option shall, during the Option holder's
lifetime, be exercisable only by the Option holder. The Committee may in its discretion provide upon the grant of any Option that the shares of Common Stock purchasable upon exercise of such Option
shall be subject to such restrictions on transferability as the Committee may determine. Upon any attempt to transfer any Option under the Plan or any right or privilege conferred hereby, contrary to
the provisions of the Plan, or (if the Committee shall so determine) upon any levy or any attachment or similar process upon the rights and privileges conferred hereby, such Option shall thereupon
terminate and become null and void. 


        6.5    Rights of Option Holders.    No Option holder or other person shall, by virtue of the granting of an Option, be
deemed for any purpose to be the owner of any shares of Common Stock subject to such Option or to be entitled to the rights or privileges of a holder of such shares unless and until the 








Option
shall have been exercised pursuant to the terms thereof with respect to such shares and the Company shall have issued and delivered the shares to the Option holder. 


        6.6    Repurchase Right.    The Committee may in its discretion provide upon the grant of any Option that the Company
shall have an option to repurchase, upon terms and conditions determined by the Committee, all or any number of shares purchased upon exercise of such Option. The repurchase price per share payable by
the Company shall be such amount or be determined by such formula as is fixed by the Committee at the time of grant of the Option for the shares subject to repurchase. In the event the Committee
grants an Option subject to such a repurchase option, then so long as the shares purchased upon exercise of that Option remain subject to the repurchase option, each certificate representing those
shares shall bear a legend satisfactory to counsel for the Company referring to the Company's repurchase option. 


        6.7    Lockup Agreement.    The Committee may in its discretion specify upon granting an Option that the Option holder
shall agree for a period of time (not to exceed 180 days) from the effective date of any registration of securities of the Company (upon request of the Company or the underwriters managing any
underwritten offering of the Company's securities), not to sell, make any short sale of, loan, grant any option for the purchase of, or otherwise dispose of any shares issued pursuant to the exercise
of
such Option, without the prior written consent of the Company or such underwriters, as the case may be. 


SECTION 7. METHOD OF EXERCISE; PAYMENT OF EXERCISE PRICE  


        7.1    Method of Exercise.    Any Option may be exercised by the Option holder by delivering to the Company, on any
business day prior to the termination of the Option, a written notice specifying the number of shares of Common Stock the Option holder then desires to purchase and the address to which the
certificates for such shares are to be mailed, accompanied by payment of the exercise price for such shares. 


        7.2    Payment of Exercise Price.    Payment for the shares of Common Stock purchased upon exercise of an Option shall
be made by: 



	(a)
	cash
in an amount, or a check, bank draft or postal or express money order payable in an amount, equal to the aggregate exercise price of the shares being purchased;



	(b)
	with
the consent of the Committee, shares of Common Stock owned by the option holder for a period of at least 6 months and having a fair market value (as defined for purposes
of Section 6.3 hereof) equal to such aggregate exercise price;



	(c)
	with
the consent of the Committee, by reducing the number of Option shares otherwise issuable to the Option holder upon exercise of the Option by a number of shares having a fair
market value (as defined for purposes of Section 6.3 hereof) equal to such aggregate exercise price;



	(d)
	with
the consent of the Committee, a personal recourse note issued by the Option holder to the Company in a principal amount equal to such aggregate exercise price and with such other
terms, including interest rate and maturity, as the Committee may determine in its discretion; provided, however, that the interest rate borne by such note shall not be less than the lowest applicable
federal rate, as defined in Section 1274(d) of the Code;



	(e)
	with
the consent of the Committee, such other consideration that is acceptable to the Committee and that has a fair market value, as determined by the Committee, equal to such
aggregate exercise price, including any broker-directed cashless exercise/resale procedure adopted by the Committee; or



	(f)
	with
the consent of the Committee, any combination of the foregoing. 




        As
promptly as practicable after receipt of notice and payment pursuant to Section 7.1 hereof and any documents required pursuant to Sections 9.2 and 9.3 hereof, the Company shall
deliver to the 








Option
holder a certificate registered in the name of the Option holder and representing the number of shares with respect to which such Option has been so exercised; provided, however, that if any
law or regulation or order of the Securities and Exchange Commission or any other body having jurisdiction in the premises shall require the Company or the Option holder to take any action in
connection with the shares then being purchased, the date for the delivery of the certificates for such shares shall be extended for the period necessary to take and complete such action. Delivery by
the Company of the certificate for such shares shall be deemed effected for all purposes when the Company or a stock transfer agent of the Company shall have deposited such certificate in the United
States mail, addressed to the Option holder, at the address specified in the notice delivered pursuant to Section 7.1 hereof. 


SECTION 8. CHANGES IN COMPANY'S CAPITAL STRUCTURE  



        8.1    Rights of Company.    The existence of outstanding Options shall not affect in any way the right or power of
the Company or its stockholders to enter into, make or authorize, without limitation, 



	(a)
	any
adjustment, recapitalization, reorganization or other change in the Company's capital structure or its business,



	(b)
	any
merger or consolidation of the Company,



	(c)
	any
issue of Common Stock or of bonds, debentures, preferred or prior preference stock or other capital stock ahead of or affecting the Common Stock or the rights thereof,



	(d)
	a
dissolution or liquidation of the Company,



	(e)
	any
sale or transfer of all or any part of the assets or business of the Company, or



	(f)
	any
other corporate act or proceeding, whether of a similar character or otherwise. 




        8.2    Recapitalization, Stock Splits and Dividends.    If the Company shall effect any subdivision or consolidation
of shares of its stock or other capital readjustment, the payment of a stock dividend, or any other increase or reduction of the number of shares of its stock outstanding, in any such case without
receiving compensation therefor in money, services or property, then 



	(a)
	the
number, class and price per share of stock subject to each outstanding Option shall be appropriately adjusted in such a manner as to entitle an Option holder to receive upon
exercise of an Option, for the same aggregate cash consideration, the same total number and class of shares as he or she would have received as a result of the event requiring the adjustment had the
Option holder exercised the Option in full immediately prior to such event, and



	(b)
	the
number and class of shares with respect to which Options may be granted under this Plan shall be adjusted by substituting for the total number of shares of Common Stock then
reserved for issuance under this Plan that number and class of shares of stock that the owner of an equal number of outstanding shares of Common Stock would own as the result of the event requiring
the adjustment. 




        8.3    Mergers, Sales, etc.    If the Company shall be a party to a reorganization or merger with one or more other
corporations (whether or not the Company is the surviving or resulting corporation), shall consolidate with or into one or more other corporations, shall be liquidated, or shall sell or otherwise
dispose of substantially all of its assets to another corporation (each a Transaction), then: 



	(a)
	subject
to the provisions of clauses (b) and (c) below, after the effective date of the Transaction, each holder of an outstanding Option shall be entitled, upon
exercise of such Option and at no additional cost, to receive shares of Common Stock or, if applicable, shares of such other stock or other securities, cash or property as the holders of shares of
Common Stock received pursuant to the terms of the Transaction; 









	(b)
	the
Committee may accelerate the time for exercise of all outstanding Options to a date prior to the effective date of the Transaction, as specified by the Committee; or



	(c)
	all
outstanding Options may be canceled by the Committee as of the effective date of the Transaction, provided that (i) notice of such cancellation shall have been given to
each Option holder and (ii) each Option holder shall have the right to exercise such Option to the extent that the same is then exercisable or, if the Committee shall have accelerated the time
for exercise of all outstanding Options, in full during the thirty-day period preceding the effective date of the Transaction. 




        8.4    Adjustments to Common Stock Subject to Options.    Except as hereinbefore expressly provided, the issue by the
Company of shares of stock of any class, or securities convertible into shares of stock of any class, for cash or property, or for labor or services, either upon direct sale or upon the exercise of
rights or warrants to subscribe therefor, or upon conversion of shares or obligations of the Company convertible into such shares or other securities, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of shares of Common Stock then subject to outstanding Options. 


        8.5    Miscellaneous.    Adjustments under this Section 8 shall be determined by the Committee, and such
determinations shall be conclusive. The Committee shall have the discretion and power in any such event to determine and to make effective provision for acceleration of the time or times at which any
Option or portion thereof shall become exercisable. No fractional shares of Common Stock shall be issued under this Plan on account of any adjustment specified above. 


SECTION 9. GENERAL RESTRICTIONS  


        9.1    Granting of Options.    No Option may be granted under this Plan after the tenth anniversary of the effective
date hereof. 


        9.2    Investment Representations.    The Company may require any individual to whom an Option is granted, as a
condition of exercising such Option, to give written assurances in substance and form satisfactory to the Company to the effect that such individual is acquiring the Common Stock subject to the Option
for his or her own account for investment and not with a view to the resale or distribution thereof, and to such other effects as the Company deems necessary or advisable in order to comply with the
Securities Act and applicable state securities laws. 


        9.3    Compliance with Securities Laws.    The Company shall not be required to sell or issue any shares under any
Option if the sale or issuance of such shares would constitute a violation by the Option holder or the Company of any provision of any law or regulation of any governmental authority, including the
Securities Act. In addition, the Company shall not be required to sell or issue shares upon the exercise of any Option unless the Committee has received evidence satisfactory to it that the holder of
such Option will not transfer such shares except pursuant to a registration statement in effect under the Securities Act or unless an opinion of counsel satisfactory to the Company has been received
by the Company to the effect that such registration is not required. Any determination in this connection by the Committee shall be final, binding and conclusive. In the event the shares issuable on
exercise of an Option are not registered under the Securities Act, the Company may imprint upon any certificate representing shares so issued the following legend or any other legend that counsel for
the Company considers necessary or advisable to comply with the Securities Act and applicable state securities laws: 



        The
shares of stock represented by this certificate have not been registered under the Securities Act of 1933 or under the securities laws of any state and may not be sold or transferred
except upon such registration or upon receipt by the issuer of an opinion of counsel satisfactory to the issuer, in form and substance satisfactory to the issuer, that registration is not required for
such sale or transfer. 


        The
Company may, but shall not be obligated to, register the shares of stock covered by any Options pursuant to the Securities Act. In the event such shares are so registered, the
Company may remove any legend on certificates representing such shares. The Company shall not be obligated to 








take
any affirmative action in order to cause the exercise of an Option or the issuance of shares pursuant thereto to comply with any law or regulation of any governmental authority. 


        9.4    Other Certificate Legends.    The Company may endorse such other legends upon the certificates for shares of
Common Stock issued upon exercise of an Option and may issue such stop transfer instructions to the transfer agent for the Common Stock as the Committee may, in its discretion, determine to be
necessary or appropriate (a) to implement the provisions of this Plan and such Option
with respect to such shares and (b) to permit the Company to determine the occurrence of a disqualifying disposition (as defined in Section 421(b) of the Code) of shares issued upon
exercise of Incentive Options. 


        9.5    Employment Obligation.    The granting of any Option shall not impose upon the Company any obligation to employ
or continue to employ any Option holder. The right of the Company to terminate the employment of any officer or other employee thereof shall not be diminished or affected by reason of the fact that an
Option has been granted to such officer or other employee. 


SECTION 10. WITHHOLDING TAXES  


        10.1    Rights of Company.    The Company may require an employee exercising a Nonqualified Option, or disposing of
shares of Common Stock acquired pursuant to the exercise of an Incentive Option in a disqualifying disposition (as defined in Section 421(b) of the Code), to reimburse the Company for any taxes
required by any government to be withheld or otherwise deducted and paid by such employer corporation in respect of the issuance or disposition of such shares. In lieu thereof, the employer
corporation shall have the right to withhold the amount of such taxes from any other sums due or to become due from such corporation to the employee upon such terms and conditions as the Committee may
prescribe. The employer corporation may, in its discretion, hold the stock certificate to which such employee is otherwise entitled upon the exercise of an Option as security for the payment of any
such withholding tax liability, until cash sufficient to pay that liability has been received or accumulated. 


        10.2    Payment in Shares.    An employee may elect to have such tax withholding obligation satisfied, in whole or in
part, by (i) authorizing the Company to withhold from shares of Common Stock to be issued pursuant to the exercise of a Nonqualified Option a number of shares with an aggregate fair market
value (as defined in Section 6.3 hereof determined as of the date the withholding is effected) that would satisfy the minimum withholding amount due with respect to such exercise, or
(ii) transferring to the Company shares of Common Stock owned by the employee for a period of at least six months and with an aggregate fair market value (as defined in Section 6.3
hereof determined as of the date the withholding is effected) that would satisfy the withholding amount due. 


        10.3    Notice of Disqualifying Disposition.    Each holder of an Incentive Option shall agree to notify the Company
in writing immediately after making a disqualifying disposition (as defined in Section 421(b) of the Code) of any Common Stock purchased upon exercise of the Incentive Option. 


SECTION 11. AMENDMENT OR TERMINATION OF PLAN  


        11.1    Amendment.    The Board may terminate the Plan and may amend the Plan at any time, and from time to time,
subject to the limitation that, except as provided in Section 8 hereof, no amendment shall be effective unless approved by the stockholders of the Company in accordance with applicable law and
regulations, at an annual or special meeting held within 12 months before or after the date of adoption of such amendment, in any instance in which such amendment would: 



	(i)
	increase
the number of shares of Common Stock that may be issued under, or as to which Options may be granted pursuant to, the Plan; or



	(ii)
	change
in substance the provisions of Section 4 hereof relating to eligibility to participate in the Plan. Without limiting the generality of the foregoing, the Board is
expressly authorized to amend the Plan, at any time and from time to time, to confirm it to the provisions of 








Rule 16b-3
(or successor rule) under the Exchange Act, as that Rule may be amended from time to time. 





        Except
as provided in Section 8 hereof, the rights and obligations under any Option granted before amendment of this Plan or any unexercised portion of such Option shall not be
adversely affected by amendment of this Plan or such Option without the consent of the holder of such Option. 



        11.2    Termination.    This Plan shall terminate as of the tenth anniversary of its effective date. The Board may
terminate this Plan at any earlier time for any or no reason. No Option may be granted after the Plan has been terminated. No Option granted while this Plan is in effect shall be altered or impaired
by termination of this Plan, except upon the consent of the holder of such Option. The power of the Committee to construe and interpret this Plan and the Options granted prior to the termination of
this Plan shall continue after such termination. 



SECTION 12. NONEXCLUSIVITY OF PLAN  


        Neither the adoption of this Plan by the Board nor the submission of this Plan to the stockholders of the Company for approval shall be construed as creating any
limitations on the power of the Board to adopt such other incentive arrangements as it may deem desirable, including the granting of stock options otherwise than under this Plan, and such arrangements
may be either applicable generally or only in specific cases. 


        The
Committee's determinations under the Plan need not be uniform and may be made by it selectively among persons who receive, or are eligible to receive, awards under the Plan (whether
or not such persons are similarly situated). Without limiting the generality of the foregoing, the Committee shall be entitled, among other things, to make non-uniform and selective
determinations, and to enter into non-uniform and selective Plan agreements, as to (i) the persons to receive awards under the Plan, (ii) the terms and provisions of awards
under the Plan, (iii) the exercise by the Committee of its discretion in respect of the exercise of options pursuant to the terms of the Plan, and (iv) the treatment of leaves of absence
pursuant to Section 5.1 hereof. 


SECTION 13. EFFECTIVE DATE  


        This Plan shall become effective upon its adoption by the Board, provided that the stockholders of the Company shall have approved this Plan within twelve months
prior to or following the adoption of this Plan by the Board. Subject to the foregoing, Options may be granted under the Plan at any time subsequent to its effective date; provided, however, that
(a) no such Option shall be exercised or exercisable unless the stockholders of the Company shall have approved the Plan within twelve months prior to or following the adoption of this Plan by
the Board, and (b) all Options issued prior to the date of such stockholders' approval shall contain a reference to such condition. 


SECTION 14. PROVISIONS OF GENERAL APPLICATION  


        14.1    Severability.    The invalidity or unenforceability of any provision of this Plan shall not affect the
validity or enforceability of any other provision of this Plan, each of which shall remain in full force and effect. 



        14.2    Construction.    The headings in this Plan are included for convenience only and shall not in any way effect
the meaning or interpretation of this Plan. Any term defined in the singular shall include the plural, and vice versa. The words herein, hereof and hereunder refer to this Plan as a whole and not to
any particular part of this Plan. The word including as used herein shall not be construed so as to exclude any other thing not referred to or described. 


        14.3    Further Assurances.    The Company and any holder of an Option shall from time to time execute and deliver any
and all further instruments, documents and agreements and do such other and further acts and things as may be required or useful to carry out the intent and purpose of this Plan and such Option and to
assure to the Company and such Option holder the benefits contemplated by 








this
Plan; provided, however, that neither the Company nor any Option holder shall in any event be required to take any action inconsistent with the provisions of this Plan. 



        14.4    Governing Law.    This Plan and each Option shall be governed by the laws of The Commonwealth of
Massachusetts. 











QuickLinks


IMPLANT SCIENCES CORPORATION 2000 INCENTIVE AND NONQUALIFIED STOCK OPTION PLAN