Exhibit 10.11


 


QUARK BIOTECH, INC.


fka EXPRESSION SYSTEMS, INC.


 


1997 STOCK PLAN


(Amended as of July 20, 2000)


 


1.             Purposes of the
Plan. The purposes of this Stock Plan are to attract and retain the best
available personnel for positions of substantial responsibility, to provide
additional incentive to Employees, Directors and Consultants and to promote the
success of the Company’s business. Options granted under the Plan may be
Incentive Stock Options or Nonstatutory Stock Options, as determined by the Administrator
at the time of grant. Stock Purchase Rights may also be granted under the Plan.


 


2.             Definitions. As
used herein, the following definitions shall apply:


 


(a)           “Administrator”
means the Board or any of its Committees as shall be administering the Plan in
accordance with Section 4 hereof.


 


(b)           “Applicable Laws”
means the requirements relating to the administration of stock option plans
under U.S. state corporate laws, U.S. federal and state securities laws, the
Code, any stock exchange or quotation system on which the Common Stock is
listed or quoted and the applicable laws of any other country or jurisdiction
where Options or Stock Purchase Rights are granted under the Plan.


 


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


 


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


 


(e)           “Committee”
means a committee of Directors appointed by the Board in accordance with
Section 4 hereof.


 


(f)            “Common Stock”
means the Common Stock of the Company.


 


(g)           “Company” means
Quark Biotech, Inc., fka Expression Systems, Inc., a California corporation.


 


(h)           “Consultant”
means any person who is engaged by the Company or any Parent or Subsidiary to
render consulting or advisory services to such entity.


 


(i)            “Director”
means a member of the Board of Directors of the Company.


 


(j)            “Disability”
means total and permanent disability as defined in Section 22(e)(3) of the
Code.


 


(k)           “Employee” means
any person, including Officers and Directors, employed by the Company or any
Parent or Subsidiary of the Company. A Service Provider shall not cease to be
an Employee in the case of (i) any leave of absence approved by the Company or
(ii) transfers between locations of the Company or between the Company, its 


 


 


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Parent, any Subsidiary, or any successor. For purposes
of Incentive Stock Options, no such leave may exceed ninety days, unless
reemployment upon expiration of such leave is guaranteed by statute or contract.
If reemployment upon expiration of a leave of absence approved by the Company
is not so guaranteed, on the 181st day of such leave any Incentive Stock Option
held by the Optionee shall cease to be treated as an Incentive Stock Option and
shall be treated for tax purposes as a Nonstatutory Stock Option. Neither
service as a Director nor payment of a director’s fee by the Company shall be
sufficient to constitute “employment” by the Company.


 


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


 


(m)          “Fair Market Value”
means, as of any date, the value of Common Stock determined as follows:


 


(i)            If the Common Stock is
listed on any established stock exchange or a national market system, including
without limitation the Nasdaq National Market or The Nasdaq SmallCap Market of
The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price
for such stock (or the closing bid, if no sales were reported) as quoted on
such exchange or system for the last market trading day prior to the time of
determination, as reported in The Wall Street Journal
or such other source as the Administrator deems reliable;


 


(ii)           If the Common Stock is
regularly quoted by a recognized securities dealer but selling prices are not
reported, its Fair Market Value shall be the mean between the high bid and low
asked prices for the Common Stock on the last market trading day prior to the
day of determination; or


 


(iii)          In the absence of an
established market for the Common Stock, the Fair Market Value thereof shall be
determined in good faith by the Administrator.


 


(n)           “Incentive Stock
Option” means an Option intended to qualify as an incentive stock option
within the meaning of Section 422 of the Code.


 


(o)           “Nonstatutory Stock
Option” means an Option not intended to qualify as an Incentive Stock
Option.


 


(p)           “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.


 


(q)           “Option” means a
stock option granted pursuant to the Plan.


 


(r)            “Option Agreement”
means a written or electronic agreement between the Company and an Optionee
evidencing the terms and conditions of an individual Option grant. The Option
Agreement is subject to the terms and conditions of the Plan.


 


(s)           “Option Exchange
Program” means a program whereby outstanding Options are exchanged for
Options with a lower exercise price.


 


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(t)            “Optioned Stock”
means the Common Stock subject to an Option or a Stock Purchase Right.


 


(u)           “Optionee” means
the holder of an outstanding Option or Stock Purchase Right granted under the
Plan.


 


(v)           “Parent” means a
“parent corporation,” whether now or hereafter existing, as defined in Section
424(e) of the Code.


 


(w)          “Plan” means this
1997 Stock Plan.


 


(x)            “Restricted Stock”
means shares of Common Stock acquired pursuant to a grant of a Stock Purchase
Right under Section 11 below.


 


(y)           “Section 16(b)”
means Section 16(b) of the Securities Exchange Act of 1934, as amended.


 


(z)            “Service Provider”
means an Employee, Director or Consultant.


 


(aa)         “Share” means a
share of the Common Stock, as adjusted in accordance with Section 12 below.


 


(bb)         “Stock Purchase Right”
means a right to purchase Common Stock pursuant to Section 11 below.


 


(cc)         “Subsidiary” means
a “subsidiary corporation,” whether now or hereafter existing, as defined in
Section 424(f) of the Code.


 


3.             Stock Subject to
the Plan. Subject to the provisions of Section 12 of the Plan, the maximum
aggregate number of Shares which may be subject to option and sold under the
Plan and the Company’s 1994 Stock Option Plan (“1994 Plan”), is that number of
shares equal to: (I) 5,000,000 Shares plus (ii) any Shares returned to the 1994
Plan as a result of termination of options under the 1994 Plan. The Shares may
be authorized but unissued, or reacquired Common Stock.


 


If an Option or Stock
Purchase Right expires or becomes unexercisable without having been exercised
in full, or is surrendered pursuant to an Option Exchange Program, the
unpurchased Shares which were subject thereto shall become available for future
grant or sale under the Plan (unless the Plan has terminated). However, Shares
that have actually been issued under the Plan, upon exercise of either an
Option or Stock Purchase Right, shall not be returned to the Plan and shall not
become available for future distribution under the Plan, except that if Shares
of Restricted Stock are repurchased by the Company at their original purchase
price, such Shares shall become available for future grant under the Plan.


 


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4.             Administration of
the Plan.


 


(a)           Administrator. The
Plan shall be administered by the Board or a Committee appointed by the Board,
which Committee shall be constituted to comply with Applicable Laws.


 


(b)           Powers of the
Administrator. Subject to the provisions of the Plan and, in the case of a
Committee, the specific duties delegated by the Board to such Committee, and
subject to the approval of any relevant authorities, the Administrator shall
have the authority in its discretion:


 


(i)            to determine the Fair
Market Value;


 


(ii)           to select the Service
Providers to whom Options and Stock Purchase Rights may from time to time be
granted hereunder;


 


(iii)          to determine the number
of Shares to be covered by each such award granted hereunder;


 


(iv)          to approve forms of
agreement for use under the Plan;


 


(v)           to determine the terms
and conditions, of any Option or Stock Purchase Right granted hereunder. Such
terms and conditions include, but are not limited to, the exercise price, the
time or times when Options or Stock Purchase Rights may be exercised (which may
be based on performance criteria), any vesting acceleration or waiver of
forfeiture restrictions, and any restriction or limitation regarding any Option
or Stock Purchase Right or the Common Stock relating thereto, based in each
case on such factors as the Administrator, in its sole discretion, shall
determine;


 


(vi)          to determine whether and
under what circumstances an Option may be settled in cash under subsection 9(e)
instead of Common Stock;


 


(vii)         to reduce the exercise
price of any Option to the then current Fair Market Value if the Fair Market
Value of the Common Stock covered by such Option has declined since the date
the Option was granted;


 


(viii)        to initiate an Option
Exchange Program;


 


(ix)           to prescribe, amend and
rescind rules and regulations relating to the Plan, including rules and
regulations relating to sub-plans established for the purpose of qualifying for
preferred tax treatment under foreign tax laws;


 


(x)            to allow Optionees to
satisfy withholding tax obligations by electing to have the Company withhold
from the Shares to be issued upon exercise of an Option or Stock Purchase Right
that number of Shares having a Fair Market Value equal to the amount required
to be withheld. The Fair Market Value of the Shares to be withheld shall be
determined on the date that the amount of tax to be withheld is to be
determined. All elections by Optionees to have Shares withheld for this purpose
shall be made in such form and under such conditions as the Administrator may
deem necessary or advisable; and


 


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(xi)           to construe and
interpret the terms of the Plan and awards granted pursuant to the Plan.


 


(c)           Effect of Administrator’s
Decision. All decisions, determinations and interpretations of the
Administrator shall be final and binding on all Optionees.


 


5.             Eligibility.


 


(a)           Nonstatutory Stock
Options and Stock Purchase Rights may be granted to Service Providers. Incentive
Stock Options may be granted only to Employees.


 


(b)           Each Option shall be
designated in the Option Agreement as either an Incentive Stock Option or a
Nonstatutory Stock Option. However, notwithstanding such designation, to the
extent that the aggregate Fair Market Value of the Shares with respect to which
Incentive Stock Options are exercisable for the first time by the Optionee
during any calendar year (under all plans of the Company and any Parent or
Subsidiary) exceeds $100,000, such Options shall be treated as Nonstatutory
Stock Options. For purposes of this Section 5(b), Incentive Stock Options shall
be taken into account in the order in which they were granted. The Fair Market
Value of the Shares shall be determined as of the time the Option with respect
to such Shares is granted.


 


(c)           Neither the Plan nor
any Option or Stock Purchase Right shall confer upon any Optionee any right
with respect to continuing the Optionee’s relationship as a Service Provider
with the Company, nor shall it interfere in any way with his or her right or
the Company’s right to terminate such relationship at any time, with or without
cause.


 


6.             Term of Plan. The
Plan shall become effective upon its adoption by the Board. It shall continue
in effect for a term of ten (10) years unless sooner terminated under Section
14 of the Plan.


 


7.             Term of Option.
The term of each Option shall be stated in the Option Agreement; provided,
however, that the term shall be no more than ten (10) years from the date of
grant thereof. In the case of an Incentive Stock Option granted to an Optionee
who, at the time the Option is granted, owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of the Company or any
Parent or Subsidiary, the term of the Option shall be five (5) years from the
date of grant or such shorter term as may be provided in the Option Agreement.


 


8.             Option Exercise
Price and Consideration.


 


(a)           The per share exercise
price for the Shares to be issued upon exercise of an Option shall be such
price as is determined by the Administrator, but shall be subject to the
following:


 


(i)            In the case of an
Incentive Stock Option


 


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(A)          granted to an Employee
who, at the time of grant of such Option, owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of the Company or any
Parent or Subsidiary, the exercise price shall be no less than 110% of the Fair
Market Value per Share on the date of grant.


 


(B)           granted to any other
Employee, the per Share exercise price shall be no less than 100% of the Fair
Market Value per Share on the date of grant.


 


(ii)           In the case of a
Nonstatutory Stock Option


 


(A)          granted to a Service
Provider who, at the time of grant of such Option, owns stock representing more
than ten percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, the exercise price shall be no less than
110% of the Fair Market Value per Share on the date of grant.


 


(B)           granted to any other
Service Provider, the per Share exercise price shall be no less than 85% of the
Fair Market Value per Share on the date of grant.


 


(iii)          Notwithstanding the
foregoing, Options may be granted with a per Share exercise price other than as
required above pursuant to a merger or other corporate transaction.


 


(b)           The consideration to be
paid for the Shares to be issued upon exercise of an Option, including the
method of payment, shall be determined by the Administrator (and, in the case
of an Incentive Stock Option, shall be determined at the time of grant). Such
consideration may consist of (1) cash, (2) check, (3) promissory note, (4)
other Shares which (x) in the case of Shares acquired upon exercise of an
Option, have been owned by the Optionee for more than six months on the date of
surrender, and (y) have a Fair Market Value on the date of surrender equal to
the aggregate exercise price of the Shares as to which such Option shall be
exercised, (5) consideration received by the Company under a cashless exercise
program implemented by the Company in connection with the Plan, or (6) any
combination of the foregoing methods of payment. In making its determination as
to the type of consideration to accept, the Administrator shall consider if acceptance
of such consideration may be reasonably expected to benefit the Company.


 


9.             Exercise of
Option.


 


(a)           Procedure for
Exercise; Rights as a Shareholder. Any Option granted hereunder shall be
exercisable according to the terms hereof at such times and under such
conditions as determined by the Administrator and set forth in the Option
Agreement. Except in the case of Options granted to Officers, Directors and
Consultants, Options shall become exercisable at a rate of no less than 20% per
year over five (5) years from the date the Options are granted. Unless the
Administrator provides otherwise, vesting of Options granted hereunder shall be
tolled during any unpaid leave of absence. An Option may not be exercised for a
fraction of a Share.


 


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An Option shall be deemed
exercised when the Company receives: (i) written or electronic notice of
exercise (in accordance with the Option Agreement) from the person entitled to
exercise the Option, and (ii) full payment for the Shares with respect to which
the Option is exercised. Full payment may consist of any consideration and
method of payment authorized by the Administrator and permitted by the Option
Agreement and the Plan. Shares issued upon exercise of an Option shall be
issued in the name of the Optionee or, if requested by the Optionee, in the
name of the Optionee and his or her spouse. Until the Shares are issued (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company), no right to vote or receive
dividends or any other rights as a shareholder shall exist with respect to the
Shares, notwithstanding the exercise of the Option. The Company shall issue (or
cause to be issued) such Shares promptly after the Option is exercised. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the Shares are issued, except as provided in Section 12 of
the Plan.


 


Exercise of an Option in
any manner shall result in a decrease in the number of Shares thereafter
available, both for purposes of the Plan and for sale under the Option, by the
number of Shares as to which the Option is exercised.


 


(b)           Termination of
Relationship as a Service Provider. If an Optionee ceases to be a Service
Provider, such Optionee may exercise his or her Option within such period of
time as is specified in the Option Agreement (of at least thirty (30) days) to
the extent that the Option is vested on the date of termination (but in no event
later than the expiration of the term of the Option as set forth in the Option
Agreement). In the absence of a specified time in the Option Agreement, the
Option shall remain exercisable for three (3) months following the Optionee’s
termination. If, on the date of termination, the Optionee is not vested as to
his or her entire Option, the Shares covered by the unvested portion of the
Option shall revert to the Plan. If, after termination, the Optionee does not
exercise his or her Option within the time specified by the Administrator, the
Option shall terminate, and the Shares covered by such Option shall revert to
the Plan.


 


(c)           Disability of
Optionee. If an Optionee ceases to be a Service Provider as a result of the
Optionee’s Disability, the Optionee may exercise his or her Option within such
period of time as is specified in the Option Agreement (of at least six (6)
months) to the extent the Option is vested on the date of termination (but in
no event later than the expiration of the term of such Option as set forth in
the Option Agreement). In the absence of a specified time in the Option
Agreement, the Option shall remain exercisable for twelve (12) months following
the Optionee’s termination. If, on the date of termination, the Optionee is not
vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option shall revert to the Plan. If, after termination, the
Optionee does not exercise his or her Option within the time specified herein,
the Option shall terminate, and the Shares covered by such Option shall revert
to the Plan.


 


(d)           Death of Optionee.
If an Optionee dies while a Service Provider, the Option may be exercised
within such period of time as is specified in the Option Agreement (of at least
six (6) months) to the extent that the Option is vested on the date of death
(but in no event later than the expiration of the term of such Option as set
forth in the Option Agreement) by the Optionee’s estate or by a person who
acquires the right to exercise the Option by bequest or inheritance. In the
absence of a specified time in the Option Agreement, the Option shall remain
exercisable for twelve (12) months following the Optionee’s termination. If, at
the time 


 


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of death, the Optionee is not vested as to the entire
Option, the Shares covered by the unvested portion of the Option shall
immediately revert to the Plan. If the Option is not so exercised within the
time specified herein, the Option shall terminate, and the Shares covered by
such Option shall revert to the Plan.


 


(e)           Buyout Provisions.
The Administrator may at any time offer to buy out for a payment in cash or
Shares, an Option previously granted, based on such terms and conditions as the
Administrator shall establish and communicate to the Optionee at the time that
such offer is made.


 


10.           Non-Transferability
of Options and Stock Purchase Rights. The Options and Stock Purchase Rights
may not be sold, pledged, assigned, hypothecated, transferred, or disposed of
in any manner other than by will or by the laws of descent or distribution and
may be exercised, during the lifetime of the Optionee, only by the Optionee.


 


11.           Stock Purchase
Rights.


 


(a)           Rights to Purchase.
Stock Purchase Rights may be issued either alone, in addition to, or in tandem
with other awards granted under the Plan and/or cash awards made outside of the
Plan. After the Administrator determines that it will offer Stock Purchase
Rights under the Plan, it shall advise the offeree in writing or electronically
of the terms, conditions and restrictions related to the offer, including the
number of Shares that such person shall be entitled to purchase, the price to
be paid, and the time within which such person must accept such offer. The
terms of the offer shall comply in all respects with Section 260.140.42 of
Title 10 of the California Code of Regulations. The offer shall be accepted by
execution of a Restricted Stock purchase agreement in the form determined by
the Administrator.


 


(b)           Repurchase Option.
Unless the Administrator determines otherwise, the Restricted Stock purchase
agreement shall grant the Company a repurchase option exercisable upon the
voluntary or involuntary termination of the purchaser’s service with the
Company for any reason (including death or disability). The purchase price for
Shares repurchased pursuant to the Restricted Stock purchase agreement shall be
the original price paid by the purchaser and may be paid by cancellation of any
indebtedness of the purchaser to the Company. The repurchase option shall lapse
at such rate as the Administrator may determine. Except with respect to Shares
purchased by Officers, Directors and Consultants, the repurchase option shall
in no case lapse at a rate of less than 20% per year over five (5) years from
the date of purchase.


 


(c)           Other Provisions.
The Restricted Stock purchase agreement shall contain such other terms,
provisions and conditions not inconsistent with the Plan as may be determined
by the Administrator in its sole discretion.


 


(d)           Rights as a
Shareholder. Once the Stock Purchase Right is exercised, the purchaser
shall have rights equivalent to those of a shareholder and shall be a
shareholder when his or her purchase is entered upon the records of the duly
authorized transfer agent of the Company. No adjustment shall be made for a
dividend or other right for which the record date is prior to the date the
Stock Purchase Right is exercised, except as provided in Section 12 of the
Plan.


 


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12.           Adjustments Upon
Changes in Capitalization, Merger or Asset Sale.


 


(a)           Changes in
Capitalization. Subject to any required action by the shareholders of the
Company, the number of shares of Common Stock covered by each outstanding
Option or Stock Purchase Right, and the number of shares of Common Stock which
have been authorized for issuance under the Plan but as to which no Options or
Stock Purchase Rights have yet been granted or which have been returned to the
Plan upon cancellation or expiration of an Option or Stock Purchase Right, as
well as the price per share of Common Stock covered by each such outstanding
Option or Stock Purchase Right, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting
from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the
number of issued shares of Common Stock effected without receipt of
consideration by the Company. The conversion of any convertible securities of
the Company shall not be deemed to have been “effected without receipt of
consideration.” Such adjustment shall be made by the Board, whose determination
in that respect shall be final, binding and conclusive. Except as expressly
provided herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares of Common Stock subject to an Option or Stock Purchase Right.


 


(b)           Dissolution or
Liquidation. In the event of the proposed dissolution or liquidation of the
Company, the Administrator shall notify each Optionee as soon as practicable prior
to the effective date of such proposed transaction. The Administrator in its
discretion may provide for an Optionee to have the right to exercise his or her
Option until fifteen (15) days prior to such transaction as to all of the
Optioned Stock covered thereby, including Shares as to which the Option would
not otherwise be exercisable. In addition, the Administrator may provide that
any Company repurchase option applicable to any Shares purchased upon exercise
of an Option or Stock Purchase Right shall lapse as to all such Shares,
provided the proposed dissolution or liquidation takes place at the time and in
the manner contemplated. To the extent it has not been previously exercised, an
Option or Stock Purchase Right will terminate immediately prior to the
consummation of such proposed action.


 


(c)           Merger or Asset Sale.
In the event of a merger of the Company with or into another corporation, or
the sale of substantially all of the assets of the Company, each outstanding
Option and Stock Purchase Right shall be assumed or an equivalent option or
right substituted by the successor corporation or a Parent or Subsidiary of the
successor corporation. In the event that the successor corporation refuses to
assume or substitute for the Option or Stock Purchase Right, the Optionee shall
fully vest in and have the right to exercise the Option or Stock Purchase Right
as to all of the Optioned Stock, including Shares as to which it would not
otherwise be vested or exercisable. If an Option or Stock Purchase Right becomes
fully vested and exercisable in lieu of assumption or substitution in the event
of a merger or sale of assets, the Administrator shall notify the Optionee in
writing or electronically that the Option or Stock Purchase Right shall be
fully exercisable for a period of fifteen (15) days from the date of such
notice, and the Option or Stock Purchase Right shall terminate upon the
expiration of such period. For the purposes of this paragraph, the Option or
Stock Purchase Right shall be considered assumed if, following the merger or
sale of assets, the option or right confers the right to purchase or receive,
for each Share of Optioned Stock subject to the Option or Stock Purchase 


 


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Right immediately prior to the merger or sale of
assets, the consideration (whether stock, cash, or other securities or
property) received in the merger or sale of assets by holders of Common Stock
for each Share held on the effective date of the transaction (and if holders
were offered a choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding Shares); provided, however, that if
such consideration received in the merger or sale of assets is not solely
common stock of the successor corporation or its Parent, the Administrator may,
with the consent of the successor corporation, provide for the consideration to
be received upon the exercise of the Option or Stock Purchase Right, for each
Share of Optioned Stock subject to the Option or Stock Purchase Right, to be
solely common stock of the successor corporation or its Parent equal in fair
market value to the per share consideration received by holders of Common Stock
in the merger or sale of assets.


 


13.           Time of Granting
Options and Stock Purchase Rights. The date of grant of an Option or Stock
Purchase Right shall, for all purposes, be the date on which the Administrator
makes the determination granting such Option or Stock Purchase Right, or such
other date as is determined by the Administrator. Notice of the determination
shall be given to each Employee to whom an Option or Stock Purchase Right is so
granted within a reasonable time after the date of such grant.


 


14.           Amendment and
Termination of the Plan.


 


(a)           Amendment and
Termination. The Board may at any time amend, alter, suspend or terminate
the Plan.


 


(b)           Shareholder Approval.
The Board shall obtain shareholder approval of any Plan amendment to the extent
necessary and desirable to comply with Applicable Laws.


 


(c)           Effect of Amendment
or Termination. No amendment, alteration, suspension or termination of the
Plan shall impair the rights of any Optionee, unless mutually agreed otherwise
between the Optionee and the Administrator, which agreement must be in writing
and signed by the Optionee and the Company. Termination of the Plan shall not
affect the Administrator’s ability to exercise the powers granted to it
hereunder with respect to Options granted under the Plan prior to the date of
such termination.


 


15.           Conditions Upon
Issuance of Shares.


 


(a)           Legal Compliance.
Shares shall not be issued pursuant to the exercise of an Option unless the
exercise of such Option and the issuance and delivery of such Shares shall
comply with Applicable Laws and shall be further subject to the approval of
counsel for the Company with respect to such compliance.


 


(b)           Investment
Representations. As a condition to the exercise of an Option, the
Administrator may require the person exercising such Option to represent and
warrant at the time of any such exercise that the Shares are being purchased
only for investment and without any present intention to sell or distribute
such Shares if, in the opinion of counsel for the Company, such a
representation is required.


 


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16.           Inability to Obtain
Authority. The inability of the Company to obtain authority from any
regulatory body having jurisdiction, which authority is deemed by the Company’s
counsel to be necessary to the lawful issuance and sale of any Shares hereunder,
shall relieve the Company of any liability in respect of the failure to issue
or sell such Shares as to which such requisite authority shall not have been
obtained.


 


17.           Reservation of
Shares. The Company, during the term of this Plan, shall at all times
reserve and keep available such number of Shares as shall be sufficient to
satisfy the requirements of the Plan.


 


18.           Shareholder Approval.
The Plan shall be subject to approval by the shareholders of the Company within
twelve (12) months after the date the Plan is adopted. Such shareholder
approval shall be obtained in the degree and manner required under Applicable
Laws.


 


19.           Information to
Optionees and Purchasers. The Company shall provide to each Optionee and to
each individual who acquires Shares pursuant to the Plan, not less frequently
than annually during the period such Optionee or purchaser has one or more
Options or Stock Purchase Rights outstanding, and, in the case of an individual
who acquires Shares pursuant to the Plan, during the period such individual
owns such Shares, copies of annual financial statements. The Company shall not
be required to provide such statements to key employees whose duties in
connection with the Company assure their access to equivalent information.


 


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