Document:

<PAGE>

                                                                    Exhibit 10.2

                           STOCK OPTION GRANT PROGRAM
                                       FOR
                         NONEMPLOYEE DIRECTORS UNDER THE
               LIGHT SCIENCES ONCOLOGY, INC. 2005 EQUITY INCENTIVE
                                      PLAN

     The following provisions set forth the terms of the stock option grant
program (the "Program") for nonemployee directors of Light Sciences Oncology,
Inc. (the "Company") under the Company's 2005 Equity Incentive Plan (the
"Plan"). The following terms are intended to supplement, not alter or change,
the provisions of the Plan, and in the event of any inconsistency between the
terms contained herein and in the Plan, the Plan shall govern. All capitalized
terms that are not defined herein shall be as defined in the Plan.

     1.   ELIGIBILITY

     Each director of the Company elected or appointed to the Board who is not
otherwise an employee of the Company or any Related Company (an "Eligible
Director") shall be eligible to receive New Grants and Annual Grants under the
Program, as discussed below.

     2.   NEW GRANTS

     Each Eligible Director shall automatically receive a Nonqualified Stock
Option to purchase 30,000 shares of Common Stock ("New Grant") as of the date of
such Eligible Director's initial election or appointment to the Board. New
Grants shall be fully vested and exercisable as of the date of such Eligible
Director's initial election or appointment to the Board.

     3.   ANNUAL GRANTS

     Beginning with the first annual meeting of shareholders after effectiveness
of the Company's initial public offering, each Eligible Director shall
automatically receive a Nonqualified Stock Option to purchase 15,000 shares of
Common Stock immediately following each year's annual meeting of shareholders
(each, an "Annual Grant"); provided that any Eligible Director who received a
New Grant within five months prior to an annual meeting of shareholders shall
not receive an Annual Grant until the next year's annual meeting. Annual Grants
shall be fully vested and exercisable upon grant.

<PAGE>

     4.   OPTION EXERCISE PRICE

     The exercise price of an Option shall be the Fair Market Value of the
Common Stock on the Grant Date.

     5.   MANNER OF OPTION EXERCISE

     An Option shall be exercised by giving the required notice to the Company
or a brokerage firm designated or approved by the Company, stating the number of
shares of Common Stock with respect to which the Option is being exercised,
accompanied by payment in full for such Common Stock, which payment may be, to
the extent permitted by applicable laws and regulations, in whole or in part (a)
in cash or check, (b) in shares of Common Stock owned by the Eligible Director
having a fair market value equal to the aggregate Option exercise price, or (c)
if and so long as the Common Stock is registered under the Exchange Act, by
delivery of a properly executed exercise notice, together with irrevocable
instructions to a broker, to promptly deliver to the Company the amount of
proceeds to pay the exercise price, all in accordance with the regulations of
the Federal Reserve Board.

     6.   TERM OF OPTIONS

     Each Option shall expire upon the earlier of ten years from the Grant Date
or five years after an Eligible Director's Termination of Service.

     In the event of the death of an Eligible Director, the Option may be
exercised until the earlier of five years from the date of the Eligible
Director's Termination of Service or ten years from the Grant Date by the
personal representative of the Eligible Director's estate, the person(s) to whom
the Eligible Director's rights under the Option have passed by will or the
applicable laws of descent and distribution or the beneficiary(ies) designated
pursuant to Section 13 of the Plan, as applicable.

     7.   TRANSFERABILITY

     During an Eligible Director's lifetime, an Option may be exercised only by
the Eligible Director or a permitted assignee or transferee of the Eligible
Director (as provided below). No Options granted under the Program may be sold,
assigned, pledged or transferred by the Eligible Director or made subject to
attachment or similar proceedings other than by (a) will or the applicable laws
of descent and distribution, (b) gift or other transfer to either (i) a spouse
or other immediate family member or (ii) any trust, partnership or other entity
in which the Eligible Director or such Eligible Director's spouse or other
immediate family member has a substantial beneficial interest; or (c) the
designation by an Eligible Director in writing during the

                                                                             -2-

<PAGE>

Eligible Director's lifetime of a beneficiary to receive and exercise Options in
the event of the Eligible Director's death (as provided in Section 13 of the
Plan); provided, however, that any Option so assigned or transferred shall be
subject to the terms and conditions of the Plan and the instrument evidencing
the Option. Any attempt to transfer, assign, pledge, hypothecate or otherwise
dispose of any Option under the Plan or of any right or privilege conferred
thereby, contrary to the provisions of the Plan, or the sale or levy or any
attachment or similar process upon the rights and privileges conferred hereby,
shall be null and void.

     8.   AMENDMENT

     The Board may amend the provisions contained herein in such respects as it
deems advisable. Any such amendment shall not, without the consent of the
Eligible Director, impair or diminish any rights of an Eligible Director under
an outstanding Option.

     9.   EFFECTIVE DATE

     The Program shall become effective on the date of effectiveness of the
initial registration of the Company's Common Stock under Section 12(b) or 12(g)
of the Exchange Act.

     Provisions of the Plan (including any amendments) that are not discussed
above, to the extent applicable to Eligible Directors, shall continue to govern
the terms and conditions of Options granted to Eligible Directors.

                                                                             -3-<PAGE>

                                                             Exhibit 10.03

                           MANAGEMENT INCENTIVE PLAN
              PLAN YEAR: OCTOBER 1, 2005 THROUGH DECEMBER 31, 2006

PURPOSE

The Bonus Program is designed to attract and retain experienced talented
employees capable of leading the Company to meet its business objectives and to
reward participants for their contributions towards achievement of Company-wide
performance goals. The plan may be revised, reviewed or eliminated at any time
at the discretion of the Company.

DEFINITIONS

"Company" means Light Sciences Oncology, Inc..

"Plan Year" means the fifteen month period beginning October 1, 2005 and ending
December 31, 2006.

ELIGIBILITY

Company employees at all levels are eligible to participate in the bonus plan.

To be eligible for payment, an employee must have a least two quarters of
eligibility in the plan year. New hires will be eligible, but the bonus is
pro-rated automatically by its calculation against actual base pay received as
opposed to total annualized base pay amount. Bonus payments will not be made to
terminating employees unless they remain employed through December 31st of the
plan year. An employee whose employment is terminated, either voluntarily or
involuntarily, prior to December 31st will not be eligible to receive any
payment. An employee who terminates after December 31st will receive payment as
soon as both corporate and individual goals are evaluated to determine the bonus
formula.

Final bonuses for all employees are calculated against cumulative actual base
pay earned while eligible during a Plan Year. Payments will be made in March of
the following year.

GOALS

For each Plan Year, the Board of Directors and/or the Compensation Committee of
the Board of Directors will set, based on discussions and input from management,
corporate goals based upon milestones important to the success of the Company.
Compensation of Directors. After the end of the plan year, the Compensation
Committee of the Board of Directors will review the Company's performance and
determine the percentage of success achieved for each goal as completed. Bonus
percentages for officers, directors, managers and employees are listed below.

The CEO and COO targets are tied 100% to achieving corporate goals. Bonus
percentages for all other employees are based upon a mix of the achievement of
corporate goals and individual goals. These individual goals are to be
established at the beginning of the Plan Year by the employee's supervisor, in
consultation with the employee, and approved by the CEO or COO.

<PAGE>

TARGET BONUS LEVELS

<TABLE>
<CAPTION>
                                     Target Eligibility    % Corporate   %Individual
Position Level:                    % of annual base pay:      Goals:        Goals:
---------------                    ---------------------   -----------   -----------
<S>                                <C>                     <C>           <C>
CEO/Executive Chair of the Board            30%                100%
Chief Operating Officer                     30%                100%
Vice President                              25%                 80%          20%
Director                                    20%                 60%          40%
Manager                                     10%                 50%          50%
All other employees                          5%                 40%          60%
</TABLE>

BONUS CALCULATION

The Compensation Committee will determine the completion percentage of each
corporate goal at the end of the Plan Year. The average of the results of each
corporate goal becomes the total bonus percentage to be used in determining the
corporate section of the bonus amount. The same procedure is performed to
determine the individual section of the bonus amount. Judgment may be applied to
weight the various goals or provide latitude for changing conditions at the sole
discretion of the Compensation Committee for corporate goals or by the
department head (with the approval of the CEO or COO) for individual goals.
FINAL APPROVAL BY THE COMPENSATION COMMITTEE OF THE BOARD OF THE DIRECTORS IS
REQUIRED BEFORE ANY BONUS PAYOUTS ARE MADE. Once the final bonus results have
been determined, they will be applied to the cumulative actual base pay amount
received by each eligible individual during the plan year.

EXAMPLE:

Director level employee, cumulative actual annual base salary received for the
year = $100,000
Target eligibility = 20% of $100,000 or $20,000
Corporate goal achievement = 85%
Individual goal achievement = 100%
Corporate goals weighted at 60% = $12,000 * 85%  = $10,200
Individual goals weighted at 40% = $8,000 * 100% = $ 8,000
                                                   -------
Total bonus earned =                               $18,200

Please contact the human resources department for questions or clarification.
The above information does not constitute a guarantee of work, job status or
employment for any period of time. The employment relationship is at will and
either the employee or the Company may terminate the relationship at any time.
This document is not intended to create a contract of employment, express or
implied.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00102-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00102-of-00352.parquet"}]]