Document:

Exhibit 10.1

 

Quidel/Inverness Settlement Agreement

 

1
         Quidel and its Affiliates will
pay the Inverness Parties and their Affiliates $17 million for a fully paid up
worldwide irrevocable license to the Inverness Portfolio of Lateral Flow
Patents for all Quidel products made and sold on or before the Effective Date
and for a release of all actual and potential claims against Quidel, its
Affiliates and their customers, distributors and retailers with respect to any
Quidel Products using lateral flow technology made and sold on or before the
Effective Date, such payment to be made within 2 business days of the execution
of this agreement.

 

2
         Quidel and its Affiliates will
pay Inverness an 8.5% royalty on all Quidel Product Sales of all Quidel Products utilizing or incorporating any of the inventions claimed in
the valid and enforceable claims of the Inverness Portfolio of Lateral Flow
Patents, which Products are manufactured or
sold anywhere in the world where Inverness maintains lateral flow patents;
provided, however, that for avoidance of doubt all current Quidel pregnancy,
strep, and flu products as well as any such products with minor modifications
or new products using the same technology shall bear royalty payments to
Inverness hereunder for the life of this agreement, but
the products covered are not limited to these. 
The parties agree to produce a list of the current Quidel Products which
will bear royalties within 20 days following execution of this Agreement.  Quidel and its Affiliates will make payments
quarterly.  The payment of any royalties
by Quidel and its Affiliates shall not be considered an admission that any
Quidel Products practice valid, enforceable claims of the Inverness Parties’ or
their Affiliates’ patents, nor shall it be considered an admission of any other
kind. Inverness shall have a right to inspect and audit Quidel royalty payments
on reasonable notice using an independent, mutually agreed upon, third party
auditor under confidentiality, at Inverness’s cost, provided that if the
auditor discovers a royalty underpayment of more that 5% Quidel shall bear the
cost of the audit.

 

3
         The Inverness Parties hereby
grant to Quidel and its Affiliates an irrevocable license, without the right to
sublicense, to make, use, sell, offer to sell, and/or import, products
utilizing or incorporating the inventions claimed in the valid and enforceable
claims of the Inverness Portfolio of Lateral Flow Patents, including
continuations, continuations in part and divisionals thereof.  Any new
patents applied for or acquired by Inverness and its Affiliates after the date
of this agreement are not included in the license, unless such patents embody
lateral flow technology of the type at issue in this dispute.  The Field of Use excludes all aspects of
cardiology testing and all aspects of consumer/over-the-counter women’s health
diagnostics except infectious diseases. 
The term of the license is to the end of the last patent to expire and
the 8.5% royalty rate is to be paid on all royalty-bearing Quidel Products
through that date.  Inverness also grants
to Quidel and its Affiliates a full release of all actual and potential claims
existing as of this date against Quidel and its Affiliates with respect to any
Quidel Products, including all claims that were or could have been brought in
the lawsuits pending between Inverness and Quidel.

 

4
         Quidel hereby grants Inverness
a worldwide royalty free license, without right to sublicense, to make, use,
sell, offer to sell, and/or import, products utilizing or incorporating the
inventions claimed in the valid and enforceable claims of the Quidel Portfolio
of Lateral Flow Patents, including without limitation, the Eisinger patent, and
any continuations, continuations in part or divisionals thereof.  Any new patents applied for or acquired by
Quidel and its Affiliates after the date of this agreement are not included in
the license, unless such patents embody lateral flow technology of the type at
issue in this dispute.  Quidel also
grants the Inverness Parties a full release of all actual and potential claims
existing as of this date against the Inverness Parties with respect to any
Inverness products using lateral flow

 

 

technology, including all
claims that were or could have been brought in the lawsuits pending between
Inverness and Quidel.

 

5
         It is expressly understood
that the payments provided for in this agreement represent a net payment from
Quidel and its Affiliates to the Inverness Parties which includes the value of
the license that Quidel is granting in paragraph 4 above.  No further
payments are due by either party in connection with the settlement except as
set out in this offer letter.

 

6
         The parties will dismiss with
prejudice all pending cases or claims against each other, including without
limitation the U.S. proceedings filed in the U.S. District Court in San Diego
and the German infringement, nullity and opposition proceedings.  The Inverness Parties and their Affiliates
will not instigate any new proceedings against the Quidel Products currently on
the market or against any such products with minor modifications or new
products using the same technology so long as the royalty is being paid on
those products.  Quidel and its
Affiliates will not instigate any new proceedings against the Inverness Parties’
lateral flow products currently on the market or against any such products with
minor modifications or new products using the same technology.  The parties agree to dismiss with prejudice,
or if they cannot do so, to withdraw from any challenge to the validity of any
of the patents licensed under this agreement and not to reinstitute challenges
to the validity of any of such patents.

 

7
         The parties represent and
warrant that they have the full authority to execute this offer letter and all
the other documents and agreements contemplated in this letter and to grant the
licenses and releases described in this letter, and that they will cause their
Affiliates to execute any documents and agreements required to implement the
licenses and releases described and perform the obligations set forth in this
offer letter agreement.

 

8
         Any dispute arising from or
relating to this Agreement or relating in any way to patents in the Inverness
Portfolio of Lateral Flow Patents (including without limitation the
patents-in-suit) or to the patents in Quidel’s Portfolio of Lateral Flow
Patents, or to any claim that Quidel and its Affiliates owe or do not owe
payments to Inverness and its Affiliates, or to any claim as to whether a
particular product (other than those products falling within the scope of the “provided,
however” portion of the first sentence of paragraph 2 above)  utilizes or incorporates a valid, enforceable
claim of patents in the Inverness Portfolio of Lateral Flow Patents, will be
decided by binding Arbitration at the American Arbitration Association in
Chicago, Illinois, under its Commercial Arbitration Rules.  To the extent state law is applicable in such
a dispute, the laws of the State of Illinois, excluding its choice of law
provisions, shall govern.  Within ten
days after execution of this agreement, Inverness and Quidel will agree to
adopt such procedures for the arbitration as are necessary to attempt to
resolve any dispute subject to this arbitration within six months.  Inverness agrees that it will not seek
injunctive relief against Quidel so long as Quidel pays the royalty sought by
Inverness, pending the arbitration decision.

 

9
         The licenses granted are
nontransferable without the written agreement of the other party prior to any
transfer, provided that the licenses, releases and other rights granted
hereunder may be transferred in a corporate merger, asset sale, acquisition,
reorganization or change in control (together a “Change in Control”) by which
all of those product lines and technology platforms of the transferring party
that exist and are being marketed on the date of the transfer are transferred
in their entirety, further provided that in the event that such Change of Control
is such that a third party already participating in the diagnostics market in
one or more of the jurisdictions in which the other party has effective patents
in force, assumes control of the transferring party, the royalty rate, if any,
shall be increased by 25% (i.e., from 8.5% to 10.625%), and yet further
provided that the acquirer shall agree in writing to be bound by the terms of
this agreement.  In addition to the rights above in this paragraph 9
relating to transferability, either party may have a one-time right to transfer
the rights under this agreement to a buyer, subject to the consent of the other
party which shall not be unreasonably withheld, in connection with the sale of
20% or more

 

 

(measured by revenue) of
a line of business subject to the license granted hereunder.  The licenses granted cannot be used by the
receiving party with a third party in any manner which would allow the third
party to obtain access to the license granted by an indirect manner. For the
avoidance of doubt, in the event of a Change in Control, the license granted to
Quidel and its Affiliates will not apply to products of the acquirer and its
Affiliates or to their customers, suppliers, distributors and retailers to the
extent such products are not Quidel Products. 
In the event that either party acquires another party whose products use
the lateral flow technology licensed, then rights under this agreement extend
to such products only if the acquiring pays the other party hereto in full for
any past infringement by such other party, at the royalty rate, if any,
applicable under this agreement at the time of the acquisition.

 

10
       This settlement is binding on Inverness
and Quidel and their Affiliates upon the execution of this offer letter by both
parties and the parties agree to promptly execute the required and appropriate
confirming documents and to cause their Affiliates to execute the required and
appropriate confirming documents.

 

11.                                 The
terms of the settlement are confidential, except as required by law.  The parties will issue a short,
matter-of-fact, joint press release announcing the settlement and, except as
required by law, will only make statements about the settlement that are
consistent with what is stated therein.

 

12.                                 DEFINITIONS

 

“Affiliates” shall
include an entity’s past, present, and future affiliated companies, parents,
subsidiaries, and brother-sister entities, and shall include U.S. and foreign
entities.

 

“Effective Date” shall
mean the date on which the parties execute this agreement.

 

“Inverness Parties” or “Inverness”
shall include Inverness Medical Innovations, Inc., Inverness Medical
Switzerland GmbH, Wampole Laboratories LLC, Applied Biotech, Inc., and
Unipath Diagnostics, Inc., and their Affiliates.

 

“Inverness Portfolio of
Lateral Flow Patents” shall include all U.S. and foreign patents and patent
applications which the Inverness Parties or their Affiliates currently own or
hereafter acquire, or with respect to which they possess the right to
sublicense, which embody lateral flow technology of the type at issue in this
dispute, and the continuations, continuations-in-part, and divisionals
thereof.  For avoidance of doubt, the
Inverness Portfolio of Lateral Flow Patents includes, but is not limited to,
all of the Inverness Parties’ and their Affiliates’ patents at issue in the
current litigation between the parties and Church & Dwight’s patents
at issue in pending litigation between the parties, to the extent Inverness has
the right to sublicense such patents. 
Inverness shall produce a list of the patents within the Inverness
Portfolio of Lateral Flow Patents not later than 10 business days of the
execution of this agreement.

 

“Quidel” shall mean
Quidel Corporation.

 

“Quidel Products” shall
mean any past, present, or future products made, used, sold, or offered for
sale by Quidel or its Affiliates.

 

“Quidel Product Sales”
shall mean gross final sales by Quidel or its Affiliates to non-affiliated
parties of Quidel Products made or sold in countries where Inverness and its
Affiliates maintain lateral flow patents, net of returns and taxes stated on
the invoices.

 

“Quidel Portfolio of
Lateral Flow Patents” shall include all U.S. and foreign patents and patent
applications which Quidel or its Affiliates currently own or hereafter acquire,
or with respect to which

 

 

they possess the right to
sublicense, which embody lateral flow technology of the type at issue in this
dispute, and the continuations, continuations-in-part, and divisionals
thereof.  For avoidance of doubt, the Quidel
Portfolio of Lateral Flow Patents includes, but is not limited to, the Eisinger
patent and its foreign counterparts.  
Quidel shall produce a list of the patents within the Quidel Portfolio
of Lateral Flow Patents not later than 10 business days following the execution
of this agreement.

 

13.                                 This
is a complete and binding agreement that is effective upon execution hereof,
but the parties may suggest additional minor terms for consideration and
possible agreement by the parties within 10 business days following the execution
of this agreement.

 

Inverness Medical
Innovations, Inc.

 

 

	
  /s/ Ron
  Zwanziger

  	
   

  
	
   

  	
   

  
	
  Read and Agreed

  	
   

  
	
   

  	
   

  
	
  Quidel
  Corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Caren L.
  MasonExhibit 10.1

 

SYNTHEMATIX, INC.

 

AMENDED AND RESTATED

 

2000 EQUITY COMPENSATION PLAN

 

 

Effective as of November 22, 2004

 

 

SYNTHEMATIX, INC.

AMENDED AND RESTATED

2000 EQUITY COMPENSATION PLAN

 

ARTICLE I - GENERAL PROVISIONS

 

1.1           The Plan
is designed, for the benefit of the Company, to attract and retain for the
Company personnel of exceptional ability; to motivate such personnel through
added incentives to make a maximum contribution to greater profitability; to
develop and maintain a highly competent management team; and to be competitive
with other companies with respect to equity compensation.

 

1.2                                 Awards
under the Plan may be made to Participants in the form of (i) Incentive Stock
Options; (ii) Nonqualified Stock Options; and/or (iii) Restricted Stock.

 

1.3                                 The
Plan became effective on the Effective Date.

 

ARTICLE II - DEFINITIONS

 

Except where the context
otherwise indicates, the following definitions apply:

 

2.1                                 “Agreement”
means the written agreement between the Company and a Participant evidencing an
Award granted to the Participant under the Plan.

 

2.2                                 “Award”
means an award granted to a Participant under the Plan of a Stock Option,
Restricted Stock or any combination of the two.

 

2.3           “Board” means the Board of Directors
of Synthematix, Inc.

 

2.4                                 “Code”
means the Internal Revenue Code of 1986, as amended.  All citations to Code sections include
references to any successor provisions.

 

2.5                                 “Committee”
means the committee consisting of one or more members of the Board as may be
appointed by the Board to administer this Plan pursuant to Article III or for
such limited purposes as may be provided by the Board.  The Board may serve as the Committee and
shall so serve to the extent that a Committee has not otherwise been appointed.

 

2.6                                 “Company”
means Synthematix, Inc., a Delaware corporation, and its successors and
assigns.  The term “Company” shall
include any Parent Corporation and any Subsidiary Corporation.  With respect to all purposes of the Plan,
including, but not limited to, the establishment, amendment, termination,
operation and administration of the Plan, Synthematix, Inc. shall be authorized
to act on behalf of all other entities included within the definition of
Company.

 

 

2.7                                 “Disability”
means (i) with respect to a Participant who is eligible to participate in the
Company’s program of long-term disability insurance, if any, a condition with
respect to which the Participant is entitled to commence benefits under such
program of long-term disability insurance, and (ii) with respect to any Participant
(including a Participant who is eligible to participate in the Company’s
program of long-term disability insurance, if any), a disability as determined
under procedures established by the Committee or in any Award.  Notwithstanding the foregoing, with respect
to any Incentive Stock Option, disability shall be determined in a manner
consistent with Code section 22(e)(3).

 

2.8           “Effective Date” means February 1,
2000.

 

2.9                                 “Eligible
Participant” means any employee of the Company (including an officer), as shall
be determined by the Committee, as well as any other person, including
non-employee members of the Board and consultants whose participation in the
Plan the Committee determines is in the best interest of the Company, subject
to limitations as may be provided by the Code or the Committee.

 

2.10                           “Fair
Market Value” means the value of a share of Stock, as determined by the
Committee in its sole discretion from time to time.  The determination of Fair Market Value in
connection with an Incentive Stock Option shall be made by the Committee in
accordance with Code section 422 and the rules and regulations under this Plan.

 

2.11                           “Incentive
Stock Option” means a stock option granted under Article IV of the Plan.

 

2.12                           “Nonqualified
Stock Option” means a stock option granted under Article V of the Plan.

 

2.13                           “Option
Grant Date” means, as to any Stock Option, the latest of:

 

(a)                                  the
date on which the Committee takes action to grant the Stock Option to the
Participant;

 

(b)                                 the
date the Participant receiving the Stock Option becomes an employee of the
Company, to the extent employment status is a condition of the grant or a
requirement of the Code; or

 

(c)                                  such
other date (later than the dates described in (a) and (b) above) as the
Committee may designate.

 

2.14                           “Parent
Corporation” means any corporation (other than Synthematix, Inc.) in an
unbroken chain of corporations ending with Synthematix, Inc. if each of the
corporations other than Synthematix, Inc. owns stock possessing fifty percent
(50%) or more of the total combined voting power of all classes of stock in one
of the other corporations in such chain.

 

2.15                           “Participant”
means an Eligible Participant to whom an Award has been granted and who has
entered into an Agreement evidencing the Award.

 

2

 

2.16                           “Plan”
means the Synthematix, Inc. 2000 Equity Compensation Plan, as amended from time
to time.

 

2.17                           “Restricted
Stock” means an Award of Stock under Article VII of the Plan, which Stock is
issued with the restriction that the holder may not sell, transfer, pledge, or
assign such Stock and with such other restrictions as the Committee, in its
sole discretion, may impose, including without limitation, any restriction on
the right to vote such Stock, and the right to receive any cash dividends,
which restrictions may lapse separately or in combination at such time or
times, in installments or otherwise, as the Committee may deem appropriate.

 

2.18                           “Restriction
Period” means the period commencing on the date an Award of Restricted Stock is
granted and ending on such date as the Committee shall determine.

 

2.19                           “Retirement”
means retirement from active employment with the Company pursuant to such
requirements as may be established by the Committee or in any Award.

 

2.20                           “Stock”
means shares of common stock of Synthematix, Inc., as may be adjusted pursuant
to the provisions of Section 3.10.

 

2.21                           “Stock
Option” means an Incentive Stock Option or a Nonqualified Stock Option.

 

2.22                           “Subsidiary
Corporation” means any corporation (other than Synthematix, Inc.) in an
unbroken chain of corporations beginning with Synthematix, Inc. if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing fifty percent (50%) or more of the total combined voting power of
all classes of stock in one of the other corporations in such chain.

 

2.23                           “Termination
of Employment” means the discontinuance of employment of a Participant with the
Company for any reason or, if the Participant is a non-employee member of the
Board, the termination of the Participant’s directorship, or, if the
Participant is a consultant to the Company, the termination of the Participant’s
relationship as a consultant.  The
determination of whether a Participant has discontinued employment shall be
made by the Committee in its discretion. 
In determining whether a Termination of Employment has occurred, the
Committee may provide that service as a consultant or service with a business
enterprise in which the Company has a significant ownership interest shall be
treated as employment with the Company, except that with respect to any
Incentive Stock Option, employment shall be interpreted in a manner consistent
with Section 422 of the Code.  The
Committee shall have the discretion, exercisable either at the time the Award
is granted or at the time the Participant terminates employment, to establish
as a provision applicable to the exercise of one or more Awards that during the
limited period of exercisability following Termination of Employment, the Award
may be exercised not only with respect to the number of shares of Stock for
which it is exercisable at the time of the Termination of Employment but also
with respect to one or

 

3

 

more
subsequent installments for which the Award would have become exercisable had
the Termination of Employment not occurred.

 

ARTICLE III - ADMINISTRATION

 

3.1           This Plan
shall be administered by the Committee. 
The Committee, in its discretion, may delegate to one or more of its
members such of its powers as it deems appropriate. The Committee also may
limit the power of any member to the extent necessary to comply with applicable
law.  If it so chooses, the Board may
appoint the members of the Committee originally, and as vacancies occur, to
serve at the pleasure of the Board.

 

3.2           The
Committee shall meet at such times and places as it determines.  A majority of its members shall constitute a
quorum, and the decision of a majority of those present at any meeting at which
a quorum is present shall constitute the decision of the Committee.  A memorandum signed by all of its members
shall constitute the decision of the Committee without necessity, in such
event, for holding an actual meeting.

 

3.3           The
Committee shall have the exclusive right to interpret, construe and administer
the Plan, to select the persons who are eligible to receive an Award, and to
act in all matters pertaining to the granting of an Award and the contents of
the Agreement evidencing the Award, including without limitation, the
determination of the number of Stock Options and shares of Stock subject to an
Award and the form, terms, conditions and duration of each Award, and any
amendment thereof consistent with the provisions of the Plan.  All acts, determinations and decisions of the
Committee made or taken pursuant to grants of authority under the Plan or with
respect to any questions arising in connection with the administration and
interpretation of the Plan, including the severability of any and all of the
provisions thereof, shall be conclusive, final and binding upon all
Participants, Eligible Participants and their beneficiaries.

 

3.4           The
Committee may adopt such rules, regulations and procedures of general
application for the administration of this Plan, as it deems appropriate.

 

3.5           The
aggregate number of shares of Stock authorized for issuance pursuant to Awards
shall be 9,182,062, subject to adjustment as provided in Section 3.10.  Such shares of Stock shall be made available
from authorized and unissued shares of the Company.  If, for any reason, any shares of Stock
awarded or subject to purchase under the Plan are not delivered or purchased or
are reacquired by the Company, for reasons including, but not limited to, a
forfeiture of Restricted Stock or termination, expiration or cancellation of a
Stock Option, or any other termination of an Award without payment being made
in the form of Stock, whether or not Restricted Stock, such shares of Stock
shall not be charged against the aggregate number of shares of Stock available
for issuance pursuant to Awards under the Plan and may again be available for
issuance pursuant to Awards under the Plan.

 

3.6           Each Award
granted under the Plan shall be evidenced by a written Agreement.  Each Agreement shall be subject to and
incorporate, by reference or otherwise, the applicable

 

4

 

terms
and conditions of the Plan, and any other terms and conditions, not
inconsistent with the Plan, required by the Committee.

 

3.7           The
Company shall not be required to issue or deliver any certificates for shares
of Stock prior to:

 

(a)                                  the
listing of such shares on any stock exchange or national quotation system on
which the Stock may then be listed if the rules of the stock exchange or
national quotation system requires listing; and

 

(b)                                 the
completion of any registration or qualification of such shares of Stock under
any federal or state law, or any ruling or regulation of any government body if
the Company shall, in its discretion, determine registration or qualification
is necessary or advisable.

 

3.8           All
certificates for shares of Stock delivered under the Plan shall also be subject
to such stop-transfer orders and other restrictions as the Committee may deem
advisable under the rules, regulations, and other requirements of the
Securities and Exchange Commission, any stock exchange or national quotation
system upon which the Stock is then listed and any applicable federal or state
laws, and the Committee may cause a legend or legends to be placed on any such
certificates to make appropriate reference to such restrictions.  In making such determination, the Committee
may rely upon an opinion of counsel for the Company.

 

3.9           Subject to
the restrictions on Restricted Stock, as provided in Article VII of the Plan
and in the Restricted Stock Agreement, each Participant who receives an Award
of Restricted Stock shall have all the rights of a shareholder with respect to
such shares of Stock, including the right to vote the shares (to the extent, if
any, such shares possess voting rights) and receive dividends and other
distributions.  Except as provided
otherwise in the Plan or in an Agreement, no Participant awarded a Stock Option
shall have any right as a shareholder with respect to any shares of Stock
covered by his or her Stock Option prior to the date of issuance to him or her
of a certificate or certificates for such shares of Stock.

 

3.10         If any
reorganization, recapitalization, reclassification, stock split, stock dividend,
or consolidation of shares of Stock, merger or consolidation or split-up or
spin-off of the Company or sale or other disposition by the Company of all or a
portion of its assets, any other change in the Company’s corporate structure,
or any distribution to shareholders other than a cash dividend results in the
outstanding shares of Stock, or any securities exchanged therefor or received
in their place, being exchanged for a different number or class of shares of
Stock or other securities of the Company, or for shares of Stock or other
securities of any other corporation; or new, different or additional shares or
other securities of the Company or of any other corporation being received by
the holders of outstanding shares of Stock, then the Committee shall make
equitable adjustments in:

 

(a)                                  the
limitation on the aggregate number of shares of Stock that may be awarded as
set forth in Section 3.5 of the Plan;

 

5

 

(b)                                 the
number of shares and class of Stock that may be subject to an Award, and which
have not been issued or transferred under an outstanding Award;

 

(c)                                  the
purchase price to be paid per share of Stock under outstanding Stock Options;
and

 

(d)                                 the
terms, conditions or restrictions of any Award and Agreement, including the
price payable for the acquisition of Stock;

 

provided,
however, that all adjustments made as the result of the foregoing in respect of
each Incentive Stock Option shall be made so that such Stock Option shall
continue to be an Incentive Stock Option, as defined in Code section 422,
unless the Committee has stated its intent in writing to treat such Stock
Option instead as a Nonqualified Stock Option.

 

3.11         In addition
to such other rights of indemnification as they may have as directors or as
members of the Committee, the members of the Committee shall be indemnified by
the Company against reasonable expenses, including attorney’s fees, actually
and necessarily incurred in connection with the defense of any action, suit or
proceeding, or in connection with any appeal therein, to which they or any of
them may be a party by reason of any action taken or failure to act under or in
connection with the Plan or any Award granted under this Plan, and against all
amounts paid by them in settlement thereof, provided such settlement is
approved by independent legal counsel selected by the Company, or paid by them
in satisfaction of a judgment or settlement in any such action, suit or
proceeding, except as to matters as to which the Committee member has been
negligent or engaged in misconduct in the performance of his duties; provided,
that within 60 days after institution of any such action, suit or proceeding, a
Committee member shall in writing offer the Company the opportunity, at its own
expense, to handle and defend the same.

 

3.12         The
Committee may require each person purchasing shares of Stock pursuant to a
Stock Option or other Award under the Plan to represent to and agree with the
Company in writing that he is acquiring the shares of Stock without a view to
distribution thereof and/or that he has met such other requirements as the
Committee determines may be applicable to such purchase.  The certificates for such shares of Stock may
include any legend which the Committee deems appropriate to reflect any
restrictions on transfer.

 

3.13         The
Committee shall be authorized to make adjustments in performance based criteria
or in the other terms and conditions of Awards in recognition of unusual or
nonrecurring events affecting the Company or its financial statements or
changes in applicable laws, regulations or accounting principles.  Unless otherwise required by applicable law,
rule or regulation, such adjustments will not be considered to result in the
grant of a new Award. The Committee may correct any defect, supply any omission
or reconcile any inconsistency in the Plan or any Agreement in the manner and
to the extent it shall deem desirable to carry it into effect.  In the event the Company shall assume
outstanding employee benefit awards or the right or obligation to make such
awards in the future in connection with the acquisition

 

6

 

of
another corporation or business entity, the Committee may, in its discretion,
make such adjustments in the terms of Awards under the Plan as it shall deem
appropriate to assume the outstanding awards, rights and obligations.

 

3.14         If the
Committee determines that egregious circumstances exist which have been caused
by the Participant, the Committee shall have the full power and authority to
cancel or suspend any Stock Option or Restricted Stock Award granted to such
Participant.  In particular, but without
limitation, all outstanding Awards granted to any Participant may be canceled
if (a) the Participant, without the consent of the Committee, while employed by
the Company or after termination of such employment, becomes associated with,
employed by, renders services to, or owns any interest in, other than any
insubstantial interest, as determined by the Committee, any business that is in
competition with the Company or with any business in which the Company has a
substantial interest as determined by the Committee; (b) the Participant is
terminated for cause as determined by the Committee in its discretion; or (c)
the Company voluntarily or involuntarily files for and obtains relief under the
United States Bankruptcy Code or any similar state law for the protection of
creditors.

 

3.15         In
connection with any underwritten public offering by the Company of its equity
securities pursuant to an effective registration statement filed under the
Securities Act of 1933, including the Company’s initial public offering, a
Participant shall not sell, make any short sale of, loan, hypothecate, pledge,
grant any option for the purchase of, or otherwise dispose or transfer for
value or otherwise agree to engage in any of the foregoing transactions with
respect to, any Stock acquired under the Plan without the prior written consent
of the Company or its underwriters.  Such
restriction (the “Market Stand-Off”) shall be in effect for such period of time
from and after the effective date of the final prospectus for the offering as
may be requested by the Company or such underwriters.  In no event, however, shall such period
exceed the period for which securities owned by the Chief Executive Officer of
the Company are subject to the same restrictions.   Any new, substituted or additional
securities that are by reason of any recapitalization or reorganization
distributed with respect to Stock acquired under the Plan shall be immediately
subject to the Market Stand-Off, to the same extent the Stock acquired under
the Plan is at such time covered by such provisions.  In order to enforce the Market Stand-Off, the
Company may impose stop-transfer restrictions with respect to the Stock
acquired under the Plan until the end of the applicable stand-off period.

 

3.16         The Awards
granted pursuant to the Plan shall be subject to the following restrictions on
transfer (the “Right of First Refusal”):

 

(a)          Except as otherwise
provided in this Section 3.16, a Participant shall not sell, assign, transfer,
pledge, hypothecate or otherwise dispose of, by operation of law or otherwise
(collectively “transfer”), any shares of Restricted Stock or shares issuable
upon exercise of Stock Options (collectively, “Shares”), or any interest
therein.

 

7

 

(b)         If, at any time or from
time to time, a Participant proposes to transfer any Shares (the “Offered
Shares”), the Participant shall first give written notice of the proposed
transfer (the “Transfer Notice”) to the Company.  The Transfer Notice shall name the proposed
transferee and state the number of Offered Shares to be transferred, the price
per Offered Share and all other material terms and conditions of the proposed
transfer.  The Company shall have the
option to purchase all, but not less than all, of the Offered Shares at the
purchase price and upon the other terms and conditions specified in the
Transfer Notice.  The Company may accept
the offer by notifying the Participant in writing, within twenty (20) days
after the date of its receipt of the Transfer Notice, of its acceptance.  The closing of the purchase of Offered Shares
pursuant to this Section 3.16 shall occur at the principal offices of the
Company fifteen (15) days after receipt by the Participant of the Company’s
notice of acceptance.  At the closing,
the Participant shall tender to the Company the certificate or certificates
representing the Offered Shares, duly endorsed in blank or with duly endorsed
stock powers attached thereto, all in form suitable for the transfer of such
Offered Shares, free and clear of all liens, encumbrances and restrictions
(other than those imposed by the Company’s Certificate of Incorporation or
Bylaws or applicable laws) to the Company against delivery by the Company to
the Participant of a check in the amount of the aggregate purchase price therefore,
provided, that if the terms of the payment set forth in the Transfer Notice
were other than cash against delivery, the Company may, at its option, pay for
the Offered Shares on the same terms and conditions set forth in the Transfer
Notice.  If the Company does not elect to
acquire all of the Offered Shares, the Participant may transfer to the proposed
transferee, within the 60-day period following the expiration of the rights
granted to the Company pursuant to this Section 3.16, all, but not less than
all, of the Offered Shares, provided, that (i) such transfer shall not
be on terms and conditions more favorable to the transferee than those
contained in the Transfer Notice, (ii) such transfer shall comply with all
applicable state and federal securities laws, (iii) the Shares so transferred
shall remain subject to this Right of First Refusal and (iv) such transferee
shall, as a condition to such transfer, deliver to the Company a written
instrument confirming that such transferee shall be bound by all of the terms
and conditions of this Right of First Refusal.

 

(c)          Notwithstanding the
foregoing, a Participant may transfer Shares to or for the benefit of any
parent, spouse, child or grandchild, or to a trust or custodial account for
his, her or their benefit, without first offering such Shares to the Company
pursuant hereto, provided that (i) such transfer shall comply with all
applicable state and federal securities laws, (ii) such Shares shall remain
subject to this Right of First Refusal, and (iii) such permitted transferee
shall, as a condition to such transfer, deliver to the Company a written
instrument confirming that such transferee shall be bound by all of the terms
and conditions of this Agreement.

 

8

 

(d)         Except as set forth in
Section 7.5 of the Plan, a Participant may not transfer any Shares of
Restricted Stock during the Restriction Period.

 

(e)          If, from time to time,
there is any stock dividend, stock split, or other change in the character or
amount of any of the outstanding stock of the Company, the stock of which is
subject to the provisions of an Award under the Plan, then, in such event, any
and all new, substituted or additional securities to which the Participant is
entitled by reason of the Participant’s ownership of the Shares shall be
immediately subject to this Right of First Refusal with the same force and
effect as the shares subject to the Right of First Refusal immediately before
such event.

 

(f)            The other provisions
of this Section 3.16 notwithstanding, this Right of First Refusal shall
terminate, and be of no further force and effect upon (i) the occurrence of a
Transfer of Control, unless the surviving, continuing, successor or purchasing
corporation, as the case may be, assumes the Company’s rights and obligations
under the Plan, or (ii) the existence of a public market for the class of
shares subject to the Right of First Refusal. 
A “public market” shall be deemed to exist if (x) such stock is listed
on a national securities exchange (as that term is used in the Securities
Exchange Act of 1934, as amended) or (y) such stock is traded on the
over-the-counter or similar market and prices therefore are published daily on
business days in a recognized financial journal.

 

ARTICLE IV - INCENTIVE STOCK OPTIONS

 

4.1           Each
provision of this Article IV and of each Incentive Stock Option granted under
this Plan shall be construed in accordance with the provisions of Code section
422, and any provision hereof that cannot be so construed shall be disregarded.

 

4.2           All or any
portion of the shares of stock authorized for issuance pursuant to Section 3.5
herein shall be available for issuance pursuant to Incentive Stock Options
granted under this Plan.

 

4.3           Incentive
Stock Options shall be granted only to Eligible Participants who are in the
active employment of the Company, each of whom may be granted one or more such
Incentive Stock Options for a reason related to his employment at such time or
times determined by the Committee following the Effective Date until the
ten-year anniversary of the Effective Date, subject to the following
conditions:

 

(a)                                  The
Incentive Stock Option price per share of Stock shall be set in the
corresponding Agreement, but shall not be less than 100% of the Fair Market
Value of the Stock on the Option Grant Date. 
However, if the Optionee owns more than 10% of the outstanding common
stock of the Company (as determined pursuant to

 

9

 

Code
sections 422(b)(6) and 424(d)) on the Option Grant Date, the Incentive Stock
Option price per share shall not be less than 110% of the Fair Market Value of
the Stock on the Option Grant Date.

 

(b)                                 Subject
to any conditions upon exercise that the Committee may specify in the
corresponding Agreement, the Incentive Stock Option may be exercised in whole
or in part within ten (10) years from the Option Grant Date (five (5) years if
the Optionee owns more than 10% of the outstanding common stock of the Company
(as determined pursuant to Code sections 422(b)(6) and 424(d)) on the Option
Grant Date), or such shorter period as may be specified by the Committee in the
Agreement; provided, that, in any event, the Incentive Stock Option shall lapse
and cease to be exercisable upon a Termination of Employment or within such
period following a Termination of Employment as shall have been specified in
the Agreement, which period shall not exceed three months unless:

 

(i)                                     employment
shall have terminated as a result of death or Disability, in which event such
period shall not exceed one year after the date of death or Disability; or

 

(ii)                                  death
shall have occurred following a Termination of Employment and while the
Incentive Stock Option was still exercisable, in which event such period shall
not exceed one year after the date of death;

 

provided,
further, that such period following a Termination of Employment shall in no
event extend the original exercise period of the Incentive Stock Option.

 

(c)                                  The
Committee may adopt any other terms and conditions which it determines should
be imposed for the Incentive Stock Option to qualify under Code section 422, as
well as any other terms and conditions not inconsistent with this Article IV as
determined by the Committee.

 

(d)                                 To
the extent the aggregate Fair Market Value, determined as of the Option Grant
Date, of the shares of Stock with respect to which incentive stock options
(determined without regard to this subsection) are first exercisable during any
calendar year (under this Plan or any other plan of the Company) by a
Participant exceeds $100,000, such Incentive Stock Options granted under the
Plan shall be treated as Nonqualified Stock Options.

 

(e)                                  Subject
to the limitations of Section 3.6, the maximum number of shares of Stock
available for issuance pursuant to Incentive Stock Option Awards is all
authorized shares under the Plan.

 

4.4           To the
extent an Incentive Stock Option fails to meet the requirements of Code section
422, it  shall be deemed a Nonqualified
Stock Option.

 

10

 

4.5           The
Committee may at any time offer to buy out for a payment in cash, Stock,
Restricted Stock or other consideration an Incentive Stock Option previously
granted, based on such terms and conditions as the Committee shall establish
and communicate to the Participant at the time that such offer is made.

 

ARTICLE V - NONQUALIFIED STOCK OPTIONS

 

5.1           Nonqualified
Stock Options may be granted to Eligible Participants to purchase shares of
Stock at such time or times determined by the Committee, subject to the terms
and conditions set forth in this Article V.

 

5.2           The Nonqualified
Stock Option price per share of Stock shall be established in the Agreement and
may be more than, equal to or less than 100% of the Fair Market Value at the
time of the grant, or at such later date as the Committee shall determine.

 

5.3           The Nonqualified
Stock Option may be exercised within such period, and subject to such
restrictions, as may be specified by the Committee in the Agreement; provided,
that, in any event, the Nonqualified Stock Option shall lapse and cease to be
exercisable upon a Termination of Employment or within such period following a
Termination of Employment as shall have been specified in the Agreement;
provided, further, that such period following a Termination of Employment shall
in no event extend the original exercise period of the Nonqualified Stock
Option.

 

5.4           The
Nonqualified Stock Option Agreement may include any other terms and conditions
not inconsistent with this Article V or Article VI, as determined by the
Committee.

 

ARTICLE VI - INCIDENTS OF STOCK OPTIONS

 

6.1           Each Stock
Option shall be granted subject to such terms and conditions, if any, not
inconsistent with this Plan, as shall be determined by the Committee, including
any provisions as to continued employment as consideration for the grant or
exercise of such Stock Option and any provisions which may be advisable to
comply with applicable laws, regulations or rulings of any governmental
authority.

 

6.2           Except as
provided below, a Stock Option shall not be transferable by the Participant
other than by will or by the laws of descent and distribution or, to the extent
otherwise allowed by applicable law, pursuant to a qualified domestic relations
order as defined by the Code and the Employee Retirement Income Security Act of
1974, as amended, or the rules thereunder, and shall be exercisable during the
lifetime of the Participant only by him or in the event of his death or
Disability, by his guardian or legal representative; provided, however, that a
Nonqualified Stock Option may be transferred and exercised by the transferee to
the extent determined by the Committee to be consistent with securities and
other applicable laws, rules and regulations and with Company policy.  Notwithstanding any language herein or in any
Agreement to the contrary, any restrictions on transfer of a Stock Option in
the Plan or an Agreement shall be void and of no effect if

 

11

 

the
Committee determines that a transfer can be made consistent with securities and
other applicable laws, rules and regulations.

 

6.3           Shares of
Stock purchased upon exercise of a Stock Option shall be paid for in such
amounts, at such times and upon such terms as shall be determined by the
Committee, subject to limitations set forth in the corresponding Agreement.  Without limiting the foregoing, the Committee
may establish payment terms for the exercise of Stock Options which permit the
Participant to deliver shares of Stock, or other evidence of ownership of Stock
satisfactory to the Company, with a Fair Market Value equal to the Stock Option
price as payment.

 

6.4           The
Committee shall be entitled to place restrictions on transfer of Stock
purchased by a Participant under a Stock Option.

 

6.5           No cash
dividends shall be paid on shares of Stock subject to unexercised Stock
Options.

 

6.6           In the
event of Disability or death, the Committee, with the consent of the
Participant or his legal representative, may authorize payment, in cash or in
Stock, or partly in cash and partly in Stock, as the Committee may direct, of
an amount equal to the difference at the time between the Fair Market Value of
the Stock subject to a Stock Option and the option price in consideration of
the surrender of the Stock Option.

 

6.7           The
Committee may permit the voluntary surrender of all or a portion of any Stock
Option granted under the Plan to be conditioned upon the granting to the
Participant of a new Stock Option for the same or a different number of shares
of Stock as the Stock Option surrendered, or may require such surrender as a
condition precedent to a grant of a new Stock Option to such Participant.  Subject to the provisions of the Plan, and
except as otherwise agreed by the Participant, such new Stock Option shall be
exercisable at the same price as the surrendered Stock Option and during such
period and on such other terms and conditions as are specified by the Committee
at the time the new Stock Option is granted. 
Upon surrender, the Stock Options surrendered shall be canceled and the
shares of Stock previously subject to them shall be available for the grant of
other Stock Options.  For purposes of
determining the number of Stock Options issued pursuant to the Plan, new Stock
Options offered in consideration for Stock Options to be surrendered shall not
be considered as issued until such Stock Options are surrendered unless
otherwise required by law.

 

ARTICLE VII - RESTRICTED STOCK

 

7.1           Restricted
Stock Awards may be made to Participants as an incentive for the performance of
future services that will contribute materially to the successful operation of
the Company.  Awards of Restricted Stock
may be made either alone or in addition to or in tandem with other Awards under
the Plan.

 

7.2           With
respect to Awards of Restricted Stock, the Committee shall:

 

12

 

(a)                                  determine
the purchase price, if any, to be paid for such Restricted Stock, which may be
equal to or less than par value and may be zero, subject to such minimum
consideration as may be required by applicable law;

 

(b)                                 determine
the length of the Restriction Period;

 

(c)                                  determine
any restrictions applicable to the Restricted Stock such as service or
performance;

 

(d)                                 determine
if the restrictions shall lapse as to all shares of Restricted Stock at the end
of the Restriction Period or as to a portion of the shares of Restricted Stock
in installments during the Restriction Period; and

 

(e)                                  determine
if dividends and other distributions on the Restricted Stock are to be paid
currently to the Participant or paid to the Company for the account of the
Participant.

 

7.3           Awards of
Restricted Stock must be accepted within a period of 60 days, or such shorter
period as the Committee may specify, by executing a Restricted Stock Agreement
and paying whatever price, if any, is required. 
The prospective recipient of a Restricted Stock Award shall not have any
rights with respect to such Award, unless such recipient has executed a
Restricted Stock Agreement and has delivered a fully executed copy thereof to
the Committee, and has otherwise complied with the applicable terms and
conditions of such Award.

 

7.4           Except
when the Committee determines otherwise, or as otherwise provided in the
Restricted Stock Agreement, if a Participant terminates employment with the
Company for any reason before the expiration of the Restriction Period, all
shares of Restricted Stock still subject to restriction shall be forfeited by
the Participant and shall be reacquired by the Company.

 

7.5           Except as
otherwise provided in this Article VII or in the corresponding Agreement, no
shares of Restricted Stock received by a Participant shall be sold, exchanged,
transferred, pledged, hypothecated or otherwise disposed of during the
Restriction Period.

 

7.6           To the
extent not otherwise provided in a Restricted Stock Agreement, in cases of
death, Disability or Retirement or in cases of special circumstances, the
Committee, if it finds that a waiver would be appropriate, may elect to waive
any or all remaining restrictions with respect to such Participant’s Restricted
Stock.

 

7.7           In the event
of hardship or other special circumstances of a Participant whose employment
with the Company is involuntarily terminated, the Committee may waive in whole
or in part any or all remaining restrictions with respect to any or all of the
Participant’s Restricted Stock, based on such factors and criteria as the
Committee may deem appropriate.

 

13

 

7.8           Upon
granting an Award of Restricted Stock to a Participant, one or more stock
certificates representing the shares of Restricted Stock shall be registered in
the Participant’s name.  Such
certificates may either:

 

(a)                                  be
held in custody by the Company until the Restriction Period expires or until
restrictions thereon otherwise lapse, and the Participant shall deliver to the
Company a stock power endorsed in blank relating to the Restricted Stock;
and/or

 

(b)                                 be
issued to the Participant and registered in the name of the Participant, and
shall bear an appropriate restrictive legend and shall be subject to appropriate
stop-transfer orders.

 

7.9           Except as
provided in this Article VII, a Participant receiving a Restricted Stock Award
shall have, with respect to the shares of Restricted Stock covered by any
Award, all of the rights of a shareholder of the Company, including the right
to vote the shares to the extent, if any, such shares possess voting rights and
the right to receive any dividends; provided, however, the Committee may
require that any dividends on such shares of Restricted Stock shall be
automatically deferred and reinvested in additional Restricted Stock subject to
the same restrictions as the underlying Award, or may require that dividends
and other distributions on Restricted Stock shall be paid to the Company for
the account of the Participant.  The Committee
shall determine whether interest shall be paid on such amounts, the rate of any
such interest, and the other terms applicable to such amounts.

 

7.10         If and when
the Restriction Period expires without a prior forfeiture of the Restricted
Stock subject to such Restriction Period, unrestricted certificates for such
shares shall be delivered to the Participant; provided, however, that the
Committee may cause such legend or legends to be placed on any such
certificates as it may deem advisable under the rules, regulations and other
requirements of the Securities and Exchange Commission and any applicable
federal or state law.

 

7.11         In order to
better ensure that Award payments actually reflect the performance of the
Company and the service of the Participant, the Committee may provide, in its
sole discretion, for a tandem performance-based or other Award designed to
guarantee a minimum value, payable in cash or Stock to the recipient of a
Restricted Stock Award, subject to such performance, future service, deferral
and other terms and conditions as may be specified by the Committee.

 

ARTICLE VIII – TRANSFER OF CONTROL

 

8.1           Upon a
merger, consolidation, corporate reorganization, or any transaction in which
all or substantially all of the assets or stock of the Company are sold,
leased, transferred or otherwise disposed of (other than a mere reincorporation
transaction or one in which the holders of capital stock of the Company immediately
prior to such merger or

 

14

 

consolidation
continue to hold at least a majority of the voting power of the surviving
corporation) (a “Transfer of Control”), then any unexercisable portion of an
outstanding Stock Option and any unvested portion of a Restricted Stock Award
shall become immediately exercisable as of a date prior to the Transfer of
Control, which date shall be determined by the Board. Notwithstanding the
foregoing, (i) an outstanding Stock Option shall not so accelerate if and to
the extent the Participant is employed in connection with the Transfer of
Control by the successor corporation (or parent thereof) and (A) such Stock
Option is either to be assumed by the successor corporation (or parent thereof)
or to be replaced with a comparable option to purchase shares of the capital
stock of the successor corporation (or parent thereof), or (B) such Stock
Option is to be replaced with a cash incentive program of the successor
corporation which preserves the spread existing on the unvested Stock Option at
the time of such Transfer of Control and provides for subsequent payout in
accordance with the same vesting schedule applicable to such Stock Option; and
(ii) an outstanding Stock Option or Restricted Stock Award shall not so
accelerate if and to the extent the acceleration of such Stock Option or
Restricted Stock Award is subject to other limitations imposed by the Board at
the time of the grant of the Award.  The
determination of option comparability under clause (i) (A) above shall be made
by the Board, and its determination shall be final, binding and conclusive.

 

8.2           The
vesting of any portion of a Restricted Stock Award or the exercise of any Stock
Option that was permissible solely by reason of this Section 8.1 shall be
conditioned upon the consummation of the Transfer of Control.  The Board may further elect, in its sole
discretion, to provide that any Stock Options which became exercisable solely
by reason of this Section 8.1 and which are not exercised as of the date of the
Transfer of Control shall terminate effective as of the date of the Transfer of
Control.

 

ARTICLE IX - AMENDMENT AND TERMINATION

 

9.1           The Board
may amend or terminate the Plan at any time and from time to time.  To the extent required by Code section 422,
no amendment, without approval by the shareholders of Synthematix, Inc., shall:

 

(a)                                  alter
the group of persons eligible to participate in the Plan;

 

(b)                                 increase
the maximum number of shares of Stock that are available for issuance pursuant
to Awards granted under the Plan;

 

(c)                                  extend
the period during which Incentive Stock Options may be granted beyond the date
which is ten (10) years following the Effective Date;

 

(d)                                 change
the definition of an Eligible Participant for the purpose of an Incentive Stock
Option or increase the limit or the value of shares of Stock for which an
Eligible Participant may be granted an Incentive Stock Option.

 

15

 

9.2           The
Committee shall be entitled to create, amend or delete appendices to this Plan
as specified herein.

 

9.3           No
amendment to or termination of this Plan or any provision thereof may, without
the written consent of the affected Participant (or his or her beneficiary, as
applicable, adversely affect the rights of the Participant (or beneficiary)
under any Award previously granted to the Participant under this Plan;
provided, however, the Committee retains the right and power to treat any
outstanding Incentive Stock Option as a Nonqualified Stock Option in accordance
with Section 4.3 above and to make adjustments to any Award pursuant to Section
3.10 without the affected Participant’s consent.

 

ARTICLE X- MISCELLANEOUS PROVISIONS

 

10.1         Nothing in
the Plan or any Award granted under this Plan shall confer upon any Participant
any right to continue in the employ of the Company, or to serve as a director
or consultant thereof, or interfere in any way with the right of the Company to
terminate his or her employment or relationship at any time.  Unless specifically provided otherwise, no
Award granted under the Plan shall be deemed salary or compensation for the
purpose of computing benefits under any employee benefit plan or other
arrangement of the Company for the benefit of its employees unless the Company
shall determine otherwise. No Participant shall have any claim to an Award
until it is actually granted under the Plan. To the extent that any person
acquires a right to receive payments from the Company under the Plan, such
right shall, except as otherwise provided by the Committee, be no greater than
the right of an unsecured general creditor of the Company. All payments to be
made under this Plan shall be paid from the general funds of the Company, and
no special or separate fund shall be established and no segregation of assets
shall be made to assure payment of such amounts, except as provided otherwise
by the Committee.

 

10.2         The Company
may make such provisions and take such steps as it may deem necessary or
appropriate for the withholding of any taxes which the Company is required by
any law or regulation of any governmental authority, whether federal, state or
local, domestic or foreign, to withhold in connection with any Award or the
exercise thereof, including, but not limited to, the withholding of payment of
all or any portion of such Award or another Award under this Plan until the
Participant reimburses the Company for the amount the Company is required to
withhold with respect to such taxes, or canceling any portion of such Award or
another Award under this Plan in an amount sufficient to reimburse itself for
the amount it is required to so withhold, or selling any property contingently
credited by the Company for the purpose of paying such Award or another Award
under this Plan, in order to withhold or reimburse itself for the amount it is
required to so withhold.

 

10.3         The Plan and
the grant of Awards shall be subject to all applicable federal and state laws,
rules, and regulations and to such approvals by any United States government or
regulatory agency as may be required.

 

16

 

10.4         The terms of
the Plan shall be binding upon the Participant, the Company, and their
successors and assigns.

 

10.5         The Plan is
intended to constitute an “unfunded” plan for incentive and deferred
compensation.  With respect to any
payments not yet made to a Participant by the Company, nothing contained herein
shall give any such Participant any rights that are greater than those of a
general unsecured creditor of the Company. 
In its sole discretion, the Committee may authorize the creation of
trusts or other arrangements to meet the obligations created under the Plan to
deliver shares of Stock or payments in lieu of or with respect to Awards under
this Plan; provided, however, that, unless the Committee otherwise determines with
the consent of the affected Participant, the existence of such trusts or other
arrangements is consistent with the “unfunded” status of the Plan.

 

10.6         Each
Participant exercising an Award under this Plan agrees to give the Committee
prompt written notice of any election made by such Participant under Code
section 83(b) or any similar provision thereof.

 

10.7         If any
provision of this Plan or an Agreement is or becomes or is deemed invalid,
illegal or unenforceable in any jurisdiction, or would disqualify the Plan or
any Agreement under any law deemed applicable by the Committee, such provision
shall be construed or deemed amended to conform to applicable laws or if it
cannot be construed or deemed amended without, in the determination of the
Committee, materially altering the intent of the Plan or the Agreement, it
shall be stricken and the remainder of the Plan or the Agreement shall remain
in full force and effect.

 

10.8         The
Committee may incorporate additional or alternative provisions for this Plan
with respect to residents of one or more individual states to the extent
necessary or desirable under state securities laws.  Such provisions shall be set out in one or
more appendices hereto which may be amended or deleted by the Committee from
time to time.

 

17

 

APPENDIX A

 

SYNTHEMATIX, INC

AMENDED AND RESTATED

2000 EQUITY COMPENSATION PLAN

 

Provisions Applicable to California Residents

 

Notwithstanding anything to the contrary specified
above, the following provisions shall apply to any stock option granted under
the Synthematix, Inc., 2000 Equity Compensation Plan (the “Plan”) to a resident
of California:

 

•                                          The
exercise price under an option granted to a California resident may not be less
than 85% of the “fair value” (as defined by Rule 260.140.50 under the
California Code) of the Company’s common stock at the time the option is
granted (110% of the “fair value” in the case of any person who owns stock
possessing more than 10% of the total combined voting power of all classes of
stock of the issuing corporation or its parent or subsidiary corporations at
the time of grant.

 

•                                          The
exercise period of a stock option granted to a California resident shall be no
longer than 120 months from the date the option is granted.

 

•                                          An
option granted to a California resident shall not be transferable, other than
by will or the laws of descent and distribution.

 

•                                          An
option granted to a California resident shall become exercisable at the rate of
at least 20% per year over 5 years from the date the option is granted, subject
to reasonable conditions such as continued employment.  However, in the case of an option granted to
a California resident who is an officer, director, or consultant of the Company
or any of its affiliates, the option may become fully exercisable, subject to
reasonable conditions such as continued employment, at any time or during any
period established by the Company.

 

•                                          Unless
employment is terminated for cause as defined by applicable law, the terms of
the stock option award agreement or a contract of employment, the right to
exercise an option granted to a California resident in the event of termination
of the optionee’s employment (to the extent that the optionee is otherwise
entitled to exercise on the date employment terminates) must terminate as
follows:

 

•                                          At
least 6 months from the date of termination if termination was caused by death
or disability; or

 

•                                          At
least 30 days from the date of termination if termination was caused by other
than death or disability.

 

18

 

•                                          The plan
shall terminate with respect to California residents on February 1, 2010.

 

•                                          The Plan
shall be available to California residents only if the shareholders of the
Company approve the plan within 12 months before or after the date the plan was
adopted.  Any option exercised by a
California resident before such shareholder approval is obtained shall be
rescinded if such shareholder approval is not obtained.  Any such rescinded shares will not be counted
in determining whether approval is obtained.

 

•                                          Each
California resident who elects to participate in the Plan will be provided with
a copy of the Company’s financial statements annually.

 

•                                          At no time
will the total number of shares of Company stock issuable under stock options
granted under this Plan, under subscription agreements under any stock purchase
plan maintained by the Company, and the total number of shares provided for
under any stock bonus or similar plan of the Company exceed the limitation set
forth in Rule 260.140.45 under the California Code, based on the shares of the
issuer which are outstanding at the time the calculation is made.

 

19

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