Document:

ex10x3.htm

    

    Exhibit 10.3

     

    
      

      INTERCREDITOR
AGREEMENT

       

      This
Intercreditor Agreement (Agreement) is made this 9th
dayof July, 2010, and entered into between __________ (Investor) and Primary
Funding Corporation (Primary Funding).

       

      Recitals

       

      WHEREAS,
the Investor and Primary Funding have entered into an agreement by the Investor
is subordinating and assigning its priority interest in the inventory and the
accounts of PepperBall Technologies – CA, Inc. (CLIENT);

       

      WHEREAS,
the parties wish to further clarify their respective rights regarding the
Agreement.

       

      NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and intending to be legally bound hereby, the
Investor and the Primary Funding hereby agree as follows:

       

    

    1.) The
term Accounts shall mean all existing and hereafter arising accounts, contract
rights, instruments, notes, drafts, documents, chattel paper and all other forms
of obligations owing to Client arising out of the sale or lease of goods or the
rendition of services by Client, irrespective of whether earned by performance,
and any and all credit insurance, guarantees and other security therefor, as
well as all merchandise returned to or reclaimed by Client and Clients books
relating to any of the foregoing.

     

    2.) The
term Inventory shall mean all of Client’s present and future inventory in which
Client has any interest, including goods which have been leased or held for sale
or lease or to be furnished under a contract of service and all of Client’s
present and future raw materials, work in process, finished goods, and packing
and shipping materials, wherever located, and any documents of title
representing any of the above.

     

    3.) The
Investor and the Primary Funding agree that Primary Funding’s security interest
in the Accounts and Inventory is to be construed as having priority to the
extent of all indebtedness secured thereby, now existing or hereafter arising in
the Accounts and Inventory over the security interest of the
Investor.

     

    4.)
Notwithstanding any other provisions of this Agreement, it is the intent of the
Investor and Primary Funding that this Agreement and all prior agreements shall
be construed to be a subordination, subject to the terms and conditions stated
herein, from the Investor to Primary Funding of its security interest as well as
all rights, title and interest in the Accounts and the Inventory. If, however,
at the time either the Investor or Primary Funding, as the case may be, has
elected to foreclose upon its secured interest in Client or otherwise files suit
against Client related to the collection of the obligation Client owes it, and
Client is indebted to Primary Funding the parties agree that the following shall
be the order and priority of their respective security interests in the Accounts
and Inventory:

     
 

     
 

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    ( i ) the
security interest of Primary Funding shall be superior to and entitled to
priority over the security interest of the Investor;

    

    ( ii ) to
the extent of the costs, expenses and attorneys fees incurred by Primary Funding
in conjunction with foreclosure efforts, the security interest of the Primary
Funding shall be superior to and entitled to priority over the security interest
of the Investor;

    

    ( iii )
thereafter, and to the extent of the indebtedness owed by Client to the
Investor, the security interest of Investor shall be superior to and entitled to
priority over the security interest of Primary Funding.

    

    5.) The
parties each agree that prior to the exercise of any of their rights and
remedies with respect to any security interest they may have in Client, the
party pursuing its rights and remedies will first give the other twenty four
hours written notice before pursuing its claim.

     

    6.) In the
event of any action to enforce or interpret the terms of this agreement, that
the prevailing party in any such action will be entitled to recover reasonable
attorney’s fees and cost.

     

    7.) The
parties agree that all actions or proceedings of any nature whatsoever relating
directly or indirectly hereto shall be litigated or arbitrated in courts or
places located within the State of California, County of San Diego and if such
action shall be brought in Federal Court then within the Federal District Court
located in said State.

     

    8.) This
Intercreditor Agreement constitutes the entire, final and integrated agreement
between the parties hereto pertaining to the subject matter hereof, and
supersedes any and all prior understandings, representations, warranties and
agreements between the parties hereto, or any of them pertaining to the subject
matter hereof.

     

    IN WITNESS
WHEREOF, this Agreement is executed on the day first written above.

     

     

    
      

      
        
          	 	PRIMARY
      FUNDING CORPORATION	 
	 	 	 
	
                   

                	/s/ Patricia
      J. Burns	 
	 	By: 
      Patricia J. Burns, President	 
	 	 	 
	 	 	 

        

      

       

    

    
      
        

        
          
            	 	INVESTOR	 
	 	 	 
	
                     

                  	 	 
	 	By:Exhibit 10.22

 

RIGEL PHARMACEUTICALS, INC.

 

2000 NON-EMPLOYEE DIRECTORS’ STOCK OPTION PLAN

 

ADOPTED AUGUST 18, 2000

APPROVED BY STOCKHOLDERS
SEPTEMBER 11, 2000

EFFECTIVE DATE: DECEMBER 4,
2000

AMENDED AND RESTATED APRIL 24,
2003

AMENDED AND RESTATED JUNE 20,
2003

APPROVED BY STOCKHOLDERS JUNE
20, 2003

AMENDED AND RESTATED APRIL 22,
2005

APPROVED BY STOCKHOLDERS JUNE
2, 2005

AMENDED AND RESTATED JANUARY
31, 2007

APPROVED BY STOCKHOLDERS MAY 31,
2007

AMENDED AND RESTATED SEPTEMBER
18, 2007

AMENDED AND RESTATED FEBRUARY
21, 2008

APPROVED BY STOCKHOLDERS MAY 29,
2008

AMENDED AND RESTATED MAY 19,
2009

AMENDED AND RESTATED JANUARY
28, 2010

APPROVED BY STOCKHOLDERS MAY 27,
2010

 

1.             PURPOSES.

 

(a)           Eligible Option Recipients. The persons eligible to receive Options are the Non-Employee Directors
of the Company.

 

(b)           Available Options.
The purpose of the Plan is to provide a means by which Non-Employee Directors
may be given an opportunity to benefit from increases in value of the Common
Stock through the granting of Nonstatutory Stock Options.

 

(c)           General Purpose.
The Company, by means of the Plan, seeks to retain the services of its
Non-Employee Directors, to secure and retain the services of new Non-Employee
Directors and to provide incentives for such persons to exert maximum efforts
for the success of the Company and its Affiliates.

 

1

 

2.             DEFINITIONS.

 

(a)           “Affiliate”
means, at the time of determination, any “parent” or “subsidiary” of the
Company as such terms are defined in Rule 405 of the Securities Act.  The Board shall have the authority to
determine the time or times at which “parent” or “subsidiary” status is
determined within the foregoing definition.

 

(b)           “Annual Grant” means an Option granted annually to all Non-Employee Directors who meet
the criteria specified in subsection 6(b) of the Plan.

 

(c)           “Annual Meeting” means the annual meeting of the stockholders of the Company.

 

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

 

(e)           A “Change in Control,” with
respect to Options granted on or after the effective date of the
Plan, will be deemed to have occurred upon the first to occur of an event set
forth in any one of the following paragraphs:

 

(i)            the acquisition (other than from the Company, by any person (as such
term is defined in Section 13(c) or 14(d) of the Exchange Act of
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of fifty percent (50%) or more of the
combined voting power of the Company’s then outstanding voting securities;

 

(ii)           the individuals who, as of the effective date of the Plan, are members
of the Board (the  “Incumbent Board”), cease for
any reason to constitute at least a majority of the Board, unless the election,
or nomination for election by the Company’s stockholders, of any new director
was approved by a vote of at least a majority of the Incumbent Board, and such
new director shall, for purposes of this Plan, be considered as a member of the
Incumbent Board; or

 

(iii)         the closing of:

 

(1)           a merger or consolidation involving the Company if the stockholders of
the Company, immediately before such merger or consolidation, do not, as a
result of such merger or consolidation, own, directly or indirectly, more
than fifty percent (50%) of the combined voting power of the then outstanding
voting securities of the corporation resulting from such merger or
consolidation in substantially the same proportion as their ownership of
the 

 

2

 

combined voting power of the voting securities of the
Company outstanding immediately before such merger or consolidation; or

 

(2)           a complete liquidation or dissolution of the Company or an agreement for
the sale or other disposition of all or substantially all of the assets of the
Company.

 

Notwithstanding the foregoing, a Change in Control
shall not be deemed to occur solely because fifty percent (50%) or more of the
combined voting power of the Company’s then outstanding securities is acquired
by (i) a trustee or other fiduciary holding securities under one or more
employee benefit plans maintained by the Company or any of its subsidiaries or (ii) any
corporation which, immediately prior to such acquisition, is owned
directly or indirectly by the stockholders of the Company in the same
proportion as their ownership of stock in the Company immediately prior to
such acquisition.

 

For the avoidance of doubt, the term Change in Control
shall not include a sale of assets, merger or other transaction effected
exclusively for the purpose of changing the domicile of the Company.

 

Notwithstanding the foregoing or any other provision
of this Plan, the definition of Change in Control (or any analogous term) in an
individual written agreement between the Company or any Affiliate and
the Optionholder shall supersede the foregoing definition with respect
to Options subject to such agreement; provided,
however, that if no definition of Change in Control or any analogous
term is set forth in such an individual written agreement, the foregoing
definition shall apply.

 

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

 

(g)           “Common Stock”
means the common stock of the Company.

 

(h)           “Company”
means Rigel Pharmaceuticals, Inc., a Delaware corporation.

 

(i)            “Consultant”
means any person, including an advisor, (i) engaged by the Company or an
Affiliate to render consulting or advisory services and who is compensated for
such services or (ii) who is a member of the Board of Directors of an
Affiliate. However, the term “Consultant” shall not include either Directors of
the Company who are not compensated by the Company for their services as
Directors or Directors of the Company who are merely paid a director’s fee by
the Company for their services as Directors.

 

(j)            “Continuous Service”
means that the Optionholder’s service with the Company or an Affiliate, whether
as an Employee, Director or Consultant, is not interrupted or terminated. 

 

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The Optionholder’s Continuous Service shall not be
deemed to have terminated merely because of a change in the capacity in which
the Optionholder renders service to the Company or an Affiliate as an Employee,
Consultant or Director or a change in the entity for which the Optionholder
renders such service, provided that there is no interruption or termination of
the Optionholder’s service. For example, a change in status without
interruption from a Non-Employee Director of the Company to a Consultant of an
Affiliate or an Employee of the Company will not constitute an interruption of
Continuous Service. The Board or the chief executive officer of the Company, in
that party’s sole discretion, may determine whether Continuous Service shall be
considered interrupted in the case of any leave of absence approved by that
party, including sick leave, military leave or any other personal leave.

 

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

 

(l)            “Disability” means the permanent and total disability of a person within the meaning
of Section 22(e)(3) of the Code.

 

(m)          “Employee”
means any person employed by the Company or an Affiliate. Mere service as a
Director or payment of a director’s fee by the Company or an Affiliate shall
not be sufficient to constitute “employment” by the Company or an Affiliate.

 

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

 

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

 

(i)            If the Common Stock is listed on any established stock exchange or
traded on the Nasdaq National Market or the Nasdaq SmallCap Market, the Fair
Market Value of a share of Common Stock shall be the closing sales price for
such stock (or the closing bid, if no sales were reported) as quoted on such
exchange or market (or the exchange or market with the greatest volume of
trading in the Common Stock) on the last market trading day prior to the day of
determination, as reported in The Wall Street Journal or such other source as
the Board deems reliable.

 

(ii)           In the absence of such markets for the Common Stock, the Fair Market
Value shall be determined in good faith by the Board.

 

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(p)           “Initial Grant” means an Option granted to a Non-Employee Director who meets the criteria
specified in subsection 6(a) of the Plan.

 

(q)           “IPO Date” means the effective date of the initial public offering of the Common
Stock.

 

(r)           “Non-Employee Director” means a Director who is not an Employee.

 

(s)           “Nonstatutory Stock Option” means an Option not intended to qualify as an incentive stock option
within the meaning of Section 422 of the Code and the regulations
promulgated thereunder.

 

(t)            “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.

 

(u)           “Option”
means a Nonstatutory Stock Option granted pursuant to the Plan.

 

(v)            “Option Agreement”
means a written agreement between the Company and an Optionholder evidencing
the terms and conditions of an individual Option grant. Each Option Agreement
shall be subject to the terms and conditions of the Plan.

 

(w)           “Optionholder”
means a person to whom an Option is granted pursuant to the Plan or, if
applicable, such other person who holds an outstanding Option.

 

(x)           “Plan”
means this Rigel Pharmaceuticals, Inc. 2000 Non-Employee Directors’ Stock
Option Plan.

 

(y)           “Rule 16b-3”
means Rule 16b-3 promulgated under the Exchange Act or any successor to Rule 16b-3,
as in effect from time to time.

 

5

 

(z)           “Securities Act”
means the Securities Act of 1933, as amended.

 

3.             ADMINISTRATION.

 

(a)           Administration by Board.
The Board shall administer the Plan. The Board may not delegate administration
of the Plan to a committee.

 

(b)           Powers of Board.
The Board shall have the power, subject to, and within the limitations of, the
express provisions of the Plan:

 

(i)            To determine the provisions of each Option to the extent not specified
in the Plan.

 

(ii)           To construe and interpret the Plan and Options granted under it, and to
establish, amend and revoke rules and regulations for its administration.
The Board, in the exercise of this power, may correct any defect, omission or
inconsistency in the Plan or in any Option Agreement, in a manner and to the
extent it shall deem necessary or expedient to make the Plan fully effective.

 

(iii)         To amend the Plan or an Option as provided in Section 12.

 

(iv)          To terminate or suspend the Plan as provided in Section 13.

 

(v)            Generally, to exercise such powers and to perform such acts as the Board
deems necessary or expedient to promote the best interests of the Company that
are not in conflict with the provisions of the Plan.

 

(c)           Effect of Board’s Decision. All determinations, interpretations and constructions made by the Board
in good faith shall not be subject to review by any person and shall be final,
binding and conclusive on all persons.

 

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(d)           Cancellation and Re-Grant of Options. Notwithstanding anything to the contrary in the Plan, neither the
Board nor any Committee shall have the authority to: (i) reprice any
outstanding Option under the Plan, (ii) cancel and re-grant any
outstanding Option under the Plan, or (iii) effect any other action that
is treated as a repricing under generally accepted accounting principles
unless, in each case, the stockholders of the Company have approved such an
action within twelve (12) months prior to such an event.

 

4.             SHARES SUBJECT TO THE PLAN.

 

(a)           Share Reserve.
Subject to the provisions of Section 11 relating to adjustments upon
changes in the Common Stock, the Common Stock that may be issued pursuant to
Options shall not exceed in the aggregate 885,000 shares of Common Stock, which
number consists of (i) 33,333 shares of Common stock initially reserved
for issuance under the Plan plus (ii) 66,667 shares of Common stock
approved by the Board in April 2003 and subsequently approved by the
Company’s stockholders plus (iii) 225,000 shares of Common Stock approved
by the Board in April 2005 and subsequently approved by the Company’s
stockholders plus (iv) 110,000 shares of Common Stock approved by the
Board in January 2007 and subsequently approved by the Company’s
stockholders plus (v) 100,000 shares of Common Stock approved by the Board
in February 2008 and subsequently approved by the Company’s stockholders
plus (vi) 350,000 shares of Common Stock approved by the Board in January 2010
and subsequently approved by the Company’s stockholders.

 

(b)           Reversion of Shares to the Share Reserve. If any Option shall for any reason expire or otherwise terminate, in
whole or in part, without having been exercised in full, the shares of Common
Stock not acquired under such Option shall revert to and again become available
for issuance under the Plan. If any shares subject to an Option are not
delivered to an Optionholder because the Option is exercised through a
reduction of shares subject to the Option (
i.e., “net exercised”), the number of shares that are not delivered
to the Optionholder shall not remain available for issuance under the Plan. If
any shares subject to an Option are not delivered to an Optionholder because
such shares are withheld in satisfaction of the withholding of taxes incurred
in connection with the exercise of an Option, the number of shares that are not
delivered to the Optionholder shall not remain available for subsequent
issuance under the Plan. If the exercise price of any Option is satisfied by
tendering shares of Common Stock held by the Optionholder (either by actual
delivery or attestation), then the number of shares so tendered shall not
remain available for subsequent issuance under the Plan.

 

(c)           Source of Shares.
The shares of Common Stock subject to the Plan may be unissued shares or
reacquired shares, bought on the market or otherwise.

 

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5.             ELIGIBILITY.

 

The Options as set forth in section 6 automatically
shall be granted under the Plan to all Non-Employee Directors who meet the specified
criteria.

 

6.             NON-DISCRETIONARY GRANTS.

 

(a)           Initial Grants.
Without any further action of the Board, each person who is elected or
appointed for the first time to be a Non-Employee Director automatically shall,
upon the date of his or her initial election or appointment to be a
Non-Employee Director by the Board or stockholders of the Company, be granted
an Initial Grant to purchase twenty-five thousand (25,000) shares of Common
Stock on the terms and conditions set forth herein.

 

(b)           Annual Grants.
Without any further action of the Board, a Non-Employee Director shall be
granted an Annual Grant as follows: On the day following each Annual Meeting
commencing with the Annual Meeting in 2010, each person who is then a
Non-Employee Director automatically shall be granted an Annual Grant to
purchase fifteen thousand (15,000) shares of Common Stock on the terms and
conditions set forth herein; provided,
however, that if the person has not been serving as a Non-Employee
Director for the entire period since the preceding Annual Meeting, then the
number of shares subject to the Annual Grant shall be reduced pro rata for each
full quarter prior to the date of grant during which such person did not serve
as a Non-Employee Director.

 

7.             OPTION PROVISIONS.

 

Each Option shall be in such form and shall contain
such terms and conditions as required by the Plan. Each Option shall contain
such additional terms and conditions, not inconsistent with the Plan, as the
Board shall deem appropriate. Each Option shall include (through incorporation
of provisions hereof by reference in the Option or otherwise) the substance of
each of the following provisions:

 

(a)           Term. No
Option shall be exercisable after the expiration of ten (10) years from
the date it was granted.

 

8

 

(b)           Exercise Price.
The exercise price of each Option shall be one hundred percent (100%) of the
Fair Market Value of the stock subject to the Option on the date the Option is
granted. Notwithstanding the foregoing, an Option may be granted with an
exercise price lower than that set forth in the preceding sentence if such
Option is granted pursuant to an assumption or substitution for another option
in a manner satisfying the provisions of Section 424(a) of the Code.

 

(c)           Consideration.
The purchase price of stock acquired pursuant to an Option may be paid, to the
extent permitted by applicable statutes and regulations, in any combination of
the following methods:

 

(i)            By cash or check.

 

(ii)           Provided that at the time of exercise the Common Stock is publicly
traded and quoted regularly in The Wall
Street Journal, by delivery to the Company of shares of Common Stock
that are owned free and clear of any liens, claims, encumbrances or security
interests, and that are valued at Fair Market Value on the date of exercise. “Delivery”
for these purposes shall include delivery to the Company of the Optionholder’s
attestation of ownership of such shares of Common Stock in a form approved by
the Company. Notwithstanding the foregoing, the Optionholder may not exercise
the Option by tender to the Company of Common Stock to the extent such tender
would violate the provisions of any law, regulation or agreement restricting
the redemption of the Company’s stock.

 

(iii)         Provided that at the time of exercise the Common Stock is publicly
traded and quoted regularly in The Wall
Street Journal, pursuant to a program developed under Regulation T
as promulgated by the Federal Reserve Board that, prior to the issuance of
Common Stock, results in either the receipt of cash (or check) by the Company
or the receipt of irrevocable instructions to pay the aggregate exercise price
to the Company from the sales proceeds.

 

(iv)          By a “net exercise” arrangement pursuant to which the Company will reduce
the number of shares of Common Stock issued upon exercise by the largest whole
number of shares with a Fair Market Value that does not exceed the aggregate
exercise price;  provided, however, that the
Company shall accept a cash or other payment from the Optionholder to the
extent of any remaining balance of the aggregate exercise price not satisfied
by such holding back of whole shares;  provided, further, however, that
shares of Common Stock will no longer be outstanding under an Option and will
not be exercisable thereafter to the extent that (i) shares are used to
pay the exercise price pursuant to the “net exercise,” (ii) shares 

 

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are delivered to the Optionholder as a result of such
exercise, and (iii) shares are withheld to satisfy tax withholding
obligations.

 

(d)           Transferability.
The Board may, in its sole discretion, impose such limitations on the
transferability of Options as the Board shall determine.  In the absence of such a determination by the
Board to the contrary, the following restrictions on the transferability of
Options shall apply:

 

(i)            Restrictions on Transfer.  An Option shall not be transferable except by
will or by the laws of descent and distribution and shall be exercisable during
the lifetime of the Optionholder only by the Optionholder; provided,
however, that the Board may, in its sole discretion, permit transfer
of the Option in a manner that is not prohibited by applicable tax and
securities laws upon the Optionholder’s request.  Except as explicitly provided herein, an
Option may not be transferred for consideration.

 

(ii)           Domestic Relations Orders.  Notwithstanding the foregoing, an Option may
be transferred pursuant to a domestic relations order.

 

(iii)         Beneficiary Designation.  Notwithstanding the foregoing, the
Optionholder may, by delivering written notice to the Company, in a form
provided by or otherwise satisfactory to the Company and any broker designated
by the Company to effect Option exercises, designate a third party who, in the
event of the death of the Optionholder, shall thereafter be entitled to
exercise the Option and receive the Common Stock or other consideration
resulting from such exercise.  In the
absence of such a designation, the executor or administrator of the
Optionholder’s estate shall be entitled to exercise the Option and receive the
Common Stock or other consideration resulting from such exercise.

 

(e)           Exercise Schedule.
The Option shall be exercisable as the shares of Common Stock subject to the Option
vest.

 

(f)            Vesting Schedule.

 

(i)            Each Option granted as an initial grant shall vest in accordance with
the schedule set forth below that results in a shorter period of full vesting:

 

(1)           1/36th of the
shares of Common Stock subject to the Option shall vest each month after the
date of grant over a period of three (3) years; or

 

10

 

(2)           the Option shall vest in equal monthly installments after the date of
grant over a period commencing on the date that the Optionholder is appointed
for the first time to be a Non-Employee Director by the Board and ending on the
date of the Annual Meeting at which the Optionholder is first scheduled to be
considered for election to be a Non-Employee Director by the stockholders of
the Company.

 

(ii)           Each Option granted as an annual grant before the Annual Meeting in 2008
shall vest such that 1/36th of the shares of Common Stock subject to such
Option shall vest each month after the date of grant over a period of three (3) years;
and each Option granted as an annual grant on or after the Annual Meeting in
2008 shall vest such that 1/12 th of the shares of Common Stock subject to such
Option shall vest each month after the date of grant over a period of one (1) year.

 

(g)           Termination of Continuous Service. In the event an Optionholder’s Continuous Service terminates (other
than upon the Optionholder’s death or Disability), the Optionholder may
exercise his or her Option (to the extent that the Optionholder was entitled to
exercise it as of the date of termination) but only within such period of time
ending on the earlier of (i) the date three (3) months following the
termination of the Optionholder’s Continuous Service, or (ii) the
expiration of the term of the Option as set forth in the Option Agreement. If,
after termination, the Optionholder does not exercise his or her Option within
the time specified in the Option Agreement, the Option shall terminate.

 

(h)           Extension of Termination Date. If the exercise of the Option following the termination of the
Optionholder’s Continuous Service (other than upon the Optionholder’s death or
Disability) would be prohibited at any time solely because the issuance of
shares would violate the registration requirements under the Securities Act,
then the Option shall terminate on the earlier of (i) the expiration of
the term of the Option set forth in subsection 7(a) or (ii) the
expiration of a total period of three (3) months (that need not be
consecutive) after the termination of the Optionholder’s Continuous Service
during which the exercise of the Option would not be in violation of such
registration requirements.

 

(i)            Disability of Optionholder. In the event an Optionholder’s Continuous Service terminates as a
result of the Optionholder’s Disability, the Optionholder may exercise his or
her Option (to the extent that the Optionholder was entitled to exercise it as
of the date of termination), but only within such period of time ending on the
earlier of (i) the date twelve (12) months following such termination or (ii) the
expiration of the term of the Option as set forth in the Option Agreement. If,
after termination, the Optionholder does not exercise his or her Option within
the time specified herein, the Option shall terminate.

 

11

 

(j)            Death of Optionholder. In
the event (i) an Optionholder’s Continuous Service terminates as a result
of the Optionholder’s death or (ii) the Optionholder dies within the
three-month period after the termination of the Optionholder’s Continuous
Service for a reason other than death, then the Option may be exercised (to the
extent the Optionholder was entitled to exercise the Option as of the date of
death) by the Optionholder’s estate, by a person who acquired the right to
exercise the Option by bequest or inheritance or by a person designated to
exercise the Option upon the Optionholder’s death, but only within the period
ending on the earlier of (1) the date eighteen (18) months following the
date of death or (2) the expiration of the term of such Option as set
forth in the Option Agreement. If, after death, the Option is not exercised
within the time specified herein, the Option shall terminate.

 

8.             COVENANTS OF THE COMPANY.

 

(a)           Availability of Shares.
During the terms of the Options, the Company shall keep available at all times
the number of shares of Common Stock required to satisfy such Options.

 

(b)           Securities Law Compliance. The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
grant Options and to issue and sell shares of Common Stock upon exercise of the
Options; provided, however, that this undertaking shall not require the Company
to register under the Securities Act the Plan, any Option or any stock issued
or issuable pursuant to any such Option. If, after reasonable efforts, the
Company is unable to obtain from any such regulatory commission or agency the
authority which counsel for the Company deems necessary for the lawful issuance
and sale of stock under the Plan, the Company shall be relieved from any
liability for failure to issue and sell stock upon exercise of such Options
unless and until such authority is obtained.

 

9.             USE OF PROCEEDS FROM STOCK.

 

Proceeds from the sale of stock pursuant to Options
shall constitute general funds of the Company.

 

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10.          MISCELLANEOUS.

 

(a)           Stockholder Rights. No
Optionholder shall be deemed to be the holder of, or to have any of the rights
of a holder with respect to, any shares subject to such Option unless and until
such Optionholder has satisfied all requirements for exercise of the Option
pursuant to its terms.

 

(b)           No Service Rights.
Nothing in the Plan or any instrument executed or Option granted pursuant
thereto shall confer upon any Optionholder any right to continue to serve the
Company as a Non-Employee Director or shall affect the right of the Company or
an Affiliate to terminate (i) the employment of an Employee with or
without notice and with or without cause, (ii) the service of a Consultant
pursuant to the terms of such Consultant’s agreement with the Company or an
Affiliate or (iii) the service of a Director pursuant to the Bylaws of the
Company or an Affiliate, and any applicable provisions of the corporate law of
the state in which the Company or the Affiliate is incorporated, as the case may
be.

 

(c)           Investment Assurances.
The Company may require an Optionholder, as a condition of exercising or
acquiring stock under any Option, (i) to give written assurances
satisfactory to the Company as to the Optionholder’s knowledge and experience
in financial and business matters and/or to employ a purchaser representative
reasonably satisfactory to the Company who is knowledgeable and experienced in
financial and business matters and that he or she is capable of evaluating,
alone or together with the purchaser representative, the merits and risks of
exercising the Option; and (ii) to give written assurances satisfactory to
the Company stating that the Optionholder is acquiring the stock subject to the
Option for the Optionholder’s own account and not with any present intention of
selling or otherwise distributing the stock. The foregoing requirements, and
any assurances given pursuant to such requirements, shall be inoperative if (iii) the
issuance of the shares upon the exercise or acquisition of stock under the
Option has been registered under a then currently effective registration
statement under the Securities Act or (iv) as to any particular
requirement, a determination is made by counsel for the Company that such
requirement need not be met in the circumstances under the then applicable
securities laws. The Company may, upon advice of counsel to the Company, place
legends on stock certificates issued under the Plan as such counsel deems
necessary or appropriate in order to comply with applicable securities laws,
including, but not limited to, legends restricting the transfer of the stock.

 

(d)           Withholding Obligations.
The Optionholder may satisfy any federal, state or local tax withholding
obligation relating to the exercise or acquisition of stock under an Option by
any of the following means (in addition to the Company’s right to withhold from
any compensation paid to the Optionholder by the Company) or by a combination
of such means:  (i) tendering a cash payment; (ii) authorizing
the Company to withhold shares from the shares of the Common Stock otherwise
issuable to the Optionholder as a result of the exercise or acquisition of
stock under the Option, provided, however, that no shares of Common Stock are
withheld 

 

13

 

with a value exceeding the minimum amount of tax
required to be withheld by law; or (iii) delivering to the Company owned
and unencumbered shares of the Common Stock.

 

(e)           Electronic Delivery.  Any reference herein to a “written” agreement
or document shall include any agreement or document delivered electronically or
posted on the Company’s intranet.

 

11.          ADJUSTMENTS UPON CHANGES IN STOCK.

 

(a)           Capitalization Adjustments. If any change is made in the stock subject to the Plan, or subject to
any Option, without the receipt of consideration by the Company (through
merger, consolidation, reorganization, recapitalization, reincorporation, stock
dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares, change in corporate
structure or other transaction not involving the receipt of consideration by
the Company), the Board shall appropriately and proportionately adjust (i) the
class(es) and maximum number of securities subject both to the Plan pursuant to
subsection 4(a) and to the nondiscretionary Options specified in Section 5,
(ii) the class(es) and number of securities and price per share of stock
subject to outstanding Options. The Board shall make such adjustments, and its
determination shall be final, binding and conclusive. (The conversion of any
convertible securities of the Company shall not be treated as a transaction “without
receipt of consideration” by the Company.)

 

(b)           Corporate Transaction. In
the event of (i) a sale, lease or other disposition of all or
substantially all of the securities or assets of the Company, (ii) a
merger or consolidation in which the Company is not the surviving corporation
or (iii) a reverse merger in which the Company is the surviving corporation
but the shares of Common Stock outstanding immediately preceding the merger are
converted by virtue of the merger into other property, whether in the form of
securities, cash or otherwise, then any surviving corporation or acquiring
corporation may assume any Options outstanding under the Plan or may substitute
similar Options (including an option to acquire the same consideration paid to
the stockholders in the transaction described in this subsection 11(b)) for
those outstanding under the Plan. In the event no surviving corporation or
acquiring corporation assumes such Options or substitutes similar Options for
those outstanding under the Plan, then with respect to Options held by
Optionholders who are in Continuous Service immediately prior to such an event,
the vesting of such Options (and the time during which such Options may be
exercised) shall be accelerated in full, and the Options shall terminate if not
exercised at or prior to such event. With respect to any other Options
outstanding under the Plan, such Options shall terminate if not exercised prior
to such event.

 

(c)           Change in Control.  Upon a Change in Control, all Options held by
each Optionholder whose Continuous Service has not terminated immediately prior
to the Change in 

 

14

 

Control shall become fully vested and exercisable
immediately prior to the effectiveness of such Change in Control.

 

12.          AMENDMENT OF THE PLAN AND OPTIONS.

 

(a)           Amendment of Plan.
The Board at any time, and from time to time, may amend the Plan. However,
except as provided in Section 11 relating to adjustments upon changes in
stock, no amendment shall be effective unless approved by the stockholders of
the Company to the extent stockholder approval is necessary to satisfy the
requirements of Rule 16b-3 or any Nasdaq or securities exchange listing
requirements.

 

(b)           Stockholder Approval.
The Board may, in its sole discretion, submit any other amendment to the Plan
for stockholder approval.

 

(c)           No Impairment of Rights.
Rights under any Option granted before amendment of the Plan shall not be
impaired by any amendment of the Plan unless (i) the Company requests the
consent of the Optionholder and (ii) the Optionholder consents in writing.

 

(d)           Amendment of Options. The
Board at any time, and from time to time, may amend the terms of any one or
more Options including, but not limited to, amendments to provide terms more
favorable than previously provided in the agreement evidencing an Option,
subject to any specified limits in the Plan that are not subject to Board
discretion; provided, however, that the rights under any Option shall not be
impaired by any such amendment unless (i) the Company requests the consent
of the Optionholder and (ii) the Optionholder consents in writing.

 

13.          TERMINATION OR SUSPENSION OF THE PLAN.

 

(a)           Plan Term.
The Board may suspend or terminate the Plan at any time. No Options may be
granted under the Plan while the Plan is suspended or after it is terminated.

 

(b)           No Impairment of Rights. Suspension
or termination of the Plan shall not impair rights and obligations under any
Option granted while the Plan is in effect except with the written consent of
the Optionholder.

 

15

 

14.          EFFECTIVE DATE OF PLAN.

 

The Plan shall become effective on the IPO Date, but
no Option shall be exercised unless and until the Plan has been approved by the
stockholders of the Company, which approval shall be within twelve (12) months
before or after the date the Plan is adopted by the Board.

 

15.          CHOICE OF LAW.

 

All questions concerning the construction, validity
and interpretation of this Plan shall be governed by the law of the State of
Delaware, without regard to such state’s conflict of laws rules.

 

16

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