Document:

EXHIBIT 10.31

 

INAMED CORPORATION

 

NON-EMPLOYEE DIRECTOR’S STOCK OPTION PLAN

 

1.         PURPOSE

 

The purpose of this Non-Employee Director Stock Option Plan (the
“Plan”) is to enable Inamed Corporation (the “Company”) to provide compensatory
stock options to members of its Board of Directors (the “Board”) who are not
also employees of or consultants to the Company (“Non-Employee
Directors”).  The Board believes that
the granting of such options will stimulate the interest of Non-Employee
Directors and strengthen their desire to remain on the Board.  The Plan was adopted by the Board of
Directors of the Company on November 16, 1993 and approved by the Shareholders
at the December 28, 1993 Annual Meeting. 
It is intended that the Plan will constitute a “formula plan” within the
meaning and for the purposes of Rule 16b-3 issued by the Securities and
Exchange Commission under Section 16 of the Securities Exchange Act of
1934.  The provisions of the Plan and/or
any option agreement made pursuant to the Plan will be interpreted and applied
accordingly.  Awards to Non-Employee
Directors are non-qualified stock options (“Non-Qualified Stock Options”).

 

2.         STOCK SUBJECT TO THE
PLAN

 

The Company may issue and sell a total of 150,000 shares of its common
stock, $.01 par value (the “Common Stock”) pursuant to the Plan.  Such shares may be either authorized and
unissued or held by the Company in its treasury.  New options may be granted under the Plan with respect to shares
of Common Stock which are covered by the unexercised portion of an option which
has terminated or expired.

 

3.         ADMINISTRATION

 

The Plan shall be administered by the Board.  Subject to the provisions of the Plan and applicable law, the
Board, acting in its sole and absolute discretion, shall have full power and authority
to interpret the provisions of the Plan and option agreements made under the
Plan, to supervise the administration of the Plan, and to take such other
action as may be necessary or desirable in order to carry out the provisions of
the Plan.  The decisions of the Board as
to any disputed question, including questions of construction, interpretation
and administration, shall be final and conclusive on all persons.

 

4.         AUTOMATIC OPTION
GRANTS

 

An option to purchase 5,000 shares of Common Stock will automatically
be granted to each Non-Employee Director on the date of the 1993 annual meeting
of

 

 

the Company’s Shareholders or,
if later, on the date of his or her initial appointment or election (by the
Board or the Shareholders, as the case may be) as a director, and an option to
purchase an additional 5,000 shares of Common Stock will automatically be
granted to each Non-Employee Director on each anniversary of his or her initial
grant date on which he or she is still serving as a director; provided, however,
that (a) no Non-Employee Director shall be granted options hereunder to
purchase more than 50,000 shares of Common Stock; and (b) no option will be
granted to a Non-Employee Director who, on the grant date, beneficially owns
(as defined in Rule 13d-3 issued by the Securities and Exchange Commission
under Section 13d of the Securities Exchange Act of 1934, as amended) five
percent or more of the Common Stock of the Company.  Upon grant of an option under the Plan, the Non-Employee Director
receiving the grant must enter into a written option agreement with the Company
that contains terms, provisions and conditions that are consistent with the
Plan and have been determined from time to time by the Board.

 

5.         TERMS AND CONDITIONS
OF OPTIONS

 

Each option granted under the Plan shall be evidenced by a written
agreement containing the following terms and conditions:

 

(a)    Option Price.  The purchase price per share shall be equal
to the fair market value of a share of Common Stock on the date the option is granted.  For purposes hereof, the fair market value
of a share of Common Stock on any date shall be equal to the closing sale price
per share as published by a national securities exchange on which shares of the
Common Stock are traded on such date or, if there is no sale of Common Stock on
such date, the average of the bid and asked prices on such exchange at the
closing of trading on such date or, if shares of the Common Stock are not
listed on a national securities exchange, on such date, the closing sale price
per share as listed on the NASDAQ National Market System or, if shares of the
Common Stock are not listed on the NASDAQ National Market System on such date,
the average of the bid and asked prices in the over-the-counter market at the
close of trading on such date.

 

(b)    Option Period.  The period during which an option may be
exercised shall be seven years from the date the option is granted.

 

(c)    Exercise of Options.  No option shall be exercisable unless the
Non-Employee Director to whom the option was granted remains in the continuous
service as a director of the Company for at least one year from the date the
option is granted.  All or part of the
exercisable portion of an option may be exercised at any time during the option
period, except that, without the consent of the Board, no partial exercise of
an option shall be made for less than 1,000 shares.  An option may be exercised by transmitting to the Company (i) a
written notice specifying the number of shares to be purchased, and (ii)
payment in full of the purchase price, together with the amount, if

 

2

 

any, deemed necessary to enable
the Company to satisfy all income tax withholding obligations with regard to
such exercise (unless other arrangements acceptable to the Board are made with
respect to the satisfaction of such withholding obligations).

 

(d)    Payment Option Price.  The purchase price of shares of Common Stock
acquired pursuant to the exercise of an option granted under the Plan shall be
payable in cash or check and/or such other form of payment as may be permitted
by the Board, including, without limitation, previously owned shares of Common
Stock.

 

(e)    Rights as a Shareholder.  No shares of Common Stock shall be issued in
respect of the exercise of an Option granted under the Plan until full payment
therefor has been made.  The holder of
an option shall have no rights as a stockholder with respect to any shares
covered by an option until the date a stock certificate for such shares is
issued to him or her.  Except as
otherwise provided herein, no adjustments shall be made for dividends or
distributions or other rights for which the record date is prior to the date
such stock certificate is issued.

 

(f)     Nontransferability of
Option.  No option shall be
assignable or transferable except upon the optionee’s death to a beneficiary
designated by the optionee in accordance with procedures established by the
Board or, if no designated beneficiary shall survive the optionee, pursuant to
the optionee’s will or by the laws of descent and distribution.  During an optionee’s lifetime, options may
be exercised only by the optionee or the optionee’s guardian or legal
representative.

 

(g)    Termination of Service.
If an optionee ceases to perform services as a director of the Company for any
reason, then each outstanding option granted to him or her under the Plan shall
terminate on the date three months after the date of such termination of
service (or, if earlier, the date specified in the option agreement).

 

(h)    Other Provisions.  The Board may impose such other conditions
with respect to the exercise of options, including, without limitation, any
conditions relating to the application of federal or state securities laws, as
it may deem necessary or advisable.

 

6.         CAPITAL CHANGES,
REORGANIZATION, SALE

 

(a)    Adjustments Upon Changes
in Capitalization.  The aggregate
number and class of shares for which options may be earned under the Plan, the
number and class of shares covered by each outstanding option and the exercise
price per share shall all be adjusted proportionately or as otherwise
appropriate to reflect any increase or decrease in the number of issued shares
of Common Stock resulting from a split-up or consolidation of shares of any
like capital adjustment, or the payment of any stock dividend, and/or to
reflect a change in the character or class of shares covered by the Plan
arising from a readjustment or recapitalization of the Company’s capital stock.

 

3

 

(b)    Cash, Stock or other
Property for Stock.  Except as
otherwise provided in this subparagraph, in the event of an Exchange
Transaction (as defined below), all optionees will be permitted to exercise
their outstanding options in whole or in part whether or not otherwise
exercisable immediately prior to such Exchange Transaction, and any outstanding
options which are not exercised before the Exchange Transaction will thereupon
terminate.  Notwithstanding the
preceding sentence, if, as part of the Exchange Transaction, the Shareholders
of the Company receive capital stock of another corporation (“Exchange Stock”)
in exchange for their shares of Common Stock, and if the Board in its sole
discretion so directs, then all outstanding options will be converted into
options to purchase shares of Exchange Stock. 
The amount and price of converted options will be determined by
adjusting the amount and price of the options granted hereunder on the same
basis as the determination of the number of shares of Exchange Stock the
holders of Common Stock will receive in the Exchange Transaction and, unless
the Board determines otherwise, the vesting conditions with respect to the
converted options will be substantially the same as the vesting conditions set
forth in the original option agreement.

 

(c)    Definition of Exchange
Transaction.  For purposes hereto,
the term “Exchange Transaction” means a merger (other than a merger of the
Company in which the holders of Common Stock immediately prior to the merger
have the same proportionate ownership of Common Stock in the surviving
corporation immediately after the merger), consolidation, acquisition of
property or stock separation, reorganization (other than a mere reincorporation
or the creating of a holding company), liquidation of the Company or other
similar transaction as a result of which the Shareholders of the company
receive cash, stock or other property in exchange for or in connection with
their shares of Common Stock.

 

(d)    Fractional Shares.  In the event of any adjustment in the number
of shares covered by any option pursuant to the provisions hereof, any
fractional shares resulting from such adjustment will be disregarded, and each
such option will cover only the number of full shares resulting from the adjustment.

 

(e)    Determination of Board
to be Final.  All adjustments under
this paragraph 6 shall be made by the Board, and its determination as to what
adjustments shall be made, and the extent thereof, shall be final, binding and
conclusive.

 

7.         AMENDMENT AND
TERMINATION OF THE PLAN

 

The Board may rescind or terminate the Plan.  Except as otherwise provided in the Plan, with respect to equity
changes, any amendment which would increase the aggregate number of shares of
Common Stock as to which options may be granted under the Plan, materially
increase the benefits under the Plan, or modify the class of persons eligible
to receive options under the Plan, shall be subject to the

 

4

 

approval of the Shareholders of
the Company.  No amendment or
termination may adversely affect any outstanding option without the written
consent of the optionee. 
Notwithstanding anything to the contrary contained herein or in any
option agreement made hereunder, the provisions of paragraphs 4 and 5(a) of the
Plan and any other provision of the Plan or of an option agreement relating to
the timing of option grants, the amount of shares covered thereby and the
exercise price thereunder may not be amended more than once every six months, and
no amendments may be made to the Plan or an option amendment if, as a result of
such amendment, the Plan would no longer qualify as a “formula plan” under Rule
16b-3 issued by the Securities and Exchange Commission under Section 16 of the
Securities Exchange Act of 1934.

 

8.         NO RIGHTS CONFERRED

 

Nothing contained herein will be deemed to give any individual any
right to receive an option under the Plan or to be retained in the employ or
service of the Company.

 

9.         GOVERNING LAW

 

The Plan and each option agreement shall be governed by the laws of the
state of Florida.

 

10.       TERM OF THE PLAN

 

The Plan shall be effective as of December 28, 1993, the date on which
Shareholder approval of the Plan was obtained at the 1993 Annual Meeting of
Shareholders.  The Plan will terminate
on December 28, 2003, ten years from the date on which it was approved by the
Shareholders of the Company, unless sooner terminated by the Board.  The rights of optionees under options
outstanding at the time of the termination of the Plan shall not be affected
solely by reason of the termination and shall continue in accordance with the
terms of the option.

 

5

 

FEDERAL INCOME TAX TREATMENT FOR THE

NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN

 

The following
is a brief description of the federal income tax treatment that will generally
apply to options granted under the Plan, based on federal income tax laws in
effect on the date hereof.  Because the
following is only a brief summary of the general federal income tax rules,
recipients of options should not rely thereon for individual tax advice, as
each taxpayer’s situation and the consequences of any particular transaction
will vary depending upon the specific facts and circumstances involved.  EACH TAXPAYER IS ADVISED TO CONSULT WITH HIS
OR HER OWN TAX ADVISOR FOR PARTICULAR FEDERAL, AS WELL AS STATE AND LOCAL,
INCOME AND ANY OTHER TAX ADVICE.

 

Non-Qualified
Stock Options

 

The grant of
Non-Qualified Stock Options is generally not a taxable event for the
optionee.  Upon exercise of the option,
the optionee will generally recognize ordinary income in an amount equal to the
excess of the fair market value of the stock acquired upon exercise (determined
as of the date of the exercise) over the exercise price of such option, and the
Company will be entitled to a deduction equal to such amount.  See “Options Granted to Insiders”
below.  A subsequent sale of Common
Stock generally will give rise to capital gain or loss equal to the difference
between the sales price and the sum of the exercise price paid for such shares
plus the ordinary income recognized with respect to such shares.

 

Options
Granted to Insiders

 

An optionee is
a Non-Employee Director and he or she is subject to Section 16 of the Exchange
Act.  During any period of time (the
“Section 16(b) Period”), a sale of the stock acquired upon exercise of the
option could subject such optionee to suit under Section 16.  In such case, the optionee will not
recognize ordinary income and the Company will be entitled to a deduction,
equal to the excess of the fair market value of the stock (determined as of the
expiration of the Section 16(b) Period over the option exercise price.  Such an optionee may elect under Section
83(b) of the Internal Revenue Code, as amended, to recognize ordinary income on
the date of exercise (an “83(b) Election”), in which case the Company would be
entitled to a deduction equal to the amount of ordinary income so
recognized.  Insiders should consult
their tax advisors to determine the tax consequences to them of exercising
Options granted to them pursuant to the Plan.

 

 

Miscellaneous
Tax Issues

 

The Company
generally will be required to make arrangements for withholding applicable
taxes with respect to any ordinary income recognized by a participant in
connection with options granted or exercised under the Plan.

 

With certain
exceptions, an individual may not deduct investment-related interest to the
extent such interest exceeds the individual’s net investment income for the year.  Investment interest generally includes
interest paid on indebtedness incurred to purchase Common Stock.  Interest disallowed under this rule may be
carried forward to and deducted in later years, subject to the same
limitations.

 

Special rules
will apply in cases where a recipient of an option pays the exercise or
purchase price of the option or applicable withholding tax obligations under
the Plan by delivering previously-owned Common Stock or by reducing the amount
of Common Stock otherwise issuable pursuant to the award.  The surrender or withholding of such shares
will in certain circumstances result in the recognition of income with respect
to such shares.

 

CERTAIN
LAWS

 

The
acquisition of shares of Common Stock by directors, certain officers, or ten
percent shareholders of the Company could be subject to the provisions of
Section 16(b) of the Exchange Act under which a purchase of the Company’s
Common Stock within six months before or after any sale of such stock could
result in recovery by the Company of all or a portion of any amount by which
the sale proceeds exceed the purchase price. 
Such officers, directors and ten percent shareholders are required to
file reports of changes in beneficial ownership under Section 16(a) of the
Exchange Act.  Rule 16b-3 under the
Exchange Act provides an exemption from Section 16(b) liability for certain
transactions pursuant to employee benefit plans.  Officers, directors and ten percent shareholders should consult
their counsel with respect to the effect of Section 16 upon their participation
in the Plan.

 

Resale of
shares received on exercise of options by any person who has a control
relationship with the Company may be restricted under the provisions of the
Securities Act and the rules and regulations of the Commission, including Rule
144.

 

The Plan is
not subject to any provisions of the Employment Retirement Income Security Act
of 1974 and is not required to be qualified under Section 401(a) of the
Code.  The Company does not make
available reports to employees participating in the Plan.EXHIBIT 10.32

 

INAMED CORPORATION

 

1998 STOCK OPTION PLAN

 

1.             Purpose
of the Plan.

 

This 1998
Stock Option Plan (the “Plan”) is intended as an incentive, to retain in the
employ of INAMED CORPORATION (the “Company”) and any Subsidiary of the Company,
within the meaning of Section 424(f) of the United States Internal Revenue Code
of 1986, as amended (the “Code”), persons of training, experience and ability,
to attract new employees, consultants, officers and directors, whose services
are considered valuable, to encourage the sense of proprietorship and to
stimulate the active interest of such persons in the development and financial
success of the Company and its Subsidiaries.

 

It is further
intended that options (the “Options”) granted pursuant to the Plan shall be
Options not intended to qualify as an incentive stock option within the meaning
of Section 422 of the Code.

 

The Company
intends that the Plan meet the requirements of Rule 16b-3 (“Rule 16b-3”)
promulgated under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”) and that transactions of the type specified in subparagraphs
(c) to (f) inclusive of Rule 16b-3 by officers and directors of the Company
pursuant to the Plan will be exempt from the operation of Section 16(b) of the
Exchange Act.  In all cases, the terms,
provisions, conditions and limitations of the Plan shall be construed and
interpreted consistent with the Company’s intent as stated in this Section 1.

 

2.             Administration
of the Plan.

 

The Board of
Directors of the Company (the “Board”) shall administer the Plan unless and
until the Board delegates administration to a Committee.  The Board may delegate administration of the
Plan to a Committee or Committees of one or more members of the Board.  In the discretion of the Board, a Committee
may consist solely of two or more Outside Directors (as such term is defined in
Section 162(m) of the Code), or solely of two or more Non-Employee Directors
(as such term is defined in Rule 16b-3). 
If administration is delegated to a Committee, the Committee shall have,
in connection with the administration of the Plan, the powers theretofore
possessed by the Board (and references in this Plan to the Board shall
thereafter be to the Committee), subject, however, to such resolutions, not inconsistent
with the provisions of the Plan, as may be adopted from time to time by the
Board.  The Board may abolish the
Committee at any time and revest in the Board the administration of the Plan.

 

Subject to the
provisions of the Plan, the Board shall have the authority, in its
discretion:  (1) to grant Options; (2)
to determine, upon review of relevant information and in accordance with
Section 5 of the Plan, the Fair Market Value of the Common Stock of the
Company, $.01 par value per share (“Common Stock”); (3) to determine the
exercise price per share of Options to be granted, which exercise price shall
be determined in accordance with Section 5 of the Plan; (4) to determine the
recipients to whom, and the time or times at which, Options shall be granted and
the number of shares to be represented by each Option; (5) to interpret the
provisions and supervise the administration of the Plan; (6) to prescribe,
amend and rescind rules and regulations relating to the Plan; (7) to determine
the terms and provisions of each Option granted (which need not be identical)
and, with the consent of the holder thereof, modify or amend each Option; (8)
to accelerate or defer (with the consent of the recipient of the Option (the
“Optionee”)) the exercise date of any Option, consistent with the provisions of
Section 5 of the Plan; (9) to authorize any person to execute on behalf of the
Company any instrument required to effectuate the grant of an Option previously
granted by the Board; and (10) to make all other determinations deemed
necessary or advisable for the administration of the Plan.

 

All decisions,
determinations and interpretations of the Board shall be final and binding on
all Optionees and any other holders of any Options granted under the Plan.

 

 

In the event that
for any reason the Board is unable to act or if the Board at the time of any
grant, award or other acquisition under the Plan of Options or Common Stock
does not consist of two or more Non-Employee Directors, they any such grant,
award or other acquisition may be approved or ratified in any other manner
contemplated by subparagraph (d) of Rule 16b-3.

 

3.             Designation
of Optionees.

 

The persons
eligible for participation in the Plan as recipients of Options (the
“Optionees”) shall include employees, consultants and directors of the Company
or any Subsidiary.  In selecting
Optionees, and in determining the number of shares to be covered by each Option
granted to Optionees, the Board may consider the office or position held by the
Optionee or the Optionee’s relationship to the Company, the Optionee’s degree
of responsibility for and contribution to the growth and success of the Company
or any Subsidiary, the Optionee’s length of service, age, promotions, potential
and any other factors that the Board may consider relevant.  An Optionee who has been granted an Option
hereunder may be granted an additional Option or Options, if the board shall so
determine.

 

4.             Common
Stock Reserved for the Plan.

 

Subject to
adjustment as provided in Section 7 hereof, a total of 450,000 shares of the
Common Stock shall be subject to the Plan. 
The shares of Common Stock subject to the Plan shall consist of unissued
shares or previously issued shares held by any Subsidiary of the Company, and
such amount of shares of Common Stock shall be and is hereby reserved for such
purpose.  Any of such shares of Common
Stock that may remain unsold and that are not subject to outstanding Options at
the termination of the Plan shall cease to be reserved for the purposes of the
Plan, but until termination of the Plan the Company shall at all times reserve
a sufficient number of shares of Common Stock to meet the requirements of the
Plan.  Should any Option expire or be
cancelled prior to its exercise in full or should the number of shares of Common
Stock to be delivered upon the exercise in full of an Option be reduced for any
reason, the shares of Common Stock theretofore subject to such Option may be
subject to future Options under the Plan.

 

5.             Terms
and Conditions of Options.

 

Options
granted under the Plan shall be subject to the following conditions and shall
contain such additional terms and conditions, not inconsistent with the terms
of the Plan, as the Board shall deem desirable:

 

(a)           Option Price.  The purchase price of each share of Common
Stock purchasable under an Option shall be determined by the Board at the time
of grant, but shall not be less than 85% of the Fair Market Value (as defined
below) of such share of Common Stock on the date the Option is granted; provided,
however, that if an option granted to the Company’s Chief Executive
Officer or to any of the Company’s other four most highly compensated officers
is intended to qualify as performance-based compensation under Section 162(m)
of the Code, the exercise price of such Option shall not be less than 100% of
the Fair Market Value of such share of Common Stock on the date the Option is
granted.  The exercise price for each
Option shall be subject to adjustment as provided in Section 7 below.  Fair Market Value means the closing price of
publicly traded shares of Common Stock on a national securities exchange or the
over-the-counter Bulletin Board market (“OTC Bulletin Board”), or, if not so
listed or regularly quoted, the mean between the closing bid and asked prices
of publicly traded shares of Common Stock in the over-the-counter market, or,
if such bid and asked prices shall not be available, as reported by any
nationally recognized quotation service selected by the Company, or as
determined by the Board in a manner consistent with the provisions of the
Code.  Anything in this Section 5(a) to
the contrary notwithstanding, in no event shall the purchase price of a share
of Common Stock be less than the minimum price permitted under rules and
policies of any national securities exchange or the OTC Bulletin Board if and
so long as the Common Stock is listed on any such exchange or the OTC Bulletin
Board.

 

(b)           Option Term.  The term of each Option shall be fixed by
the Board, but no Option shall be exercisable more than 10 years after the date
such Option is granted.

 

2

 

(c)           Excercisability.  Options shall be exercisable at such time or
times and subject to such terms and conditions as shall be determined by the
Board at the time of grant.  Unless the
Board shall decide otherwise, Options shall vest ratably over three (3) years.

 

(d)           Method of Exercise.  Options to the extent then exercisable may
be exercised in whole or in part at any time during the option period, by
giving written notice to the Company specifying the number of shares of Common
Stock to be purchased, accompanied by payment in full of the purchase price, in
cash, by check or such other instrument as may be acceptable to the Board.  Payment in full or in part may also be made
by (i) exchanging Common Stock owned by the Optionee which is not the subject
of any pledge or security interest, (ii) the Optionee’s written selection to
have shares of Common Stock withheld by the Company from the shares of Common
Stock otherwise to be received with such withheld shares of Common Stock having
a Fair Market Value on the date of exercise equal to the exercise price of the
Option, or (iii) by a combination of the forgoing, provided that the combined
value of all cash and cash equivalents and the Fair Market Value of any shares
surrendered to the Company is at least equal to such exercise price.  An Optionee shall have the right to
dividends and other rights of a stockholder with respect to shares of Common
Stock purchased upon exercise of an Option after (i) the Optionee has given
written notice of exercise and has paid in full for such shares and (ii)
becomes a stockholder of record with respect thereto.  The provisions of this subsection 5(d) are subject to any Option
provisions governing the minimum number of shares as to which an Option may be
exercised.

 

Neither the
recipient of an Option nor any person to whom an Option is transferred in
accordance with the Plan 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 person has satisfied all requirements for exercise of the
Option pursuant to its terms.

 

(e)           Non-transferability of Options.  Options may be transferred to the extent
provided in the Option Agreement; provided that if the Option Agreement does
not expressly permit the transfer of an Option, the Option shall not be
transferable except by will, by the laws of descent and distribution or
pursuant to a domestic relations order satisfying the requirements of Rule 16
of the Exchange Act and shall be exercisable during the lifetime of the person
to whom the Option is granted only by such person or any transferee pursuant to
a domestic relations order. 
Notwithstanding the foregoing, the person to whom the Option is granted
may, by delivering written notice to the Company, in a form satisfactory to the
Company, designate a third party who, in the event of the death of the
Optionee, shall thereafter be entitled to exercise the Option.  Any attempt to transfer, assign, pledge or
otherwise dispose of, or to subject to execution, attachment or similar
process, any Option contrary to the provisions hereof shall be void and
ineffective and shall give no right to the purported transferee.

 

(f)            Termination by Death.  Unless otherwise determined by the Board at
grant, if any Optionee’s employment with or service to the Company or any
Subsidiary terminates by reason of death, the Option may thereafter be
exercised, to the extent then exercisable (or on such accelerated basis as the
Board shall determine at or after grant), by the legal representative of the
estate or by the legatee of the Optionee under the will of the Optionee, for a
period of one year after the date of such death or until the expiration of the
stated term of such Option as provided under the Plan, whichever period is
shorter.

 

(g)           Termination by Reason of
Disability.  Unless otherwise
determined by the Board at grant, if any Optionee’s employment with or service
to the Company or any Subsidiary terminates by reason of total and permanent
disability (as defined in Section 22(e)(3) of the Code, “Disability”), any
Option held by such Optionee may thereafter be exercised, to the extent it was
exercisable at the time of termination due to Disability (or on such
accelerated basis as the Board shall determine at or after grant), but may not
be exercised after 30 days after the date of such termination of employment or
service or the expiration of the stated term of such Option, whichever period
is shorter; provided, however, that, if the Optionee dies within such 30 day
period, any unexercised Option held by such Optionee shall thereafter be
exercisable to the extent to which it was exercisable at the time of death for
a period of one year after the date of such death or for the stated term of
such Option, whichever period is shorter.

 

3

 

(h)           Other Termination.  Unless otherwise determined by the Board at
grant, if any Optionee’s employment with or service to the Company or any
Subsidiary terminates for any reason other than death or Disability, the Option
shall thereupon terminate, except that the portion of any Option that was
exercisable on the date of such termination of employment may be exercised for
the lesser of 30 days after the date of termination or the balance of such
Option’s term if the Optionee’s employment or service with the Company or any
Subsidiary is terminated by the Company or such Subsidiary without cause (the
determination as to whether termination was for cause to be made by the
Board).  The transfer of an Optionee
from the employ of the Company to a Subsidiary, or vice versa, or from one
Subsidiary to another, shall not be deemed to constitute a termination of
employment for purposes of the Plan.

 

6.             Effective
Date of Plan and Term of Plan

 

The Plan is
subject to approval, at a duly held shareholders’ meeting, within twelve (12)
months after the date the Board approves the Plan, by the affirmative vote of
the holders of a majority of the voting shares of the Company represented in
person or by proxy and entitled to vote at the meeting.  Options may be granted, but not exercised,
before such shareholder approval.  If
the shareholders fail to approve the Plan within the required time period, any
Options granted under the Plan shall be void, and no additional Options may
thereafter be granted.  The Plan shall
continue until such time as it may be terminated by action of the Board; provided,
however, that no Options may be granted under this Plan on or after the
tenth anniversary of approval of the Plan by the Board, but Options theretofore
granted may extend beyond that date.

 

7.             Adjustments
Upon Changes in Capitalization or Merger.

 

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

 

(b)           Unless otherwise provided by the
Board at the time of grant, in the event of: (i) a dissolution, liquidation or
sale of substantially all of the assets of the Company; (ii) a merger or
consolidation in which the Company is not the surviving corporation; (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; or (iv) the acquisition by any person, entity or group within
the meaning of Section 13(d) or 14(d) of the Exchange Act, or any comparable
successor provisions (excluding any employee benefit plan or related trust
sponsored or maintained by the Company or any affiliate of the Company), of the
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act, or comparable successor rule) of securities of the Company
representing at least fifty percent (50%) of the combined voting power entitled
to vote in the election of directors, then, with respect to Options held by
Optionees, the vesting of such Options (and, if applicable, the time during
which such Options may be exercised) shall be accelerated immediately prior to
such event and the Options shall terminate if not exercised (if applicable)
twenty days following such acceleration.

 

4

 

8.             Purchase
for Investment.

 

Unless the
Options and shares covered by the Plan have been registered under the United
States Securities Act of 1933, as amended (the “Securities Act”), or the
Company has determined that such registration is unnecessary, each person
exercising an Option under the Plan may be required by the Company to give a
representation in writing that he is acquiring the shares for this own account
for investment and not with a view to, or for sale in connection with, the
distribution of any part thereof.

 

9.             Taxes.

 

The Company
may make such provisions as it may deem appropriate, consistent with applicable
law, in connection with any Options granted under the Plan with respect to the
withholding of taxes or any other tax matters.

 

10.          Amendment
and Termination.

 

The Board may
amend, suspend, or terminate the Plan, except that no amendment shall be made
that would impair the rights of any Optionee under any Option theretofore
granted without his consent, and except that no amendment shall be made which,
without the approval of the stockholders of the Company would:

 

(a)           materially increase
the number of shares that may be issued under the Plan, except as provided in
Section 7;

 

(b)           materially increase
the benefits accruing to the Optionees under the Plan;

 

(c)           materially modify
the requirements as to eligibility for participation in the Plan; or

 

(d)           extend the term of
any Option beyond that provided for in Section 5(b).

 

The Board may
amend the terms of any Option theretofore granted, prospectively or
retroactively, but no such amendment shall impair the rights of any Optionee
without his consent.  The Board may also
substitute new Options for previously granted Options, including options
granted under other plans applicable to the participant and previously granted
Options having higher option prices, upon such terms as the Board may deem
appropriate.

 

11.          Government
Regulations.

 

The Plan, and the
grant and exercise of Options hereunder, and the obligation of the Company to
sell and deliver shares under such Options, shall be subject to all applicable
laws, rules and regulations, and to such approvals by any governmental
agencies, or by national securities exchanges or the OTC Bulletin Board if and
so long as the Common Stock is listed on any such exchange or the OTC Bulletin
Board, as may be required.

 

12.          General
Provisions.

 

(a)           Certificates.  All certificates for shares of Common Stock
delivered under the Plan shall be subject to such stop transfer orders and
other restrictions as the Board may deem advisable under the rules, regulations
and other requirements of the Securities and Exchange Commission, or other
securities commission having jurisdiction, any applicable Federal, provincial
or state securities law, any stock exchange upon which the Common Stock is then
listed and the Board may cause a legend or legends to be placed on any such
certificates to make appropriate reference to such restrictions.

 

5

 

(b)           Employment Matters.  The adoption of the Plan shall not confer
upon any Optionee of the Company or any Subsidiary any right to continued
employment or, in the case of an Optionee who is a director, continued service
as a director, with the Company or a Subsidiary, as the case may be, nor shall
it interfere in any way with the right of the Company or any Subsidiary to
terminate the employment of any of its employees, the service of any of its
directors or the retention of any of its consultants or advisors at any time.

 

(c)           Limitation of Liability.  No member of the Board or the Committee, or
any officer or employee of the Company acting on behalf of the Board or the
Committee, shall be personally liable for any action, determination, or
interpretation taken or made in good faith with respect to the Plan, and all
members of the Board or the Committee and each and any officer or employee of
the Company acting on their behalf shall, to the extent permitted by law, be
fully indemnified and protected by the Company in respect of any such action,
determination or interpretation.

 

(d)           Registration of Common Stock.  Notwithstanding any other provision in the
Plan, no Option may be exercised unless and until the Common Stock to be issued
upon the exercise thereof has been registered under the Securities Act and
applicable state securities laws, or is, in the opinion of counsel to the
Company, exempt from such registration in the United States or exempt from the
prospectus and registration requirements under applicable provincial
legislation.  The Company shall not be
under any obligation to register under applicable federal or state securities
laws any Common Stock to be issued upon the exercise of an Option granted
hereunder, or to comply with an appropriate exemption from registration under
such laws or the laws of any province in order to permit the exercise of an
Option and the issuance and sale of the Common Stock subject to such Option.  However, the Company may in its sole
discretion register such Common Stock at such time as the Company shall
determine.  If the Company chooses to
comply with such an exemption from registration, the Common Stock issued under the
Plan may, at the direction of the Board, bear an appropriate restrictive legend
restricting the transfer or pledge of the Common Stock represented thereby, and
the Committee may also give appropriate stop transfer instructions to the
Company’s transfer agents.

 

6

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00036-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00036-of-00352.parquet"}]]